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United Natural Foods Reports Record Sales In Fiscal 2002 First Quarter

December 04, 2001

Reports $0.26 Net Income Per Share Before Special Charge

Net sales for the first quarter of fiscal 2002 totaled $280.3 million, a 14.8% increase over the $244.1 million reported in the first quarter of fiscal 2001, slightly above the Company's guidance of 12 -- 14% sales growth. This increase was primarily due to increased sales throughout the Company's distribution centers and retail division and included super natural, independent and mass market distribution channels.

Net income for the first quarter of fiscal 2002, excluding the effect of a non-cash special charge, was $4.9 million, or $0.26 per diluted share, compared to net income of $3.3 million, or $0.18 per diluted share for the first quarter of fiscal 2001. The non-cash special charge was related to Statement of Financial Accounting Standards No. 133 (FAS 133), "Accounting for Derivative Instruments and Hedging Activities." The Company recorded FAS 133 expense of approximately $2.3 million, net of tax, on its interest rate swap agreements resulting from the significant decline in interest rates during the quarter. The Company adopted Statement of Financial Accounting Standards No. 142 (FAS 142), "Goodwill and Other Intangible Assets" on August 1, 2001. The result of adopting FAS 142 was a reduction in operating expenses of approximately $0.2 million. There were no special charges recorded during the first quarter of 2001. Net income including the non-cash special charge was $2.6 million, or $0.14 per diluted share, for the first quarter of 2002.

Comments from Management

Commenting on the first quarter results, Michael Funk, Chief Executive Officer, said, "We are pleased with our first quarter results and remain confident in the execution of our fiscal 2002 business plan. Sales growth was slightly higher than expected as we achieved double-digit growth in both our eastern and western regions as well as across all three of our main distribution channels. Operating metrics continue to track at efficient levels with service rates to customers continuing to perform at optimum levels. Looking forward we believe our sales growth for fiscal 2002 will continue in the 10%-14% range. At these sales levels we expect net income for fiscal 2002 to be approximately $1.06-$1.11 per diluted share and net income for the fiscal 2002 second quarter to be approximately $0.25 to $0.27 per diluted share. Our guidance for both fiscal 2002 and the second quarter excludes special charges for FAS 133 and relocation expenses related to the new distribution facilities in Atlanta and southern California."

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. ET on December 4, 2001 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is 703-871-3795. The audio webcast will be available, on a listen only basis, via the Internet at . Please allow extra time prior to the webcast to visit the webcast site and download any software required 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 over 30,000 products to more than 7,000 customers nationwide. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores and independent retail operators.

For more information on United Natural Foods, Inc., visit the Company's web site at

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding United Natural's business which 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 annual report on Form 10-K filed with the Commission on October 23, 2001, 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. United Natural Foods, Inc. is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws.


                                                          QUARTER ENDED
                                                           OCTOBER 31,
    (In thousands, except per share data)             2001           2000

    Net sales                                       $280,315       $244,141
    Cost of sales                                    225,314        196,091
      Gross profit                                    55,001         48,051
    Operating expenses                                45,024         40,782
    Amortization of intangibles                           64            263
      Total operating expenses                        45,088         41,045
      Operating income                                 9,913          7,006

    Other expense (income):
      Interest expense                                 1,746          1,778
      Change in fair value of financial instruments    3,787              -
      Other, net                                          44           (214)
        Total other expense                            5,577          1,564
        Income before income taxes                     4,336          5,442

    Income taxes                                       1,734          2,177
      Net income                                      $2,602         $3,265

    Per share data (basic):
      Net income                                       $0.14          $0.18

    Weighted average basic shares of common stock     18,665         18,320

    Per share data (diluted):
      Net income                                       $0.14          $0.18

    Weighted average diluted shares of common stock   19,074         18,663

                         CONSOLIDATED BALANCE SHEETS

    (In thousands)                                 OCTOBER 31,      JULY, 31
                                                      2001            2001
    Current assets:
      Cash                                            $5,309         $6,393
      Accounts receivable, net                        90,533         81,559
      Notes receivable, trade                            654            685
      Inventories                                    124,861        110,653
      Prepaid expenses                                 6,037          5,394
      Deferred income taxes                            3,799          3,513
      Refundable income taxes                              -            366
        Total current assets                         231,193        208,563

    Property & equipment, net                         65,372         62,186

    Other assets:
      Notes receivable, trade, net                       940          1,050
      Goodwill, net                                   27,499         27,500
      Covenants not to compete, net                      155            180
      Other, net                                       1,734            965

        Total assets                                $326,893       $300,444

    Current liabilities:
      Notes payable - line of credit                 $80,240        $68,056
      Current installments of long-term debt           1,048         19,625
      Current installment of obligations under
        capital leases                                 1,049          1,120
      Accounts payable                                72,700         53,169
      Accrued expenses                                23,067         13,242
      Income taxes payable                             2,006              -
        Total current liabilities                    180,110        155,212

    Long-term debt, excluding current installments     6,193          7,805
    Deferred income taxes                                  -              -
    Obligations under capital leases, excluding
      current installments                             1,885          1,484
        Total liabilities                            188,188        164,501

    Stockholders' equity:
    Preferred stock, $.01 par value,
      authorized 5,000 shares; none issued
      and outstanding
    Common stock, $.01 par value,
      authorized 50,000 shares; issued and
      outstanding 18,666 at October 31, 2001;
      issued and outstanding 18,653
      at July 31, 2001                                   187            187
      Additional paid-in capital                      72,763         72,644
      Unallocated shares of ESOP                      (2,217)        (2,258)
      Retained earnings                               67,972         65,370
        Total stockholders' equity                   138,705        135,943

    Total liabilities and stockholders' equity      $326,893       $300,444


                                                         THREE MONTHS ENDED
                                                            OCTOBER 31,
                                                       2001           2000
    (In thousands)
    Net income                                        $2,602         $3,265
      Adjustments to reconcile net income to
        net cash provided by operating activities:
        Depreciation and amortization                  1,814          1,825
        Change in fair value of financial
          instruments                                  3,787              -
        Gain on disposals of property & equipment         (3)            (1)
        Deferred income tax (benefit) expense           (287)            99
        Provision for doubtful accounts                  513            537
        Changes in assets and liabilities,
          net of acquired companies:
      Accounts receivable                             (9,487)        (5,205)
      Inventory                                      (14,208)        (3,448)
      Prepaid expenses                                  (643)           (46)
      Refundable income taxes                            366          1,894
      Other assets                                      (728)            80
      Notes receivable, trade                            141            214
      Accounts payable                                19,532         17,819
      Accrued expenses                                 6,038            167
      Income taxes payable                             2,006              -
        Net cash provided by operating activities     11,443         17,200

      Proceeds from disposals of property
        and equipment                                     16             10
      Capital expenditures                            (4,360)        (3,692)
       Net cash used in investing activities          (4,344)        (3,682)

      Net borrowings under note payable               12,184         (5,504)
      Repayments on long-term debt                   (20,189)          (670)
      Proceeds from long-term debt                         -             39
      Principal payments of capital
        lease obligations                               (299)          (310)
      Proceeds from exercise of stock options            121            427
      Net cash used in financing activities           (8,183)        (6,018)

    NET (DECREASE) INCREASE IN CASH                   (1,084)         7,500
    Cash at beginning of period                        6,393          1,943
    Cash at end of period                             $5,309         $9,443

    Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                        $1,629         $1,615
      Income taxes, net of refunds                      $196           $138

SOURCE United Natural Foods, Inc.


Thomas Simone Joseph Calabrese Vanessa Schwartz
Chairman of the Board General Information Analyst Information
(707) 537-9872 (212) 445-8434 (212) 445-8433

Copyright (C) 2001 PR Newswire. All rights reserved.

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