UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: June 14, 2002
WILD OATS MARKETS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21577 84-1100630
(State or other jurisdiction of Commission File Number (I.R.S. Employer
incorporation or organization) Identification Number)
3375 Mitchell Lane
Boulder, Colorado 80301
(Address of principal executive offices, including zip code)
(303) 440-5220
(Registrant's telephone number, including area code)
TABLE OF CONTENTS
Page
Item 5. Other Events. 1
SIGNATURES 1
Item 5. Other Events
On June 14, 2002, the Registrant entered into an Agreement for Distribution
of Products (the "Agreement") with Tree of Life, Inc., as distributor. The
distribution arrangement commences effective September 1, 2002, which is
the date upon which the Registrant's existing primary distribution contract
with United Natural Foods, Inc. expires. The Agreement has no specified
term, although either party can terminate the Agreement after three years
upon 120 days' prior written notice to the other party. Either party also
may terminate the Agreement for defaults, as defined in the Agreement, by
the other party of certain provisions of the Agreement. Under the terms of
the Agreement, the Registrant is obligated to purchase 90% of its total
cost of goods from specified categories of goods for sale in its U.S.
stores from Tree of Life, except in certain defined circumstances when such
percentage purchasing obligation is excused. The Registrant currently
purchases approximately 28.2% of its aggregate cost of goods for all
product for all stores from its existing primary distributor. The
Registrant believes Tree of Life has sufficient warehouse capacity and
distribution technology to service the Registrant's existing stores'
distribution needs for natural foods and products as well as the needs of
new stores in the future. Upon expiration of the existing distribution
agreement with the Registrant's current primary distributor, other than the
Agreement with Tree of Life the Registrant will have no other supply
contracts with the majority of its smaller vendors, who could discontinue
selling to Wild Oats at any time. Although the Registrant believes that it
could develop alternative sources of supply, any such termination may
create a short-term disruption in store-level merchandise selection.
Exhibits
Exhibit 99.1 Press Release of the Registrant, dated June 17, 2002.
Exhibit 99.2 Agreement for Distribution of Products, dated June
14, 2002, between the Registrant and Tree of Life,
Inc.*
* Confidential treatment requested as to certain portions. The term
"[CONFIDENTIAL]" as used throughout the indicated exhibit means that
material has been omitted and separately filed with the Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Wild Oats Markets, Inc.
By: /s/ Freya R. Brier
----------------------
Name: Freya R. Brier
Title: Vice President of Legal;
General Counsel
Date: July 1, 2002
Exhibit 99.1
FOR IMMEDIATE RELEASE
June 17, 2002
Contact: Sonja Tuitele
Corporate Communications
(720) 562-4984
Wild Oats Markets, Inc. Announces Contract with
Tree of Life, Inc. as Primary Distribution Partner
BOULDER, Colo., June 17 - Wild Oats Markets, Inc. (NASDAQ: OATS),
a leading national natural and organic foods retailer, today announced it
has signed a distribution contract, commencing September 1, 2002, with Tree
of Life, Inc., a global natural products distributor, as its primary
national distribution partner for organic, natural and specialty food
products. Tree of Life is a wholly owned subsidiary of multinational
Netherlands-based food company, Koninklijke Wessanen nv.
"Over the past several months we have been conducting a thorough
review and analysis of our current distribution system and supply chain.
The objective of this process was to determine the best distribution
partner and system that will enable Wild Oats to optimize our overall
supply chain, leverage our purchasing power, reduce costs and improve
service to our stores," said Perry Odak, President and CEO of Wild Oats
Markets, Inc. "Tree of Life was selected as our distribution partner due to
their extensive distribution and logistics expertise, as well as their
advanced information systems and distribution technology. Tree of Life was
able to provide us with competitive pricing and terms, and an ability to
meet not only our current distribution and supply chain needs, but also
future needs as we continue to grow our business."
Wild Oats expects this new distribution relationship will reduce
current procurement and distribution costs through competitive product
costs, consolidated management of freight and logistics, and reduced store
expenses through consolidated deliveries. Additionally, Tree of Life will
commit resources for marketing support, product line expansions,
performance standards and growth objectives.
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Wild Oats Announces New Primary Distribution Partner - page 2
The three-year agreement with Tree of Life will commence on
September 1, 2002 with the expiration of Wild Oats' current distribution
contract. With extensive support from Tree of Life, Wild Oats expects that
all systems will be in place to transition to Tree of Life as its new
distributor and to minimize the disruption to its business. To ensure a
seamless transition, a dedicated, multi-disciplined, Wild Oats/Tree of Life
project team has been established to manage all phases of the process.
Additionally, Tree of Life's resources and experience executing large,
geographically vast distribution programs will enable a rapid and
comprehensive implementation.
"Ultimately, we want a supply chain partner that will help us be a
leader in the natural and organic products industry as we continue to grow
our business," said Mr. Odak. "We are making a change in our business that
we believe will have substantial long-term benefits for our Company and for
our industry. Our strategic partnership with Tree of Life will accelerate
the advancement of the natural and organic products industry's current
distribution systems, and we are confident this will be a competitive
advantage for us in the future."
Once the transition is complete, Wild Oats anticipates improved
service for its stores with consistent, reliable product availability and
more seamless service with consolidated store deliveries, advanced
receiving systems and a unified pricing structure. The Company is confident
that it will improve these and other service levels as a result of Tree of
Life's extensive North American distribution system and experience working
with numerous national retail accounts. Tree of Life's core distribution
and logistics competencies, coupled with Wild Oats' recent centralization
of procurement functions, will further enable Wild Oats' store management
personnel to focus on store-level operations and customer service rather
than product purchasing.
"We are committed to providing Wild Oats with exemplary customer
service and logistical support for each of its locations," said Richard A.
Thorne, Chairman of Tree of Life. "Both organizations' management teams
have significant experience executing and managing large-scale changes in
distribution strategies and, as a result of thorough planning, we believe
the transition will be seamless. Our experience working with companies of
this size and scale, both nationally and internationally, will enable us to
meet the needs of Wild Oats, both now and as the Company accelerates its
growth going forward."
About Wild Oats
Wild Oats Markets, Inc. is a nationwide chain of natural and
organic food markets in the U.S. and Canada. With annual sales of nearly
$900 million, the company currently operates 102 stores in 23 states and
British Columbia. The Company's natural food stores include Wild Oats
Natural Marketplace, Henry's Marketplace, Nature's - a Wild Oats Market,
Sun Harvest and Capers Community Markets. For more information, please
visit the Company's website at www.wildoats.com.
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Wild Oats Announces New Primary Distribution Partner - page 3
About Tree of Life
With distribution facilities across the U.S. and Canada, Tree of
Life, Inc. is the world's leading marketer and distributor of natural and
specialty foods, serving more than 20,000 retail customers. Founded in St.
Augustine, Florida in 1970 as a natural foods retailer, Tree of Life has
evolved and established itself as the leading premier distributor of
natural, specialty and organic foods in the United States and Canada, and
has recently expanded into Western Europe. Tree of Life employs more than
6,000 people globally and maintains an inventory of more than 100,000
natural, organic and specialty products. Its specialty products are
marketed under the company's Gourmet Award Foods division. Tree of Life is
owned by Koninklijke Wessanen nv, a $3.6 billion (U.S.) multinational food
company based in the Netherlands. Shares of Koninklijke Wessanen nv are
traded on the Amsterdam, London, Frankfurt, Dusseldorf and EBS Switzerland
stock exchanges. Sponsored ADRs are traded in the United States.
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