Press Release Details

United Natural Foods Announces 23% Increase in Net Revenue and $0.22 in Earnings Per Share, Excluding Special Items, a 42% Increase for the Third Quarter of Fiscal 2004

June 1, 2004

Reports Record Sales of $449 Million in the Third Quarter of Fiscal 2004

DAYVILLE, Conn., June 1 /PRNewswire-FirstCall/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $9.2 million for the third quarter of fiscal 2004, ended April 30, 2004, or $0.22 per share on a diluted basis, excluding special items. Net income for the third quarter of fiscal 2004, including special items, was $8.6 million, or $0.21 per share on a diluted basis.

Net sales for the third quarter of fiscal 2004 were $448.9 million, an increase of $85.3 million, or 23.5%, from the $363.6 million recorded in the third quarter of fiscal 2003. This increase included growth in the supernatural, conventional mass market and independent channels of 44%, 20% and 9%, respectively.

Net income for the third quarter of fiscal 2004, excluding the effect of special items, increased 48.7% to $9.2 million, or $0.22 per diluted share, compared to $6.2 million, or $0.16 per diluted share, excluding special items, for the quarter ended April 30, 2003. The special items for the third quarter of fiscal 2004 consisted of certain equipment rental and labor costs recorded in the third quarter of fiscal 2004 for start-up and transition costs associated with implementing the Company's primary distribution relationship with Wild Oats Market, Inc. In the third quarter of 2003, a special non-cash expense item was recorded related to the change in fair value of certain interest rate swaps and the related option agreements, and certain costs relating to the expansion of the Chesterfield facility. Net income for the third quarter of fiscal 2004, including the effect of special items, increased 49.0% to $8.6 million, or $0.21 per diluted share, compared to $5.8 million, or $0.15 per diluted share, for the quarter ended April 30, 2003.

The following table details the amounts and effects of these special items:

     Quarter Ended April 30, 2004             Pretax               Per diluted
     (in thousands, except per share data)    Income   Net of Tax      share

     Income, excluding special items:        $15,115     $9,220        $0.22

     Special items - Income/(Expense)
     Related to the transition to the
      primary distributorship for
      Wild Oats Market, Inc.
      (included in operating expenses)        (1,010)      (616)       (0.01)

     Income, including special items:        $14,105     $8,604        $0.21


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

     Income, excluding special items:         $10,162     $6,199        $0.16

     Special items - Income/(Expense)
     Interest rate swap and related
      agreements (included in change in
      fair value of financial instruments)       (360)      (220)       (0.01)
     Costs related to the Chesterfield
      expansion
     (included in operating expenses)            (336)      (205)       (0.01)

     Income, including special items:          $9,466     $5,774        $0.15*

    * Total reflects rounding

The non-cash item from the change in fair value on interest rate swap agreements was caused by unfavorable changes in interest rate yield curves during the quarter ended April 30, 2003. The costs related to the expansion of the Chesterfield facility were primarily labor related.

On March 17, 2004, the Company's Board of Directors approved a two-for-one split of the Company's common stock that was payable in the form of a stock dividend. Stockholders received one additional share of the Company's common stock for each share of common stock held on the record date of March 29, 2004. The split became effective on April 20, 2004. The applicable share and per-share data for all periods included herein have been restated to give effect to this stock split.

As previously reported, the Company entered into an amended and restated four-year $250 million revolving credit facility with a bank group that was led by Bank of America Business Capital (formerly Fleet Capital Corporation) as the administrative agent, effective April 30, 2004. The amended and restated credit facility provides for improved terms and conditions that provide the Company with more financial flexibility and reduced costs, as well as increased liquidity. The new credit facility replaces an existing $150 million revolving credit facility. The Company's outstanding commitments under the amended and restated credit facility as of April 30, 2004 were approximately $123 million.

Comments from Management

Commenting on the third quarter results, Steven Townsend, Chief Executive Officer, said, "We achieved another strong quarter of financial results reflecting the efforts of a well-focused team and the successful execution of our sales strategies designed to meet the growing demand for natural and organic products. Our results are highlighted by solid gains in net sales, net income and earnings per share, all indicators that our sales, marketing and operational plans are on target. We remain focused on serving a broad customer base and are pleased to realize sales growth of 23.5% and comparable sales growth of 15.1%, excluding sales to Wild Oats Markets. We remain committed to meeting the needs of all of our customers while consistently providing superior service levels across our entire distribution network."

Mr. Townsend added, "We are also very pleased with our continued progress to improve our operating margins. Excluding special items, our fiscal 2004 third quarter operating margin was 3.7%, up 40 basis points from the same period last year."

Raises Fiscal 2004 Guidance

The Company is raising its guidance for revenue for fiscal year ended July 31, 2004 to $1.62 to $1.64 billion from $1.60 to $1.62 billion, and raising the guidance on earnings per share, excluding special items, to $0.74 to $0.77 from $0.73 to $0.76 per diluted share.

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. ET on June 1, 2004 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is 303-262-2211 or 800-218-0204. The audio webcast will be available, on a listen only basis, via the Internet at http://www.fulldisclosure.com or at the Investor Relations section of the Company's website, http://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 35,000 products to more than 18,000 customers nationwide. The Company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. For more information on United Natural Foods, Inc., visit the Company's website at http://www.unfi.com .

For more information on United Natural Foods, Inc., visit the Company's website at http://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 March 16, 2004, 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 of America. 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)

                                      QUARTERS ENDED       NINE MONTHS ENDED
                                        APRIL 30,              APRIL 30,
    (In thousands, except per         2004      2003        2004      2003
     share data)

    Net sales                      $448,900  $363,611  $1,223,530  $1,013,050

    Cost of sales                   361,323   290,056     980,995     812,574

       Gross profit                  87,577    73,555     242,535     200,476

    Operating expenses               71,388    61,930     199,706     167,949

    Amortization of intangibles         676       130       1,142         234

       Total operating expenses      72,064    62,060     200,848     168,183

       Operating income              15,513    11,495      41,687      32,293

    Other expense (income):
      Interest expense                1,536     1,811       5,990       5,729
      Change in fair value of
       financial instruments              -       360        (704)      1,839
      Other, net                       (128)     (142)       (358)       (562)

          Total other expense         1,408     2,029       4,928       7,006

          Income before income taxes 14,105     9,466      36,759      25,287

    Income taxes                      5,501     3,692      14,336      10,020

          Net income                 $8,604    $5,774     $22,423     $15,267

    Per share data (basic):

          Net income                  $0.22     $0.15       $0.57       $0.40

    Weighted average basic shares
     of common stock                 39,648    38,483      39,296      38,310

    Per share data (diluted):

          Net income                  $0.21     $0.15       $0.55       $0.39

    Weighted average diluted shares
     of common stock                  41,344    39,500      40,813     39,271


                 UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

    (In thousands)                                   APRIL 30,       JULY 31,
                                                       2004            2003
                                                   (UNAUDITED)     (UNAUDITED)
    ASSETS
    Current assets:
     Cash                                              $8,802         $3,645
     Accounts receivable, net                         110,094         90,111
     Notes receivable, trade, net                         690            585
     Inventories                                      203,715        158,263
     Prepaid expenses                                   5,672          5,706
     Deferred income taxes                              6,004          6,455
     Refundable income taxes                                -            704
      Total current assets                            334,977        265,469

    Property & equipment, net                         112,125        101,238

    Other assets:
     Goodwill                                          57,242         57,400
     Notes receivable, trade, net                       2,264          1,261
     Intangible assets, net                               168          1,014
     Other, net                                         3,532          3,717

      Total assets                                   $510,308       $430,099

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
     Notes payable - line of credit                  $114,514        $96,170
     Accounts payable                                  96,531         67,187
     Accrued expenses and other current liabilities    24,877         26,347
     Current portion of long-term debt                  4,597          4,459
     Current portion of obligations under capital
      leases                                              512            903
     Financial instruments                                  -          6,104
     Income taxes payable                                  61              -
      Total current liabilities                       241,092        201,170

    Long-term debt, excluding current portion          45,367         38,507
    Deferred income taxes                               2,247          2,247
    Obligations under capital leases, excluding
     current portion                                      244            612
      Total liabilities                               288,950        242,536

    Commitments and contingencies

    Stockholders' equity:
     Preferred stock, $0.01 par value, authorized
      5,000 shares at January 31, 2004 and July 31,
      2003, respectively; none issued and outstanding
      Common stock, $0.01 par value, authorized
      50,000 shares; issued and outstanding 39,877 and
      19,510 at April 30, 2004 and July 31, 2003,
      respectively                                       399            195
     Additional paid-in capital                       97,211         86,068
     Unallocated shares of ESOP                       (1,809)        (1,931)
     Accumulated other comprehensive income              335            432
     Retained earnings                               125,222        102,799
      Total stockholders' equity                     221,358        187,563

    Total liabilities and stockholders' equity      $510,308       $430,099


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

                                                         NINE MONTHS ENDED
                                                              APRIL 30,
    (In thousands)                                       2004          2003
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                         $22,423        $15,267

     Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
       Depreciation and amortization                     8,807          7,663
       Change in fair value of financial instruments      (704)         1,839
       Gains on disposals of property & equipment          (61)           (18)
       Provision for doubtful accounts                   2,521          1,952
       Changes in assets and liabilities, net of
        acquired companies:
       Accounts receivable                             (22,504)        (2,279)
       Inventory                                       (45,345)        (6,575)
       Prepaid expenses and other assets                 1,050         (2,155)
       Notes receivable, trade                          (1,108)            31
       Accounts payable                                 29,344          9,606
       Accrued expenses                                   (968)           806
       Income taxes payable                                 61          2,651
       Financial instruments                            (5,400)             -
       Tax effect of stock options                       3,870            846
       Net cash (used in) provided by operating
        activities                                      (8,014)        29,635

    CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of acquired businesses, net of
      cash acquired                                         (6)       (43,964)
     Proceeds from disposals of property and equipment     202             60
     Capital expenditures                              (18,989)       (14,975)
     Net cash used in investing activities             (18,793)       (58,879)

    CASH FLOWS FROM FINANCING ACTIVITIES:
     Net borrowings (repayments) under note payable     18,344         (9,267)
     Proceeds from issuance of long-term debt           10,204         30,954
     Repayments on long-term debt                       (3,302)        (1,282)
     Principal payments of capital lease obligations      (759)        (1,002)
     Proceeds from exercise of stock options             7,477          3,613
     Net cash provided by financing activities          31,964         23,016

    NET INCREASE (DECREASE) IN CASH                      5,157         (6,228)
     Cash at beginning of period                         3,645         11,184
     Cash at end of period                              $8,802         $4,956

    Supplemental disclosures of cash flow information:
     Cash paid during the period for:
      Interest                                          $5,788         $5,591

      Income taxes, net of refunds                      $9,686         $4,598

SOURCE United Natural Foods, Inc. -0- 06/01/2004 /CONTACT: Rick Puckett, Chief Financial Officer of United Natural Foods, Inc., +1-860-779-2800; or for General Information, Joseph Calabrese of Financial Relations Board, +1-212-445-8434/ (UNFI) CO: United Natural Foods, Inc. ST: Connecticut, New York