Press Release Details

United Natural Foods Reports Results for Fourth Quarter and Year Ended July 31, 2003

September 2, 2003
     - Quarterly net income of $0.32 per diluted share, excluding special
       items, and $0.25 per diluted share, including special items
     - Annual net income of $1.19 per diluted share, excluding special items,
       and $1.02 per diluted share, including special items

DAYVILLE, Conn., Sept. 2 /PRNewswire-FirstCall/ -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported net income of $5.0 million, or $0.25 per share on a diluted basis, for the fourth quarter of fiscal 2003, which ended July 31, 2003. Net income for the fourth quarter of fiscal 2003 was $6.4 million or $0.32 per share on a diluted basis, excluding special items, in line with the guidance previously provided by the Company.

Net sales for the fourth quarter of fiscal 2003 were $366.8 million, an increase of 18.6% from the $309.3 million recorded in the fourth quarter of fiscal 2002. Sales in the fourth quarter included a full quarter of sales for Blooming Prairie and Northeast Cooperatives, acquired by the Company in October 2002 and December 2002, respectively. This increase included growth in the independent and mass market channels of approximately 36.0% and 23.0%, respectively, compared to the same period last year. Sales in the supernatural distribution channel decreased approximately 6.0% compared to the same period last year primarily due to the previously announced transition of the Company's former second-largest customer to a new primary distributor. The supernatural distribution channel is comprised of small and large chains of natural foods supermarkets.

Net income for the fourth quarter of fiscal 2003 increased 20.4% to $5.0 million, or $0.25 per diluted share, compared to $4.1 million, or $0.21 per diluted share, for the same period last year. Net income for the fourth quarter of fiscal 2003, excluding the effect of special items, increased 15.6% to $6.4 million, or $0.32 per diluted share, compared to $5.6 million, or $0.29 per diluted share, excluding special items, for the same period last year.

The special items for the fourth quarter of fiscal 2003 included a goodwill impairment charge, inventory write down, and restructuring and asset impairment charges at the Company's subsidiary, Hershey Import. In addition, the Company recorded non-cash income related to the change in fair value of interest rate swaps and related options agreements caused by favorable changes in yield curves. The special items also included moving and other costs related to the completion of the expansion of the Company's Chesterfield, New Hampshire distribution facility. The special items for the fourth quarter of fiscal 2002 included a non-cash charge related to the change in fair value of interest rate swaps and related options agreements as well as moving and other costs related to the relocation of the Company's subsidiary, Hershey Import.

The following tables detail the amounts and effect of these special items and the reconciliation of net income, excluding special items (Non-GAAP basis), to net income, including special items (GAAP basis):

     Quarter Ended July 31, 2003
     (in thousands, except per       Pretax                       Per diluted
      share data)                    Income         Net of Tax       share

    Net income, excluding
     special items:                 $10,549          $6,435         $0.32

    Less: special items
     expense (income)
    Goodwill impairment charge        1,353             825          0.04
    Interest rate swap agreements
     (change in value of
     financial instruments)          (1,355)           (827)        (0.04)
    Inventory write down
     (cost of goods sold)             1,104             673          0.03
    Restructuring and asset
     impairment charges                 773             472          0.02
    Moving and other costs
     (included in operating
     expenses)                          554             339          0.02

    Net income, including
     special items:                  $8,120          $4,953         $0.25


     Quarter Ended July 31, 2002
     (in thousands, except per       Pretax                       Per diluted
       share data)                   Income        Net of Tax        share

    Net income, excluding
     special items:                  $9,277          $5,566         $0.29

    Less: special items expense
    Interest rate swap
     agreements (change in
     value of financial
     instruments)                     2,136           1,281          0.07
    Moving and other costs
     (included in operating
     expenses)                          284             171          0.01

    Net income, including
     special items:                  $6,857          $4,114          0.21

All non-GAAP numbers have been adjusted to exclude special charges. A reconciliation of specific adjustments to GAAP results for the fourth quarter of fiscal 2003 and the same period last year is included in the financial tables shown above. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below.

Year End Results

Net sales for the twelve months ended July 31, 2003 were $1.4 billion, an increase of 17.4% over the $1.2 billion recorded in the comparable prior year period. Sales for the twelve months ended July 31, 2003 included over 9 months of sales from Blooming Prairie, acquired by the Company on October 11, 2002, and 7 months of sales from Northeast Cooperatives, acquired by the Company on December 31, 2002. Net income for the twelve months ended July 31, 2003 increased $3.0 million, or 17.5%, to $20.2 million, or $1.02 per diluted share, from $17.2 million, or $0.89 per diluted share, for the twelve months ended July 31, 2002. Net income, excluding special items, was $23.4 million, or $1.19 per diluted share, compared to $21.2 million, or $1.10 per diluted share, for the twelve months ended July 31, 2002. The special items for the twelve months ended July 31, 2003 included a goodwill impairment charge, inventory write down and restructuring and asset impairment charges related to the Company's subsidiary, Hershey Import, and, moving and other costs related to the expansion of the Company's Chesterfield, New Hampshire distribution facility. In addition, the special items included costs related to the loss of a major customer and a non-cash charge related to the change in fair value of interest rate swaps and related option agreements. The special items for the fiscal year ended July 31, 2002 included a non-cash charge related to the change in fair value of interest rate swaps and related options agreements caused by unfavorable changes in yield curves as well as moving, asset impairment and redundant rent expense related to moving the Company's Atlanta, Georgia distribution facility, incremental costs such as labor, utilities and rent related to the startup of the Company's southern California distribution facility, and labor, utilities, rent and severance related to relocating the Company's subsidiary, Hershey Import.

The following tables detail the amounts and effect of these special items and the reconciliation of net income, excluding special items (Non-GAAP basis), to net income, including special items (GAAP basis):

     Year Ended July 31, 2003
     (in thousands, except per       Pretax                       Per diluted
      share data)                    Income        Net of Tax        share

    Net income, excluding
     special items:                 $38,655         $23,395         $1.19

    Less: special items expense
    Goodwill impairment charge        1,353             819          0.04
    Inventory write down
     (cost of goods sold)             1,104             668          0.03
    Moving and other costs
     (included in operating
     expenses)                        1,004             607          0.03
    Restructuring and asset
     impairment charges                 773             467          0.02
    Costs related to loss of
     major customer (included
     in operating expenses)             530             321          0.02
    Interest rate swap agreements
     (change in value of
     financial instruments)             484             293          0.02

    Net income, including
     special items:                 $33,407         $20,220         $1.02*

     *Total reflects rounding


     Year Ended July 31, 2002
     (in thousands, except per       Pretax                       Per diluted
      share data)                    Income        Net of Tax        share

    Net income, excluding
     special items:                 $35,409         $21,245         $1.10

    Less: special items expense
    Interest rate swap
     agreements (change in value
     of financial instruments)        4,331           2,599          0.13
    Moving and other costs
     (included in operating
     expenses)                        1,972           1,183          0.06
    Restructuring and asset
     impairment charges                 424             254          0.01

    Net income, including
     special items:                 $28,682         $17,209         $0.89

All non-GAAP numbers have been adjusted to exclude special charges. A reconciliation of specific adjustments to GAAP results for the year ended July 31, 2003 and the same period last year is included in the financial tables shown above. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below.

Comments from Management

Steven Townsend, President and Chief Executive Officer of the Company, said, "All divisions, except Hershey Import, contributed to our strong growth and record sales of $1.4 billion for fiscal 2003. Our successful integration of two acquisitions and a distribution facility expansion are a tribute to the hard work of all of our associates at United Natural Foods." Mr. Townsend continued, "Our strong growth for the quarter and the year is a direct result of our continued commitment to providing the best customer service and support. In addition, we continue to see ongoing strong demand for natural and organic products in all sales channels and above average growth in the independent and mass market channels."

The Company reaffirms its guidance for fiscal 2004, ending July 31, 2004, with revenues in the $1.55 to $1.57 billion range and net income, excluding potential special items, in the range of $1.42 - $1.46 per diluted share. Historically, interest rate swaps, distribution facility expansions and asset impairment charges (including goodwill) have been classified as special items. However, at this time we do not know the extent or significance of these items or whether the Company will in fact incur any of these items in fiscal 2004. The Company's guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If any of these assumptions vary, the Company's guidance may change. There can be no assurance that the Company will achieve these results.

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. ET on September 2, 2003 to review the Company's quarterly results, market trends and outlook. The conference call dial-in number is 703-871-3630. The audio webcast will be available, on a listen only basis, via the Internet at www.viavid.net or at the Investor Relations section of the Company's website, www.unfi.com . Please allow extra time to the webcast to visit the 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

The Company carries and distributes over 30,500 products to more than 11,000 customers nationwide. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores and independent retail operators.

                           Financial Tables Follow

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

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding the Company's business that 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 quarterly report on Form 10-Q filed with the Commission on June 14, 2003, 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. The Company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so.

Non-GAAP Results: To supplement its financial statements presented on a GAAP basis, the Company uses non-GAAP additional measures of operating results, net earnings and earnings per share adjusted to exclude special charges. The Company believes that the use of these additional measures is appropriate to enhance an overall understanding of its past financial performance and also its prospects for the future as these special charges are not expected to be part of the Company's ongoing business. The adjustments to the Company's GAAP results are made with the intent of providing both management and investors with a more complete understanding of the underlying operational results and trends and its marketplace performance. For example, these adjusted non-GAAP results are among the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with generally accepted accounting principles in the United States. A comparison and reconciliation from non-GAAP to GAAP results is included in the tables within this release.

                 UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

     (In thousands,            QUARTER ENDED               YEAR ENDED
      except per share            JULY 31,                  JULY 31,
      data)                  2003         2002         2003          2002

    Net sales             $366,843      $309,255   $1,379,893    $1,175,393

    Cost of sales          292,482       245,506    1,099,704       934,238

      Gross profit          74,361        63,749      280,189       241,155

    Operating expenses      63,483        53,191      236,784       200,586
    Goodwill impairment
     charge                  1,353             -        1,353             -
    Restructuring and
     asset impairment
     charges                   773             -          773           424
    Amortization of
     intangibles               229            46          463           180

        Total operating
         expenses           65,838        53,237      239,373       201,190

        Operating income     8,523        10,512       40,816        39,965

    Other expense (income):
      Interest expense       2,065         1,910        7,795         7,233
      Change in value of
       financial
       instruments          (1,355)        2,136          484         4,331
      Other, net              (307)         (392)        (870)         (281)

        Total other
         expense               403         3,654        7,409        11,283

        Income before
         income taxes        8,120         6,858       33,407        28,682

    Income taxes             3,167         2,744       13,187        11,473

        Net income          $4,953        $4,114      $20,220       $17,209

    Per share data (basic):

        Net income           $0.25         $0.22        $1.05         $0.91

    Weighted average basic
     shares of
     common stock           19,475        19,106       19,235        18,933

    Per share data
     (diluted):

        Net income           $0.25         $0.21        $1.02         $0.89

    Weighted average
     diluted shares of
     common stock           20,025        19,423       19,727        19,334


                 UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                          JULY 31,             JULY 31,
     (In thousands)                         2003                 2002

    ASSETS
    Current assets:
      Cash                                  $3,645             $11,184
      Accounts receivable, net              90,111              84,303
      Notes receivable, trade, net             585                 513
      Inventories                          158,263             131,932
      Prepaid expenses                       5,706               4,493
      Deferred income taxes                  6,455               4,612
      Refundable income taxes                  704                  58
        Total current assets               265,469             237,095

    Property & equipment, net              101,238              82,702

    Other assets:
      Goodwill, net                         57,400              31,399
      Notes receivable, trade, net           1,261                 956
      Other intangibles, net                 1,014                 248
      Deferred taxes                             -                 800
      Other, net                             3,717               1,257

        Total assets                      $430,099            $354,457

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Notes payable - line of credit       $96,170            $106,109
      Current installments of
       long-term debt                        4,459               1,658
      Current installment of obligations
       under capital leases                    903               1,037
      Accounts payable                      67,187              52,789
      Accrued expenses                      26,347              18,185
      Financial instruments                  6,104               5,620
        Total current liabilities          201,170             185,398

    Long-term debt, excluding
     current installments                   38,507               7,677
    Deferred income taxes                    2,247                   -
    Obligations under capital leases,
     excluding current installments            612                 995
        Total liabilities                  242,536             194,070

    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
     19,510 at July 31, 2003; issued and
     outstanding 19,106 at July 31, 2002       195                 191
      Additional paid-in capital            86,068              79,711
      Unallocated shares of ESOP            (1,931)             (2,094)
      Other comprehensive income               432                   -
      Retained earnings                    102,799              82,579
        Total stockholders' equity         187,563             160,387

    Total liabilities and
     stockholders' equity                 $430,099            $354,457


                 UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

                                                  TWELVE MONTHS ENDED
                                                       JULY 31,
     (In thousands)                              2003            2002
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                 $20,220         $17,209
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation and amortization           10,330           8,206
        Change in fair value of
         financial instruments                     484           4,331
        Goodwill impairment charge               1,353               -
        Loss on disposals of
         property & equipment                      154             307
        Deferred income taxes                    1,667          (1,099)
        Provision for doubtful accounts          2,622           1,806
        Changes in assets and liabilities,
         net of acquired companies:
          Accounts receivable                   (1,083)         (3,867)
          Inventory                             (3,861)        (21,091)
          Prepaid expenses                         869             921
          Refundable income taxes                 (647)            308
          Other assets                          (2,552)           (928)
          Notes receivable, trade                   87             266
          Accounts payable                        (496)           (692)
          Accrued expenses                       1,775           5,346
          Tax effect of exercise
           of stock options                        950             415
        Net cash provided by
         operating activities                   31,872          11,438

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of acquired businesses,
       net of cash acquired                    (43,723)            (16)

      Proceeds from disposals of
       property and equipment                      257              33
      Capital expenditures                     (20,025)        (27,789)
        Net cash used in
         investing activities                  (63,491)        (27,772)

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Net (repayments) borrowings
       under note payable                       (9,939)         38,053
      Repayments on long-term debt              (2,073)        (21,062)
      Proceeds from long-term debt              32,110           2,967
      Principal payments of capital
       lease obligations                        (1,429)         (1,240)
      Proceeds from exercise of stock options    5,411           2,407
        Net cash provided by
         financing activities                   24,080          21,125

    NET (DECREASE) INCREASE IN CASH             (7,539)          4,791
    Cash at beginning of period                 11,184           6,393
    Cash at end of period                       $3,645         $11,184

    Supplemental disclosures of
     cash flow information:
      Cash paid during the period for:
        Interest                                $7,697          $7,089
        Income taxes, net of refunds            $7,999         $12,883
SOURCE  United Natural Foods, Inc.
    -0-                             09/02/2003
    /CONTACT:  Rick Puckett, Chief Financial Officer of United Natural Foods,
Inc., +1-860-779-2800; or Joseph Calabrese, General Information,
+1-212-445-8434, or Vanessa Schwartz, Analyst Information, +1-212-445-8433,
both of FRB Weber Shandwick/
    /Web site:  http://www.unfi.com /
    (UNFI)

CO:  United Natural Foods, Inc.
ST:  Connecticut
IN:  FOD REA
SU:  ERN CCA ERP



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