Exhibit 99.1
[LETTERHEAD OF UNITED NATURAL FOODS, INC.]
IMMEDIATE RELEASE
February 20, 2007
UNITED NATURAL FOODS ANNOUNCES NET SALES OF $668.5 MILLION
FOR THE SECOND QUARTER OF FISCAL 2007
Announces New 237,000 Square Foot Distribution Facility
to be Located in Ridgefield, WA
Dayville, Connecticut - February 20, 2007 -- United Natural Foods, Inc. (Nasdaq:
UNFI) (the "Company") today reported net sales for the second quarter of fiscal
2007, ended January 27, 2007, of $668.5 million, an increase of approximately
$67.5 million, or 11.2%, from the $601.1 million recorded in the second quarter
of fiscal 2006.
Operating expenses during the second quarter of fiscal 2007 were negatively
impacted by approximately $2.2 million of losses related to the Company's two
Auburn, California facilities. In January 2007, the Company incurred a loss of
$1.5 million associated with the sale of one of the facilities. In addition, the
Company recorded an impairment loss in accordance with SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, of $0.8 million on its
second Auburn, California facility, as a result of the Company's decision to
sell the property. Accordingly, the assets associated with the second facility
have been reclassified on the balance sheet from property and equipment to other
current assets as of January 27, 2007. During the second quarter of fiscal 2007,
the Company also incurred $0.4 million in fees related to the early termination
of unused leased space at a facility in Minnesota, and recorded a related
write-off of $0.3 million in abandoned leasehold improvements.
In the second quarter of fiscal 2007, the Company recorded share-based
compensation expense of $1.0 million in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 123R, Share-Based Payment, compared to $0.9
million of share-based compensation expense for the second quarter of fiscal
2006, ended January 28, 2006.
The Company reported net income of $10.9 million, or $0.25 per diluted share,
for the second quarter of fiscal 2007. After adjusting for the impact of losses
attributable to the two Auburn, California facilities and the early termination
of the Minnesota facility and the related asset write-off described above, net
income for the quarter would have been $12.7 million or $0.30 per diluted share.
Net income for the second quarter of fiscal 2006, excluding special items, was
$10.8 million, or $0.26 per diluted share. Net income for the second quarter of
fiscal 2006, including special items, was $10.6 million, or $0.25 per diluted
share.
The following table details the amounts and effect of special items and a
reconciliation of net income and per share amounts, excluding special items
(non-GAAP basis), to net income and per share amounts, including special items
(GAAP basis), for the second quarter of fiscal 2006:
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Quarter Ended January 28, 2006 Pretax Per diluted
(in thousands, except per share data) Income Net of Tax share
------ ---------- -----
Income, excluding special items: $17,398 $10,787 $0.26
Special items - (Expense)
Rocklin, CA facility relocation costs
(included in operating expenses) (251) (156) (0.00)
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Income, including special items: $17,147 $10,631 $0.25*
===============================================================================
* Total reflects rounding.
All non-GAAP numbers have been adjusted to exclude special items. A
reconciliation of specific adjustments to GAAP results for the quarter ended
January 28, 2006 is included in the financial table shown above. A description
of the Company's use of non-GAAP information is provided under "Non-GAAP
Results" below.
"Fiscal 2007 continues to be a strong year and we are quite pleased with our
operating performance and financial results during the second quarter," said
Michael Funk, President and Chief Executive Officer. "Sales growth in our
supermarket channel remained solid and we expect the super natural channel to
realize increased sales growth with the number of new stores expected to open
during 2007. I am also pleased to report that the transition during the quarter
related to our expanded Whole Foods relationship in the Southern Pacific region
of the United States has gone smoothly. We continue to develop operational
efficiencies while servicing our customers at a high service level."
New Facility in Ridgefield, Washington
The Company also announced today that it is expanding its operations in the
Pacific Northwest of the United States with the construction of a new 237,000
square foot state-of-the-art distribution center in Ridgefield, Washington. The
new facility will create approximately 100 jobs upon opening.
The distribution center is scheduled to commence operations in the late summer
of 2007 and will serve as a regional distribution hub for customers in Portland,
Oregon and other Northwest states. The Company currently has 16 distribution
facilities throughout the United States, consisting of an aggregate of 3.3
million square feet of space. The Company has the largest capacity of any
distributor in the natural products industry.
Mr. Funk commented, "To accommodate anticipated industry growth and accelerating
consumer demand for natural and organic products we are pleased to announce
plans to open a new facility in the Pacific Northwest. Supporting our commitment
to our customers, the Ridgefield distribution center will improve our
distribution capabilities and provide customers with further product diversity
and enhanced customer service. The new distribution center will also allow us
the opportunity to create new sales opportunities in this region and will
provide lower transportation costs to our customers."
Mr. Funk added, "We are grateful for the partnership and support we have
received from the City of Ridgefield and look forward to building a long-lasting
relationship with the community."
Conference Call
Management will conduct a conference call and audio webcast at 11:00 a.m. EST on
February 20, 2007 to review the Company's quarterly results, market trends and
future outlook. The conference call dial-in number is (303) 205-0033. 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 18,000 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, Inc. 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
For more information on United Natural Foods, Inc., visit the Company's website
at www.unfi.com.
AT THE COMPANY: FINANCIAL RELATIONS BOARD
- --------------------------------------------------------------------------------
Mark Shamber Joseph Calabrese
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 Securities and
Exchange Commission on December 7, 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 Six months ended
---------------------------- ----------------------------
January 27, January 28, January 27, January 28,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net sales $ 668,545 $ 601,082 $ 1,314,978 $ 1,176,722
Cost of sales 544,477 484,677 1,067,339 950,051
------------ ------------ ------------ ------------
Gross profit 124,068 116,405 247,639 226,671
------------ ------------ ------------ ------------
Operating expenses 101,739 96,057 202,018 191,570
Impairment on assets held for sale 756 -- 756 --
Amortization of intangibles 138 142 289 286
------------ ------------ ------------ ------------
Total operating expenses 102,633 96,199 203,063 191,856
------------ ------------ ------------ ------------
Operating income 21,435 20,206 44,576 34,815
------------ ------------ ------------ ------------
Other expense (income):
Interest expense 3,350 3,195 6,261 5,562
Interest income (180) (73) (294) (141)
Other, net 399 (63) 371 (123)
------------ ------------ ------------ ------------
Total other expense 3,569 3,059 6,338 5,298
------------ ------------ ------------ ------------
Income before income taxes 17,866 17,147 38,238 29,517
Provision for income taxes 6,968 6,516 14,913 11,216
------------ ------------ ------------ ------------
Net income $ 10,898 $ 10,631 $ 23,325 $ 18,301
============ ============ ============ ============
Per share data (basic):
Net income $ 0.26 $ 0.26 $ 0.55 $ 0.44
============ ============ ============ ============
Weighted average basic shares of common stock 42,438 41,406 42,299 41,395
============ ============ ============ ============
Per share data (diluted):
Net income $ 0.25 $ 0.25 $ 0.55 $ 0.43
============ ============ ============ ============
Weighted average diluted shares of common stock 42,848 41,952 42,733 42,076
============ ============ ============ ============
UNITED NATURAL FOODS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
January 27, July 29,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 17,066 $ 20,054
Accounts receivable, net 162,954 147,686
Notes receivable, trade, net 1,290 1,254
Inventories 288,989 257,259
Prepaid expenses and other current assets 18,546 12,596
Deferred income taxes 10,911 10,911
----------- -----------
Total current assets 499,756 449,760
----------- -----------
Property & equipment, net 161,476 163,247
Other assets:
Goodwill 78,044 78,016
Notes receivable, trade, net 2,620 2,760
Intangible assets, net 187 251
Other 10,340 6,561
----------- -----------
Total assets $ 752,423 $ 700,595
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 123,000 $ 125,005
Accounts payable 116,272 102,146
Accrued expenses and other current liabilities 34,375 34,245
Current portion of long-term debt 5,552 5,433
----------- -----------
Total current liabilities 279,199 266,829
Long-term debt, excluding current portion 66,666 59,716
Deferred income taxes 8,827 9,693
Other long-term liabilities 858 883
----------- -----------
Total liabilities 355,550 337,121
----------- -----------
Stockholders' equity:
Preferred stock, $0.01 par value, authorized 5,000 shares at
January 27, 2007 and July 29, 2006; none issued and outstanding -- --
Common stock, $0.01 par value, authorized 100,000 shares;
43,013 issued and 42,785 outstanding shares at January 27, 2007;
42,477 issued and 42,248 outstanding shares at July 29, 2006 430 425
Additional paid-in capital 161,212 149,840
Unallocated shares of Employee Stock Ownership Plan (1,298) (1,380)
Treasury stock (6,092) (6,092)
Accumulated other comprehensive (loss) income (338) 1,047
Retained earnings 242,959 219,634
----------- -----------
Total stockholders' equity 396,873 363,474
----------- -----------
Total liabilities and stockholders' equity $ 752,423 $ 700,595
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UNITED NATURAL FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six months ended
--------------------------
January 27, January 28,
2007 2006
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,325 $ 18,301
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 9,378 7,988
Loss (gain) on disposals of property & equipment 1,968 (30)
Impairment on assets held for sale 756 --
Provision for doubtful accounts 815 1,600
Share-based compensation 1,997 3,480
Changes in assets and liabilities, net of acquired companies:
Accounts receivable (16,083) (28,333)
Inventory (31,730) (28,596)
Prepaid expenses and other assets (10,675) 1,970
Notes receivable, trade 104 (589)
Accounts payable 11,843 20,571
Accrued expenses and other current liabilities (1,213) 6,510
----------- -----------
Net cash (used in) provided by operating activities (9,515) 2,872
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (14,542) (11,774)
Proceeds from disposals of property and equipment 5,441 43
Other investing activities (1,028) (575)
----------- -----------
Net cash used in investing activities (10,129) (12,306)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of long-term debt 10,000 --
Net (repayments) borrowings under note payable (2,005) 37,428
Increase (decrease) in bank overdraft 2,283 (14,053)
Proceeds from exercise of stock options 6,663 7,713
Purchases of treasury stock -- (6,092)
Repayments on long-term debt (2,999) (2,922)
Tax effect of stock options 2,718 1,626
Principal payments of capital lease obligations (4) (273)
----------- -----------
Net cash provided by financing activities 16,656 23,427
----------- -----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,988) 13,993
Cash and cash equivalents at beginning of period 20,054 12,615
----------- -----------
Cash and cash equivalents at end of period $ 17,066 $ 26,608
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 6,280 $ 5,167
=========== ===========
Federal and state income taxes, net of refunds $ 17,313 $ 8,749
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