(LOS ANGELES) — Unified Western Grocers, Inc., the largest retailer-owned wholesale grocery distributor in the Western United States, announced significantly improved results for its continuing operations for the year ended September 28, 2002 ("Fiscal 2002").

The Los Angeles-based cooperative's continuing operations achieved earnings before Patronage Dividends of $20.9 million in Fiscal 2002, a 56% improvement over the prior year. After deducting for patronage dividends to be distributed to the Company's membership, Unified had pre-tax earnings of $4.2 million versus a loss of $1.5 million in the prior year.

The Company attributed its improved performance in 2002 to an increase in net sales ($22 million improvement over the prior year), improvements in productivity and throughput in each of the Company's five major distribution centers, a company-wide reduction in expenses, a workforce reduction, improvements in the profitability of its insurance and specialty grocery subsidiaries, continued strength in its financing subsidiary, and improved working capital levels.

As a result of its improved performance, Unified generated $16.7 million in patronage dividends for members of the cooperative, up from $14.9 million in 2001.

The Company's retail operations also experienced improvement in Fiscal 2002 over the prior year, but Management and the Board of Directors decided in September 2002 to exit the retail business. The Company said that divesting its retail business would provide it with greater financial flexibility, including the ability to invest in the profitable wholesale distribution business and reduce its level of debt. The Fiscal 2002 results also reflect the decision to exit retail operations and contain non-cash write-offs to treat those operations as discontinued. Concurrent with the decision to exit retail, the Company implemented quasi-reorganization accounting that provides for adjusting its assets and liabilities to fair value, including the write-down of retail assets to fair value. The accumulated deficit in retained earnings is then eliminated against paid-in-capital. After share issuance from the Company's patronage dividend distribution, the Company ended the year with $87 million of shareholders' equity compared to $88.5 million at the previous year-end.

"Our results for 2002 reflect some very significant operational improvements in our wholesale business," said Alfred A. Plamann, president and chief executive officer of Unified Western Grocers. "Our core wholesale business remained strong and robust in a very difficult economic environment. We were effective in our efforts to pare expenses without sacrificing service levels and our subsidiaries had improvements over the prior year. We are moving into the new year with a clean slate and are looking forward to the challenges and opportunities that lie ahead."

Plamann also gave credit to Unified's Board of Directors for addressing some important issues during the past year, including the decision to exit retail operations and a program designed to enhance the cooperative's equity capital base for many years to come.

"Our Board recognizes that a financially strong Unified Western Grocers is critical to the long-term success of independent retail grocers in the Western U.S.," said Plamann. "I believe we have a solid platform from which to launch programs that will assure our success in the future."

Unified Western Grocers, Inc. is a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the Western United States. Unified and its subsidiaries, which generated approximately $2.8 billion in sales during Fiscal 2002, offer independent retailers all the resources they need to compete in the supermarket industry.

An online version of Unified's Form 10-K, filed with the Securities and Exchange Commission, is available at www.sec.gov/edgar.shmtl.


Safe Harbor Statement
This press release contains forward-looking statements about the future performance of Unified Western Grocers, Inc. based on Management's assumptions and beliefs in light of information currently available to it. There are a variety of factors that could cause actual and future results to differ materially from those anticipated by the statements made above. These factors are outlined in the Company's Form 10-K filed with the Securities and Exchange Commission and other interim reports. Furthermore, Unified undertakes no obligation to update, amend or clarify forward-looking statements whether as a result of new information, future events, or otherwise.


Unified Western Grocers, Inc.

(Amounts in thousands)

Fiscal Year Ended

                                        September 29, 2001         September 28, 2002


Net Sales (from continuing
operations)                               $2,770,203                     $2,792,782


Operating Income                          $40,404                          $44,027


Earnings from continuing               $13,399                          $20,870
operations before patronage
dividends and income taxes


Patronage dividends                     $14,934                          $16,713


Earnings (loss) from continuing    ($1,535)                            $4,157
operations after patronage
dividends and before income
taxes


Net Loss                                     ($13,136)                        ($38,605)
 

Total shareholders' equity            $88,458                          $87,032


Total assets                                $769,734                         774,440