Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS]
IMMEDIATE RELEASE
May 25, 2006
UNITED NATURAL FOODS REPORTS $0.29 DILUTED EPS, ON RECORD
REVENUES OF $637 MILLION FOR THE THIRD QUARTER OF FISCAL 2006
Increases Guidance for Fiscal 2006 Revenues
Dayville, Connecticut - May 25, 2006 -- United Natural Foods, Inc. (Nasdaq:
UNFI) (the "Company") today reported net income of $12.3 million, or $0.29 per
diluted share, for the third quarter of fiscal 2006, ended April 29, 2006. The
Company reported revenues for the third quarter of fiscal 2006 of $637.1
million, an increase of $102.7 million, or 19.2%, from the $534.3 million
recorded in the third quarter of fiscal 2005. Strong growth across all major
sales channels of the wholesale segment contributed to the record sales.
For the third quarter of fiscal 2006, net income increased 15.1% to $12.3
million, or $0.29 per diluted share, compared to $10.7 million, or $0.26 per
diluted share, for the third quarter of fiscal 2005. Net income, excluding
special items, for the third quarter of fiscal 2006 increased 14.4% to $12.3
million, or $0.29 per diluted share, compared to $10.8 million, or $0.26 per
diluted share, for the third quarter of fiscal 2005. There were no special items
in the third quarter of fiscal 2006. Special items in the third quarter of
fiscal 2005 consisted of certain incremental labor costs associated with closing
the Mounds View, Minnesota facility, which was completed in the third quarter of
fiscal 2005, and opening the Greenwood, Indiana facility, which occurred in
August 2005.
In December 2004, the Financial Accounting Standards Board finalized FAS 123R,
which requires all companies to expense share-based payments, including stock
options, at fair value as of the beginning of the first annual reporting period
that begins after June 15, 2005. As such, the Company began expensing stock
options on August 1, 2005. The Company has adopted the modified prospective
method allowed under FAS 123R. The charge to earnings during fiscal 2006
includes the impact of the vesting of stock options granted in prior years,
because the expense is recognized over the vesting period of the options, which
is typically four years. For the third quarter of fiscal 2006, share-based
compensation negatively impacted earnings before taxes by $1.2 million or 19
basis points.
"Fiscal 2006 continues to be a strong year and we are very proud of our
financial performance in the third quarter," said Michael Funk, President and
Chief Executive Officer. "We posted another quarter of growth across all three
major sales channels and realized a 19% increase in revenues and a 15% increase
in earnings. These results reflect the continued strong consumer demand for
natural and organic products as well as the underlying strength of our sales
channels across all regions in the country."
Mr. Funk added, "Looking ahead we remain focused on serving the needs of our
customers and committed to our core strategies and approach to the market. Given
the continuing strong underlying demand in our markets we remain well positioned
to achieve record financial results in fiscal 2006 and to achieve our objectives
for growth in fiscal 2007."
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
April 30, 2005 is included in the financial table shown below. A description of
the Company's use of non-GAAP information is provided under "Non-GAAP Results"
below.
The following table details the non-GAAP measures for the third quarter of
fiscal 2005:
Quarter ended April 30, 2005 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items: $17,489 $10,756 $ 0.26
Special items - (Expense)
Related to the closing of the Mounds View,
Minnesota facility (included in operating expenses) (103) (63) (0.00)
Related to the opening of the Greenwood, Indiana
facility (included in operating expenses) (11) (7) (0.00)
- -----------------------------------------------------------------------------------------
Income, including special items: $17,375 $10,686 $ 0.26
=========================================================================================
Raises Fiscal 2006 Revenue Guidance and Revises Earnings Guidance
The Company is raising its projected revenues guidance to $2.42 to $2.45 billion
for fiscal 2006, ending July 29, 2006. In addition, the Company is narrowing its
guidance on earnings per share, excluding special items, to a range of $1.08 -
$1.10 per diluted share. Previously, the Company had announced revenue guidance
from $2.38 to $2.42 billion and earnings per share guidance, excluding potential
special items, from $1.05 - $1.10 per diluted share for the fiscal year. At this
time, the Company is further narrowing the anticipated impact of share-based
compensation expense to approximately $5.5 million to $6.2 million on a pre-tax
basis, or $0.08 to $0.09 per diluted share after taxes. Previously, the Company
had expected to incur approximately $5.5 million to $6.8 million of share-based
compensation expense on a pre-tax basis, or $0.08 to $0.10 per diluted share
after taxes, excluding potential special items. Finally, the Company also
lowered anticipated fiscal 2006 capital expenditures to a range of $18 to $23
million from prior guidance of $30 to $35 million due to revised timing of
planned expenditures.
Actual share-based compensation expenses recorded during the remainder of fiscal
2006 may fluctuate beyond the guidance provided based on various factors, such
as additional equity awards granted to employees, changes in the Company's stock
price, and actual results in comparison to the underlying assumptions used in
estimating the fair value of share-based payments.
Historically, the Company has classified expenses related to distribution
facility expansions and distribution facility relocations as special items.
However, at this time the Company does not know the extent or significance of
these items or whether the Company will in fact incur any additional special
items in fiscal 2006. The Company's guidance is based on a number of
assumptions, which are subject to change and many of which are outside the
control of the Company. If any of these assumptions vary, the Company's guidance
may change. There can be no assurance that the Company will achieve these
results. A description of the Company's use of non-GAAP information is provided
under "Non-GAAP Results" below.
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on
May 25, 2006 to review the Company's quarterly results, market trends and future
outlook. The conference call dial-in number is (303) 262-2138. An audio webcast
of the conference call will be available to the public, on a listen-only basis,
via the Internet at www.earnings.com or at the Investor Relations section of the
Company's website at www.unfi.com. Please allow extra time prior to the call to
visit the site and download the necessary software to listen to the Internet
broadcast. The online archive of the webcast will be available for 30 days.
About United Natural Foods
United Natural Foods, Inc. carries and distributes more than 40,000 products to
more than 20,000 customers nationwide. The Company serves a wide variety of
retail formats including conventional supermarket chains, natural product
superstores, independent retail operators and the food service channel. United
Natural Foods was ranked by Forbes in 2005 as one of the "Best Managed Companies
in America," ranked by Fortune in 2006 as one of its "Most Admired Companies,"
and ranked by Business Ethics as one of its "100 Best Corporate Citizens for
2006." For more information on United Natural Foods, Inc., visit the Company's
website at www.unfi.com.
Financial Tables Follow
AT THE COMPANY: FINANCIAL RELATIONS BOARD
Mark Shamber Joseph Calabrese
Acting Chief Financial Officer General Information
(860) 779-2800 (212) 827-3772
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding the Company's business that are
not historical facts are "forward-looking statements" that involve risks and
uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements, including but not limited to general business conditions, the impact
of competition and our dependence on principal customers, see "Risk Factors" in
the Company's quarterly report on Form 10-Q filed with the Commission on March
9, 2006, and its other filings under the Securities Exchange Act of 1934, as
amended. Any forward-looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made. The Company is not undertaking to update any information in the foregoing
reports until the effective date of its future reports required by applicable
laws. Any projections of future results of operations should not be construed in
any manner as a guarantee that such results will in fact occur. These
projections are subject to change and could differ materially from final
reported results. The Company may from time to time update these publicly
announced projections, but it is not obligated to do so.
Non-GAAP Results: To supplement its financial statements presented on U.S.
generally accepted accounting principles ("GAAP") basis, the Company uses
non-GAAP additional measures of operating results, net income and earnings per
share adjusted to exclude special charges. The Company believes that the use of
these additional measures is appropriate to enhance an overall understanding of
its past financial performance and also its prospects for the future as these
special charges are not expected to be part of the Company's ongoing business.
The adjustments to the Company's GAAP results are made with the intent of
providing both management and investors with a more complete understanding of
the underlying operational results and trends and its marketplace performance.
For example, these adjusted non-GAAP results are among the primary indicators
management uses as a basis for its planning and forecasting of future periods.
The presentation of this additional information is not meant to be considered in
isolation or as a substitute for net earnings or diluted earnings per share
prepared in accordance with GAAP. A comparison and reconciliation from non-GAAP
to GAAP results is included in the tables within this release.
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
April 29, April 30, April 29, April 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net sales $ 637,068 $ 534,335 $1,813,790 $1,516,587
Cost of sales 516,904 432,387 1,466,955 1,226,872
---------- ---------- ---------- ----------
Gross profit 120,164 101,948 346,835 289,715
---------- ---------- ---------- ----------
Operating expenses 97,318 82,655 288,887 235,828
Restructuring charge -- -- -- 170
Amortization of intangibles 142 177 428 490
---------- ---------- ---------- ----------
Total operating expenses 97,460 82,832 289,315 236,488
---------- ---------- ---------- ----------
Operating income 22,704 19,116 57,520 53,227
---------- ---------- ---------- ----------
Other expense (income):
Interest expense 2,747 1,877 8,310 4,887
Other, net (162) (136) (426) (359)
---------- ---------- ---------- ----------
Total other expense 2,585 1,741 7,884 4,528
---------- ---------- ---------- ----------
Income before income taxes 20,119 17,375 49,636 48,699
========== ========== ========== ==========
Provision for income taxes 7,819 6,689 19,035 18,906
========== ========== ========== ==========
Net income $ 12,300 $ 10,686 $ 30,601 $ 29,793
========== ========== ========== ==========
Per share data - basic:
Net income $ 0.29 $ 0.26 $ 0.74 $ 0.74
========== ========== ========== ==========
Weighted average basic shares of common stock 41,885 40,900 41,568 40,470
========== ========== ========== ==========
Per share data - diluted:
Net income $ 0.29 $ 0.26 $ 0.73 $ 0.72
========== ========== ========== ==========
Weighted average diluted shares of common stock 42,446 41,774 42,210 41,494
========== ========== ========== ==========
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
April 29, July 31,
2006 2005
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 6,061 $ 12,615
Accounts receivable, net 156,952 136,472
Notes receivable, trade, net 1,075 877
Inventories 260,496 235,700
Deferred income taxes 7,419 7,419
Prepaid expenses and other current assets 15,218 9,811
-------- --------
Total current assets 447,221 402,894
Property & equipment, net 163,167 167,909
Other assets:
Goodwill 76,962 73,808
Notes receivable, trade, net 2,367 1,802
Intangible assets, net 290 307
Other 7,119 4,538
-------- --------
Total assets $697,126 $651,258
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $124,981 119,177
Notes payable 117,001 $123,574
Accrued expenses and other current liabilities 30,222 34,915
Current portion of long-term debt 5,475 5,843
-------- --------
Total current liabilities 277,679 283,509
Long-term debt, excluding current portion 61,127 64,852
Deferred income taxes 7,493 6,904
Other long-term liabilities 1,638 474
-------- --------
Total liabilities 347,937 355,739
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000 shares
at April 29, 2006 and July 31, 2005, respectively; none
issued and outstanding -- --
Common stock, $0.01 par value, authorized 50,000 shares;
42,426 issued and 42,197 outstanding shares at April 29,
2006; 41,287 issued and outstanding shares at July 31, 2005 424 413
Additional paid-in capital 148,419 120,354
Unallocated shares of ESOP (1,482) (1,605)
Accumulated other comprehensive income 962 --
Retained earnings 206,958 176,357
Treasury stock, at cost, 229 and 0 shares at April 29, 2006
and July 31, 2005, respectively (6,092) --
-------- --------
Total stockholders' equity 349,189 295,519
-------- --------
Total liabilities and stockholders' equity $697,126 $651,258
======== ========
UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended
----------------------
April 29, April 30,
2006 2005
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,601 $ 29,793
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,557 9,944
Gains on disposals of property & equipment (25) (26)
Provision for doubtful accounts 2,800 1,378
Share-based compensation 4,712 --
Changes in assets and liabilities, net of acquired companies:
Accounts receivable (23,215) (29,151)
Inventory (24,479) (28,322)
Prepaid expenses and other assets 1,067 (5,157)
Notes receivable, trade (763) (400)
Accounts payable 5,599 20,557
Accrued expenses and other current liabilities (3,258) (4,131)
Tax benefit of stock options -- 7,167
-------- --------
Net cash provided by operating activities 5,596 1,652
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (14,804) (41,197)
Purchases of acquired businesses, net of cash acquired (3,292) (6,219)
Proceeds from disposals of property and equipment 57 248
-------- --------
Net cash used in investing activities (18,039) (47,168)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 17,879 8,403
Net (repayments) borrowings under note payable (6,573) 37,781
Purchases of treasury stock (6,092) --
Tax benefit of stock options 5,485 --
Repayments on long-term debt (4,401) (5,591)
Principal payments of capital lease obligations (409) (513)
-------- --------
Net cash provided by financing activities 5,889 40,080
-------- --------
NET DECREASE IN CASH (6,554) (5,436)
Cash at beginning of period 12,615 13,633
-------- --------
Cash at end of period $ 6,061 $ 8,197
======== ========
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized $ 8,021 $ 4,903
======== ========
Federal and state income taxes paid, net of refunds $ 14,993 $ 14,107
======== ========