Press Release Details

United Natural Foods Reports Results for Third Quarter Ended April 30, 2003

June 4, 2003
Earns $0.31 Per Diluted Share Excluding Special Items, $0.29 Per Diluted Share Including Special Items

DAYVILLE, Conn., Jun 4, 2003 /PRNewswire-FirstCall via COMTEX/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $5.8 million, or $0.29 per share on a diluted basis, for the third quarter of fiscal 2003, ended April 30, 2003. Net income for the third quarter of fiscal 2003, excluding special items, was $6.2 million or $0.31 per share on a diluted basis.

Net sales for the third quarter of fiscal 2003 were $363.6 million, an increase of 21% from the $300.4 million recorded in the third quarter of fiscal 2002. This increase included growth in the mass market and independent distribution channels of approximately 21% and 38%, respectively. Sales in the supernatural distribution channel decreased by approximately 3% 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. These results included a full quarter of the net sales resulting from the acquisitions of Blooming Prairie and Northeast Cooperatives. Sales for the third quarter of fiscal 2003, excluding the effect of acquisitions, were relatively flat compared to the same period last year.

Net income increased 9.4% to $5.8 million, or $0.29 per diluted share, for the third quarter of fiscal 2003 compared to $5.3 million, or $0.27 per diluted share, in the same period last year. Net income for the third quarter of fiscal 2003, excluding the effect of special items, increased 11.2% to $6.2 million, or $0.31 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 third quarter of fiscal 2003 included non-cash expense related to the change in fair value of interest rate swaps and related option agreements caused by unfavorable changes in yield curves. In addition, special items included labor, moving and other costs related to the expansion of the Company's Chesterfield, New Hampshire distribution facility. Special items for the third quarter of fiscal 2002 consisted of moving and other costs related primarily to the start up of the Company's southern California distribution facility and non-cash income related to the change in fair value of interest rate swaps and related options agreements. The following table details the amounts and effect of these items:

     Quarter Ended April 30, 2003
      (in thousands, except per            Pretax                Per diluted
       share data)                         Income    Net of Tax     share

    Income, excluding special items:      $10,162      $6,199        $0.31

    Less: special items expense
    Interest rate swap agreements
     (change in value of financial
     instruments)                             360         220         0.01

    Costs related to expanding
     Chesterfield, New Hampshire
     distribution center (included in
     operating expenses)                      336         205         0.01

    Income, including special items:       $9,466      $5,774        $0.29


     Quarter Ended April 30, 2002
      (in thousands, except per           Pretax                  Per diluted
       share data)                        Income     Net of Tax      share

    Income, excluding special items:       $9,284      $5,570        $0.29

    Less: special items (income) /
     expense
    Moving and other startup costs
     related to southern California
     distribution center
     (operating expenses)                     720         431         0.02

    Interest rate swap agreements
     (change in value of financial
     instruments)                            (234)       (140)       (0.01)

    Income, including special items:       $8,798      $5,279         0.27*

    *Total reflects rounding

    All non-GAAP numbers have been adjusted to exclude special charges.  A
    reconciliation of specific adjustments to GAAP results for the third
    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.

Comments from Management

Steven Townsend, President and Chief Executive Officer of United Natural Foods, said, "Our solid third quarter performance reflects continued strong consumer demand for natural foods as well as our commitment to effectively service customers at the highest levels. Operationally, we continue to focus on the integration of our recent acquisitions, and have seen the benefits with improved operating margins over the second quarter of this year. The improvements have come about through our ability to gain efficiencies in our purchasing practices and by leveraging operating expenses. Additionally, we have completed the expansion of our Chesterfield, New Hampshire distribution center and we are on track to consolidate Northeast Cooperatives' Brattleboro division into our Chesterfield facility this June."

The Company believes that sales growth for the fourth quarter of fiscal 2003 will be in the 15% - 19% range. The Company believes earnings per diluted share for the fiscal year ending July 31, 2003 will be $1.18 - $1.20, consistent with previous guidance.

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. ET on June 4, 2003 to review the Company's quarterly results, market trends and outlook. The conference call dial-in number is 703-871-3597. The audio webcast will be available, on a listen only basis, via the Internet at www.viavid.com 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

United Natural Foods, Inc. 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 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 quarterly report on Form 10-Q filed with the Commission on March 17, 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. United Natural is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by applicable laws.

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)

                                QUARTER ENDED            NINE MONTHS ENDED
                                  APRIL 30,                  APRIL 30,
    (In thousands, except
     per share data)          2003        2002          2003         2002

    Net sales               $363,611    $300,362    $1,013,050     $866,139

    Cost of sales            290,056     239,408       807,222      688,733

        Gross profit          73,555      60,954       205,828      177,406

    Operating expenses        61,930      50,175       173,301      147,395

    Restructuring and
     asset impairment charges    ---         ---           ---          424

    Restructuring and
     merger expenses

    Amortization of
     intangibles                 130          56           234          134

        Total operating
         expenses             62,060      50,231       173,535      147,953

        Operating income      11,495      10,723        32,293       29,453

    Other expense (income):
      Interest expense         1,811       1,934         5,729        5,323
      Change in value of
       financial instruments     360        (234)        1,839        2,195
      Other, net                (142)        225          (562)         110

        Total other expense    2,029       1,925         7,006        7,628

        Income before
         income taxes          9,466       8,798        25,287       21,825

    Income taxes               3,692       3,519        10,020        8,730

        Net income            $5,774      $5,279       $15,267      $13,095

    Per share data (basic):

        Net income             $0.30       $0.28         $0.80        $0.69

    Weighted average basic
     shares of common stock   19,242      19,049        19,155       18,874

    Per share data (diluted):

        Net income             $0.29       $0.27         $0.78        $0.68

    Weighted average diluted
     shares of common stock   19,750      19,493        19,636       19,304

    In consideration of guidance issued by the Financial Accounting Standards
    Board's Emerging Issues Task Force Issue No. 02-16, Accounting by a
    Customer (Including a Reseller) for Certain Consideration Received from a
    Vendor, vendor payments received for advertising arrangements formerly
    classified as reductions of operating expenses have been re-classified as
    a reduction of cost of sales for all the periods presented.  These changes
    reduce cost of sales and also increase operating expenses by $3.1 million
    and $2.6 million in the third quarters of fiscal 2003 and 2002,
    respectively, and $8.4 million and $7.6 million in the first nine months
    of fiscal 2003 and 2002, respectively.  This accounting change had no
    impact on reported operating income, net income or earnings per share for
    any of the periods presented.


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

    (In thousands)                            APRIL 30,       JULY 31,
                                                 2003           2002

    ASSETS
    Current assets:
      Cash                                       $4,956        $11,184
      Accounts receivable, net                   91,982         84,303
      Notes receivable, trade                       549            513
      Inventories                               161,205        131,932
      Prepaid expenses                            6,645          4,493
      Deferred income taxes                       4,612          4,612
      Refundable income taxes                       ---             58
        Total current assets                    269,949        237,095

    Property & equipment, net                    99,233         82,702

    Other assets:
      Notes receivable, trade, net                1,354            956
      Goodwill                                   60,901         31,399
      Intangibles, net                            1,150            248
      Other, net                                  2,678          2,057
        Total assets                           $435,265       $354,457

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Notes payable - line of credit            $96,842       $106,109
      Current installments of long-term debt      3,830          1,658
      Current installment of obligations
       under capital leases                         742          1,037
      Accounts payable                           77,290         52,789
      Accrued expenses                           26,244         18,185
      Financial instruments                       7,459          5,620
      Income taxes payable                        2,651            ---
        Total current liabilities               215,058        185,398
      Long-term debt, excluding current
       installments                              38,772          7,677
      Obligations under capital leases,
       excluding current installments             1,200            995
        Total liabilities                       255,030        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 19,454 at
       April 30, 2003; issued and
       outstanding 19,106 at July 31, 2002          194            191
      Additional paid-in capital                 84,167         79,711
      Unallocated shares of ESOP                 (1,972)        (2,094)
      Retained earnings                          97,846         82,579
        Total stockholders' equity              180,235        160,387

    Total liabilities and stockholders'
     equity                                    $435,265       $354,457


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

                                                  NINE MONTHS ENDED
                                                      APRIL 30,
                                                  2003          2002
    (In thousands)
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                  $15,267        $13,095
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
        Depreciation and amortization             7,663          5,899
        Change in fair value of financial
         instruments                              1,839          2,195
        (Gain) loss on disposals of property
         & equipment                                (18)           295
        Deferred income tax benefit                 ---           (921)
        Provision for doubtful accounts           1,952          1,379
        Changes in assets and liabilities,
         net of acquired companies:
      Accounts receivable                        (2,279)        (9,197)
      Inventory                                  (6,575)       (28,928)
      Prepaid expenses                             (183)          (172)
      Refundable income taxes                        58            366
      Other assets                               (2,029)        (1,679)
      Notes receivable, trade                        31             29
      Accounts payable                            9,606         11,537
      Accrued expenses                              806          7,033
      Income taxes payable                        2,651          1,727
        Net cash provided by operating
         activities                              28,789          2,658

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of acquired businesses,
       net of cash acquired                     (43,964)           (19)
      Proceeds from disposals of property
       and equipment                                 60             31
      Capital expenditures                      (14,975)       (23,633)
        Net cash used in investing activities   (58,879)       (23,621)

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Net (repayments) borrowings under
       note payable                              (9,267)        39,011
      Repayments on long-term debt               (1,282)       (20,739)
      Proceeds from long-term debt               30,954          1,234
      Principal payments of capital lease
       obligations                               (1,002)          (840)
      Proceeds from exercise of stock options     4,459          2,402
        Net cash provided by financing
         activities                              23,862         21,068

    NET (DECREASE) INCREASE IN CASH              (6,228)           105
    Cash at beginning of period                  11,184          6,393
    Cash at end of period                        $4,956         $6,498

    Supplemental disclosures of cash flow
     information:
      Cash paid during the period for:
        Interest                                 $5,591         $5,240
        Income taxes, net of refunds             $4,598         $8,980

    In the nine months ended April 30, 2003 and 2002, the Company incurred $0
    and $628, respectively, of capital lease obligations.
    In the nine months ended April 30, 2002 the fair value of common stock
    issued for the acquisition of subsidiary was $4,250.

SOURCE United Natural Foods, Inc.

Rick Puckett, Chief Financial Officer of United Natural Foods, Inc., +1-860-779-2800; or General Information, Joseph Calabrese, +1-212-445-8434, or Analyst Information, Vanessa Schwartz, +1-212-445-8433, both of FRB Weber Shandwick, for United Natural Foods, Inc.