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United Natural Foods Announces Net Sales of $668.5 Million for the Second Quarter of Fiscal 2007

February 20, 2007
           Announces New 237,000 Square Foot Distribution Facility
                       to be Located in Ridgefield, WA

DAYVILLE, Conn., Feb. 20 /PRNewswire-FirstCall/ -- United Natural Foods, Inc. (Nasdaq: UNFI) (the "Company") today reported net sales for the second quarter of fiscal 2007, ended January 27, 2007, of $668.5 million, an increase of approximately $67.5 million, or 11.2%, from the $601.1 million recorded in the second quarter of fiscal 2006.

Operating expenses during the second quarter of fiscal 2007 were negatively impacted by approximately $2.2 million of losses related to the Company's two Auburn, California facilities. In January 2007, the Company incurred a loss of $1.5 million associated with the sale of one of the facilities. In addition, the Company recorded an impairment loss in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, of $0.8 million on its second Auburn, California facility, as a result of the Company's decision to sell the property. Accordingly, the assets associated with the second facility have been reclassified on the balance sheet from property and equipment to other current assets as of January 27, 2007. During the second quarter of fiscal 2007, the Company also incurred $0.4 million in fees related to the early termination of unused leased space at a facility in Minnesota, and recorded a related write-off of $0.3 million in abandoned leasehold improvements.

In the second quarter of fiscal 2007, the Company recorded share-based compensation expense of $1.0 million in accordance with Statement of Financial Accounting Standard ("SFAS") No. 123R, Share-Based Payment, compared to $0.9 million of share-based compensation expense for the second quarter of fiscal 2006, ended January 28, 2006.

The Company reported net income of $10.9 million, or $0.25 per diluted share, for the second quarter of fiscal 2007. After adjusting for the impact of losses attributable to the two Auburn, California facilities and the early termination of the Minnesota facility and the related asset write-off described above, net income for the quarter would have been $12.7 million or $0.30 per diluted share. Net income for the second quarter of fiscal 2006, excluding special items, was $10.8 million, or $0.26 per diluted share. Net income for the second quarter of fiscal 2006, including special items, was $10.6 million, or $0.25 per diluted share.

The following table details the amounts and effect of special items and a reconciliation of net income and per share amounts, excluding special items (non-GAAP basis), to net income and per share amounts, including special items (GAAP basis), for the second quarter of fiscal 2006:

    Quarter Ended January 28, 2006           Pretax               Per diluted
    (in thousands, except per share data)    Income   Net of Tax       share

    Income, excluding special items:         $17,398    $10,787        $0.26

    Special items - (Expense)
    Rocklin, CA facility relocation costs
     (included in operating expenses)           (251)      (156)       (0.00)

    Income, including special items:         $17,147    $10,631        $0.25*

     * Total reflects rounding.

All non-GAAP numbers have been adjusted to exclude special items. A reconciliation of specific adjustments to GAAP results for the quarter ended January 28, 2006 is included in the financial table shown above. A description of the Company's use of non-GAAP information is provided under "Non-GAAP Results" below.

"Fiscal 2007 continues to be a strong year and we are quite pleased with our operating performance and financial results during the second quarter," said Michael Funk, President and Chief Executive Officer. "Sales growth in our supermarket channel remained solid and we expect the super natural channel to realize increased sales growth with the number of new stores expected to open during 2007. I am also pleased to report that the transition during the quarter related to our expanded Whole Foods relationship in the Southern Pacific region of the United States has gone smoothly. We continue to develop operational efficiencies while servicing our customers at a high service level."

New Facility in Ridgefield, Washington

The Company also announced today that it is expanding its operations in the Pacific Northwest of the United States with the construction of a new 237,000 square foot state-of-the-art distribution center in Ridgefield, Washington. The new facility will create approximately 100 jobs upon opening.

The distribution center is scheduled to commence operations in the late summer of 2007 and will serve as a regional distribution hub for customers in Portland, Oregon and other Northwest states. The Company currently has 16 distribution facilities throughout the United States, consisting of an aggregate of 3.3 million square feet of space. The Company has the largest capacity of any distributor in the natural products industry.

Mr. Funk commented, "To accommodate anticipated industry growth and accelerating consumer demand for natural and organic products we are pleased to announce plans to open a new facility in the Pacific Northwest. Supporting our commitment to our customers, the Ridgefield distribution center will improve our distribution capabilities and provide customers with further product diversity and enhanced customer service. The new distribution center will also allow us the opportunity to create new sales opportunities in this region and will provide lower transportation costs to our customers."

Mr. Funk added, "We are grateful for the partnership and support we have received from the City of Ridgefield and look forward to building a long- lasting relationship with the community."

Conference Call

Management will conduct a conference call and audio webcast at 11:00 a.m. EST on February 20, 2007 to review the Company's quarterly results, market trends and future outlook. The conference call dial-in number is (303) 205- 0033. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at or at the Investor Relations section of the Company's website at Please allow extra time prior to the call to visit the site and download the necessary software 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 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. United Natural Foods, Inc. was ranked by Forbes in 2005 as one of the "Best Managed Companies in America," ranked by Fortune in 2006 as one of its "Most Admired Companies," and ranked by Business Ethics as one of its "100 Best Corporate Citizens for 2006." For more information on United Natural Foods, Inc., visit the Company's website at

                           Financial Tables Follow

For more information on United Natural Foods, Inc., visit the Company's website at

"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 Securities and Exchange Commission on December 7, 2006, 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 U.S. generally accepted accounting principles ("GAAP") basis, the Company uses non- GAAP additional measures of operating results, net income 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.
                    (In thousands, except per share data)

                                    Three months ended     Six months ended
                                     January   January     January   January
                                       27,       28,         27,       28,
                                      2007      2006        2007      2006

    Net sales                       $668,545  $601,082  $1,314,978 $1,176,722

    Cost of sales                    544,477   484,677   1,067,339    950,051

                     Gross profit    124,068   116,405     247,639    226,671

    Operating expenses               101,739    96,057     202,018    191,570

    Impairment on assets held for
     sale                                756         -         756          -

    Amortization of intangibles          138       142         289        286

                    Total operating
                     expenses        102,633    96,199     203,063    191,856

                    Operating income  21,435    20,206      44,576     34,815

    Other expense (income):
             Interest expense          3,350     3,195       6,261      5,562
             Interest income            (180)      (73)       (294)      (141)
             Other, net                  399       (63)        371       (123)

                     Total other
                      expense          3,569     3,059       6,338      5,298

                     Income before
                      income taxes    17,866    17,147      38,238     29,517

    Provision for income taxes         6,968     6,516      14,913     11,216

                    Net income       $10,898   $10,631     $23,325    $18,301

    Per share data (basic):

                    Net income         $0.26     $0.26       $0.55      $0.44

    Weighted average basic shares of
     common stock                     42,438    41,406      42,299     41,395

    Per share data (diluted):

                    Net income         $0.25     $0.25       $0.55      $0.43

    Weighted average diluted shares
     of common stock                  42,848    41,952      42,733     42,076

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

                                                     January 27,     July 29,
                                                         2007          2006
    Current assets:
        Cash and cash equivalents                      $17,066       $20,054
        Accounts receivable, net                       162,954       147,686
        Notes receivable, trade, net                     1,290         1,254
        Inventories                                    288,989       257,259
        Prepaid expenses and other current assets       18,546        12,596
        Deferred income taxes                           10,911        10,911
           Total current assets                        499,756       449,760

    Property & equipment, net                          161,476       163,247

    Other assets:
        Goodwill                                        78,044        78,016
        Notes receivable, trade, net                     2,620         2,760
        Intangible assets, net                             187           251
        Other                                           10,340         6,561

           Total assets                               $752,423      $700,595

    Current liabilities:
        Notes payable                                 $123,000      $125,005
        Accounts payable                               116,272       102,146
        Accrued expenses and other current
         liabilities                                    34,375        34,245
        Current portion of long-term debt                5,552         5,433
           Total current liabilities                   279,199       266,829

    Long-term debt, excluding current portion           66,666        59,716
    Deferred income taxes                                8,827         9,693
    Other long-term liabilities                            858           883
           Total liabilities                           355,550       337,121

    Stockholders' equity:
      Preferred stock, $0.01 par value, authorized
       5,000 shares at January 27, 2007 and
       July 29, 2006; none issued and outstanding            -             -
      Common stock, $0.01 par value, authorized
       100,000 shares; 43,013 issued and 42,785
       outstanding shares at January 27, 2007;
       42,477 issued and 42,248 outstanding shares
       at July 29, 2006                                    430           425
      Additional paid-in capital                       161,212       149,840
      Unallocated shares of Employee Stock
       Ownership Plan                                   (1,298)       (1,380)
      Treasury stock                                    (6,092)       (6,092)
      Accumulated other comprehensive (loss) income       (338)        1,047
      Retained earnings                                242,959       219,634
         Total stockholders' equity                    396,873       363,474

    Total liabilities and stockholders' equity        $752,423      $700,595

                          UNITED NATURAL FOODS, INC.
                                (In thousands)

                                                          Six months ended
                                                      January 27, January 28,
                                                          2007         2006
    Net income                                           $23,325     $18,301
    Adjustments to reconcile net income to net cash
      (used in) provided by operating activities:
        Depreciation and amortization                      9,378       7,988
        Loss (gain) on disposals of property &
         equipment                                         1,968         (30)
        Impairment on assets held for sale                   756           -
        Provision for doubtful accounts                      815       1,600
        Share-based compensation                           1,997       3,480
    Changes in assets and liabilities, net of
     acquired companies:
      Accounts receivable                                (16,083)    (28,333)
      Inventory                                          (31,730)    (28,596)
      Prepaid expenses and other assets                  (10,675)      1,970
      Notes receivable, trade                                104        (589)
      Accounts payable                                    11,843      20,571
      Accrued expenses and other current
       liabilities                                        (1,213)      6,510
         Net cash (used in) provided by operating
          activities                                      (9,515)      2,872

    Capital expenditures                                 (14,542)    (11,774)
    Proceeds from disposals of property and
     equipment                                             5,441          43
    Other investing activities                            (1,028)       (575)
         Net cash used in investing activities           (10,129)    (12,306)

    Proceeds from borrowings of long-term debt            10,000           -
    Net (repayments) borrowings under note payable        (2,005)     37,428
    Increase (decrease) in bank overdraft                  2,283     (14,053)
    Proceeds from exercise of stock options                6,663       7,713
    Purchases of treasury stock                                -      (6,092)
    Repayments on long-term debt                          (2,999)     (2,922)
    Tax effect of stock options                            2,718       1,626
    Principal payments of capital lease obligations           (4)       (273)
         Net cash provided by financing activities        16,656      23,427

    AND CASH EQUIVALENTS                                  (2,988)     13,993
    Cash and cash equivalents at beginning of period      20,054      12,615
    Cash and cash equivalents at end of period           $17,066     $26,608

    Supplemental disclosures of cash flow
    Cash paid during the period for:
         Interest, net of amounts capitalized             $6,280      $5,167
         Federal and state income taxes, net of
          refunds                                        $17,313      $8,749

SOURCE United Natural Foods, Inc.

CONTACT: Mark Shamber, Chief Financial Officer of United Natural Foods,
Inc., 1-860-779-2800; or General Information: Joseph Calabrese of Financial
Relations Board, 1-212-827-3772, for United Natural Foods, Inc.
Web site:

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