Welcome to the United Natural Foods first quarter 2010 conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Thursday, December 10, 2009. I would now like to turn the conference over to our host Mr. Scott Eckstein with Financial Relations Board.

By now you should have all received a copy of this morning’s press release. If anyone still needs a copy please contact Joe Calabrese in our New York office at 212-827-3772 and we’ll send you a copy immediately following this morning’s conference call. With us this morning from management is Steve Spinner, President and Chief Executive Officer and Mark Shamber, Chief Financial Officer. We’ll begin this morning with opening comments from management and then we will open the line for questions. As a reminder, this call is also being webcast today and can be accessed over the Internet at www.UNFI.com. Before we begin, as usual we’d like to remind everyone about the cautionary language regarding forward-looking statements contained in the press release. That same language applies to comments made on this morning’s conference call. With that, I’d like to turn the call over to Steve Spinner. Steven L. Spinner I’m quite pleased with our results in the first quarter of our fiscal year 2010. Earnings per share were up 16% over the prior year at $0.36 per share on sales of $885 million up 2.4%. Operating income was 3.1% up 17 basis points from the prior year. During previous quarters we’ve talked about the volatility in sales and the unpredictable nature of our economic environment. Today, we are experiencing positive growth trends with consistency in each week’s sales. Additionally, inflation which was running as high as 6% to 8% a year ago is now at more historic levels with 2.1% during the quarter. This data points to an improving top line and a more stable economic environment. During the last several weeks UNFI sales have been averaging about mid single digits positive versus the prior year. While encouraging, it’s important to remember that we have now lapped the most significant…

(Operator Instructions) Your first question comes from Gregory Badishkanian – Citi. Gregory Badishkanian – Citi: Just two questions, first is with respect to inflation this quarter versus last quarter kind of what were you seeing there, any main categories of deflationary pressure and also the impact to dollar profit? Then also from a fuel perspective, what type of fuel are you assuming in your current guidance? Steven L. Spinner Greg, on inflation I think it was really a matter of a lot of categories moderating. The biggest categories that I had what we would call deflation which was 10% plus reduction in cost was produce and dairy, they’re not particularly material in the overall scheme of all the categories that we sell. I think it’s more a factor of a wide range of products returning to more historical levels of inflation versus deflation in any one or two product categories. Certainly if you look out over the course of the last 10 years you’d find that the historic rate of inflation is 2% to 4%. On the fuel, we don’t provide any disclosure on where we budget fuel. I will tell you and I think we’ve talked about this in prior calls that we do have about 30% of our fuel hedged and we feel very confident with that. The reason we hedge 30% of our fuel is as you know most of our contracts with customers have fuel surcharge language which covers the largest share of increase if we get in to a market where diesel is rapidly accelerating. The 30% hedge covers that differential between how much we pass along and how much we’re exposed to. Gregory Badishkanian – Citi: If I could throw one more question, the improvement that we’ve been seeing lately in terms of sales is that due do you think just primarily because you have easier comparisons and even if it is the case, which categories or is there any type of theme that you’re seeing the improvement with? Steven L. Spinner As much as we’d like to take credit for all the growth, you’re absolutely right we’re comping a year ago that if you recall that’s where the sales really took a deep dive so that’s absolutely true. Most of the growth as Mark talked about earlier is coming in the conventional and super natural channel. Gregory Badishkanian – Citi: Any particular category or just across the board? Steven L. Spinner It’s across the board.

Your next question comes from John Heinbockel – Goldman Sachs. John Heinbockel – Goldman Sachs: Steve I know specialty is a little more economically sensitive, have you seen that bounce back and show stability alongside the organic product? Steven L. Spinner No, I think that the specialty growth is still lagging the organic growth. Interestingly, what we found over the last year is the core organic products really did not have a significant fall off. Where we did see significant fall off was in the periphery, organic pet food, paper products, but the core organic products did not fall off considerably. Specialty did across the board and I think that’s going to take a while to creep back to where it was. So, the answer is specialty has not come back to the degree that it was a year ago. John Heinbockel – Goldman Sachs: But you’ve seen clear signs of the bottom I guess, is that fair? Steven L. Spinner I would say that that is true, yes. John Heinbockel – Goldman Sachs: The new contract wins you talked about, what were the annualized run rate on all of those be, do you have a generalized rate on that? Steven L. Spinner We talked a lot about that and we figured that was going to be a big question point this morning and we’re not in a position to disclose that yet. We’ve signed the contracts with these customers, we’re starting to gear up, we haven’t shipped a case yet. So, what I think we’re going to do is we’re going to wait until we start shipping and that will put us in a position where we can kind of set the high water mark of giving guidance around the total amount of business that has actually come on board. John Heinbockel – Goldman Sachs: Is that primarily specialty or is it a little bit of organic as well? And, I guess all of these are totally new customers? Steven L. Spinner It’s a little bit of both, it’s new customers, it’s extension of existing customers with new concepts under their umbrella and it’s natural, organic and specialty. In some of the cases it’s more specialty than natural and in some it’s the other way around but in all of the cases it’s specialty, natural and organic. John Heinbockel – Goldman Sachs: Finally, the Woodstock costs, how material was that? Mark E. Shamber I’d say its somewhere between six and 10 basis points impact on the margin for the quarter. John Heinbockel – Goldman Sachs: That will not repeat I take it? Mark E. Shamber Correct.

Your next question comes from Meredith Adler – Barclays Capital. Meredith Adler – Barclays Capital: If we could talk a little bit more about the new business, I think last quarter you talked about kind of having a pipeline, or people you were talking to I wouldn’t say a pipeline of new business but what you hoped to accomplish. Can you talk about whether you still have a lot of conversations going on and transactions that might be pending? Steven L. Spinner The contracts that we’ve signed I think is a relatively conservative number of the total customer discussions that we’re having. So, my expectation is that the contract wins are going to continue throughout the next 12 months. Meredith Adler – Barclays Capital: I was just also wondering if you could talk a little bit about some of the things that you’re doing around private label and branding and I think you had particularly had an initiative to service independents better and give them something unique, maybe you could talk about that a little bit? Steven L. Spinner Yes, we have pretty effectively rolled out a brand new blue marble brand called Field Day which is an independent brand and we’ve seen a lot of excitement around that category of products. I don’t remember how many SKUs we have under Field Day but they’re rolling out 20 to 30 at a time and then will continue to roll out over the next couple of years. So, there has been a fair amount of excitement under that brand in the independent channel. On the blue marble side we are trying to determine – well, we know our go forward strategy is going to be to concentrate on a fewer number of core brands that we think are going to lead…

Your next question comes from Analyst for Scott Mushkin – Jefferies & Co. Analyst for Scott Mushkin – Jefferies & Co.: Just a few quick housekeeping items, on interest expense you guys beat us by a decent amount on that interest expense line so I just wanted to see if you had provided any guidance for that for the rest of the year? Mark E. Shamber We historically haven’t but obviously if we continue to pay down debt and interest rates – I think Bernanke was quoted the other day of sort of saving Fed has the ability to keep interest rates at low levels for an extended period of time so as long as rates stay where they are and we continue to generate free cash I would expect that on a sequential basis interest expense would be relatively within the range of $100,000 to $200,000 of where it is each quarter and/or declining. I think it’s one area if you were to look quarter-to-quarter since the end of Q2 we’ve continued to pay it down and then rates being where they are have been to our benefit where our debt on the revolving credit facility is at LIBOR plus 75 so we’ve got an all in rate right now of a little under 1%. Analyst for Scott Mushkin – Jefferies & Co.: Then for the revenue guidance, what level of new customer signings are you assuming in the 2.5 to 5? Mark E. Shamber I guess what I would say is only the customers that we’ve already signed are in the guidance that we have given. Analyst for Scott Mushkin – Jefferies & Co.: We would not have anything perspective in our guidance. Analyst for Scott Mushkin – Jefferies & Co.: On the uptick in volume in the…

Your next question comes from Edward Aaron – RBC Capital Markets. Edward Aaron – RBC Capital Markets: On the specialty business, you had alluded in the recent past about a few smaller customers that you picked up along the way, I wasn’t under the impression that any of those added up to anything hugely material. I know you’re not ready to quantify these new wins but do you think they’re big enough so that they can really get the ball rolling to help secure other businesses, other pieces of business as other customers see you supplying these retailers and recognize that you’re capable of performing in that specialty category? Steven L. Spinner Yes, you’re right on. The reason we had to have the small wins were we were in geographies where we didn’t carry the specialty products in the DC. So, the wins put us in a position where we now had the specialty mix in the west coast primarily so now that we have the product in the facilities and we’ve got a sales force to go out and promote it, it puts us in a much better position to be able to go to a large group of customers to sell the natural, organic and specialty mix of SKUs. Edward Aaron – RBC Capital Markets: On the margins Mark maybe you can elaborate a little bit on some comments you made earlier about seasonality? I think they were down about 30 basis points sequentially at the EBIT line and I know you had a manufacturing issue that cost you six to 10 basis points but if I’m not mistaken in the fourth quarter you also had some startup costs that I think have since gone away so that would seem to explain that the entire sequential decline would…

Your next question comes from Andrew Wolf – BB&T Capital Markets. Andrew Wolf – BB&T Capital Markets: Follow up questions in the sales area, Steve given the mid single digit trend you’re running at this quarter kind of looking at the model and how that shakes out, is it fair to say that versus your sales guidance you’re really looking for very little of the sales growth contribution 2.5 to 5 to come from these new customer wins given they come so late in the year? Steven L. Spinner I’d say that’s accurate. Andrew Wolf – BB&T Capital Markets: As you start to get other contracts as you spoke to, would they potentially start to be in this year’s numbers or more likely in fiscal ’11? Steven L. Spinner You know probably not, I’d say fiscal ’11 at this point. Mark E. Shamber If you think from a stand point we talk about sometimes Andy that we’ll win a contract and it could be anywhere from a 60 to 120 day lead time before you start shipping them so if we were to be awarded something today we might not start shipping until fourth quarter at the earliest so there may be a nominal benefit in fiscal ’10 but more it would be an ’11. Andrew Wolf – BB&T Capital Markets: On the customer segments, sequentially the numbers speak for themselves. The independents had a little positive delta, still negative but a little positive delta and then you’re saying obviously business is better now, can you give us a sense of the independents also continuing to show something of a positive delta versus where they were in the quarter you just reported? Steven L. Spinner Very marginally, not to the degree that we’re seeing it in conventional and super natural…

Your next question comes from Scott Van Winkle – Canaccord Adams. Scott Van Winkle – Canaccord Adams: Mark, I just want to make sure I understand the answer you had on the seasonality of margins. It sounds like the seasonality negative impacted the gross margin and the offset that you normally have with the channel mix and lower operating costs was offset by new initiatives that kind of threw some additional expenses on there. Is that the way to think about it? Mark E. Shamber I guess I would say that I wouldn’t say the seasonality that the impact so much on the gross margin as it did on the operating expenses. The gross margin was really more impacted by lower fuel surcharge, the shift towards the growth that you saw from the supermarkets and super naturals and the decline in the independents and then some of the impact that we had from Woodstock Farms but I was focusing more on the seasonal aspect with respect to our operating expenses because as I said, a lot of [inaudible] companies, once it’s a new budget year folks who have put programs together they want to get those programs started as soon as possible. They start hiring, they start incurring expenses and that’s really what we see in Q1 and Q2 where we don’t necessarily always have that significant sales lift during those two quarters. It tends to be a modest lift in sales in Q1 versus Q4, once in a while it’s flat. That’s how I meant it. I’m not sure if that clarifies it any better. Scott Van Winkle – Canaccord Adams: Steve, on the startup cost with new business is there a time that you say if I’ve got a $3 million investment over a couple of quarters in…

Your next question comes from [Larry Giblin – Quinn Miller]. [Larry Giblin – Quinn Miller]: Given that the new business is approximately the same margin or potentially a little better on the operating margin line, I guess the question is you’re increasing the revenue guidance somewhat higher than where the street is at for the year and the quarter came in better than the street on revenues but your guidance isn’t going up so is that more general conservatism or is it more focused on the very short term impact of the new business? Mark E. Shamber I guess from that stand point really where we’re saying is you’ve got the investment cost that you need in order to take on that new business so while – I’m not sure where the street numbers were so I’ll take you at your statement, if you say that we’re higher from a revenue stand point for the quarter and the year than where the street had us and you’re asking why we didn’t raise the earnings range that we had, we talked about the fact that there will be an investment of up to $1.5 million in the second quarter and the third quarter so from our stand point roughly $700,000 is $0.01 of earnings so while there may be additional sales that we’re picking up there could be anywhere upwards of $0.04 of additional expenses we didn’t have in the plan as well. I think that’s from our standpoint not necessarily being conservative on it but being realistic that until we start to hire folks, start to get the sales volume up and see where all that plays out and when it comes on board, we’re comfortable with what we had issued previously but we didn’t see any reason to change…

Your next question comes from Doug Thomas – JET Investment Research. Doug Thomas – JET Investment Research: Most of my questions have been answered. Steve I was just wondering there doesn’t seem to be a day that goes by that we don’t see – last week it was an article about Salmonella in chicken, this week there’s been a lot of stories about school lunch beef and the issues that the industry is really facing and I’m just wondering from an awareness perspective, you’ve talked about exploring the possibility of getting in to the protein business one way or another and I’m just trying to figure out who you view the value proposition that UNFI brings not just to your existing customers, new conventional customers but what’s the possibility to use this as a platform to expand within for example food service or to use the blue marble brand to get you in to some of these businesses that appear to be ripe for a company like yours? Steven L. Spinner Doug, you hit it right on that head and that is we’re using sophisticated refrigerated multi temperature equipment, we’re using sophisticated multi temperature distribution facilities in both our core UNFI business as well as our Albert’s business to deliver perishables. Every one of our customers for the most part is buying some variety of natural antibiotic free protein and/or specialty cheese. Sometimes if you’re in an urban market these products tend to be easier to procure than if you were in a more rural market. So all of our constituents have said on the supplier side, “Boy it’s natural for us to sell our product through you.” And our customers have said, “Boy, it would be great if we could buy these products through you as opposed to having…

Your next question comes from Ajay Jain – Hapoalim Securities USA, Inc. Ajay Jain – Hapoalim Securities USA, Inc.: Steve, in your prepared comments I know you indicated that supplier pricing is getting back to more normalized levels so I just wanted to ask if that’s also your assessment for the supermarket related business in general? I know you talked a little bit about this before but with all the discounting going on in the conventional supermarkets I’m just wondering if the price competition in the center of the store deflation just at the retail level starting to heat up from a supplier perspective as well? Steven L. Spinner I really can’t intelligently talk to that one. You’re talking more in terms of a more EDLC, everyday low price maybe collapsing of the margin, more discounting going on at the retail level. I don’t have a lot of clarity in to that so I can only comment about what we see from the suppliers’ perspective. Ajay Jain – Hapoalim Securities USA, Inc.: And what are you seeing from the suppliers perspective? Steven L. Spinner Again, much more moderated inflation, back to that 2% to 4% range that we had referenced earlier. A lot of the pricing is pass through so the conventional retailer or the super natural or the super natural or even the independent pricing and discounting is done directly between the manufacturer and the retailer. We’ll serve as a conduit but the actual change in the price occurs between those two. Mark E. Shamber I think Ajay another way maybe from our standpoint is that last year when we saw things in the commodity prices rising, we saw suppliers trying to put through a price increase every quarter or twice a year when historically it had been once a year or every six months. So I think really we’ve seen that to a normal trend where okay there’s an annual price increase or its semiannual but you’re not trying to do it every quarter just to keep up with where your commodity pricing is going. Ajay Jain – Hapoalim Securities USA, Inc.: But within that class of trade it doesn’t seem like you’re seeing irrational pricing activity from a suppliers perspective, is that a fair assessment? Steven L. Spinner That’s fair. Ajay Jain – Hapoalim Securities USA, Inc.: Then just lastly, on the new Texas DC is it fair to assume that since that facility doesn’t become operational until I guess August that there’s no incremental impact on D&A for this year is that directionally correct? Mark E. Shamber If we don’t get a certificate of occupancy until August there will be no depreciation on that building in fiscal ’10.

Your last question comes from Michael Krestell – M Partners, Inc. Michael Krestell – M Partners, Inc.: Just two very quick questions, I’m wondering if you can talk about what the overall utilization or excess capacity and maybe excess capacity is the wrong word but what exists out there in the network right now? Mark E. Shamber We’re still probably in the mid 60s, maybe low 60s of some of the expansions that we’ve done. I wouldn’t call it excess capacity because really it’s an investment for growth in some of this new business that we’re winning. As we’ve said in the past there may be a particular facility that’s operating at 100% where somebody else might be closer to 40% to 50% and that really is a function of the newer facilities that are much larger and have growth that should handle the next 10 years, they’re probably closer to the 50 where some of the mature facilities that will either have an expansion five years from now or from that stand point are closer to 100. So, I’d say we’re probably a little bit lower than we’ve been the last few years but that’s really a function of getting the distribution network built out and position ourselves for not needing to do any new facilities or expansions for a number of years. Michael Krestell – M Partners, Inc.: At what point do you think that would be? Are we talking is it a three or a five year window before you need to take a look at it again? I know there is a lot of growth implied but – Mark E. Shamber If you can tell me what the demand is and where it will be, I can give you that answer. It’s a function really of…

At this time I will turn the conference back over to Mr. Spinner for any closing remarks. Steven L. Spinner Thanks for joining us this morning. UNFI is extremely proud of its position as a company which will deliver long term return to our shareholders while continuing its dedication to sustainability, the environment, support of the organic industry and philanthropy. Thank you again for joining us this morning and have a great holiday.

Ladies and gentlemen that does conclude your conference for today. If you would like to listen to a reply of today’s conference, please dial 1-800-406-7325 or 303-590-3030 with the access code of 4183951#. That does conclude your call. Thank you for participating. You may now disconnect.