Performance Food Group (Nasdaq/NM:PFGC)
  • Net sales increased 15% to new third-quarter high of $798.8 million.
  • Net earnings rose 55% to $12.9 million.
  • Earnings per share rose 21% to $0.34 per share (diluted) on 31% additional shares.

Performance Food Group (Nasdaq/NM:PFGC) yesterday announced a new quarterly high in net sales and net earnings for the three months ended September 29, 2001.

Sales for the third quarter of 2001 amounted to $798.8 million, up 15% from $693.1 million in the year-earlier period. Net earnings for the quarter increased 55% to $12.9 million compared with $8.3 million a year ago. Net earnings per share for the quarter increased 21% to $0.34 per share diluted compared with net earnings of $0.28 per share diluted in the year-earlier quarter. The average number of shares outstanding increased 31% for the third quarter compared to the year-earlier period, due principally to the Company's secondary offering completed in December 2000. All share and per share figures reflect the 2-for-1 stock split distributed on April 30, 2001.

The Company indicated that net earnings, excluding goodwill amortization, amounted to $0.38 per share diluted for the third quarter, up 27% from a year ago and earnings per share on the same basis for the first nine months totaled $0.91 per share diluted, up 28% from the year-earlier period.

C. Michael Gray, president and chief executive officer, remarked, ``This marks the 27th consecutive quarter in which we have recorded increased net sales and net earnings compared with the year-earlier period. Our year-to-year gains in the quarter have been driven primarily by productivity and margin improvements in each of our business segments. We believe this strong performance clearly validates our fundamental growth strategy. Despite the impact that the tragic events of September 11th have had in accelerating the slowdown that was already occurring in the nation's economy, our internal growth for the quarter amounted to 5.5%. We are fortunate that the foodservice industry is again demonstrating its resiliency to sudden changes in the pace of economic activity and swings in consumer confidence.

``Our third quarter was highlighted not only by outstanding financial results but also by progress on two important strategic acquisitions that have now been completed. A component of our growth strategy is the acquisition of complementary foodservice operations. Although we have successfully completed acquisitions regularly over the past several years, 2001 has been an especially eventful period. At the start of the second quarter, we added Empire Seafood that expanded our product offerings in the rapidly growing seafood category. We are pleased with the assimilation of Empire to date. Although we are experiencing some slowing in demand from cruise lines, we are optimistic about the contribution of Empire as we move into the seasonally strongest period of sales for its products. Toward the end of the third quarter, we completed the merger of Springfield Foodservice Corporation that meaningfully strengthened our broadline operations in the heavily populated and attractive New England region. The largest transaction this year, and in fact our largest ever, was completed subsequent to quarter end through the acquisition of Fresh Express, the category leader in the approximately $6 billion fresh-cut produce industry. We are excited about the opportunities that Fresh Express brings through product innovations, expanded markets for existing products and synergies in production and product procurement.''

Gray added, ``As we have indicated, we expect these recent acquisitions to contribute incremental earnings in 2002. Although the slowdown in the economy has restricted the growth of our sales, our operations are continuing to report gratifying improvement in productivity and efficiency. We are especially pleased with the 22% increase in sales of our proprietary brands that enable us to offer customers more value and develop even stronger working relationships. Our plan for selectively adding new customers was rewarded during the third quarter by a contract to provide customized foodservice distribution for approximately 250 restaurants operated under the names Ruby Tuesday, American Cafe and Tia's Tex Mex. The roll-out of our service to these restaurants will extend into the first quarter of 2002 and should have a positive impact on our operations once it is fully implemented.

Gray added, "In early July, we completed a $90 million receivables securitization facility, which allows us to monetize accounts receivables at a very attractive cost. As of quarter end, we had sold $78 million of receivables under this program. Another recent highlight was the completion earlier this month of a secondary offering of 5,750,000 shares of common stock and $201.25 million of 5 1/2% convertible subordinated notes due 2008. Concurrent with these offerings, we completed a new $200 million revolving credit facility. Our ability to successfully complete these financings in such a volatile investment environment is especially gratifying. The additional capital was specifically used to fund the acquisition of Fresh Express, and we continue to have considerable flexibility to fund our ongoing growth and pursue strategic acquisitions."

Performance Food Group markets and distributes more than 36,000 national and private label food and food-related products to approximately 29,000 restaurants, hotels, cafeterias, schools, healthcare facilities and other institutions. For more information on Performance Food Group, visit www.pfgc.com.

Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are based on current expectations and management's estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to, general economic conditions, the relatively low margins and economic sensitivity of the foodservice business, the Company's reliance on major customers, the ability to identify and successfully complete acquisitions of other foodservice distributors and management of the Company's planned growth, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission.

                    PERFORMANCE FOOD GROUP COMPANY
                    Unaudited Financial Highlights

                                            Three Months Ended
                                        ----------------------------
                                         Sept. 29,        Sept. 30,
                                           2001             2000
                                        ------------    ------------
Net sales                               $798,807,000    $693,127,000
Net earnings                            $ 12,921,000    $  8,329,000
Net earnings per share:(1)
  Basic                                 $       0.35    $       0.30
  Diluted                               $       0.34    $       0.28
Weighted average number of
 common shares outstanding:(1)
  Basic                                   36,944,000      27,966,000
  Diluted                                 38,377,000      29,394,000

                                             Nine Months Ended
                                      -------------------------------
                                         Sept. 29,        Sept. 30,
                                           2001             2000
                                      --------------   --------------
Net sales                             $2,317,104,000   $1,927,480,000
Net earnings                          $   30,092,000   $   18,933,000
Net earnings per share:(1)
  Basic                               $         0.83   $         0.68
  Diluted                             $         0.80   $         0.65
Weighted average number of
 common shares outstanding:(1)
  Basic                                   36,359,000       27,897,000
  Diluted                                 37,719,000       28,974,000

    (1) All share and per share figures reflect the 2-for-1 stock
split that was distributed to shareholders on April 30, 2001.

Performance Food Group Company
Condensed Consolidated Balance Sheet and Income Statement
September 29, 2001
(In thousands, except net earnings per common share)

                                     Sept. 29, 2001     Dec. 30, 2000
                                     --------------     -------------
Assets
  Cash                               $       16,041     $      18,530
  Trade accounts and notes
    receivable, net                          66,816           167,444
  Inventories                               159,625           123,586
  Other current assets                       56,196            14,696
                                     --------------     -------------
     Total current assets                   298,678           324,256
                                     --------------     -------------
  Property, plant and equipment,
    net                                     150,476           143,142
  Intangible assets, net                    367,691           239,311
  Other assets                                7,789             2,987
     Total assets                    $      824,634     $     709,696

Liabilities and Shareholders' Equity
  Outstanding checks in excess
    of deposits                      $       47,062     $      33,330
  Current installments of
    long-term debt                            1,347             1,966
  Trade accounts payable                    155,086           134,986
  Other current liabilities                  68,303            57,504
                                     --------------     -------------
     Total current liabilities              271,798           227,786
  Long-term debt, excluding
    current installments                     88,544           114,492
  Deferred income taxes                       9,845             9,701
  Shareholders' equity                      454,447           357,717
                                     --------------     -------------
     Total liabilities and
       shareholders' equity          $      824,634     $     709,696
                                     ==============     =============

                                        Three Months Ended
                                   Sept. 29,           Sept. 30,
                                     2001                 2000
                                ---------------     ---------------
Net sales                       $798,807  100.0%    $693,127  100.0%
Cost of goods sold               687,910   86.1%     599,904   86.5%
                                ---------------     ---------------
     Gross profit                110,897   13.9%      93,223   13.5%
Operating expenses                87,943   11.0%      78,084   11.3%
                                ---------------     ---------------
     Operating profit             22,954    2.9%      15,139    2.2%
Other income (expense):
   Interest expense               (1,252)             (1,716)
   Loss of sale of receivables      (836)                  -
   Other, net                        (25)                 10
                                ---------------     ---------------
     Other expense, net           (2,113) (0.3)%      (1,706) (0.2)%
                                ---------------     ---------------
     Earnings before
       income taxes               20,841    2.6%      13,433    2.0%
Income taxes                       7,920    1.0%       5,104    0.8%
                                ---------------     ---------------
     Net earnings               $ 12,921    1.6%    $  8,329    1.2%
                                ===============     ===============

Weighted average common
  shares outstanding              36,944              27,966
                                ===============     ===============
Basic net earnings per
  common share                  $   0.35            $   0.30
                                ===============     ===============
Weighted average common
  shares and dilutive
  potential common
  shares outstanding              38,377              29,394
                                ===============     ===============
Diluted net earnings per
  common share                  $   0.34            $   0.28
                                ===============     ===============

                                        Nine Months Ended
                                   Sept. 29,           Sept. 30,
                                     2001                 2000
                               -----------------   -----------------
Net sales                      $2,317,104  100.0%  $1,927,480  100.0%
Cost of goods sold              2,002,216   86.4%   1,669,869   86.6%
     Gross profit                 314,888   13.6%     257,611   13.4%
Operating expenses                259,978   11.2%     222,520   11.6%
                               -----------------   -----------------
     Operating profit              54,910    2.4%      35,091    1.8%
Other income (expense):
   Interest expense                (5,055)             (4,604)
   Loss of sale of receivables       (836)                  -
   Other, net                        (483)                 50
                               -----------------   -----------------
     Other expense, net            (6,374) (0.3)%      (4,554) (0.2)%
                               -----------------   -----------------
     Earnings before
       income taxes                48,536    2.1%      30,537    1.6%
Income taxes                       18,444    0.8%      11,604    0.6%
                               -----------------   -----------------
     Net earnings              $   30,092    1.3%  $   18,933    1.0%
                                ===============     ===============
Weighted average common
  shares outstanding               36,359              27,897
                                ===============     ===============
Basic net earnings per
  common share                 $     0.83          $     0.68
                                ===============     ===============
Weighted average common
  shares and dilutive
  potential common
  shares outstanding               37,719              28,974
                                ===============     ===============
Diluted net earnings per
  common share                 $     0.80          $     0.65
                                ===============     ===============