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United Natural Foods Announces First Quarter Fiscal 2010 Results

December 10, 2009
$0.36 Diluted EPS For Q1 2010, A 16% Increase Over Diluted EPS For Q1 2009Highlights- Achieved net income of $15.5 million for the first quarter of fiscal 2010- Net sales increased by 2.4% to $884.8 million

"Fiscal 2010 began with another quarter of strong year over year improvement. During the quarter, we began to see some signs of improvement, with reduced weekly sales volatility, supplier price increases returning to historical levels and improving trends in sales growth towards the end of the quarter," said Steven Spinner, President and Chief Executive Officer.

Gross margin was 18.6% for the first quarter of fiscal 2010, which represents an 80 basis point decline from the gross margin of 19.4% for the first quarter of fiscal 2009. The lower gross margin compared to the prior year was largely due to a combination of lower fuel surcharge revenues resulting from the lower average diesel prices compared to the quarter ended November 1, 2008, and a change in the mix of sales by channel.

Operating expenses as a percentage of net sales decreased to 15.5% for the first quarter of fiscal 2010, a decrease of approximately 1.0% compared to the quarter ended November 1, 2008. Operating expenses decreased by $5.1 million, or 3.6%, to $137.4 million, compared to the quarter ended November 1, 2008, which had operating expenses of $142.5 million. Operating income as a percentage of net sales increased to 3.1% for the first quarter of fiscal 2010 from 2.9% for the first quarter of fiscal 2009.

"During the first quarter, we successfully secured new conventional supermarket business as a direct result of our strategic expansion into specialty foods and products. We expect that this business will begin to ship during the first calendar quarter of 2010. Additionally, we continue to gain momentum with our combined natural, organic and specialty product offerings, and are poised to open our newly announced Lancaster, Texas distribution facility in August," added Mr. Spinner.

Today, the Company also provided revenue guidance for fiscal 2010, ending July 31, 2010. For fiscal 2010, the Company expects revenues to increase by approximately 2.5% to 5.0% over fiscal 2009 levels, to a range of $3.54 billion to $3.63 billion.

The Company's guidance is based on a number of assumptions, which are subject to change and many of which are outside the Company's control. If any of these assumptions vary, the Company's guidance may change. There can be no assurance that the Company will achieve these results.

Conference Call & Webcast

The Company's first quarter 2010 conference call and audio webcast will be held at 10:00 a.m. EST on December 10, 2009. The audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at or at the Investors section of the Company's website at The online archive of the webcast will be available on the Company's website for 30 days.

About United Natural Foods

United Natural Foods, Inc. ( carries and distributes more than 60,000 products to more than 17,000 customer locations 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, 2007 and 2009 as one of its "Most Admired Companies," ranked by Business Ethics as one of its "100 Best Corporate Citizens for 2006" and winner of the Supermarket News 2008 Sustainability Excellence Award.

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 uncertaintiesand are based on current expectations and management's estimates; actual results may differ materially. The risks and uncertainties which could impact these statements are described in the Company's filings under the Securities Exchange Act of 1934, as amended, including its annual report on Form 10-K filed with the Securities and Exchange Commission on September 30, 2009, and include, but are not limited to, the Company's dependence on principal customers; the Company's sensitivity to general economic conditions, including the current economic environment, changes in disposable income levels and consumer spending trends; increased fuel costs; the Company's sensitivity to inflationary pressures; the relatively low margins and economic sensitivity of the Company's business; the ability to identify and successfully complete acquisitions of other foodservice distributors; and management's allocation of capital and the timing of capital expenditures. 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 are based on a number of assumptions, many of which are outside the Company's control and 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.

                   UNITED NATURAL FOODS, INC.
             (In thousands, except per share data)

                                                  Three months ended
                                              October 31,   November 1,
                                              -----------   -----------
                                                    2009          2008
                                                    ----          ----

Net sales                                       $884,768      $864,236
Cost of sales                                    720,167       696,648
                                                 -------       -------
      Gross profit                               164,601       167,588
                                                 -------       -------
Operating expenses                               137,409       142,543
                                                 -------       -------
      Total operating expenses                   137,409       142,543
                                                 -------       -------
      Operating income                            27,192        25,045
                                                  ------        ------
Other expense (income):
  Interest expense                                 1,381         3,410
  Interest income                                    (69)         (252)
  Other, net                                          (8)          (48)
                                                     ---           ---
      Total other expense                          1,304         3,110
                                                   -----         -----
      Income before income taxes                  25,888        21,935

Provision for income taxes                        10,355         8,686
                                                  ------         -----
      Net income                                 $15,533       $13,249
                                                 =======       =======
Basic per share data:
      Net income                                   $0.36         $0.31
                                                   =====         =====
      Weighted average basic shares
       of common stock                            42,982        42,764
                                                  ======        ======
Diluted per share data:
      Net income                                   $0.36         $0.31
                                                   =====         =====
      Weighted average diluted shares
       of common stock                            43,211        42,919
                                                  ======        ======

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

                                              October 31,   August 1,
                                              -----------   ---------
                                                      2009         2009
                                                      ----         ----
Current assets:
    Cash and cash equivalents                      $14,854      $10,269
    Accounts receivable, net                       198,052      179,455
    Notes receivable, trade, net                     1,872        1,799
    Inventories                                    412,600      366,611
    Prepaid expenses and other current assets       11,647       16,423
    Deferred income taxes                           18,074       18,074
                                                    ------       ------
       Total current assets                        657,099      592,631

Property and equipment, net                        245,797      242,051

Other assets:
    Goodwill                                       164,333      164,333
    Intangible assets, net                          37,825       38,358
    Notes receivable, trade, net                     2,377        2,176
    Other                                           18,510       19,001
                                                    ------       ------
Total assets                                    $1,125,941   $1,058,550
                                                ==========   ==========

Current liabilities:
    Accounts payable                              $205,756     $155,211
    Notes payable                                  185,000      200,000
    Accrued expenses and other current
     liabilities                                    78,886       63,347
    Current portion of long-term debt                5,023        5,020
                                                     -----        -----
       Total current liabilities                   474,665      423,578

Long-term debt, excluding current portion           52,601       53,858
Deferred income taxes                               12,261       12,297
Other long-term liabilities                         24,792       24,345
                                                    ------       ------
       Total liabilities                           564,319      514,078
                                                   -------      -------

Stockholders' equity:
Preferred stock, $0.01 par value, authorized
 5,000 shares; none issued and outstanding
                                                         -            -
Common stock, $0.01 par value, authorized
 100,000 shares; 43,303 issued and 43,074
 outstanding shares at October 31, 2009;
 43,237 issued and 43,008 outstanding shares
 at August 1, 2009

                                                       433          432
  Additional paid-in capital                       176,760      175,182
  Treasury stock                                    (6,092)      (6,092)
  Unallocated shares of Employee Stock
   Ownership Plan                                     (836)        (877)
  Accumulated other comprehensive loss              (1,626)      (1,623)
  Retained earnings                                392,983      377,450
                                                   -------      -------
     Total stockholders' equity                    561,622      544,472
                                                   -------      -------

Total liabilities and stockholders' equity      $1,125,941   $1,058,550
                                                ==========   ==========

                        UNITED NATURAL FOODS, INC.
                              (In thousands)

                                                 Three months ended
                                            October 31,   November 1,
                                            -----------   -----------
                                                    2009          2008
                                                    ----          ----
Net income                                       $15,533       $13,249
Adjustments to reconcile net income to
 net cash provided by
  (used in) operating activities:
    Depreciation and amortization                  6,650         6,369
    Share-based compensation                       2,120         1,686
    Provision for doubtful accounts                  496           842
    (Gain) loss on disposals of property
     and equipment                                   (13)           53
Changes in assets and liabilities, net
 of acquisitions:
    Accounts receivable                          (19,066)      (13,350)
    Inventories                                  (45,989)      (73,646)
    Prepaid expenses and other assets              5,144         3,536
    Notes receivable, trade                         (301)          228
    Accounts payable                              36,962        20,527
    Accrued expenses and other current
     liabilities                                  15,947         9,307
                                                  ------         -----
      Net cash provided by (used in)
       operating activities                       17,483       (31,199)
                                                  ------       -------

Capital expenditures                              (9,700)      (11,415)
Proceeds from disposals of property
 and equipment                                        21             -
Purchases of acquired businesses, net
 of cash acquired                                      -          (190)
                                                     ---          ----
      Net cash used in investing activities       (9,679)      (11,605)
                                                  ------       -------

Net (repayments) borrowings under note
 payable                                         (15,000)       11,148
Increase in bank overdraft                        13,583        16,989
Repayments of long-term debt                      (1,254)         (818)
Capitalized debt issuance costs                       (7)            -
Proceeds from exercise of stock
 options                                              14           565
Payment of employee restricted stock
 tax withholdings                                   (558)            -
Tax benefits from equity awards                        3           133
Payments on life insurance policy
 loans                                                 -        (3,072)
                                                     ---        ------
      Net cash (used in) provided by
       financing activities                       (3,219)       24,945
                                                  ------        ------

 CASH EQUIVALENTS                                  4,585       (17,859)
Cash and cash equivalents at beginning
 of period                                        10,269        25,333
                                                  ------        ------
Cash and cash equivalents at end of
 period                                          $14,854        $7,474
                                                 =======        ======

Supplemental disclosures of cash flow
Cash paid during the period for:
     Interest, net of amounts capitalized         $1,200        $3,271
                                                  ======        ======
     Federal and state income taxes, net of
      refunds                                     $1,525        $1,169
                                                  ======        ======

SOURCE United Natural Foods, Inc.
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