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PFG 2004 Sales Reach $6.1 Billion, Up 13.5%

RICHMOND, VA - Performance Good Group here, the third largest North American distributorship, according to the ID Top 50 poll, reported 2004 net sales of $6.1 billion from three principal divisions, according to the company.

After initially delaying its report, the distributorship announced today that its sales increased 13.5% last year adjusted for the 53rd week. Subtracting revenue from its Fresh-Cut division, which is designed for retail markets, sales of PFG's broadline and customized divisions equaled $5,173.1 billion, an increase of 12.3%, according to the ID Top 50 Report, with street sales advancing 11%.

PFG said that its sales in the fourth quarter as well as the entire year were based on internal growth.

"We're especially pleased with the efforts of our associates in driving strong internal sales growth in the fourth quarter. The results reflect that our focus on serving our customers is yielding a steady improvement in our business each quarter. We are very pleased that in the fourth quarter, we realized significant operating earnings growth over the prior year period," Bob Sledd, chairman and chief executive officer said in a press statement.

Net sales for the fourth quarter of last year totaled $1.6 billion, a 6% increase from the year earlier period. Adjusted for the company's 53rd week in fiscal 2003, which contributed approximately $101 million to sales in the year earlier period, results for the quarter reflect a 13% increase over the prior year period.

Inflation for the fourth quarter 2004 was approximately 4%. All of the company's sales increase represented internal growth, PFG reported.

Net earnings for the quarter amounted to $8.5 million, a decline of 30% compared with the prior year period. Net earnings for the quarter reflect the impact of the company's previously disclosed one-time charge of approximately $10.1 million, or $6.4 million after tax, for the redemption of the company's outstanding convertible notes, it pointed out.

Net earnings for the quarter, excluding the one-time charge were approximately $14.9 million, an increase of 22% over the $12.2 million in the same period in the previous year. Quarterly net earnings per share amounted to approximately 18 cents per share diluted. Net earnings per share for the quarter excluding the impact of the one-time charge were approximately 31 cents per share diluted, an increase of 19% versus the year earlier period.

PFG reported that net sales for the full year of 2004 amounted to $6.1 billion, an increase of 11% from the prior year period. Adjusted for the company's 53rd week in fiscal 2003, net sales for the year increased 13.5% over the same period last year. Internal growth represented all of the company's sales increase for the year. Inflation for 2004 amounted to approximately 5%.

Net earnings for the year declined approximately 29% to $52.6 million. Net earnings for the year excluding the impact of the one-time charge amounted to $58.8 million, a decline of 21% versus the $74.2 million in 2003. Net earnings per share diluted declined approximately 28% to $1.11 per share diluted. Net earnings per share diluted excluding the impact of the one-time charge amounted to $1.25 per share diluted, a decline of approximately 19% versus $1.54 in the prior year period.

According to Sledd, "Sales in the Broadline distribution segment increased approximately 7% in the fourth quarter and 11% for the full year over the same prior year periods. Adjusted for the 53rd week in 2003, which contributed approximately $48 million to sales in the previous year period, Broadline sales increased approximately 15% in the quarter and 13% for the full year."

He said inflation was about 3% in the quarter and 5% for the year, while sales gains in the quarter were the result of previously disclosed new business rollouts, combined with incremental growth through existing customers. The impact of new business rollouts in the quarter contributed to a faster rate of growth in chain business versus street business. For the full year, street sales increased 11% over the prior year, adjusted for the 53rd week in 2003."

Sledd said customized distribution sales increased about 7% in the fourth quarter and 14% for the full year compared with the same periods in the prior year. Adjusted for the 53rd week in 2003, which contributed approximately $38 million to sales in the prior year period, customized sales grew approximately 16% in the quarter and 17% for the year, when inflation stood at 6% in the quarter and full year, he said.

"Sales gains in the fourth quarter were driven by continued growth with existing customers. A major focus in the customized segment during 2005 will be the addition of new capacity throughout the year to position us for growth with new customers in 2006," Sledd said.

Noting the sale of Fresh-cut, Sledd said that the move provides the company with an opportunity to "focus exclusively" on the core broadline and customized businesses.

"Our balance sheet remains strong with a debt to capital ratio of approximately 24% at the end of the fourth quarter, excluding $130 million of interests in accounts receivable sold under an accounts receivable purchase facility. We believe that we have turned the corner in our operating performance and we expect to achieve solid operating earnings improvement in our distribution businesses throughout the year in 2005," he said.

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