United Natural Foods (UNFI) 8-K Unfi Reports Second Quarter Fiscal 2010 Diluted Earnings Per Share of $0.36

Exhibit 99.1

UNFI REPORTS SECOND QUARTER FISCAL 2010 DILUTED EARNINGS PER SHARE OF $0.36

AN INCREASE OF 13.9% OVER THE PRIOR YEAR PERIOD

Second Quarter 2010 Highlights

· Net sales increased 6.0% to $898 million over net sales for the second quarter of fiscal 2009

· Net income increased 15% to $15.7 million versus prior year comparable quarter

First Half Fiscal 2010 Highlights

· Diluted EPS increased 14.3% to $0.72 compared with $0.63 in comparable fiscal 2009 period

· Net sales increased 4.2% to $1.78 billion

· Net Income increased 16.1% versus prior year to $31.2 million

Providence, Rhode Island – March 2, 2010 -- United Natural Foods, Inc. (Nasdaq: UNFI) today reported that net income for the second quarter of fiscal 2010 ended January 30, 2010 increased $2.1 million, or 15.0%, to $15.7 million, or $0.36 per diluted share, from $13.6 million, or $0.32 per diluted share, for the second quarter of fiscal 2009.  Net sales for the second quarter of fiscal 2010 were $898.2 million, an increase of 6.0%, or $50.6 million, from net sales of $847.6 million recorded in the second quarter of fiscal 2009.

“The second quarter of fiscal year 2010 marks another period of solid revenues and profitability for UNFI,” said Steven Spinner, President and Chief Executive Officer.  “Improving sales trends have provided us with a solid level of top-line growth as we continue to work to gain market share and incremental business.  UNFI has been awarded approximately $100 million in annual new business during the last six months, which is expected to phase in throughout fiscal 2010.  As we begin the second half of fiscal 2010, I look forward to continued revenue growth throughout our company.”

Gross margin was 18.5% for the second quarter of fiscal 2010, which represents a 0.6% decline from the gross margin of 19.1% for the second quarter of fiscal 2009. The lower gross margin compared to the prior year’s comparable period was largely due to a combination of lower fuel surcharge revenues, a shift in customer mix and moderated inflation.

Operating expenses as a percentage of net sales decreased by 0.6% during the second quarter of fiscal 2010 when compared to the second quarter of 2009 to 15.5% of net sales, or $139.0 million versus 16.1% in the prior year.  Operating expenses were positively impacted by lower fuel costs and the continued implementation of expense control programs across all UNFI divisions.  The Company recorded $0.7 million in expenses during the quarter related to severance for a previously announced separation agreement and start-up costs associated with on-boarding of new customers.

 

First Half 2010 Summary

Sales for the first half of 2010 were $1.78 billion, a 4.2% increase over the prior fiscal year comparable period.  Diluted EPS was $0.72 per share, a 14.3% increase over prior year.  At 15.5% of net sales, operating expenses were 78 basis points lower than prior year.  Gross margin was 68 basis points less than prior year, at 18.6% of net sales for the first six months of fiscal 2010.

“UNFI will continue to enhance its national leadership position in the natural, organic and specialty foods channel,” said Mr. Spinner.  “Our strategy to increase market share, drive operational excellence, operate as one company and further our sustainability and philanthropic causes will serve as the primary vehicle for success over the long term.”

2010 Second Quarter Conference Call Webcast

The Company’s second quarter fiscal 2010 conference call and audio webcast will be held at 10:00 a.m. EST on March 2, 2010. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the Internet at www.earnings.com or at the Investors section of the Company’s website at www.unfi.com.   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. (www.unfi.com) 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," winner of the Supermarket News 2008 Sustainability Excellence Award, and recognized by the Nutrition Business Journal for its 2009 Environment and Sustainability Award.

Financial Tables Follow

For more information on United Natural Foods, Inc., visit the Company’s website at www.unfi.com.

AT THE COMPANY:	FINANCIAL RELATIONS BOARD
Mark Shamber	Joseph Calabrese
Chief Financial Officer	General Information
(401) 528-8634	(212) 827-3772

“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 and are based on current expectations and management 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 its quarterly report on Form 10-Q filed on December 10, 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.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)

	Three months ended						Six months ended
	January 30, 2010			January 31, 2009			January 30, 2010			January 31, 2009
Net sales	$	898,217		$	847,635		$	1,782,985		$	1,711,871
Cost of sales		731,611			685,570			1,451,778			1,382,217
Gross profit		166,606			162,065			331,207			329,654
Operating expenses		139,001			136,212			276,411			278,755
Total operating expenses		139,001			136,212			276,411			278,755
Operating income		27,605			25,853			54,796			50,899
Other expense (income):
Interest expense		1,557			3,200			2,938			6,611
Interest income		(41	)		(92	)		(110	)		(343	)
Other, net		(10	)		196			(19	)		147
Total other expense		1,506			3,304			2,809			6,415
Income before income taxes		26,099			22,549			51,987			44,484
Provision for income taxes		10,439			8,929			20,795			17,616
Net income	$	15,660		$	13,620		$	31,192		$	26,868
Basic per share data:
Net income	$	0.36		$	0.32		$	0.73		$	0.63
Weighted average basic shares         of common stock		43,024			42,821			43,003			42,803
Diluted per share data:
Net income	$	0.36		$	0.32		$	0.72		$	0.63
Weighted average diluted shares         of common stock		43,315			42,910			43,266			42,931

UNITED NATURAL FOODS, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except per share data)

	January 30, 2010			August 1, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	8,046		$	10,269
Accounts receivable, net		198,166			179,455
Notes receivable, trade, net		3,066			1,799
Inventories		393,596			366,611
Prepaid expenses and other current assets		13,800			16,423
Deferred income taxes		18,074			18,074
Total current assets		634,748			592,631
Property and equipment, net		245,800			242,051
Other assets:
Goodwill		164,333			164,333
Notes receivable, trade, net		741			2,176
Intangible assets, net		37,882			38,358
Other		18,344			19,001
Total assets	$	1,101,848		$	1,058,550
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	185,775		$	200,000
Accounts payable		172,323			155,211
Accrued expenses and other current liabilities		69,119			63,347
Current portion of long-term debt		5,026			5,020
Total current liabilities		432,243			423,578
Long-term debt, excluding current portion		51,344			53,858
Deferred income taxes		12,325			12,297
Other long-term liabilities		25,366			24,345
Total liabilities		521,278			514,078
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5,000 shares at January 30, 2010 and August 1, 2009; none issued and outstanding		-			-
Common stock, $0.01 par value, authorized 100,000 shares; 43,421 issued and 43,192 outstanding shares at January 30, 2010; 43,237 issued and 43,008 outstanding shares at August 1, 2009		434			432
Additional paid-in capital		179,979			175,182
Unallocated shares of Employee Stock Ownership Plan		(795	)		(877	)
Treasury stock		(6,092	)		(6,092	)
Accumulated other comprehensive loss		(1,598	)		(1,623	)
Retained earnings		408,642			377,450
Total stockholders’ equity		580,570			544,472
Total liabilities and stockholders’ equity	$	1,101,848		$	1,058,550

UNITED NATURAL FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Six months ended
	January 30, 2010			January 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	31,192		$	26,868
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		13,356			13,288
Share-based compensation		3,918			3,312
Provision for doubtful accounts		515			1,776
Excess tax benefits from share-based payment arrangements		(301	)		(133	)
(Gain) loss on disposals of property and equipment		(13	)		68
Changes in assets and liabilities, net of acquired companies:
Accounts receivable		(19,496	)		(15,102	)
Inventories		(26,985	)		(9,666	)
Prepaid expenses and other assets		2,748			(3,392	)
Notes receivable, trade		438			113
Accounts payable		13,621			(8,945	)
Accrued expenses and other current liabilities		7,147			8,370
Net cash provided by operating activities		26,140			16,557
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(15,822	)		(17,012	)
Purchases of acquired businesses, net of cash acquired		(194	)		(4,301	)
Proceeds from disposals of property and equipment		21			-
Net cash used in investing activities		(15,995	)		(21,313	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under note payable		(14,225	)		8,950
Increase (decrease) in bank overdraft		3,491			(27	)
Repayments of long-term debt		(2,508	)		(2,075	)
Proceeds from exercise of stock options		1,803			566
Payment of employee restricted stock tax withholdings		(1,223	)		(416	)
Excess tax benefits from share-based payment arrangements		301			133
Capitalized debt issuance costs		(7	)		-
Payments on life insurance policy loans		-			(3,072	)
Net cash (used in) provided by financing activities		(12,368	)		4,059
NET DECREASE IN CASH AND CASH EQUIVALENTS		(2,223	)		(697	)
Cash and cash equivalents at beginning of period		10,269			25,333
Cash and cash equivalents at end of period	$	8,046		$	24,636
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	2,437		$	6,216
Federal and state income taxes, net of refunds	$	15,554		$	17,621