United Natural Foods Reports Record Sales And Earnings Results for the Fourth Quarter and Year Ended July 31, 2005

August 31, 2005
- Quarterly net sales increased 22% from the fourth quarter of fiscal 2004 to $543.0 million and quarterly net income per diluted share increased 21% to $0.28, excluding special items, and increased 22% to $0.28 per diluted share, including special items.
- Annual net sales increased 23% from the full fiscal year 2004 to $2.06 billion and annual net income per diluted share increased 27% from fiscal 2004 to $1.00, excluding special items, and increased 28% to $1.00 per diluted share, including special items.
- Comparable wholesale sales growth rates were 19.3% for the quarter and 15.3% for the full year.

DAYVILLE, Conn., Aug 31, 2005 /PRNewswire-FirstCall via COMTEX/ -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported net income of $11.6 million for the fourth quarter of fiscal 2005, ended July 31, 2005, or $0.28 per share on a diluted basis, excluding special items. Net income for the fourth quarter of fiscal 2005, including special items, was $11.8 million, or $0.28 per share on a diluted basis.

Net sales for the fourth quarter of fiscal 2005 were $543.0 million, an increase of $96.6 million, or 21.6%, from the $446.4 million recorded in the fourth quarter of fiscal 2004. On a comparable growth analysis, wholesale revenue growth was 19.3% for the current quarter compared to last year.

Net income for the fourth quarter of fiscal 2005, excluding the effect of special items, increased 21.6% to $11.6 million, or $0.28 per diluted share, compared to $9.6 million, or $0.23 per diluted share, excluding special items, for the quarter ended July 31, 2004. Net income for the fourth quarter of fiscal 2005, including the effect of special items, increased 23.2% to $11.8 million, or $0.28 per diluted share, compared to $9.6 million, or $0.23 per diluted share, for the quarter ended July 31, 2004. The special items for the fourth quarter of fiscal 2005 included certain costs associated with the opening of the Company's new Greenwood, Indiana facility and the closing of its Hawaii facility. In addition, the fourth quarter included other income related to the early termination of the interest rate swap agreement that was originally entered into in May 2003. There were no special items related to the fourth quarter of fiscal 2004.

During the fourth quarter of fiscal 2005, Select Nutrition Distributors, which was acquired in December 2004, and higher fuel costs both had a negative impact on diluted earnings per share. In addition, the Company has experienced higher than expected external costs associated with its compliance efforts under Section 404 of Sarbanes-Oxley.

The following table details 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) for the quarter ended July 31 2005:

Quarter Ended July 31, 2005
                                            Pretax                 Per diluted
    (in thousands, except per share data)   Income    Net of Tax      share

    Income, excluding special items:       $18,116      $11,633        $0.28

    Special items - Income/(Expense):
     Related to the closing of the Hawaii
      facility (included in operating
      expenses)                                (67)         (42)       (0.00)

     Related to the opening of the
      Greenwood, Indiana facility (included
      in operating expenses)                  (254)        (158)       (0.00)

     Termination of interest rate swap
      agreement (included in other income,
      net)                                     557          346         0.01

    Income, including special items:       $18,352      $11,779        $0.28*

    * Total reflects rounding

All Non-GAAP numbers have been adjusted to exclude special charges. A description of the Company's use of Non-GAAP information is provided under "Non-GAAP Results" below.

Record Year End Results

Net income, excluding special items, for the year ended July 31, 2005 increased $9.2 million, or 28.3%, to $41.7 million, or $1.00 per diluted share, from $32.5 million, or $0.79 per diluted share, for the year ended July 31, 2004. Net income, including special items, was $41.6 million, or $1.00 per diluted share, compared to $32.0 million, or $0.78 per diluted share, for the year ended July 31, 2004.

Net sales for the year ended July 31, 2005 were $2.06 billion, an increase of 23.3%, or $389.6 million, over the $1.67 billion recorded in the year ended July 31, 2004. On a comparable growth analysis, wholesale division's revenue growth was 15.3% compared to last year.

Special items for fiscal 2005 included certain costs associated with closing the Mounds View, Minnesota and Hawaii facilities, and certain costs associated with opening the new Greenwood, Indiana facility. In addition, other income related to the early termination of the interest rate swap agreement, which was originally entered into in May 2003, was recorded in the fourth quarter. Special items for the fiscal year ended July 31, 2004 included 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 as well as start-up and transition costs of the Wild Oats Markets, Inc. primary distributorship.

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) for the years ended July 31, 2005 and 2004:

Year Ended July 31, 2005
                                            Pretax                 Per diluted
    (in thousands, except per share data)   Income     Net of Tax      share

    Income, excluding special items:       $67,284       $41,716        $1.00

    Special items - Income (Expense):
     Related to the closing of the
      Mounds View, Minnesota facility
      (included in operating expenses)        (456)         (283)       (0.01)

     Related to the closing of the
      Hawaii facility (included in
      operating expenses)                      (67)          (42)       (0.00)

     Related to the opening of the
      Greenwood, Indiana facility
      (included in operating expenses)        (266)         (165)       (0.00)

     Termination of interest rate swap
      agreement (included in other income,
      net)                                     557           346         0.01

    Income, including special items:       $67,052       $41,572        $1.00



    Year Ended July 31, 2004
                                            Pretax                 Per diluted
    (in thousands, except per share data)   Income     Net of Tax      share

    Income, excluding special items:       $53,293       $32,509        $0.79

    Special items - Income (Expense):
     Wild Oats Markets, Inc. primary
      distributorship transition related
      costs (included in operating
      expenses)                             (1,561)         (952)       (0.02)

     Interest rate swap and related
      option agreements (change in fair
      value of financial instruments)          704           429         0.01

    Income, including special items:       $52,436       $31,986        $0.78

All non-GAAP numbers have been adjusted to exclude special charges. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below.

Comments from Management

"I am very pleased with our Company's financial and operating performance in fiscal 2005," commented Steven Townsend, Chairman and Chief Executive Officer. "These results reflect the success of our sales and marketing strategies which enabled us to achieve solid growth across our three primary distribution channels. We remain focused on serving a growing 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 57 basis point improvement in our operating expenses, in spite of the higher fuel costs and Sarbanes-Oxley compliance costs that have been experienced. Overall, we realized solid increases in net sales, net income and earnings per share, which further indicates that our operating strategies are on target. We were also able to strengthen our financial position and solidify our balance sheet. At the same time, we continued to strengthen our industry presence by entering new channels of business and fostering several new business relationships."

Mr. Townsend added, "As we look ahead, we are excited about our Company's prospects for fiscal 2006 and beyond. Our efforts remain focused on helping our customers be more successful in their marketplace while maintaining our position as America's premier certified organic distributor. To ensure that United Natural Foods is well positioned to capitalize on favorable growth opportunities in the natural and organic foods industry, we will continue to invest in our people, facilities, equipment and new technologies."

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. EDT on August 31, 2005 to review the Company's quarterly and annual 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.earnings.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 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 June 9, 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 generally accepted accounting principles ("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.
                CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                    (In thousands, except per share data)

                                   Quarters ended            Years ended
                                      July 31,                 July 31,
                                 2005         2004         2005        2004

    Net sales                  $542,981     $446,422   $2,059,568  $1,669,952

    Cost of sales               437,652      358,500    1,664,523   1,339,496

          Gross profit          105,329       87,922      395,045     330,456

    Operating expenses           85,857       70,960      321,685     270,666

    Restructuring charge              -            -          170           -

    Amortization of
     intangibles                    169          164          660       1,306

          Total operating
           expenses              86,026       71,124      322,515     271,972

          Operating income       19,303       16,798       72,530      58,484

    Other expense (income):
       Interest expense           1,682        1,275        6,568       7,265

       Change in fair value of
        financial instruments         -            -            -        (704)

       Other income, net           (731)        (154)      (1,090)       (513)

          Total other expense       951        1,121        5,478       6,048

          Income before income
           taxes                 18,352       15,677       67,052      52,436

    Income taxes                  6,573        6,114       25,480      20,450

          Net income            $11,779       $9,563      $41,572     $31,986

    Per share data (basic):

          Net income              $0.29        $0.24        $1.02       $0.81

    Weighted average basic
     shares of common stock      41,139       39,993       40,639      39,471

    Per share data (diluted):

          Net income              $0.28        $0.23        $1.00       $0.78

    Weighted average diluted
     shares of common stock      41,951       41,623       41,607      41,025


                          UNITED NATURAL FOODS, INC.
                   CONSOLIDATED BALANCE SHEETS (Unaudited)
                    (In thousands, except per share data)

                                                      July 31,       July 31,
                                                        2005           2004
    ASSETS
    Current assets:
      Cash                                             $12,615        $13,633
      Accounts receivable, net                         136,472        106,178
      Notes receivable, trade, net                         877            772
      Inventories                                      235,700        196,171
      Prepaid expenses and other current assets          9,811          7,007
      Deferred income taxes                              7,419          7,610
       Total current assets                            402,894        331,371

    Property & equipment, net                          167,909        114,140

    Other assets:
      Goodwill                                          73,808         57,242
      Notes receivable, trade, net                       1,802          1,601
      Intangible assets, net                               307            154
      Other                                              4,538          4,259

       Total assets                                   $651,258       $508,767

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Notes payable - line of credit                  $123,574       $107,004
      Accounts payable                                 119,177         80,875
      Accrued expenses and other current liabilities    34,915         29,501
      Current portion of long-term debt                  5,843          4,766
       Total current liabilities                       283,509        222,146

    Long-term debt, excluding current portion           64,852         43,978
    Deferred income taxes                                6,904          7,730
    Other long-term liabilities                            474            137
       Total liabilities                               355,739        273,991

    Commitments and contingencies

    Stockholders' equity:
     Preferred stock, $0.01 par value, authorized
      5,000 shares; none issued and outstanding              -              -
     Common stock, $0.01 par value, authorized
      50,000 shares; issued and outstanding 41,287
      and 40,118 at July 31, 2005 and 2004,
      respectively                                         413            401
     Additional paid-in capital                        120,354        101,118
     Unallocated shares of Employee Stock Ownership
      Plan                                              (1,605)        (1,768)
     Accumulated other comprehensive income                  -            240
     Retained earnings                                 176,357        134,785
     Total stockholders' equity                        295,519        234,776

    Total liabilities and stockholders' equity        $651,258       $508,767


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

                                                           Years ended
                                                            July 31,
                                                       2005           2004
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                       $41,572        $31,986
    Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
      Depreciation and amortization                   13,573         11,660
      Change in fair value of financial instruments        -           (704)
      Gains on disposals of property & equipment         (29)           (95)
      Deferred income taxes                            1,763          3,724
      Provision for doubtful accounts                  2,471          3,586
      Stock-based compensation                           162              -
    Changes in assets and liabilities, net of
     acquired companies:
      Accounts receivable                            (27,437)       (19,653)
      Inventory                                      (34,645)       (37,801)
      Prepaid expenses and other assets               (3,291)          (913)
      Notes receivable, trade                           (306)          (527)
      Accounts payable                                32,219         13,688
      Accrued expenses and other current liabilities   4,199          3,202
      Financial instruments                                -         (5,400)
      Tax effect of stock options                      8,095          6,213
      Net cash provided by operating activities       38,346          8,966

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                             (65,951)       (23,851)
    Purchases of acquired businesses, net of cash
     acquired                                        (16,615)            (6)
    Proceeds from disposals of property and
     equipment                                           242            244
      Net cash used in investing activities          (82,324)       (23,613)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt, net     30,288         10,204
    Proceeds from exercise of stock options           10,991          9,043
    Net borrowings under note payable                 10,850         10,834
    Repayments on long-term debt                      (8,438)        (4,522)
    Principal payments of capital lease obligations     (731)          (924)
      Net cash provided by financing activities       42,960         24,635

    NET (DECREASE) INCREASE IN CASH                   (1,018)         9,988
    Cash at beginning of period                       13,633          3,645
    Cash at end of period                            $12,615        $13,633

    Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                        $7,006         $7,074
      Income taxes, net of refunds                   $16,609         $9,851

SOURCE United Natural Foods, Inc.

Rick Puckett, Chief Financial Officer for United Natural Foods, Inc., +1-860-779-2800; or General Information - Joseph Calabrese of Financial Relations Board for United Natural Foods, Inc., +1-212-827-3772