Performance Food Group Announces Strong 2008 Forecast

Performance Food Group Company (NASDAQ/NGS: PFGC) announced today its forecast for the 2008 fiscal year. "PFG is moving forward and our business is very well positioned for sustainable growth and profitability,” commented Steven L. Spinner, president and chief executive officer. "We anticipate solid earnings growth in 2008, especially given current economic conditions. We remain focused on driving efficiencies through our technology investments, aggressively managing our costs, and growing our higher margin street sales. We are committed to maintaining a distribution network that supports the growth objectives of the Company. In evaluating our infrastructure, we have decided to discontinue operations at the Company’s Magee, Mississippi broadline location in March 2008. This facility was part of an acquisition that the Company made in 2002, and the location does not fit our long-term growth model with respect to demographics and scale. We anticipate one-time, pre-tax costs associated with this closing of $8 to $10 million. While we are sensitive to the impact that this decision has on our associates, customers, and the local community, we believe that this is the right decision for PFG’s future growth. Based on our current view of the business, we expect adjusted net earnings per share diluted to be in the range of $1.53 to $1.65 for the full year, excluding the one-time charges, and net earnings per share diluted to be $1.39 to $1.49. On a consolidated basis, internal sales growth is expected to be in the mid to high single digits for 2008. Sales growth will be positively impacted by a 53rd week and negatively impacted by the exit of certain business related to the closing of our Magee broadline facility. Our growth should again exceed the overall industry growth, which is expected to remain moderate in the coming year. Consolidated operating margins (adjusted for the facility closing) are expected to improve 5 to 15 basis points for the year, compared to anticipated 2007 results, and are expected to be relatively consistent with the prior year (including the impact of the one-time charges.) Internal sales growth in the broadline segment is expected to be in the mid single digits for the full year. We continue to explore opportunities for broadline acquisitions and to leverage our scale. Broadline operating margins (adjusted for the closing) are expected to improve 15 to 25 basis points for the year and to remain relatively unchanged (including the impact of the one-time charges) compared to 2007. In the customized segment, sales growth is expected to be in the upper single to low double digits for the year. This reflects the impact of the previously announced business that was added in late 2007, and a new customer that will roll-out in early 2008. Late in the year, we anticipate beginning construction on a ninth customized facility to be located in the western United States. For 2008, we expect to maintain approximately the same level of customized operating margins that we experienced in the 2007 year. Corporate costs are expected to decrease slightly as a percentage of sales, excluding stock compensation expense, reflecting continued leverage of our corporate infrastructure. Pre-tax stock compensation expense is expected to be approximately $8.5 to $9.5 million for the 2008 year, reflecting an incremental increase of approximately $2 to $3 million, compared to the anticipated expense for 2007. For 2008, depreciation is expected to be approximately $28 to $32 million, amortization approximately $3 to $4 million, and capital expenditures approximately $30 to $40 million for the year, as we anticipate a more moderate level of capital expenditures.” Steve Spinner concluded, "We are pleased with the consistent progress we’ve made growing PFG in this challenging economic climate—further evidence that our strategies are working. We continue to invest in technology and the centralization of financial support functions. The Company’s balance sheet remains very strong and will allow us to take advantage of acquisitions and other opportunities. We believe that our initiatives position us for sustained growth in sales and earnings over the next several years.” Performance Food Group markets and distributes more than 68,000 national and private label food and food-related products to approximately 41,000 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, the Company’s sensitivity to general economic conditions, including the current economic environment, changes in disposable income levels and consumer spending trends; increased fuel costs; the Company’s ability to close its Magee, Mississippi distribution facility within its cost estimates and the potential that customers of that facility may not remain customers of the Company; the Company’s sensitivity to inflationary pressures; the Company’s ability to achieve projected operational efficiencies and increase sales, particularly higher margin street sales; the risk to the Company from severe weather disturbances that are beyond the Company’s control; the Company’s ability to add new customers, particularly in its customized segment; 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; management’s allocation of capital and the timing of capital expenditures; the Company’s ability to successfully develop, produce and market new products, management of the Company’s planned growth and continued development of technological investments, all as detailed from time to time in the reports filed by the Company with the Securities and Exchange Commission. Performance Food Group Company Non-GAAP Reconciliation Adjusted EPS for Impact of Facility Closure January 10, 2008 Earnings Guidance Release     Low   High Projected net earnings per diluted share $ 1.39 $ 1.49 Projected per share diluted impact of one time costs (1) $ 0.14 (2) $ 0.16 (3) Projected adjusted net earnings per share diluted $ 1.53 $ 1.65 (1)   Calculated using an estimated full year 2008 tax rate of 39% and an estimated full year 2008 weighted average shares outstanding diluted of 35.8 million (2) Assuming charge of $8 million in pre-tax costs (3) Assuming charge of $10 million in pre-tax costs