United Natural Foods Announces a 19% Increase in Net Sales and a 24% Increase in Net Income

May 31, 2005
Reports Record Sales of $534.3 Million in the Third Quarter of Fiscal 2005 Raises Fiscal 2005 Revenue Guidance

DAYVILLE, Conn., May 31, 2005 /PRNewswire-FirstCall via COMTEX/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $10.8 million for the third quarter of fiscal 2005, ended April 30, 2005, or $0.26 per share on a diluted basis, excluding special items. Net income for the third quarter of fiscal 2005, including special items, was $10.7 million, or $0.26 per share on a diluted basis. The recent acquisition of Select Nutrition Distributors (SND) had a minimal negative impact on diluted earnings per share in the current quarter. Higher fuel costs continued to negatively impact diluted earnings per share during the quarter by $0.014 when compared to actual costs in the third quarter of fiscal 2004.

Net sales for the third quarter of fiscal 2005 were $534.3 million, an increase of $85.4 million, or 19.0%, from the $448.9 million recorded in the third quarter of fiscal 2004. On a comparable growth analysis, wholesale revenue growth was 14.6% for the current quarter compared to last year.

Net income for the third quarter of fiscal 2005, excluding the effect of special items, increased 16.7% to $10.8 million, or $0.26 per diluted share, compared to $9.2 million, or $0.22 per diluted share, excluding special items, for the quarter ended April 30, 2004. The special items for the third quarter of fiscal 2005 included certain labor costs associated with the closing of the Mounds View, Minnesota facility which was completed in the third quarter of fiscal 2005. Special items in the third quarter of fiscal 2005 also included certain labor costs associated with opening the Greenwood, Indiana facility which is planned to be completed by the end of July 2005. In the third quarter of fiscal 2004, special items 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. Net income for the third quarter of fiscal 2005, including the effect of special items, increased 24.2% to $10.7 million, or $0.26 per diluted share, compared to $8.6 million, or $0.21 per diluted share, for the quarter ended April 30, 2004.

The following table details the amounts and effects of the special items for the quarter ended April 30, 2005:

Quarter Ended April 30, 2005           Pretax   Net of Tax    Per diluted
    (in thousands, except per share data)  Income                       share

    Income, excluding special items:      $17,489      $10,756          $0.26

    Special items - Income/(Expense)

    Related to the closing of the
     Mounds View, Minnesota facility
     (included in operating expenses)        (103)         (63)         (0.00)

    Related to the opening of the
     Greenwood, Indiana facility
     (included in operating expenses)         (11)          (7)         (0.00)

    Income, including special items:      $17,375      $10,686          $0.26

The following table details the amounts and effects of the special item for quarter ended April 30, 2004:

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

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

    Special item - Income/(Expense)

    Wild Oats Markets, Inc. primary
     distributorship transition
     related costs (included in operating
     expenses)                              (1,010)        (616)        (0.01)

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

All non-GAAP numbers have been adjusted to exclude special charges. A reconciliation of specific adjustments to GAAP results for the quarters ended April 30, 2005, and April 30, 2004, 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, Chief Executive Officer, said, "We are pleased with our continued strong performance highlighted by our success in meeting the growing consumer demand for natural and organic foods. During the quarter, we realized solid increases in net sales, net income and earnings per share which indicates that our sales, marketing and operating strategies are on target. We remain focused on serving a broad customer base and are pleased that we achieved strong year over year growth in all channels. In addition, we continue to leverage our expenses as we saw a 35 basis point improvement in our operating expenses."

"Looking ahead, we remain committed to meeting the needs of all our customers while consistently providing high service levels across our entire distribution network."

Raises Fiscal 2005 Revenue Guidance

The Company is raising its guidance for fiscal 2005, ending July 31, 2005, with projected revenues increasing to $2.00 to $2.05 billion. Previously, the Company had announced revenue guidance from $1.9 to $2.0 billion for the fiscal year.

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on May 31, 2005 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is (303) 262-2131. 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 prior 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 more than 40,000 products to more than 20,000 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 14, 2005, 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 basis of generally accepted accounting principles in the United States of America (GAAP), 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 GAAP. A comparison and reconciliation from non- GAAP to GAAP results is included in the tables within this release.

UNITED NATURAL FOODS, INC.
                CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                    (In thousands, except per share data)


                             Three months ended       Nine months ended
                                 April 30,                April 30,

                            2005         2004       2005          2004

    Net sales             $534,335     $448,900   $1,516,587   $1,223,530

    Cost of sales          432,387      361,323    1,226,872      980,995

        Gross profit       101,948       87,577      289,715      242,535

    Operating expenses      82,655       71,388      235,828      199,706

    Restructuring charge         -            -          170            -

    Amortization of
     intangibles               177          676          490        1,142

        Total operating
         expenses           82,832       72,064      236,488      200,848

        Operating income    19,116       15,513       53,227       41,687

    Other expense (income):
     Interest expense        1,877        1,536        4,887        5,990
     Change in fair value of
      financial instruments      -            -            -         (704)
     Other, net               (136)        (128)        (359)        (358)

       Total other expense   1,741        1,408        4,528        4,928

       Income before income
        taxes               17,375       14,105       48,699       36,759

    Income taxes             6,689        5,501       18,906       14,336

       Net income          $10,686       $8,604      $29,793      $22,423

    Per share data (basic):

       Net income            $0.26        $0.22        $0.74        $0.57

    Weighted average basic
     shares of common stock 40,900       39,648       40,470       39,296

    Per share data (diluted):

    Net income               $0.26        $0.21        $0.72        $0.55

    Weighted average diluted
     shares of common stock 41,774       41,344       41,494       40,813



                          UNITED NATURAL FOODS, INC.
                   CONSOLIDATED BALANCE SHEETS (Unaudited)
                                (In thousands)

                                                     April 30,      July 31,
                                                       2005           2004
    ASSETS
    Current assets:
     Cash and cash equivalents                          $8,197        $13,633
     Accounts receivable, net                          143,088        106,178
     Notes receivable, trade, net                          592            772
     Inventories                                       228,746        196,171
     Prepaid expenses                                   10,853          7,007
     Deferred income taxes                               8,117          7,610
      Total current assets                             399,593        331,371

    Property & equipment, net                          146,460        114,140

    Other assets:
     Goodwill                                           64,744         57,242
     Notes receivable, trade, net                        2,181          1,601
     Intangible assets, net                                338            154
     Other                                               5,770          4,259

       Total assets                                   $619,086       $508,767

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
     Notes payable - line of credit                   $150,505       $107,004
     Accounts payable                                  111,691         80,875
     Accrued expenses and other current liabilities     26,399         29,501
     Current portion of long-term debt                   5,834          4,766
      Total current liabilities                        294,429        222,146

    Long-term debt, excluding current portion           37,319         43,978
    Deferred income taxes                                6,469          7,730
    Other long-term liabilities                            551            137
      Total liabilities                                338,768        273,991

    Commitments and contingencies

    Stockholders' equity:
    Preferred stock, $0.01 par value, authorized
     5,000 shares at April 30, 2005 and July 31, 2004,
     respectively; none issued and outstanding              -             -
    Common stock, $0.01 par value, authorized 50,000
     shares; issued and outstanding 41,029 and 40,118
     at April 30, 2005 and July 31, 2004, respectively     410           401
    Additional paid-in capital                         116,680       101,118
    Unallocated shares of ESOP                          (1,646)       (1,768)
    Accumulated other comprehensive income                 296           240
    Retained earnings                                  164,578       134,785
      Total stockholders' equity                       280,318       234,776

    Total liabilities and stockholders' equity        $619,086      $508,767



                          UNITED NATURAL FOODS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                (In thousands)

                                                         Nine months ended
                                                              April 30,
                                                          2005       2004
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                         $29,793    $22,423
    Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
      Depreciation and amortization                      9,944      8,807
      Change in fair value of financial instruments          -       (704)
      Gains on disposals of property & equipment           (26)       (61)
      Provision for doubtful accounts                    1,378      2,521
    Changes in assets and liabilities, net of
     acquired companies:
      Accounts receivable                              (34,541)   (22,504)
      Inventory                                        (28,322)   (45,345)
      Prepaid expenses and other assets                 (5,157)     1,050
      Notes receivable, trade                             (400)    (1,108)
      Accounts payable                                  25,947     29,344
      Accrued expenses and other current liabilities    (4,131)      (907)
      Financial instruments                                  -     (5,400)
      Tax benefit of stock options                       7,167      3,870
      Net cash provided by (used in) operating
       activities                                        1,652     (8,014)

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                               (41,197)   (18,989)
    Purchases of acquired businesses, net of
     cash acquired                                      (6,219)        (6)
    Proceeds from disposals of property and equipment      248        202
      Net cash used in investing activities            (47,168)   (18,793)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings under note payable                   37,781     18,344
    Proceeds from exercise of stock options              8,403      7,477
    Repayments on long-term debt                        (5,591)    (3,302)
    Principal payments of capital lease obligations       (513)      (759)
    Proceeds from issuance of long-term debt                 -     10,204
      Net cash provided by financing activities         40,080     31,964

    NET (DECREASE) INCREASE IN CASH                     (5,436)     5,157
    Cash and cash equivalents at beginning of period    13,633      3,645
    Cash and cash equivalents at end of period          $8,197     $8,802

    Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                          $4,903     $5,788
      Income taxes, net of refunds                     $14,107     $9,686

SOURCE United Natural Foods, Inc.

Rick Puckett, Chief Financial Officer of United Natural Foods, Inc., +1-860 779-2800 or General Information - Joseph Calabrese, Financial Relations Board, +1-212-445-8434, for United Natural Foods, Inc.