UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 3, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-15723
UNITED NATURAL FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
05-0376157
(I.R.S. Employer Identification No.)
313 Iron Horse Way, Providence, RI 02908
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (401) 528-8634
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock, par value $0.01
UNFI
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $876 million based upon the closing price of the registrant’s
common stock on the New York Stock Exchange on January 26, 2024. The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as
of September 26, 2024 was 59,522,765.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on December 17, 2024 are incorporated herein by reference into
Part III of this Annual Report on Form 10-K.
UNITED NATURAL FOODS, INC.
FORM 10-K
TABLE OF CONTENTS
Section
Page
Part I
Item 1.
Business
1
Item 1A.
Risk Factors
9
Item 1B.
Unresolved Staff Comments
22
Item 1C.
Cybersecurity
22
Item 2.
Properties
24
Item 3.
Legal Proceedings
25
Item 4.
Mine Safety Disclosures
26
Part II
Item 5.
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
26
Item 6.
Reserved
28
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
28
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
44
Item 8.
Financial Statements and Supplementary Data
47
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
96
Item 9A.
Controls and Procedures
96
Item 9B.
Other Information
97
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
97
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
98
Item 11.
Executive Compensation
98
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
98
Item 13.
Certain Relationships and Related Transactions, and Director Independence
98
Item 14.
Principal Accounting Fees and Services
98
Part IV
Item 15.
Exhibit and Financial Statement Schedules
99
Item 16.
Form 10-K Summary
101
Signatures
102
PART I.
ITEM 1. BUSINESS
In this Annual Report on Form 10-K (“Annual Report” or “Report”), unless otherwise specified, references to “United Natural
Foods”, “UNFI”, “we”, “us”, “our” or the “Company” mean United Natural Foods, Inc. together with its consolidated
subsidiaries. We are a Delaware corporation based in Providence, Rhode Island. We conduct our business through various
subsidiaries. Since the formation of our predecessor in 1976, we have grown our business both organically and through
acquisitions, which have expanded our distribution network, product selection and customer base.
Our Background
UNFI is a leading distributor of grocery and non-food products, and support services provider to retailers in the United States
and Canada. We believe we are uniquely positioned to provide the broadest array of products and services to customers
throughout North America. Our diversified customer base includes over 30,000 customer locations ranging from some of the
largest grocers in the country to smaller independents as well. We offer approximately 250,000 products consisting of national,
regional and private label brands grouped into the following main product categories: grocery and general merchandise;
perishables; frozen foods; wellness and personal care items; and bulk and foodservice products. We believe we are North
America’s premier grocery wholesaler with 55 distribution centers and warehouses representing approximately 31 million
square feet of warehouse space. We are a coast-to-coast distributor with customers in all 50 states as well as all ten provinces in
Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product
assortment and service offerings are unmatched by our wholesale competitors. We plan to continue to pursue new business
opportunities with independent retailers that operate diverse formats, regional and national chains, as well as international
customers with wide-ranging needs. Our business is classified into two reportable segments: Wholesale and Retail; and also
includes a manufacturing division and a branded product line division.
Our Strategic Priorities
We are continually striving to better serve our stakeholders, including our customers, suppliers, associates and communities,
and to drive profitable growth and sustainable shareholder value creation. We have undertaken a new strategy and have
established new three-year financial objectives that begin in fiscal 2025 and are designed to make the Company more efficient
while improving free cash flow generation and reducing net leverage.
Our strategy is centered on adding value to our customers and suppliers through our expansive assortment of products, services,
programs, and insights that help them grow and compete. Our strategy is highly focused on actively positioning our Company
to add value to a resilient portion of the food retail industry that totals over $90 billion of wholesale sales and includes many
specialty, natural, multi-cultural and conventional retailers. This new strategy capitalizes on UNFI’s strengths, including our
heritage in natural and organic products, as well as our growing, value-added digital and professional services portfolio.
Simultaneously, we are working to improve free cash flow generation and reduce net leverage by optimizing controllable
variables including:
1. Intensified Network Optimization: Streamlining our distribution center footprint to create a more efficient supply chain
with a lower level of fixed capital invested.
2. Reduced Capital Intensity: Prioritizing capital investment needs and reducing the overall level of future spending while
continuing to emphasize maintenance and targeted network enablement and technology enhancements. We also plan to
lower overall working capital levels while driving higher customer satisfaction.
3. Optimized Cost Structure: Reducing ongoing operating expenses and better aligning corporate resources to reflect our
updated strategy and customer and supplier-facing work.
During fiscal 2024, we continued to implement near-term initiatives to help improve profitability and strengthen our foundation
while we finalized and began implementing our revised strategy.
We expect to continue to use available capital to re-invest in our business and are committed to improving our free cash flow
and financial leverage while reducing outstanding debt.
We believe we can optimize our performance and profitability through our improvement efforts, which we expect will improve
our cost structure, increase sales of products and services, and position us to provide tailored, data-driven solutions to help our
customers run their businesses more efficiently and contribute to customer acquisitions.
Table of Contents
1
Our Commitment to Social and Environmental Responsibility
Creating a Better Future for Communities
As North America’s premier grocery wholesaler, we are working to create a better future for our communities by improving
access to quality food, empowering our associates to give back and protecting the planet we share. We look for ways to use our
scale to drive progress across the food industry, while focusing on sustainability initiatives that drive efficiency and cost
savings and create sustainable value for our stakeholders. Now in the fourth year since unveiling our Better for All impact
strategy, we continue to evaluate the impacts we have along our value chain, focusing on proactively engaging with the people
making and moving the products we distribute.
In fiscal 2024, we published our 13th annual Better for All report, which offers a summary of our social, environmental, and
governance impacts during the fiscal year. The report demonstrates our enhanced focus on our six most pressing impact areas:
safety, well-being, waste, climate, sourcing and community. The report is available on our website at www.betterforall.unfi.com
and highlights progress toward our goals, including waste reduction, supplier diversity, food donations and food safety. Our
Better for All report and the contents of our Better for All webpage are not incorporated by reference into or considered to be
part of this Annual Report.
Upstream
Our impact begins with the decisions made by our partners and suppliers, well before products reach our distribution centers.
We are investing in programs and partnerships that are designed to help build a more equitable system and carry our values
further upstream. In fiscal 2023, we launched the UNFI Climate Action Partnership, encouraging suppliers to set credible
climate goals. The program builds on UNFI’s Climate Action Hub, which offers suppliers a variety of tools and resources to
innovate and scale climate solutions across the food system. We also published a new Deforestation Policy, an updated Animal
Welfare Position Statement, and an updated Supplier and Vendor Code of Conduct, clearly outlining expectations of suppliers
on responsible procurement topics. These policies help us to work more efficiently and effectively with suppliers and vendors
in pursuing our shared goals.
Operations
We remain focused on operating efficiently and sustainably, which includes managing the social and environmental impacts
within our direct control. Our associates’ safety and well-being are of utmost importance to us. Our primary goal is to cultivate
a culture that values care and safety for all. Through continuous efforts we are dedicated to minimizing the risk of injuries and
accidents, ensuring a safe and thriving environment for everyone. In fiscal 2024, for the third year in a row, we received a score
of 100 on the Disability Equality Index. In fiscal 2024, our seven associate-led Belonging & Innovation Groups continued to
cultivate a culture of innovation, learning and impact across the Company.
In addition, we began work on a new roof-mounted solar array installation at our Riverside, California distribution center,
which will be our largest to date. UNFI’s solar array initiatives provide a strong return on investment and reduce the energy cost
of operating a distribution center, while lowering the Company’s carbon footprint.
Downstream
We aim to be responsible community members, from how we provide information and services to our customers, to the local
organizations our associates support with their volunteer hours. In fiscal 2024, we significantly grew associate volunteerism,
and the UNFI Foundation, a 501(c)(3) organization, began implementation of its five-year plan and awarded over $1.5 million
in grants. We also made significant strides toward our food waste reduction goal and deployed a Reverse Logistics Disposition
Reporting system at all UNFI distribution centers to enhance inventory visibility and operational efficiency. This initiative is
expected to reduce food waste, minimize waste disposal costs and decrease shrink in the distribution centers.
Social and environmental responsibility remains integral to our overall business strategy, and we believe these practices deliver
significant value to our stakeholders, including our stockholders, associates, customers, suppliers and communities.
Table of Contents
2
Our Customers
We maintain long-standing relationships with many of our customers. We serve over 30,000 unique customer locations,
primarily located across the United States and Canada, which we classify into five customer types: Chains; Independent
retailers; Supernatural; Retail; and Other. Refer to Note 3—Revenue Recognition in Part II, Item 8 of this Annual Report for
additional information.
One Wholesale customer, which includes customers under common control, constituted more than 10% of total Net sales in
fiscal 2024. On May 21, 2024, we amended and restated our distribution agreement with our largest customer which, among
other things, extended the term of that agreement through May 20, 2032.
Our international Net sales primarily reflect UNFI Canada, Inc. (“UNFI Canada”), which represented approximately 1% of our
Net sales in fiscal 2024. International business excludes sales transacted in U.S. dollars and shipped internationally, which is an
even smaller component of our business.
We also continue to invest in technology and systems with the intent of improving the efficiency of our operations, enhancing
the customer experience and growing our services platform, including our eCommerce and innovation businesses. This includes
sales to eCommerce companies as well as business-to-business sales to non-traditional customers. Marketplace by UNFI is our
business-to-business digital eCommerce solution for emerging brands looking to expand distribution with UNFI customers.
Through this virtual marketplace, suppliers gain immediate access to UNFI’s digital infrastructure to promote and sell their
products to UNFI’s broad customer base while UNFI customers gain access to an even broader assortment of unique and local
items with flexible order sizes and the convenience of ordering from multiple sources online in one place.
Wholesale
We organize and operate our Wholesale reportable segment through three U.S. geographic regions: East, Central and West,
each of which is led by a separate regional president responsible for product and service strategy, execution, and financial
results; and Canada Wholesale, which is operated separately from the U.S. Wholesale business. Product and service categories
include grocery, fresh, private brands, wellness and personal care items, eCommerce and foodservice. This operating structure
includes regional sales organizations and distribution center networks, which offer a combination of conventional and natural
products to our customers as a consolidated supply solution. Territory managers in these regions sell our complete lines of
products, which allows us to anticipate and identify sales opportunities that result from our customers having a single point of
contact for all of our products and services.
Operations
We have established a national network of strategically located distribution centers utilizing a multi-tiered logistics system. The
network includes facilities that carry slow turn or fast turn groceries, perishables, general merchandise and home, health and
beauty care products. For financial reporting purposes, sales from our distribution centers to our own Retail stores are
eliminated from of our Wholesale segment within Eliminations.
We offer Wholesale customers a wide variety of food and non-food products, and our own lines of private label products. We
also offer a broad array of professional services. As a logistics provider, efficiency is an important customer service measure.
We are in the process of optimizing our facilities to implement leading warehouse technology, ranging from radio-frequency
devices guiding selectors to mechanized facilities with completely automated order selection for dry groceries that help us
deliver aisle-ready pallets to Wholesale customers. Deployment of continuous improvement methodologies within our supply
chain is focused on delivering labor and cost efficiencies while also improving our ability to more effectively service our
customers.
To maintain our market position and improve our operating efficiencies, we seek to continually:
•
expand our marketing and customer service programs across regions;
•
expand our national purchasing opportunities;
•
offer a broader product and value add service selection than our competitors;
•
offer operational excellence with high service levels and a higher percentage of on-time deliveries and fill rates than
our competitors;
•
centralize and streamline general and administrative functions to reduce expenses;
•
consolidate systems applications among physical locations and regions; and
•
invest in our people, facilities, equipment and technology.
Table of Contents
3
Procurement
We maintain contracts with suppliers to procure their products. Our procurement process includes assessments of demand
planning, pricing, seasonality and other factors. Inventory costs are determined when products are procured and include vendor
funds received and inbound freight, among other items. The gross margins we earn on sales to our customers are typically based
on a percentage mark-up, or fee, on top of vendor listed base cost, which vary by customer, product type, vendor size, volume
throughput, transportation methods and distances, among other factors. Net sales to customers are determined at the time of sale
based on the then prevailing vendor listed base cost, and include discounts we offer to our customers. The differential between
the procured cost, including vendor funds and inbound freight, as compared to the net sales price of these products, primarily
generates our gross margin.
Retail
Our Retail segment includes 76 Cub Foods and Shoppers retail grocery stores. Our retail stores provide an extensive grocery
offering and, depending on size, a variety of additional products, including general merchandise, home, health and beauty care,
and pharmacy. We offer national and local brands, as well as our own private label products. A typical retail store carries
approximately 17,000 to 21,000 core SKUs and ranges in size from approximately 50,000 to 70,000 square feet. We believe our
retail banners have strong local and regional brand recognition in the markets in which they operate. Our Retail operations are
principally supplied by six of our Wholesale distribution centers.
Our Product Offerings
Our extensive selection of products includes natural, organic, specialty, produce and conventional grocery, and non-food
products. We offer nationally recognized brand name and private label products, including grocery (both perishable and
nonperishable), general merchandise, home, health and beauty care, and pharmacy, which are sold through our Wholesale
segment to wholesale customers and our Retail stores. We offer the following main product categories: grocery and general
merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.
Our owned brands portfolio is a collection of brands that offer high quality solutions for private label to our customers.
ESSENTIAL EVERYDAY® is our leading national brand equivalent private label solution with nearly 2,200 items for
departments throughout the store. It is complemented by SHOPPERS VALUE®, which offers the budget conscious consumer
quality alternatives to national brands. Our WILD HARVEST® brand offers a full range of products made with simple,
wholesome ingredients across multiple categories, including pet foods. Our Field Day® brand is primarily sold to natural store /
co-op retailers as a private label solution. Our category-specific brands, primarily including STONE RIDGE CREAMERY®,
EQUALINE®, and CULINARY CIRCLE®, also provide national brand equivalent products at a competitive price.
Our Blue Marble Brands portfolio is a collection of national brands that offer United States Department of Agriculture
(“USDA”) organic, non-GMO Project Verified, and specialty food and non-food items. The WOODSTOCK® brand has been
pioneering organic / non-GMO products for over 35 years and continues to launch innovative products.
Our subsidiary doing business as Woodstock Farms Manufacturing specializes in importing, roasting, packaging and
distributing nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections for our customers and
in the Company’s branded products. We operate an organic (USDA and Quality Assurance International (“QAI”)) and kosher
(Circle K) certified packaging, roasting, and processing facility in New Jersey that is SQF (Safety Quality Food) level 2
certified. Woodstock Farms Manufacturing sells items manufactured in bulk and through private label packaging arrangements
with large health food, supermarket and convenience store chains and independent retailers.
Our Service Offerings
We offer a broad array of professional services that provide Wholesale customers with cost-effective and scalable business
solutions. Our services are designed to help customers address business challenges, better serve their customers and compete in
the marketplace. These services include solutions we develop and provide directly, as well as pass-through programs in which
vendors provide services directly to our Wholesale customers. We provide shelf and planogram management, retail store
support, pricing strategy, electronic payments processing, advertising, couponing, store layout and design, equipment sourcing
and procurement, point-of-sale hardware and software, network and data hosting solutions, consumer convenience services,
eCommerce, automation tools, sustainability services and administrative back-office solutions. The sales and operating results
for these services are included within Wholesale.
Table of Contents
4
We offer a variety of marketing services designed to increase sales for our customers and suppliers, including consumer and
trade marketing programs, as well as programs to support suppliers in understanding our markets. Trade and consumer
marketing programs are supplier-sponsored programs that cater to a broad range of retail formats. Retail marketing programs
offer web and digital marketing services, including websites, mobile applications and eCommerce capabilities, and circular
programs for our customers and vendors. Supplier marketing programs include information sharing programs designed to
provide heightened transparency to suppliers through demand planning, forecasting and procurement insights. We have also
created a retail media network, the UNFI Media Network (“UMN”), that enables retailers to reach their consumers digitally
while connecting to our large network of suppliers, who in turn, can utilize the platform for personalized and targeted digital
marketing. All of our programs and services are designed to educate consumers, profile suppliers and increase sales for
retailers, many of which do not have the resources necessary to conduct such marketing programs independently. Our goal is to
provide support to ensure collective long-term success.
In addition to these services, we provide data, insights and resources that help our customers compete and succeed in their
respective markets. We also offer our customers:
•
trends reports in the natural and organic industry:
•
product data information such as best seller lists, store usage reports and catalogs;
•
in-store signage and promotional materials, and assistance with product display planning and set up;
•
shelf tags for products; and
•
a robust retailer portal with product information, search and ordering capabilities, reports and publications.
Our Suppliers
We purchase our products from nearly 11,000 suppliers. The majority of our suppliers are based in the United States and
Canada, but we also source products from suppliers throughout the world. We believe suppliers seek to distribute their products
through us because we provide access to a large customer base across the United States and Canada, distribute the majority of
the suppliers’ products and offer a wide variety of marketing programs to our customers to help sell our suppliers’ products.
Substantially all product categories that we distribute are available from a number of suppliers and, therefore, we are not
dependent on any single supply source for any product category. In addition, although we have exclusive distribution
arrangements and support programs with several suppliers, none of our suppliers accounted for more than 5% of our total
purchases in fiscal 2024.
We have positioned ourselves as one of the largest purchasers of organically grown bulk products in the natural and organic
products industry by centralizing our purchase of nuts, seeds, grains, flours and dried foods. As a result, we are able to negotiate
purchases from suppliers on the basis of volume and other considerations that may include discounted pricing or prompt
payment discounts. Furthermore, some of our purchase arrangements include the right of return to the supplier with respect to
products that we do not sell in a specified period of time. Each region is responsible for placing its own orders and can select
the products that it believes will most appeal to its customers, although each region is able to participate in our company-wide
purchasing programs.
Our Distribution Network
Logistics
We select the sites for our distribution centers to provide direct access to the markets we serve and configure them to minimize
total operating costs. This proximity allows us to reduce our transportation costs relative to those of our competitors that seek to
service these customers from locations that are often further away. We believe that we incur lower inbound freight expense than
our regional competitors because our scale allows us to buy full and partial truckloads of products. Products are delivered to our
distribution centers primarily by our fleet of leased and owned trucks, contract carriers and the suppliers themselves. When
financially advantageous, we pick up products from suppliers or satellite staging facilities and return them to our distribution
centers using our own trucks. Additionally, the scale of our distribution network provides us with the flexibility to shift volume
amongst distribution centers in the case of volume spikes, unique customer needs, temporary inbound fill rate challenges and
weather-related events as well as the capacity to support future sales growth.
The majority of our trucks are leased and are maintained by third-party national leasing companies, which in some cases
maintain facilities on our premises for the maintenance and service of these vehicles. We also have facilities where we operate
our own maintenance shops.
Table of Contents
5
We ship certain orders for supplements or for items that are destined for areas outside of regular delivery routes through
independent carriers. Deliveries to areas outside the continental United States and Canada are typically shipped by freight-
forwarders through ocean-going containers.
Organic Certification
We have 33 distribution centers in the United States that are “National Organic Program certified as Organic Handlers by QAI”.
Our California locations are certified as Organic Handlers by QAI, and we are registered as Organic Handlers with the State of
California Department of Public Health Food and Drug Branch and the California Department of Food and Agriculture. In
addition, our Canadian distribution center in British Columbia holds an Organic Distributor certification from QAI.
We maintain a comprehensive quality assurance program. All products we sell that are represented as organic are required to be
certified as such by an independent third-party agency. We maintain current certification affidavits on most organic
commodities and produce in order to verify the authenticity of the product. Most potential suppliers of organic products are
required to provide such third-party certifications to us before they are approved as suppliers.
Our Technology Investments
We continue to make significant investments in distribution, financial, information and warehouse management systems. We
continually evaluate and upgrade our systems and distribution center infrastructure to enhance security, efficiency, cost-
effectiveness and responsiveness to customer needs. We believe these systems include best in class functionality in warehouse
management systems, inventory control, labor management, scan-based fulfillment applications, mechanized pick-to-light
systems and order management systems. We are in the process of updating our fulfillment technology with Universal Product
Code (“UPC”) scan-based technology for selection, loading and customer deliveries to ensure order accuracy throughout the
supply chain. We have also begun to make significant investments in warehouse automation solutions to support full case and
unit pick fulfillment processes. These investments are intended to unlock our supply chain capabilities, improve customer
experience and enable growth. We continue to leverage a management information system that enables us to lower inbound
transportation costs by making optimum use of our own fleet of trucks and/or by consolidating deliveries to achieve full
truckloads. In addition, we use cloud solutions to assist us in developing the most efficient routes, tracking vehicle maintenance
and monitoring driver safety and the movement of trucks in real-time. As part of our “one company” approach, we continue an
effort to standardize to best in industry software solutions for inventory procurement, order management, transportation
operations and warehouse management systems throughout our network. Our investment in technology is intended to improve
our supply chain effectiveness for our suppliers, associates and customers enabling our collective success.
Competition
Our Wholesale and Retail businesses operate in a highly competitive and rapidly evolving industry, which is characterized by
low profit margins, new business models and the entry of new, non-traditional competitors that intensify competition. Our food
distribution business competes with many traditional and specialty grocery wholesalers and retailers that maintain or develop
self-distribution systems for the business of independent grocery retailers. We also increasingly compete with retailers that
maintain or develop self-distribution systems, as well as companies that offer services in digital advertising, fulfillment and
delivery services, health and wellness and financial services. The primary competitive factors in the Wholesale business include
price, service level, product quality, variety, availability, location of distribution centers and other value-added services. In
recent years, consolidation within the grocery industry has resulted in, and is expected to continue to result in, increased
competition, including from some competitors that have greater financial, marketing and other resources than we do.
Independent retailers and smaller Chain customers represent a significant portion of our business and face intense competition
from national grocery chains, supercenters, deep discounters, mass merchandisers, limited assortment stores and eCommerce
providers, many of whom offer expansive services beyond grocery.
Our retail banners compete with traditional and specialty grocery stores, supercenters, deep discounters, mass merchandisers,
limited assortment stores and eCommerce providers. The principal competitive factors in grocery retail include the location and
image of the store; the price, quality, and variety of the fresh offering; and the quality, convenience, and consistency of service.
Competitive strategies vary based on many factors, such as the competitor’s format, strengths, weaknesses, pricing, and sales
focus. Our retail stores have continued to respond to growing competition from online and non-traditional retailers by adding
options and services such as online ordering, curbside pick-up and home delivery.
Table of Contents
6
Government Regulation
Our operations and many of the products that we distribute in the United States are subject to regulation by state and local
health departments, the USDA and the United States Food and Drug Administration (the “FDA”), which generally impose
standards for product quality and sanitation and are responsible for the administration of bioterrorism legislation. In the United
States, our facilities generally are inspected at least once annually by state or federal authorities. For certain product lines, we
are also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural
Commodities Act, the Packers and Stockyard Act and regulations promulgated by the USDA to interpret and implement these
statutory provisions. The USDA imposes standards for product safety, quality and sanitation through the federal meat and
poultry inspection program.
The FDA Food Safety Modernization Act in the United States and the Safe Foods for Canadians Act in Canada have expanded
food safety requirements across the food supply chain and, among other things, impose additional regulations focused on
prevention of food contamination, more frequent inspection of high-risk facilities, increased record-keeping, and improved
tracing of food. Products that do not meet regulatory standards and/or comply with these regulations may be considered to be
adulterated and/or misbranded and subject to recall.
The Surface Transportation Board and the Federal Highway Administration regulate our trucking operations. In addition,
interstate motor carrier operations are subject to safety requirements prescribed by the United States Department of
Transportation and other relevant federal and state agencies. Such matters as weight and dimension of equipment are also
subject to federal and state regulations.
Our facilities are subject to regulations issued pursuant to the U.S. Occupational Safety and Health Act by the U.S. Department
of Labor and similar regulations by state agencies. These regulations require us to comply with certain health and safety
standards to protect our employees from recognized hazards. We are also subject to the National Labor Relations Act, which
provides employees the right to organize and bargain collectively with their employer and to engage in other protected
concerted activity, and the Fair Labor Standards Act, which establishes minimum wages and overtime standards, among other
requirements.
Our facilities in the United States and in Canada are subject to various environmental protection statutes and regulations,
including those relating to the use of water resources and the discharge of wastewater. Further, many of our distribution
facilities have ammonia-based refrigeration systems and tanks for the storage of diesel fuel, hydrogen fuel and other petroleum
products which are subject to laws regulating such systems and storage tanks. Moreover, in some of our facilities we, or third
parties with whom we contract, perform vehicle maintenance. Our policy is to comply with all applicable federal, state,
provincial and local provisions relating to the protection of the environment or the discharge of materials.
Our international business operations are subject to various laws and regulations regarding the import and export of products
and preventing corruption and bribery (including the U.S. Foreign Corrupt Practices Act). We have implemented and continue
to develop import/export and anti-corruption compliance programs and processes to comply with applicable laws and
regulations governing our international business activities.
Human Capital Management
Our employees are critical to supporting our values and achieving our strategic vision, and we are striving to be an employer of
choice. We are focused on associate engagement, empowerment and safety to foster innovation and bring best-in-class solutions
to our customers and suppliers in an ever-changing retail landscape, including new ways of work scheduling and productivity
investments. The Compensation Committee of our Board of Directors has oversight of human capital management matters with
a focus on associate wellbeing across a variety of measures.
As of August 3, 2024, we had approximately 28,333 full and part-time employees, 10,704 of whom (approximately 38%) are
covered by 48 collective bargaining agreements, including existing agreements under negotiation. We have been the focus of
union-organizing efforts, and we believe it is likely that similar efforts will continue in the future.
Table of Contents
7
Developing Talent
Attracting and retaining talent is one of our top priorities. Our goal is to differentiate ourselves in the market by offering
flexibility to associates in the way, when and how they work. To reduce turnover, we have an emphasized focus on and
commitment to our associates, their experiences as well as their continued engagement. We are committed to the continued
support and development of our associates and provide access to robust leadership development programming, role-based
training and other career development opportunities at every stage of an associate’s tenure with us. Designed to enhance the
leadership capabilities of our people, we design and deliver optional programs to leaders across all departments to come
together to learn and practice their management skills as well as identify opportunities to lead more effectively. The Elevate
program for Director-level and above associates works to solidify our talent pipeline and promote the success of the
organization’s future leaders. Our Learning & Development teams partner with key groups such as Sales, Operations,
Transportation and Environmental Health & Safety to develop role-based training to drive greater productivity and safety. We
also offer associates additional learning and career development opportunities that extend from skills-based training deployed
electronically through our BetterU learning system, to mentorship programs and career development discussions and beyond.
Compensation and Benefits
Our compensation and benefits programs are designed to promote a culture of wellbeing and recognize our associates for their
outstanding achievements and dedication to serving our customers and keeping them safe during even the most challenging of
times. We are committed to offering market competitive pay programs that reward high levels of performance and behaviors
that challenge convention and drive company success. Our short-term incentive programs are tied to the Company’s financial
goals and are intended to align our eligible associates’ rewards with our financial success. Long-term incentives, including
restricted stock units and performance stock unit awards, are designed to attract and retain innovative leaders and align their
financial interests with that of our shareholders and other stakeholders. As part of our commitment to recognize our associates’
“whole self” – health, finances and overall wellbeing – we offer a comprehensive health and welfare benefit program to eligible
associates providing a variety of medical, dental and vision options plus additional voluntary benefits like long-term disability
and optional life insurance. Additionally, we provide to eligible associates a leading edge, no-cost wellness program, paid time
off programs including paid parental leave, an employee assistance program, 401(k) plan and a recently enhanced education
assistance program.
Diversity, Equity and Inclusion
In order to recruit, inspire and retain the most talented team at all levels that maximizes speed, agility, innovation, execution
and performance from the Boardroom to our distribution centers, we pledge to promote equity, celebrate diversity and support
inclusion for all. Our Board of Directors is diverse in gender and ethnic background, as well as having a broad range of
experience, with four out of 11 directors identifying as female, two members identifying as African American, one member
identifying as Asian American, one member identifying as LGBTQ+ and one member identifying as a veteran. We recognize
that innovation thrives when there is unity and respect for diverse backgrounds and perspectives. Additionally, we aim to foster
a culture of belonging, equity and empathy through open dialogues, educational opportunities and by honoring the experiences
and special events that speak to our associates’ many identities.
We built a Diversity, Equity and Inclusion (“DEI”) team, and our DEI strategy is built on a foundation of research, best
practices and leadership commitment. Our Vice President of Diversity, Inclusion, Equity and Wellbeing oversees our DEI
efforts, inclusive procurement initiatives and wellbeing programs. Our diversity and wellbeing council and seven associate-led
Belonging & Innovation Groups actively strive to create a workplace where all associates feel welcome and are motivated to
reach their full potential. We developed a multi-pronged approach to educate and engage associates that includes open
discussions on various dimensions of diversity, a podcast, DEI and mental health awareness trainings on our associate
platforms, targeted volunteerism, and campaigns encouraging respect and empathy.
Creating a Safe Environment
Safety is at the forefront of everything we do. We continue to focus on the safety of our associates, customers, communities and
consumers with increased safety measures. We continue to be committed to continuous learning and improvement, and we
believe in the power of learning from past experiences to enhance our safety system and performance, including through root
cause incident analysis. We also continue to invest in our safety brand and pledge, Every Moment Matters, which is designed to
foster a culture of caring and doing the right thing.
Table of Contents
8
This past year, we focused on reducing lost time injuries (“LTI”), improving our root cause analysis process, implementing a
comprehensive safety management software solution, completing internal and external audits and closing findings identified
therein, creating more comprehensive reporting on key performance indicators and continuing to build upon our safety culture.
In fiscal 2024, we were able to reduce our LTI rate by nearly 50%. We also began installation of a new video telematics
solution to optimize fleet operations and improve driver safety, while continuing to reduce our preventable accident rates.
Additionally, we increased our focus on how we deliver value to our customers and consumers, strengthening our food safety
programs with the creation of our vision for a world class food safety management system.
Seasonality
Overall product sales are fairly balanced throughout the year, although demand for certain products of a seasonal nature may be
influenced by holidays, changes in seasons or other annual events. Our working capital needs are generally greater during the
months of and leading up to high sales periods, such as the buildup in inventory leading to the calendar year-end holidays. Our
inventory, accounts payable and accounts receivable levels may be impacted by macroeconomic impacts and changes in food-
at-home purchasing rates. These effects can result in normal operating fluctuations in working capital balances, which in turn
can result in changes to cash flow from operations that are not necessarily indicative of long-term operating trends.
Available Information
Our internet address is http://www.unfi.com. The contents of our website are not incorporated by reference into or considered to
be part of this Annual Report, and our internet address is included in this document as an inactive textual reference only. We
make our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
available free of charge through our website as soon as reasonably practicable after we file such reports with, or furnish such
reports to, the Securities and Exchange Commission.
ITEM 1A. RISK FACTORS
Our business, financial condition and results of operations are subject to various risks and uncertainties, including those
described below and elsewhere in this Annual Report. This section discusses factors that, individually or in the aggregate, we
believe could cause our actual results to differ materially from expected and historical results. If any of the events described
below occurs, our business, financial condition or results of operations could be materially adversely affected and our stock
price could decline.
We provide these factors for investors as permitted by and to obtain the rights and protections under the Private Securities
Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors.
Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties
applicable to our business. See Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Cautionary Note Regarding Forward-Looking Statements in Part II, Item 7 of this Annual Report for more information on our
business and the forward-looking statements included in this Annual Report.
Table of Contents
9
Strategic and Operational Risks
A significant portion of our revenues are from our principal customers, and our success is heavily dependent on retaining
this business and on our principal customers’ ability to maintain and grow their businesses.
A significant portion of our revenues is from our principal customers, and our success is heavily dependent on retaining this
business and on our principal customers’ ability to maintain and grow their businesses. The loss or cancellation of business
from our principal customers, including due to the utilization of alternative sources of products, whether through other
distributors or increased self-distribution, closures of stores, reductions in the amount of products that our customers sell to their
customers, operational issues or our failure to comply with the terms of our distribution agreements, where applicable, could
materially and adversely affect our business, financial condition or results of operations. For example, our largest customer
accounted for approximately 23% of our Net sales in fiscal 2024. We serve as the primary distributor of natural, organic and
specialty non-perishable products, and also distribute certain specialty protein, cheese, culinary items, deli items and products
from health, beauty and supplement categories to this customer under the terms of our distribution agreement, which expires on
May 20, 2032. A loss or significant decrease in volume with our largest customer could impact our ability to efficiently serve
other, smaller customers in these categories who utilize these distribution centers. Our ability to maintain a close, mutually
beneficial relationship with our principal customers is an important element to our continued growth. Similarly, if our largest
customer diverts some or all of its purchases from us, our business, financial condition or results of operations may be
materially and adversely affected.
Our business is characterized by low margins, which are sensitive to inflationary and deflationary pressures, and intense
competition and consolidation in the grocery industry, and our inability to maintain or increase our operating margins
could adversely affect our results of operations.
The grocery industry is characterized by a relatively high volume of sales with relatively low profit margins, and as competition
in certain areas intensifies and the industry continues to consolidate, our results of operations may be negatively impacted
through a loss of sales and reduction in gross margin dollars. The grocery business is intensely competitive and the landscape is
dynamic and continues to evolve, including from some competitors that have greater financial and other resources than we do.
Consumers also have more choices for grocery and consumable purchases, including mass merchandisers, eCommerce
providers, deep discount retailers, limited assortment stores, wholesale membership clubs and meal-delivery services, which
may reduce the demand for products supplied by our wholesale customers. We may not be able to compete effectively against
current and future competitors.
Our ability to compete successfully is largely dependent on our ability to provide quality products and services at competitive
prices. Our competition comes from a variety of sources, including other distributors, as well as specialty or independent
grocery and mass market grocery distributors and cooperatives, and customers with their own distribution channels. Mass
market grocery distributors, many with substantially greater financial and other resources than us and that may be better
established in their markets, continue to increase their offerings of natural and organic products, resulting in more direct
competition with our natural and organic product offerings. While natural and organic products typically generate higher
margins, these margins could be affected by changes in the public’s perception of the benefits of natural and organic products
compared to similar conventional products.
In addition, many supermarket chains have increased self-distribution or purchases of items directly from suppliers. Relatively
low barriers to entry have led to the emergence of alternative business models and channels in our markets. We also encounter
indirect competition as a result of the fact that our customers with physical locations compete with online retailers and
distributors that seek to sell certain products directly to consumers. Further, club stores, commercial wholesale outlets, direct
food wholesalers and online food retailers have developed lower cost structures, creating increased pressure on the industry’s
profit margins. Our current or potential competitors may provide products or services comparable or superior to those provided
by us or adapt more quickly than we do to evolving industry trends or changing market requirements. It is also possible that
alliances among competitors may develop and that competitors may rapidly acquire significant market share. Increased
competition may result in price reductions, reduced gross margins, lost business and loss of market share, any of which could
materially and adversely affect our business, financial condition or results of operations.
The continuing consolidation of retailers, the growth of chains and closures of grocery locations may reduce our gross margins
in the future should more customers qualify for greater volume discounts, and should we experience pricing pressure from
suppliers and retailers. Sales to some of our largest customers generate a lower gross margin than do sales to our smaller
customers due to agreements that include volume discounts with many of these customers, including our largest customer.
Increased sales to these customers results in downward pressure on our gross margins, which may or may not be offset by
increases in sales or a reduction in expenses incurred to service these customers.
Table of Contents
10
If we are not able to capture scale efficiencies and enhance our merchandise offerings, we may not be able to achieve our goals
with respect to our operating margins. In addition, if we are not able to refine and improve our systems continually or
effectively implement improvements to our systems without disruption, including any information technology migration to a
cloud environment, we may not be able to reduce costs, increase sales and services, effectively manage inventory and
procurement processes, or effectively manage customer pricing plans. As a result, our operating margins may stagnate or
decline.
Further, because many of our sales are at prices that are based on our product cost plus a percentage markup, volatile food costs
have a direct impact upon our profitability. We have experienced volatile levels of inflation during the past few years, which
has had varying impacts on our business. For example, we experienced negative impacts on our profitability as inflation slowed
in recent years and decreased the positive impact of inflation-related buying activities. Prolonged periods of product cost
inflation and periods of rapidly increasing inflation may have a negative impact on our profit margins and results of operations
to the extent that we are unable to pass on all or a portion of such product cost increases to our customers, or to the extent our
operating expenses increase. In addition, product cost inflation may negatively impact consumer discretionary spending trends
and reduce the demand for higher-margin natural and organic products, which could adversely affect profitability. Conversely,
our profit levels may be negatively impacted during periods of slowing inflation or product cost deflation even though our
Gross profit as a percentage of Net sales may remain relatively constant. If we are unable to reduce our expenses as a
percentage of Net sales, including our expenses related to servicing this lower gross margin business, our business, financial
condition or results of operations could be materially and adversely impacted.
We may not realize the anticipated benefits of our strategic initiatives.
Our long-term strategy is centered on adding value to our customers and suppliers through our expansive assortment of
products, services, programs and insights that help them grow and compete. Simultaneously, we are working to improve free
cash flow by focusing on what we can control around the areas of network optimization, reduced levels of capital intensity and
optimization of our cost structure. The successful design, implementation and management of these initiatives may present
significant challenges, many of which are beyond our control. In addition, the initiatives may not advance our business strategy
as expected. We may not realize all or any of the anticipated benefits, or may not realize the anticipated benefits within the
expected time frame, due to financial or operational challenges, delays, lower than expected levels of customer and supplier
acceptance and implementation or unexpected costs. Any failure to implement the initiatives in accordance with expectations
could adversely affect our ability to achieve the anticipated revenue and profitability benefits. In addition, the complexity of the
initiatives requires a substantial amount of management and operational resources. Our management team must successfully
implement operational changes necessary to achieve the anticipated benefits of the initiatives. These and related demands on its
resources may divert the Company’s attention from existing core businesses and could also have adverse effects on existing
business relationships with suppliers and customers. As a result, our business, financial condition or results of operations may
be adversely affected.
Changes in relationships with our suppliers may adversely affect our profitability, and conditions beyond our control can
interrupt our supplies and alter our product costs.
As a wholesaler, we are dependent upon the consistent supply of products from manufacturers. We maintain supply contracts to
fulfill product sales obligations to our customers. Manufacturers’ disruptions in their ability to produce, maintain and supply
product based on changing levels of demand could result in an inability to fulfill our obligations to our customers.
Table of Contents
11
The majority of our suppliers are based in the United States and Canada, but we also source products from suppliers throughout
the world. For the most part, we do not have long-term contracts with our suppliers committing them to provide products to us.
Although our purchasing volume can provide benefits, suppliers may not provide the products needed by us in the quantities or
at the prices requested. For example, we experienced higher than usual levels of out-of-stocks leading to reduced fill rates
during the COVID-19 pandemic. These shortages caused us to incur higher operating expenses due to the cost of moving
products between our distribution facilities to maintain expected service levels, and we cannot anticipate whether this trend will
recur in the future. We are also subject to supply chain uncertainties and increases in product costs based on conditions outside
of our control. These conditions include work slowdowns, work interruptions, strikes or other job actions by employees of
suppliers, short-term weather conditions or more prolonged climate change, crop conditions, product recalls, water shortages,
transportation interruptions, unavailability of fuel or increases in fuel costs, competitive demands, raw material shortages,
geopolitical disruptions and natural disasters or other catastrophic events (including, but not limited to food-borne illnesses). As
the consumer demand for natural and organic products has increased, certain retailers and other producers have entered the
market and attempted to buy certain raw materials directly, limiting availability for use in certain of our suppliers’ products. In
addition, increased costs of imported goods, including due to tariffs, import restrictions, global conflict or otherwise, may
reduce customer demand for affected products if the parties experiencing those increased costs increase their prices.
We cooperatively engage in and support a variety of promotional programs and services with our suppliers. We manage these
programs and services to increase sales while maintaining or improving our margins. We experienced a reduction in
promotional spending and payment of slotting fees for new products by our suppliers as a result of the COVID-19 pandemic,
including decreased promotional forward-buying opportunities, and we may experience further reductions or changes in
promotional spending (including as a result of the increasing attractiveness of alternative retail channels), which could have a
significant impact on our profitability. We depend heavily on our ability to purchase merchandise in sufficient quantities at
competitive prices, and we benefit from our ability to purchase product in advance of price increases. We have no assurances of
continued supply, pricing or access to new products, and suppliers could change the terms upon which they sell to us, the
services they request from us or discontinue selling to us altogether.
Further, increased frequency or duration of extreme weather conditions, or other factors which may be the result of climate
change, also could impair production capabilities, disrupt our supply chain or impact demand for our products. For example, in
the past, weather patterns or events, such as lower than average levels of precipitation in key agricultural states or wildfires in
the West, have affected prices of food products of certain of our suppliers. Input costs could increase at any time for a large
portion of the products that we sell for a prolonged period. Conversely, weather patterns could lead to a decline in our product
costs (for example, if rainfall levels are abundant), particularly in our perishable and produce businesses, and this product cost
deflation could negatively impact our results of operations. Our inability to obtain adequate products as a result of any of the
foregoing factors or otherwise could prevent us from fulfilling our obligations to customers, and these customers may turn to
other distributors. In that case, our business, financial condition or results of operations could be materially and adversely
affected.
Failure by us to develop and operate a reliable technology platform and the costs of maintaining secure and effective
information technology systems could negatively impact our business, and we may not realize the anticipated benefits of our
investments in information technology.
Our ability to decrease costs and increase profits, as well as our ability to serve customers most effectively, depends on the
reliability of our technology platform. We use software and other technology systems, among other things, to send, receive,
generate and select orders, load and route trucks and monitor and manage our business on a day-to-day basis. Failure to have
adequate technology systems across the enterprise and any disruption to these systems could adversely impact our customer
service, decrease the volume of our business, and result in increased costs negatively affecting our business, financial condition
or results of operations.
In our attempt to reduce operating expenses, increase operating efficiencies and better serve our customers and suppliers, we
have invested and continue to invest in the development and implementation of new information technology. We are in the
process of converting our existing facilities into a single warehouse management and supply chain platform. In addition, we
remain focused on the automation of certain distribution centers and plan to develop further digital solutions for our customers,
suppliers and associates. We may not be able to implement these technological enhancements at all or in the anticipated time
frame and delays in implementation could negatively impact our business, financial condition or results of operations. In
addition, the costs may exceed our estimates and are expected to exceed the benefits during the early stages of implementation.
Even if implementation progresses in accordance with our current plans, and within our current cost estimates, we may not
achieve the expected efficiencies and cost savings from our investments. Moreover, as we implement information technology
enhancements, disruptions in our business may be created (including disruption with our customers), which may have a
material adverse effect on our business, financial condition or results of operations.
Table of Contents
12
We face risks related to the availability of qualified labor, labor costs and labor relations.
In the past, we have experienced a shortage of qualified labor. Recruiting and retention efforts, and actions to increase
productivity, may not be successful. Such a shortage could potentially increase labor costs, reduce profitability or decrease our
ability to effectively serve customers. If we are unable to realize the anticipated benefits of our efforts to improve labor
efficiency, including through automation and other technology initiatives, or to increase productivity and efficiency through
other methods, we may be more susceptible to labor shortages than our competitors. We have incurred increased costs to retain
and address a shortage of qualified labor in certain geographies, particularly for warehouse workers and drivers, including wage
actions, sign-on bonus programs, and increased use of third-party labor.
Because our labor costs are, as a percentage of Net sales, higher than in many other industries, we may be significantly harmed
by labor cost increases. Further, if we are unable to accurately predict and adjust our labor needs with respect to our sales
volume, our cost of labor as a percentage of Net sales may increase. In addition, labor is a significant cost of many of our
wholesale customers. Any increase in their labor costs, including any increases in costs as a result of increases in minimum
wage requirements or wage competition, could reduce the profitability of our customers and reduce demand for the products we
supply. Additionally, the terms of some of our collective bargaining agreements may limit our ability to increase efficiencies.
As of August 3, 2024, approximately 10,704 of our 28,333 employees (approximately 38%) were covered by 48 collective
bargaining agreements, including existing agreements under negotiation, which expire through June 1, 2029. In the event we
are unable to negotiate reasonable contract renewals with our union associates or are required to make significant changes to
terms that are unfavorable to us, our relationship with employees may become fractured, and we could be subject to work
stoppages or additional expenses. In that event, it would be necessary for us to hire replacement workers or implement other
business continuity contingency plans to continue to meet our obligations to our customers. The costs to hire replacement
workers, employ effective security measures, and, if necessary, serve customers from alternative facilities, could negatively
impact the profitability of any affected facility. Depending on the length of time of any work stoppage or if we are required to
employ replacement workers and implement security measures these costs could be significant and could have a material
adverse effect on our business, financial condition or results of operations.
We have been the focus of union-organizing efforts, and we believe it is likely that similar efforts will continue in the future.
We are in the process of negotiating collective bargaining agreements with newly certified units. New contracts could have
substantially less favorable terms than our existing contracts.
We may fail to realize the expected benefits of strategic transactions or fail to effectively integrate the businesses we acquire,
which may adversely affect our business, financial condition and results of operations.
We have engaged in, and could continue to pursue, strategic transactions. Strategic transactions present significant challenges
and risks relating to execution.
Our ability to achieve the expected benefits of strategic transactions will depend on, among other things, our ability to
effectively execute on our business strategies, integrate and manage the combined operations for acquisitions, retain customers
and suppliers on terms similar to those in place prior to the transaction, achieve desired operating efficiencies and sales growth,
optimize delivery routes, coordinate administrative and distribution functions, integrate management information systems,
expand into new markets to include markets of the acquired business, retain our associates and retain and assimilate the
acquired businesses’ employees and maintain our financial and internal controls and systems as we evolve our operations.
Achieving the anticipated benefits of strategic transactions also depends on the adequacy of our implementation plans and the
ability of management to oversee and operate effectively any changes to the operations.
Our growth plans may not produce the results that we expect.
Our future growth may be limited by our ability to optimize our network of distribution centers to serve our customers, retain
existing customers, successfully integrate acquired entities or significant new customers, implement information systems and
automation initiatives, or adequately manage our personnel. If we fail to optimize the volume of supply operations in our
distribution center network, do not retain existing business or do not utilize added network capacity in line with our
expectations, excess capacity may exist, which may lead to inefficiencies and adversely affect our business, financial condition
or results of operations, including as a result of incurring operating costs for these facilities without sufficient corresponding
sales revenue to cover these costs.
Table of Contents
13
If we are unable to successfully optimize our distribution center network or open additional distribution centers in new or
existing markets if needed to accommodate or facilitate growth or if our distribution centers have increased operational
challenges it could have a material impact on our ability to grow. Our ability to compete effectively, maintain service levels and
manage future growth, if any, will depend on our ability to maximize operational efficiencies across our distribution center
network, to implement and improve on a timely basis operational, financial and management information systems, including
our warehouse management systems, and to expand, train, motivate and manage our work force. Our existing personnel,
systems, procedures and controls may not be adequate to support the future growth of our operations. In addition, we have
recently appointed new executive leaders, and these transitions may be disruptive. Our inability to manage our growth
effectively could have a material adverse effect on our business, financial condition or results of operations.
Further, a key element of our current growth strategy is to increase the amount of differentiated products that we distribute and
services that we offer. We believe that the ability to distribute these products and offer these services will distinguish us from
our competitors and increase demand for our products. If we are unable to increase these differentiated products and services,
our business, financial condition or results of operations may be materially and adversely affected.
Our wholesale distribution and services businesses could be adversely affected if we are not able to attract new customers,
increase sales to or retain existing customers or if our customers are unable to grow their businesses.
The profitability of our wholesale segment is dependent upon sufficient volume to support our operating infrastructure. The
inability to attract new customers or the loss of existing customers from a decision to use alternative sources of distribution,
whether through a competing wholesaler or by converting to self-distribution, or due to retail closure or industry consolidation
may negatively impact our sales and operating margins. If there were a rapid reduction in demand for the products we distribute
or services we offer, our results and cash flows may be negatively impacted if we are unable to reduce working capital
maintained to support current sales levels.
Our success also depends in part on the financial success and cooperation of our wholesale customers. They may not experience
an acceptable level of sales or profitability, and our revenues and gross margins could be negatively affected as a result. We
may also need to extend credit to our wholesale customers. While we seek to obtain security interests and other credit support in
connection with the financial accommodations we extend, such collateral may not be sufficient to cover our exposure.
Additionally, in the past we have entered into wholesale customer support arrangements to guaranty or subsidize real estate
obligations, which make us contingently liable in the event our wholesale customers default. If sales trends or profitability
worsen for wholesale customers, their financial results may deteriorate, which could result in, among other things, lost business
for us, delayed or reduced payments to us or defaults on payments or other liabilities owed by wholesale customers to us, any of
which could adversely impact our financial condition and results of operations, as well as our ability to grow our wholesale
business. In this regard, our wholesale customers are affected by the same economic conditions, including food inflation and
deflation, and competition that our retail segment faces. The magnitude of these risks increases as the size of our wholesale
customers increases.
Many of our customers are not obligated to continue purchasing products from us, and larger customers that have multiyear
contracts with us may terminate these contracts early in certain situations or choose not to renew or extend these contracts
at expiration.
Many of our wholesale customers buy from us under purchase orders, and we generally do not have written agreements with or
long-term commitments from these customers for the purchase of products. We cannot assure you that these customers will
maintain or increase their orders for the products supplied by us or that we will be able to maintain or add to our existing
customer base. Decreases in volumes or orders for products supplied by us for these customers with whom we do not have a
long-term contract may have a material adverse effect on our business, financial condition or results of operations.
We may have contracts with certain of our customers (as is the case with many of our chain customers) that obligate the
customer to buy products from us for a particular period of time. Even in this case, the contracts may not require the customer
to purchase a minimum number of products from us or the contracts may afford the customer better pricing in the event that the
volume of the customer’s purchases exceeds certain levels. If these customers were to terminate or fail to perform under these
contracts prior to their scheduled termination, or if we or the customer elected not to renew or extend the term of the contract at
its expiration or not to renew or extend at historical purchase levels, it may have a material adverse effect on our business,
financial condition or results of operations, including additional operational expenses to transition out of the business or to
adjust our facilities and staffing costs to cover the reduction in Net sales.
Table of Contents
14
Disruptions to our or third-party information technology systems, including cyber-attacks and security breaches, and the
costs of maintaining secure and effective information technology systems could negatively affect our business and results of
operations.
The efficient operation of our businesses is highly dependent on computer hardware and software systems, including
customized information technology systems. Additionally, our businesses increasingly involve the receipt, storage and
transmission of sensitive data, including personal information about our customers, employees, and vendors and our proprietary
business information. We also share information with vendors. Information technology systems are vulnerable to not
functioning as designed and to disruptions and security breaches by computer hackers and cyber terrorists, which risks may be
more pronounced as associates continue to work remotely.
Although we continue to take actions to strengthen the security of our information technology systems, these measures and
technology may not adequately anticipate or prevent security breaches in the future or we may not be able to timely implement
these measures and technology. Cyber-attacks are rapidly evolving and becoming increasingly frequent, sophisticated and
difficult to detect. The failure to promptly detect, determine the extent of, appropriately respond to, and contain a significant
data security attack or breach of our systems or any third-party system used by us could have a material adverse impact on our
business, financial condition or results of operations. Any such failure also could result in the loss of credibility with our
customers and damage to our reputation and future sales, including through negative publicity. In addition, the unavailability of
information technology systems or failure of these systems or software to perform as anticipated for any reason, including a
ransomware attack, and any inability to respond to, or recover from, such an event, could disrupt our business, impact our
customers and result in decreased performance, increased overhead costs and increased risk for liability, causing our business
and results of operations to suffer.
We have experienced losses due to the uncollectibility of accounts in the past and could experience losses in the future if our
customers are unable to timely pay their debts to us.
Certain of our customers have from time to time experienced bankruptcy, insolvency or an inability to pay their debts to us as
they come due. If our customers suffer significant financial difficulty, they may be unable to pay their debts to us timely or at
all, which could have a material adverse effect on our business, financial condition or results of operations. It is possible that
customers may reject their contractual obligations to us under bankruptcy laws or otherwise. Significant customer bankruptcies
could further adversely affect our revenues and increase our Operating expenses by requiring larger provisions for bad debt. In
addition, even when our contracts with these customers are not rejected in bankruptcy, if customers are unable to meet their
obligations on a timely basis, it could adversely affect our ability to collect receivables. Further, we may have to negotiate
significant discounts and/or extended financing terms with these customers in such a situation, each of which could have a
material adverse effect on our business, financial condition or results of operations.
During periods of economic weakness, small to medium-sized businesses, like many of our independent channel customers,
may be impacted more severely and more quickly than larger businesses. Similarly, these smaller businesses may be more
likely to be more severely impacted by events outside of their control, like macro-economic shifts or significant weather events.
Consequently, the ability of such businesses to make payments to us may deteriorate, and in some cases this deterioration may
occur quickly, which could materially and adversely impact our business, financial condition or results of operations.
Increases in healthcare, pension and other costs under the Company’s single employer benefit plan and multiemployer
benefit plans could adversely affect our financial condition and results of operations.
We provide single employer and multiemployer health, defined benefit pension and defined contribution benefits to many of
our employees and, in some cases, former employees. The costs of such benefits continue to increase, and the extent of any
increase depends on a number of different factors, many of which are beyond our control. These factors include governmental
regulations such as The Patient Protection and Affordable Care Act, which resulted in changes to the U.S. healthcare system
and imposes mandatory types of coverage, reporting and other requirements; return on plan assets; changes in actuarial
valuations, estimates, or assumptions used to determine our benefit obligations for certain benefit plans, which require the use
of significant estimates, including the discount rate, expected long-term rate of return on plan assets, mortality rates and the
rates of increase in compensation and healthcare costs; for multiemployer plans, the outcome of collective bargaining and
actions taken by trustees who manage the plans; and potential changes to applicable legislation or regulation. If we are unable to
control these benefits and costs, we may experience increased operating costs, which may adversely affect our financial
condition and results of operations.
Table of Contents
15
Additionally, certain multiemployer pension plans in which we participate are underfunded with the projected benefit
obligations exceeding the fair value of those plans’ assets, in certain cases, by a wide margin. If a withdrawal were to occur, the
withdrawal liability from our multiemployer plans could be material, our efforts to mitigate these liabilities may not be
successful, and potential exposure to withdrawal liabilities could cause us to forgo or negatively impact our ability to enter into
other business opportunities. Some of these plans have required rehabilitation plans or funding improvement plans, and we can
give no assurances of the extent to which a rehabilitation plan or a funding improvement plan will improve the funded status of
the plan. It is possible that increases of unfunded liabilities of the multiemployer pension plans would result in increased future
payments by us and the other participating employers over the next several years. Any changes to our pension plans that would
impact associates covered by collective bargaining agreements will be subject to negotiation, which may limit our ability to
manage our exposure to these plans. A significant increase to funding requirements could adversely affect our financial
condition, results of operations, or cash flows. The financial condition of these pension plans may also negatively impact our
debt ratings, which may increase the cost of borrowing or adversely affect our ability to access financial markets.
Activist investors could negatively impact our business and cause disruptions to our operations.
We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy and
performance. Activist stockholders who disagree with the composition of the Board of Directors, our strategy or the way the
Company is managed may seek to effect change through various strategies and channels, such as through commencing a proxy
contest, making public statements critical of our performance or business or engaging in other similar activities.
Responding to such actions by activist investors can be costly and time-consuming, disruptive to our operations and divert the
attention of management, our Board of Directors and our employees, and our ability to execute our strategic plan could also be
impaired as a result. For example, we have been required to retain the services of various professionals to advise us on activist
stockholder matters, including legal, financial and other advisory fees. In the event of an activist campaign, we could be
required to incur substantially increased legal, public relations and other advisory fees and proxy solicitation expenses. In
addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist investors
may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers,
directors, employees, collaborators or other partners, disrupt relationships with the Company, and the market price of our
common stock could also experience periods of increased volatility as a result.
Our insurance and self-insurance programs may not be adequate to cover future claims.
We use a combination of insurance and self-insurance to provide for potential liabilities, including workers’ compensation,
general and auto liability, director and officer liability, property risk, cyber and privacy risks and employee healthcare benefits.
We believe that our insurance coverage is customary for businesses of our size and type. However, there are types of losses we
may incur that cannot be insured against or that we believe are not commercially reasonable to insure. These losses, should they
occur, could have a material adverse effect on our business, financial condition or results of operations. In addition, the cost of
insurance fluctuates based upon our historical trends, market conditions, and availability. In response to the current market, we
have also increased deductibles and increased percentages of loss retention above the deductible for certain of our policies,
which could expose us to higher costs in the event of a claim.
We estimate the liabilities and required reserves associated with the risks we retain. Any such estimates and actuarial projection
of losses is subject to a considerable degree of variability. Among the causes of this variability are changes in benefit levels,
medical fee schedules, medical utilization guidelines, severity of injuries and accidents, vocation rehabilitation and
apportionment and unpredictable external factors affecting inflation rates, discount rates, rising healthcare costs, litigation
trends, legal interpretations, and actual claim settlement patterns. If actual losses incurred are greater than those anticipated, our
reserves may be insufficient and additional costs could be recorded in our consolidated financial statements. If we suffer a
substantial loss that exceeds our self-insurance reserves and any excess insurance coverage, the loss and attendant expenses
could harm our business, financial condition, or results of operations.
The cost of the capital available to us and limitations on our ability to access additional capital may have a material adverse
effect on our business, financial condition or results of operations.
Historically, acquisitions and capital expenditures have been a large component of our growth. We anticipate that capital
expenditures will continue to be, and acquisitions may be, important to our growth in the future. As a result, increases in the
cost of capital available to us, which could result from volatility in the credit markets, downgrades of our credit ratings, our not
being in compliance with restrictive covenants under our debt agreements or our inability to access additional capital to finance
acquisitions and capital expenditures through borrowed funds could restrict our ability to grow our business organically or
through acquisitions, which could have a material adverse effect on our business, financial condition or results of operations.
Table of Contents
16
In addition, our profit margins depend on strategic buying initiatives, such as discounted bulk purchases, which require
spending significant amounts of working capital up-front to purchase products that we then sell over a multi-month time period.
Increases in the cost of capital or our inability to access additional capital on satisfactory terms could restrict our ability to
engage in strategic buying initiatives, which could reduce our profit margins and have a material adverse effect on our business,
financial condition or results of operations.
Our debt agreements contain restrictive covenants that may limit our operating flexibility.
Our debt agreements, including the loan agreement (the “ABL Loan Agreement”) related to our $2,730 million asset-based
revolving credit facility (the “ABL Credit Facility”) entered into in June 2022, as amended, and the term loan agreement (the
“Term Loan Agreement”) related to our $500 million term loan facility (the “Term Loan Facility”) entered into on October 22,
2018, as amended, and the indenture governing our unsecured 6.750% Senior Notes due October 15, 2028 (the “Senior Notes”)
contain financial covenants and other restrictions that limit our operating flexibility and our flexibility in planning for or
reacting to changes in our business. These restrictions may prevent us from taking actions that we believe would be in the best
interest of our business if we were not subject to these limitations and may make it difficult for us to successfully execute our
business strategy or effectively compete with companies that are not similarly restricted.
In addition, our ABL Loan Agreement, Term Loan Agreement and the indenture governing the Senior Notes require that we
comply with various financial tests and impose certain restrictions on us, including among other things, restrictions on our
ability to incur additional indebtedness, create liens on assets, make loans or investments, or return capital to stockholders
through share repurchases or paying dividends. Failure to comply with these covenants could have a material adverse effect on
our business, financial condition, or results of operations.
Impairment charges for long-lived assets could adversely affect the Company’s financial condition and results of operations.
We monitor the recoverability of our long-lived assets, such as buildings, equipment and leased assets, and evaluate their
carrying value for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets
may not be fully recoverable. If the review performed indicates that impairment has occurred, we are required to record a non-
cash impairment charge for the difference between the carrying value and fair value of the long-lived assets, in the period the
determination is made. The testing of long-lived assets and goodwill for impairment requires us to make estimates that are
subject to significant assumptions about our future revenue, profitability, cash flows, fair value of assets and liabilities, and
weighted average cost of capital, as well as other assumptions. Changes in these estimates, or changes in actual performance
compared with these estimates, may affect the fair value of long-lived assets, which may result in an impairment charge.
We cannot accurately predict the amount or timing of any impairment. Should the value of long-lived assets become impaired,
our financial condition and results of operations may be adversely affected.
Table of Contents
17
Economic Risks
Changes in consumer purchasing habits could materially and adversely affect our business, financial condition or results of
operations.
Changes in consumer purchasing habits may reduce demand for certain of the products we distribute. Consumer habits could be
affected by a number of factors, including an increase in food-away-from home options, changes in attitudes regarding benefits
of natural and organic products when compared to similar lower margin conventional products, new information regarding the
health effects of consuming certain foods, changes in disposable income levels, which may be impacted by a reduction in the
level of government spending that supports grocery purchases, or other macro trends. For example, we experienced declines in
certain of our sales channels as a result of changes in consumer purchasing habits related to the COVID-19 pandemic, including
reductions in foodservice, bulk snacks, seeds and nuts and international categories, and we cannot be certain how consumer
habits may continue to evolve. Further, in a sustained economic downturn, consumers may shift their purchases to lower-cost,
lower-margin products. Although there is a growing consumer preference for sustainable, organic and locally grown products,
which are higher margin products, there can be no assurance that such trend will continue. Changing consumer preferences also
result from generational shifts, including younger generations seeking new and different foods, as well as more multi-cultural
menu options and menu innovation. However, there can be no assurance that such trends will continue. If consumer eating
habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we
may experience higher costs associated with the implementation of those changes. Additionally, if we are not able to effectively
respond to changes in consumer perceptions or adapt our product offerings to new or developing trends in eating habits, our
business, financial condition, or results of operations could suffer.
Our leverage and debt service obligations increase our sensitivity to the effects of economic downturns and could adversely
affect our business.
As of August 3, 2024, we had approximately $2.1 billion of long-term debt outstanding. Our leverage, and any increase therein,
could have important potential consequences, including, but not limited to:
•
increasing our vulnerability to, and reducing our flexibility in planning for and responding to, adverse general
economic and industry conditions and changes in our business and the competitive environment and placing us at a
disadvantage to our competitors that are less leveraged;
•
requiring us to use a substantial portion of operating cash flow to pay principal of, and interest on, indebtedness,
instead of other purposes, such as funding working capital, capital expenditures, acquisitions, returning capital to
stockholders through dividends or share repurchases or other corporate purposes;
•
increasing our vulnerability to downgrades of our credit rating, which could adversely affect our cost of funds,
liquidity, and access to capital markets;
•
restricting us from making desired strategic acquisitions in the future or causing us to make non-strategic divestitures;
•
increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to
variable rates of interest;
•
making it more difficult for us to repay, refinance, or satisfy our obligations with respect to our indebtedness;
•
limiting our ability to borrow additional funds and increasing the cost of any such borrowing; and
•
imposing restrictive covenants on our operations, which could result in an event of default if we are unable to comply,
and absent any cure or waiver of such default ultimately could result in the acceleration of the such debt and
potentially other debt with cross-acceleration or cross-default provisions.
There is no assurance that we will generate sufficient cash flow from operations or that future debt or equity financing will be
available to us to enable us to pay our indebtedness. As a result, we may need to refinance all or a portion of our indebtedness
on or before maturity, however, we may not be able to do so on favorable terms, or at all. Any inability to generate sufficient
cash flow or refinance our indebtedness on favorable terms could have a material adverse effect on our business, financial
condition or results of operations.
Table of Contents
18
Disruption of our distribution network or to the operations of our customers could adversely affect our business.
Damage or disruption to our distribution capabilities due to weather, including extreme or prolonged weather conditions,
natural disaster, fire, civil unrest, terrorism, pandemic, strikes, product recalls or safety concerns generally, crop conditions,
availability of key commodities, regulatory actions, disruptions in technology, the financial and/or operational instability of key
suppliers, performance by outsourced service providers, transportation interruptions, labor supply or stoppages or vendor
defaults or disputes, or other reasons could impair our ability to distribute our products. To the extent that we are unable, or it is
not financially feasible, to mitigate the likelihood or potential impact of such events, or to effectively manage such events if
they occur, there could be an adverse effect on our business, financial condition or results of operations.
In addition, such disruption may interrupt or impede access to, or otherwise reduce the number of consumers who visit, our
customers’ facilities, all of which could have a material adverse effect on our business, financial condition or results of
operations.
Increased fuel costs may adversely affect our results of operations.
Increased fuel costs may have a negative impact on our results of operations. Both the price and supply of fuel are unpredictable
and fluctuate based on events outside our control, including geopolitical developments, supply and demand for oil and gas,
actions by the Organization of Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing
countries and regions, regional production patterns and environmental concerns. Higher costs for diesel fuel can increase the
price we pay for products as well as the costs we incur to deliver products to our customers, including costs of inbound goods
from our suppliers. These factors, in turn, may negatively impact our Net sales, margins, operating expenses and operating
results. To the extent we do not enter into commodity derivative contracts to hedge a portion of our projected diesel fuel
requirements, our exposure to volatility in the price of diesel fuel would increase relative to our exposure to volatility in periods
in which we have outstanding commodity derivative contracts. We also maintain a fuel program with certain customers, which
allows us to pass some of the changes in fuel costs through to those customers. If fuel costs continue to increase in the future,
we may experience difficulties in passing all or a portion of these costs along to our customers, which may adversely affect our
business, financial condition or results of operations.
Legal and Regulatory Risks
We are subject to significant governmental regulation and failure to comply with such regulations may have a material
adverse effect on our business, financial condition or results of operations.
Our business is highly regulated at the federal, state, and local levels, and our products and distribution operations require
various licenses, permits and approvals. For example:
•
The products that we distribute in the United States are subject to inspection by the United States Food and Drug
Administration.
•
Our warehouse and distribution centers are subject to inspection by the United States Department of Agriculture, the
United States Department of Labor Occupational and Health Administration, the Environmental Protection Agency
and various state health and workplace safety authorities.
•
Our United States trucking operations are subject to regulation by the United States Department of Transportation and
the United States Federal Highway Administration.
In addition, the various federal, state and local laws, regulations and administrative practices to which we are subject require us
to comply with numerous provisions regulating areas such as environmental, health and sanitation standards, food safety,
marketing of natural or organically produced food, facilities, pharmacies, equal employment opportunity, public accessibility,
employee benefits, wages and hours worked and licensing for the sale of food, drugs, tobacco and alcoholic beverages, among
others. For example:
Table of Contents
19
Environmental, Health and Safety: Our operations are subject to extensive and increasingly stringent laws and regulations
pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the
disposal of food by-products, the handling, treatment, and disposal of wastes, maintenance of refrigeration systems, and
remediation of soil and groundwater contamination. Compliance with existing or changing environmental and safety
requirements, including more stringent limitations imposed or expected to be imposed in any recently renewed or soon-to-be
renewed environmental permits, may require capital expenditures. Additionally, concern over climate change, including the
impact of global warming, has led to significant United States and international legislative and regulatory efforts to limit
greenhouse gas emissions. Increased regulation regarding greenhouse gas emissions, particularly with respect to diesel engine
emissions, could result in substantial additional operating expenses. These expenses may include an increase in the cost of the
fuel and other energy we purchase and capital costs associated with updating or replacing our vehicles sooner than planned.
Until the timing, scope and extent of such regulation becomes known, we cannot predict its effect on our results of operations.
It is reasonably possible, however, that it could result in material costs, which we may be unable to pass on to our customers.
Further, our business may be subject to climate-related transition risks, which arise from society’s transition toward a low-
carbon economy due to changes in laws or regulations, technological advancements, and investor and consumer sentiment. We
also have announced third-party validated emissions reduction targets covering our operations and value chain. While many of
our initiatives will create efficiencies and return on investment, the transition to a low-carbon economy generally and our own
efforts to reduce emissions could lead to increased costs to transition to or invest in renewable energy sources, including electric
vehicles, increased compliance costs, including tracking and reporting systems, and increased costs of products, commodities
and energy.
Food Safety and Marketing: There is significant governmental scrutiny, regulations and public awareness regarding food
quality and food and drug safety. We may be adversely affected if consumers lose confidence in the safety and quality of the
food we manufacture or the food and drug products we distribute. In addition, we are subject to governmental scrutiny of and
public awareness regarding food safety and the sale, packaging, and marketing of natural and organic products. Compliance
with these laws may impose a significant burden on our operations.
Wage Rates and Paid Leave: Changes in federal, state or local minimum wage and overtime laws or employee paid leave laws
could cause us to incur additional wage costs, which could adversely affect our operating margins. Failure to comply with
existing or new laws or regulations could result in significant damages, penalties and/or litigation costs.
Information Security: As a merchant that accepts debit and credit cards for payment, we are subject to the Payment Card
Industry Data Security Standard (“PCI DSS”), issued by the PCI Council. Additionally, we are subject to PCI DSS as a service
provider, which is a business entity that is not a payment brand directly involved in the processing, storage or transmission of
cardholder data. PCI DSS contains compliance guidelines and standards with regard to our security surrounding the physical
and electronic storage, processing and transmission of individual cardholder data. By accepting debit cards for payment, we are
also subject to compliance with American National Standards Institute data encryption standards and payment network security
operating guidelines. The cost of complying with stricter privacy and information security laws, standards and guidelines,
including evolving PCI DSS standards, and developing, maintaining, and upgrading technology systems to address future
advances in technology, could be significant and we could experience problems and interruptions associated with the
implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems.
Failure to comply with such laws, standards, and guidelines, or payment card industry standards such as those involving
MasterCard, Visa and Europay (EMV) transactions, could have a material adverse impact on our business, financial condition
or results of operations.
Foreign Operations: Our supplier base includes domestic and foreign suppliers. In addition, we have customers located outside
the United States. Accordingly, laws and regulations affecting the importation and taxation of goods, including duties, tariffs
and quotas, or changes in the enforcement of those laws and regulations could adversely impact our financial condition and
results of operations. In addition, we are required to comply with laws and regulations governing export controls, and ethical,
anti-bribery and similar business practices such as the Foreign Corrupt Practices Act. Our Canadian operations are similarly
subject to extensive regulation, including the English and French dual labeling requirements applicable to products that we
distribute in Canada. The loss or revocation of any existing licenses, permits, or approvals or the failure to obtain any additional
licenses, permits, or approvals in new jurisdictions where we intend to do business could have a material adverse effect on our
business, financial condition or results of operations.
Table of Contents
20
Pharmacy: We are required to meet various security and operating standards and comply with the Controlled Substances Act
and its accompanying regulations governing the sale, marketing, packaging, holding, record keeping and distribution of
controlled substances. During the past several years, the United States healthcare industry has been subject to an increase in
governmental regulation and audits at both the federal and state levels. For example, in 2019, the Company settled with the
Drug Enforcement Administration alleged violations of the Controlled Substances Act relating to an administrative subpoena
received by Supervalu that requested, among other things, information on the Company’s pharmacy policies and procedures
generally, as well as the production of documents that are required to be kept and maintained pursuant to the Controlled
Substances Act and its accompanying regulations.
The failure to comply or maintain compliance with applicable governmental laws and regulations, including those referred to
above and in Item 1. Business - Government Regulation of this Annual Report, could result in, among other things,
administrative, civil, or criminal penalties or fines; mandatory or voluntary product recalls; warning or other letters; cease and
desist orders against operations that are not in compliance; closure of facilities or operations; the loss, revocation, or
modification of any existing licenses, permits, registrations or approvals; the failure to obtain additional licenses, permits,
registrations or approvals in new jurisdictions where we intend to do business; or the loss of our ability to participate in federal
and state healthcare programs, any of which could have a material adverse effect on our business, financial condition or results
of operations. These laws and regulations may change in the future. We cannot predict the nature of future laws, regulations,
interpretations or applications, nor can we determine the effect that additional governmental regulations or administrative
orders, when and if promulgated, or disparate federal, state and local regulatory schemes would have on our future business.
We may incur material costs in our efforts to comply with current or future laws and regulations or due to any required product
recalls.
In addition, if we fail to comply with applicable laws and regulations or encounter disagreements with respect to our contracts
subject to governmental regulations, including those referred to above, we may be subject to investigations, criminal sanctions
or civil remedies, including fines, injunctions, prohibitions on exporting, seizures, or debarments from contracting with the U.S.
or Canadian governments. The cost of compliance or the consequences of non-compliance, including debarments, could have a
material adverse effect on our business, financial condition, or results of operations. In addition, governmental units may make
changes in the regulatory frameworks within which we operate that may require us to incur substantial increases in costs in
order to comply with such laws and regulations.
Product liability claims could have an adverse effect on our business.
We face a risk of exposure to product liability claims if the products we sell or manufacture cause injury or illness. In addition,
meat, seafood, cheese, poultry and other products that we distribute could be subject to recall because they are, or are alleged to
be, contaminated, spoiled or inappropriately labeled. Our meat and poultry products may be subject to contamination by
disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella and generic E. coli. These pathogens
are generally found in the environment, and as a result, there is a risk that they, as a result of food processing, could be present
in the meat and poultry products we distribute. These pathogens can also be introduced as a result of improper handling at the
consumer level. These risks may be controlled, although not eliminated, by adherence to good manufacturing practices and
finished product testing. We have little, if any, control over proper handling before we receive the product or once the product
has been shipped to our customers. Any events that give rise to actual or potential food contamination, drug contamination or
food-borne illness or injury, or events that give rise to claims that our products are not of the quality or composition claimed to
be, may result in product liability claims from individuals, consumers and governmental agencies, penalties and enforcement
actions from government agencies, a loss of consumer confidence, harm to our reputation and could cause production and
delivery disruptions, which may adversely affect our financial condition or results of operations.
In addition, if we were to manufacture or distribute foods that are or are perceived to be unsafe, contaminated, or defective, it
may be necessary for us to recall such products, or we may recall products that we determine do not satisfy our quality
standards. Any resulting product recalls could have an adverse effect on our business, financial condition or results of
operations. We have, and the companies we have acquired have had, liability insurance with respect to product liability claims.
This insurance may not continue to be available at a reasonable cost or at all and may not be adequate to cover product liability
claims against us or against companies we have acquired.
We generally seek contractual indemnification and insurance coverage from our suppliers and manufacturers, but any such
indemnification is limited to the creditworthiness of the indemnifying party. We may be subject to liability, which could be
substantial, because of actual or alleged contamination in products manufactured or sold by us, including products sold by
companies before we acquired them. If we do not have adequate insurance or contractual indemnification available, product
liability claims and costs associated with product recalls, including a loss of business, could have a material adverse effect on
our business, financial condition or results of operations.
Table of Contents
21
We may be unable to adequately protect our intellectual property rights, which could harm our business.
We rely on a combination of trademark, service mark, trade secret, copyright and domain name law and internal procedures and
nondisclosure agreements to protect our intellectual property. We believe our trademarks, private label products and domain
names are valuable assets. However, our intellectual property rights may not be sufficient to distinguish our products and
services from those of our competitors and to provide us with a competitive advantage. From time to time, third parties may use
names, logos and slogans similar to ours, may apply to register trademarks or domain names similar to ours, and may infringe
or otherwise violate our intellectual property rights. Our intellectual property rights may not be successfully asserted against
such third parties or may be invalidated, circumvented or challenged. Asserting or defending our intellectual property rights
could be time consuming and costly and could distract management’s attention and resources. If we are unable to prevent our
competitors from using names, logos, slogans and domain names similar to ours, consumer confusion could result, the
perception of our brands and products could be negatively affected and our sales and profitability could suffer as a result. In
addition, if our wholesale customers receive negative publicity or fail to maintain the quality of the goods and services used in
connection with our trademarks, our rights to, and the value of, our trademarks could potentially be harmed. Failure to protect
our proprietary information could also have an adverse effect on our business.
We may also be subject to claims that our activities or the products we sell infringe, misappropriate, or otherwise violate the
intellectual property rights of others. Any such claims can be time consuming and costly to defend and may distract
management’s attention and resources, even if the claims are without merit, and may prevent us from using our trademarks in
certain geographies or in connection with certain products and services, any of which could adversely affect our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We have established policies and processes for assessing, identifying and managing risks from cybersecurity threats based on
the National Institute of Standards and Technology (“NIST”) cybersecurity framework. Our technology environment is
regularly assessed, both internally and through the use of third parties, against the six NIST principles (identify, detect, protect,
recover, respond, govern) to oversee and identify the likelihood and impact of risks from cybersecurity threats. Additionally, we
apply these principles where appropriate to third-party technology providers. We also utilize third parties to assess the
effectiveness of our cybersecurity program on a periodic basis, which includes engaging cybersecurity assessors and
cybersecurity experts to assist in the detection, verification and validation of risks from cybersecurity threats, as well as to
support associated mitigation plans when necessary. We have a cybersecurity incident response plan in place to assist us in
detecting, analyzing, containing, responding to and recovering from cybersecurity incidents. We also maintain cybersecurity
insurance coverage to protect against certain potential losses arising from cybersecurity incidents.
We have identified and as a result monitor cybersecurity as an enterprise risk of the Company. We have an Information Security
Steering Committee that meets quarterly to review the cybersecurity threat landscape, current risks, incidents and program
management. We routinely assess the cybersecurity threat landscape, including any potential unauthorized occurrence on or
conducted through our information systems that may result in adverse effects on the confidentiality, integrity or availability of
our information systems or any information residing therein.
Our Chief Information Security Officer (“CISO”) leads a dedicated cybersecurity team responsible for policy, governance,
vulnerability management, architecture and incident response. Our team monitors and tests our cybersecurity policies and
procedures through methods such as periodic reviews, targeted assessments and tabletop exercises. All personnel with access to
UNFI systems are made aware of our cybersecurity policies and procedures upon hire and through periodic refresher trainings.
Such policies and procedures cover areas such as identity and access management, vendor management, data governance and
protection, vulnerability management, incident response, recovery, communications and cybersecurity hygiene.
Table of Contents
22
We have not experienced any cybersecurity incidents that have materially impacted or are likely to materially impact our
business strategy, results of operations or financial condition based on information known to us as of the date of this Annual
Report. Although we cannot eliminate all potential threats, our cybersecurity program is operated in a manner to minimize the
likelihood of any threat becoming material and to keep pace with a constantly evolving cybersecurity landscape. For more
information on risks from cybersecurity threats, refer to the risks described under “Risk Factors” included in Part I, Item 1A in
this Annual Report.
Governance
Board’s Role in Oversight of Risks from Cybersecurity Threats
Our Board of Directors has appointed the Audit Committee to assist in fulfilling its responsibilities with respect to the oversight
of cybersecurity, data privacy and information technology. Several of our Directors, including certain members of our Audit
Committee, have backgrounds or professional experience in risk management, digital platforms, information technology or
cybersecurity and meet regularly with members of our management team to advise on cybersecurity matters and technology
initiatives.
Our Chief Information Officer (“CIO”), CISO and other members of management provide quarterly updates to the Audit
Committee and meet with the Board of Directors at least annually regarding risks related to information systems, information
security and cybersecurity. Specific topics may include updates to the Company’s strategy to combat cybersecurity risks;
cybersecurity news and events; key focus areas; the threat landscape; and the results of certain assessments and testing. Our
CIO, CISO or other members of management provide information to the Audit Committee or our Board of Directors, as
applicable, pursuant to risk-based escalation protocols for cybersecurity incidents in accordance with an established materiality
framework.
Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats
The information security function is led by our CISO, under the direction of our CIO. Our CISO, who has been serving in this
position since January 2020, has over 20 years of experience in information security and is a Certified Information Systems
Security Professional. Our CISO maintains primary responsibility for developing cybersecurity strategies; cybersecurity
governance; identifying, assessing and monitoring cybersecurity risks; preparing for and responding to cybersecurity incidents;
verification and testing of cybersecurity; and disaster recovery governance. Our CISO may authorize specific Company
associates to assist in managing these responsibilities if determined necessary, including the Crisis Response Team. Our CIO
and CISO have oversight responsibilities of the Company’s cybersecurity program.
We conduct a regular cybersecurity risk assessment process through our CISO and dedicated information security team, which
reports to the Information Security Steering Committee. This committee meets at least quarterly to review current program
progress and discuss and evaluate risks that could be material to our business, including cybersecurity threats. The Information
Security Steering Committee is comprised of key leadership across the Company to support cross-functional representation.
Table of Contents
23
ITEM 2. PROPERTIES
Distribution Centers
We maintained 55 distribution centers and warehouses at August 3, 2024, which were utilized by our Wholesale segment and
our other operating segments. The following table shows our dry and cold storage distribution and warehouse facilities and their
associated owned and leased square footage occupied as of August 3, 2024:
Hopkins, Minnesota(2)
1,866
—
1,866
Allentown, Pennsylvania
—
1,327
1,327
Manchester, Pennsylvania
—
1,319
1,319
Stockton, California
—
1,290
1,290
Mechanicsville, Virginia(2)
1,249
—
1,249
Riverside, California
—
1,171
1,171
Centralia, Washington
—
1,155
1,155
Green Bay, Wisconsin
—
1,080
1,080
York, Pennsylvania
—
1,039
1,039
Joliet, Illinois
—
988
988
Champaign, Illinois
—
910
910
Pompano Beach, Florida
—
903
903
Harrisburg, Pennsylvania
—
883
883
Fort Wayne, Indiana(2)
871
—
871
Commerce, California
—
858
858
Ridgefield, Washington(2)
779
—
779
Quincy, Florida(2)
758
—
758
Sarasota, Florida
—
743
743
Pittsburgh, Pennsylvania
679
—
679
Atlanta, Georgia(2)
389
259
648
Lancaster, Texas
—
590
590
Anniston, Alabama
465
105
570
Indianola, Mississippi(2)
543
—
543
Aurora, Colorado
—
529
529
Montgomery, New York(2)
500
—
500
Rocklin, California(2)
469
—
469
Stevens Point, Wisconsin(2)
314
146
460
Gilroy, California(2)
447
—
447
Sturtevant, Wisconsin(2)
442
—
442
Moreno Valley, California
—
434
434
Carlisle, Pennsylvania
—
423
423
Howell Township, New Jersey(2)
397
—
397
Chesterfield, New Hampshire(2)
300
69
369
Richburg, South Carolina(2)
342
—
342
Fargo, North Dakota(2)
336
—
336
Oglesby, Illinois
—
325
325
Dayville, Connecticut(2)
317
—
317
Greenwood, Indiana(2)
308
—
308
Prescott, Wisconsin(2)
307
—
307
Santa Fe Springs, California
—
298
298
Location(1)
Owned Square
Footage
Leased Square
Footage
Total Square
Footage
(in thousands)
Table of Contents
24
Iowa City, Iowa(2)
271
—
271
West Sacramento, California(2)
251
—
251
Bismarck, North Dakota(2)
244
—
244
Anniston, Alabama
—
231
231
Billings, Montana(2)
220
—
220
Vaughan, Ontario
—
180
180
Edison, New Jersey
—
178
178
West Newell, Illinois(2)
155
—
155
Richmond, British Columbia
—
126
126
Londonderry, New Hampshire
—
124
124
Philadelphia, Pennsylvania
—
100
100
West Sacramento, California(2)
85
—
85
Fife, Washington
—
39
39
Montreal, Quebec
—
31
31
Truckee, California
—
8
8
Total
13,304
17,861
31,165
Location(1)
Owned Square
Footage
Leased Square
Footage
Total Square
Footage
(in thousands)
(1)
Distribution centers and warehouses as presented here reflect the location of the main distribution center campus and warehouse
combined with their related offsite storage used to supply customers from these locations.
(2)
These distribution centers secure our Term Loan Facility.
Retail Stores
The following table summarizes retail stores utilized by our Retail segment as of August 3, 2024:
Retail Banner
Number of
Stores
Owned Square
Footage
Leased Square
Footage
Total Square
Footage
(square footage in thousands)
Cub Foods(1)(2)
54
1,194
2,507
3,701
Shoppers
22
—
1,273
1,273
Total
76
1,194
3,780
4,974
(1)
Cub Foods stores include stores in which we have a controlling ownership interest and excludes 32 franchised Cub Foods full-line
and separate liquor stores in which we have no ownership interest or a minority interest.
(2)
Includes 7 Cub Foods stores securing our Term Loan Facility.
Corporate
As of August 3, 2024, we had approximately 900 thousand square feet, 90% of which was leased, of surplus retail stores and
warehouses, excluding assigned leases.
As of August 3, 2024, we utilized approximately 253 thousand square feet of office space primarily related to our corporate
offices located in Providence, Rhode Island as well as other smaller administrative offices across the United States. We own
approximately 61 thousand square feet and lease the remaining 192 thousand square feet of our corporate office space.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we are involved in routine litigation or other legal proceedings that arise in the ordinary course of our
business, including investigations and claims regarding employment law including wage and hour, pension plans, unfair labor
practices, labor union disputes, supplier, customer and service provider contract terms, product liability, real estate and antitrust.
Other than as set forth in Note 17—Commitments, Contingencies and Off-Balance Sheet Arrangements in Part II, Item 8 of this
Annual Report, which is incorporated herein, there are no pending material legal proceedings to which we are a party or to
which our property is subject.
Table of Contents
25
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information, Holders and Dividends
Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “UNFI”.
On September 26, 2024, we had 73 stockholders of record.
We have never paid any cash dividends on our capital stock and we have no current intention to pay cash dividends. Our future
dividend policy will depend on our earnings, capital requirements, financial condition and other factors considered relevant by
our Board of Directors. Our Term Loan Facility, ABL Credit Facility and Senior Notes contain terms that limit our ability to
make cash dividends.
Table of Contents
26
Comparative Stock Performance
The following graph compares the yearly change in cumulative total stockholder returns on our common stock for the last five
fiscal years with the cumulative return on the Standard & Poor’s (“S&P”) SmallCap 600 Index and the S&P SmallCap 600
Food Distributors Index. The comparison assumes the investment of $100 on August 3, 2019 in our common stock and in each
of the indices and, in each case, assumes reinvestment of all dividends. The stock price performance shown below is not
necessarily indicative of future performance.
This performance graph shall not be deemed “soliciting material” or be deemed to be “filed” for purposes of Section 18 of the
Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference
into any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among United Natural Foods, Inc., the S&P SmallCap 600, the S&P SmallCap 600 Food Distributors(1)
United Natural Foods, Inc.
S&P SmallCap 600 Index
S&P SmallCap 600 Food Distributors Index
August 3,
2019
August 1,
2020
July 31,
2021
July 30,
2022
July 29,
2023
August 3,
2024
$0
$100
$200
$300
$400
$500
$600
(1)
Our selected industry peer group is the S&P SmallCap 600 Food Distributors Index, which includes SpartanNash Company, The
Andersons, Inc., The Chef’s Warehouse, Inc. and United Natural Foods, Inc.
August 3,
2019
August 1,
2020
July 31,
2021
July 30,
2022
July 29,
2023
August 3,
2024
United Natural Foods, Inc.
$
100.00 $
235.75 $
393.35 $
504.87 $
246.08 $
173.40
S&P SmallCap 600 Index
$
100.00 $
93.77 $
147.18 $
137.99 $
143.97 $
155.88
S&P SmallCap 600 Food Distributors Index $
100.00 $
102.43 $
168.28 $
227.64 $
184.82 $
175.57
Issuer Purchases of Equity Securities
On September 21, 2022, our Board of Directors authorized a repurchase program for up to $200 million of our common stock
over a term of four years (the “2022 Repurchase Program”). Under the 2022 Repurchase Program, we repurchased
approximately 1,888,000 shares of our common stock for a total cost of $62 million in fiscal 2023. We did not repurchase any
shares of our common stock in fiscal 2024. As of August 3, 2024, we had $138 million remaining authorized under the 2022
Repurchase Program.
Table of Contents
27
Any repurchases are intended to be made in accordance with applicable securities laws from time to time in the open market,
through privately negotiated transactions or otherwise. With respect to open market purchases, we may use a plan or plans
meeting the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which allows us to repurchase
shares during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-
imposed blackout periods. We manage the timing of any repurchases in response to market conditions and other relevant
factors, including any limitations on our ability to make repurchases under the terms of our ABL Credit Facility, Term Loan
Facility and Senior Notes.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the
notes thereto, “Risk Factors” included in Part I, Item IA, “Cautionary Note Regarding Forward-Looking Statements” and
other risks described elsewhere in this Annual Report. The following includes a comparison of our consolidated results of
operations, our segment results and financial position for fiscal years 2024 and 2023. For a comparison of our consolidated
results of operations, segment results and financial position for fiscal years 2023 and 2022, see Item 7 of Part II,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Annual Report on
Form 10-K for the fiscal year ended July 29, 2023, filed with the Securities and Exchange Commission on September 26,
2023.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act, and
Section 21E of the Exchange Act, that involve substantial risks and uncertainties. In some cases you can identify these
statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“seek,” “should,” “will” and “would,” or similar words. Statements that contain these words and other statements that are
forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future
results of operations or of financial positions or state other “forward-looking” information.
Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect. These statements are based
on our management’s beliefs and assumptions, which are based on currently available information. These assumptions could
prove inaccurate. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be
required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including, but not limited to:
•
our dependence on principal customers;
•
the relatively low margins of our business, which are sensitive to inflationary and deflationary pressures and intense
competition, including as a result of the continuing consolidation of retailers and the growth of consumer choices for
grocery and consumable purchases;
•
our ability to realize the anticipated benefits of our strategic initiatives;
•
changes in relationships with our suppliers;
•
our ability to operate, and rely on third parties to operate, reliable and secure technology systems;
•
labor and other workforce shortages and challenges;
•
the addition or loss of significant customers or material changes to our relationships with these customers;
•
our ability to realize anticipated benefits of strategic transactions;
•
our ability to continue to grow sales, including of our higher margin natural and organic foods and non-food products;
•
our ability to maintain sufficient volume in our wholesale distribution and services businesses to support our operating
infrastructure;
•
our ability to access additional capital;
•
increases in healthcare, pension and other costs under our single employer benefit plan and multiemployer benefit
plans;
•
the potential for additional asset impairment charges;
•
our sensitivity to general economic conditions including inflation, changes in disposable income levels and consumer
purchasing habits;
Table of Contents
28
•
our ability to timely and successfully deploy our warehouse management system throughout our distribution centers
and our transportation management system across the Company and to achieve efficiencies and cost savings from
these efforts;
•
the potential for disruptions in our supply chain or our distribution capabilities from circumstances beyond our control,
including due to lack of long-term contracts, severe weather, labor shortages or work stoppages or otherwise;
•
moderated supplier promotional activity, including decreased forward buying opportunities;
•
union-organizing activities that could cause labor relations difficulties and increased costs;
•
our ability to maintain food quality and safety; and
•
volatility in fuel costs.
You should carefully review the risks described under “Risk Factors” included in Part I, Item 1A, as well as any other
cautionary language in this Annual Report, as the occurrence of any of these events could have an adverse effect, which may be
material, on our business, results of operations, financial condition or cash flows.
EXECUTIVE OVERVIEW
Business Overview
UNFI is a leading distributor of grocery and non-food products, and support services provider to retailers in the United States
and Canada. We believe we are uniquely positioned to provide the broadest array of products and services to customers
throughout North America. Our diversified customer base includes over 30,000 customer locations ranging from some of the
largest grocers in the country to smaller independents as well. We offer approximately 250,000 products consisting of national,
regional and private label brands grouped into the following main product categories: grocery and general merchandise;
perishables; frozen foods; wellness and personal care items; and bulk and foodservice products. We believe we are North
America’s premier grocery wholesaler with 55 distribution centers and warehouses representing approximately 31 million
square feet of warehouse space. We are a coast-to-coast distributor with customers in all 50 states as well as all ten provinces in
Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product
assortment and service offerings are unmatched by our wholesale competitors. We plan to continue to pursue new business
opportunities with independent retailers that operate diverse formats, regional and national chains, as well as international
customers with wide-ranging needs. Our business is classified into two reportable segments: Wholesale and Retail; and also
includes a manufacturing division and a branded product line division.
We are focused on becoming a more effective and efficient business partner to our customers, which we believe will position us
for long-term profitable growth. We have undertaken a new strategy and have established new three-year financial objectives
that begin in fiscal 2025 and are designed to make us more efficient while improving free cash flow generation and reducing net
leverage. Our strategy includes the areas of focus detailed under “Business” included in Part 1, Item 1 of this Annual Report.
During fiscal 2024, we continued to implement near-term initiatives to help improve profitability and strengthen our foundation
while we finalized and began implementing our revised strategy.
We expect to continue to use available capital to re-invest in our business and are committed to improving our free cash flow
and financial leverage while reducing outstanding debt.
We believe we can optimize our performance and profitability through our improvement efforts, which we expect will improve
our cost structure, increase sales of products and services, and position us to provide tailored, data-driven solutions to help our
customers run their businesses more efficiently and contribute to customer acquisitions.
Our largest customer accounted for more than 10% of our Net sales in fiscal 2024. On May 21, 2024, we amended and restated
our distribution agreement with this customer which, among other things, extended the term of that agreement through May 20,
2032.
Trends and Other Factors Affecting Our Business
Our results are impacted by macroeconomic and demographic trends, changes in the food distribution market structure and
changes in consumer behavior. We believe food-at-home expenditures as a percentage of total food expenditures are subject to
these trends, including changes in consumer behaviors in response to social and economic trends, such as levels of disposable
income and the health of the economy in which our customers and our stores operate.
Table of Contents
29
The U.S. economy has experienced economic volatility in recent years, which has had, and we expect may continue to have, an
impact on consumer confidence and behavior. Consumer spending may continue to be impacted by levels of discretionary
income and consumers trading down to a less expensive mix of products for grocery items or buying fewer items. In addition,
inflation continues to affect our business, and fluctuating commodity and labor input costs may continue to impact the prices of
products we procure from manufacturers. We believe our product mix, which ranges from high-quality natural and organic
products to national and local conventional brands, including cost conscious private label brands, positions us to serve a broad
cross section of North American retailers and end customers, and may lessen the impact of any further shifts in consumer and
industry trends in grocery product mix.
We are also impacted by changes in food distribution trends affecting our Wholesale customers, such as direct store deliveries
and other methods of distribution. Our Wholesale customers manage their businesses independently and operate in a
competitive environment.
Wholesale Distribution Network Optimization
We are making initial strides towards our network optimization goal by streamlining our distribution center network to create a
more efficient supply chain and reduce capital intensity. Subsequent to the fourth quarter of fiscal 2024, we began the
consolidation of the volume of two distribution centers in the upper Midwest and their related off-site storage facilities into
other facilities in the Central region. We expect to achieve synergies and cost savings as a result of these efforts through
eliminating inefficiencies, including incurring lower operating, shrink and off-site storage expenses.
In the second quarter of fiscal 2024, we began the development of our new Manchester, Pennsylvania distribution center, which
has approximately 1.3 million square feet. We recognized a $205 million right-of-use asset and operating lease liability for this
distribution center in fiscal 2024. Subsequent to the fourth quarter of fiscal 2024, in September 2024, we began operating this
facility, and we expect to begin consolidating volume from other nearby distribution centers in the East region into this new
distribution center in fiscal 2025.
We plan to continue to evaluate our distribution center network to further optimize performance and expect to incur incremental
expenses related to any future network realignment, expansion or improvements, including network optimization and
automation initiatives. We are working to both minimize these potential future costs and obtain new business to further improve
the efficiency of our transforming distribution network.
Retail Operations
We currently operate 76 retail grocery stores, including 54 Cub Foods corporate stores and 22 Shoppers Food Warehouse
stores. In addition, we supply another 26 Cub Foods stores operated by our Wholesale customers through franchise and equity
ownership arrangements. We operate 81 pharmacies primarily within the stores we operate and the stores of our franchisees. In
addition, we operate 24 “Cub Wine and Spirit” and “Cub Liquor” stores.
We plan to continue to invest in our Retail segment in areas such as customer-facing merchandising initiatives, physical
facilities, technology and operational tools. Cub Foods and Shoppers Food Warehouse anticipate continued investment in
improving the customer and associate experience through express remodels focused on customer facing elements.
Impact of Product Cost Changes
We experienced a mix of inflation and deflation across product categories during fiscal 2024. In the aggregate across our
businesses, including the mix of products, management estimates our businesses experienced product cost inflation of
approximately one percent in fiscal 2024 as compared to fiscal 2023. Cost inflation and deflation estimates are based on
individual like items sold during the periods being compared. Changes in merchandising, customer buying habits and
competitive pressures create inherent difficulties in measuring the impact of inflation and deflation on Net sales and Gross
profit. Absent any changes in units sold or the mix of units sold, inflation generally has the effect of increasing sales. Under the
last-in, first out (“LIFO”) method of inventory accounting, product cost increases are recognized within Cost of sales based on
expected year-end inventory quantities and costs, which generally has the effect of decreasing Gross profit and the carrying
value of inventory during periods of inflation.
Table of Contents
30
Our pricing to our customers is determined at the time of sale primarily based on the then prevailing vendor listed base cost,
and includes discounts we offer to our customers. Generally, in an inflationary environment as a wholesaler, rising vendor costs
result in higher Net sales driven by higher vendor prices when other variables such as quantities sold and vendor promotions are
constant. In fiscal 2024, we experienced fewer and less significant vendor product cost increases as compared to fiscal 2023.
These decreases negatively impacted our gross profit rate when comparing fiscal 2024 to fiscal 2023.
Composition of Consolidated Statements of Operations and Business Performance Assessment
Net Sales
Our Net sales consist primarily of product sales of natural, organic, specialty, produce, and conventional grocery and non-food
products, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional
services revenue. Net sales also include amounts charged by us to customers for shipping and handling and fuel surcharges.
Cost of Sales and Gross Profit
The principal components of our Cost of sales include the amounts paid to suppliers for product sold, plus transportation costs
necessary to bring the product to, or move product between, our distribution centers and retail stores, partially offset by
consideration received from suppliers in connection with the purchase or promotion of the suppliers’ products.
Operating Expenses
Operating expenses include distribution expenses of warehousing, delivery, purchasing, receiving, selecting, and outbound
transportation expenses, and selling and administrative expenses. These expenses include salaries and wages, employee
benefits, occupancy, insurance, depreciation and amortization expense and share-based compensation expense.
Restructuring, Acquisition and Integration Related Expenses
Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including
severance costs, share-based compensation acceleration charges and acquisition and integration related expenses. Integration
related expenses include certain professional consulting expenses and incremental expenses related to combining facilities
required to optimize our distribution network as a result of acquisitions.
Loss (Gain) on Sale of Assets and Other Asset Charges
Loss (gain) on sale of assets and other asset charges primarily includes losses (gains) on sales of assets, losses on sales of
financial assets, and asset impairments.
Net Periodic Benefit Income, Excluding Service Cost
Net periodic benefit income, excluding service cost reflects the recognition of expected returns on benefit plan assets and
interest costs on plan liabilities.
Interest Expense, Net
Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt
extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest
income.
Adjusted EBITDA
Our Consolidated Financial Statements are prepared and presented in accordance with generally accepted accounting principles
in the United States (“GAAP”). In addition to the GAAP results, we consider certain non-GAAP financial measures to assess
the performance of our business and understand underlying operating performance and core business trends, which we use to
facilitate operating performance comparisons of our business on a consistent basis over time. Adjusted EBITDA is provided as
a supplement to our results of operations and related analysis, and should not be considered superior to, a substitute for or an
alternative to, any financial measure of performance prepared and presented in accordance with GAAP. Adjusted EBITDA
excludes certain items because they are non-cash items or items that do not reflect management’s assessment of ongoing
business performance.
Table of Contents
31
We believe Adjusted EBITDA is useful because it provides additional information regarding factors and trends affecting our
business, which are used in the business planning process to understand expected operating performance, to evaluate results
against those expectations, and because of its importance as a measure of underlying operating performance, as the primary
compensation performance measure under certain compensation programs and plans. We believe Adjusted EBITDA is
reflective of factors that affect our underlying operating performance and facilitate operating performance comparisons of our
business on a consistent basis over time. Investors are cautioned that there are material limitations associated with the use of
non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures reflected below
exclude items that may be considered recurring in nature and may be reflected in our financial results for the foreseeable future.
These measurements and items may be different from non-GAAP financial measures used by other companies. Adjusted
EBITDA should be reviewed in conjunction with our results reported in accordance with GAAP in this Annual Report.
There are significant limitations to using Adjusted EBITDA as a financial measure including, but not limited to, it not reflecting
the cost of cash expenditures for capital assets or certain other contractual commitments, finance lease obligation and debt
service expenses, income taxes and any impacts from changes in working capital.
We define Adjusted EBITDA as a consolidated measure which we reconcile by adding Net (loss) income including
noncontrolling interests, less Net income attributable to noncontrolling interests, plus Non-operating income and expenses,
including Net periodic benefit income, excluding service cost, Interest expense, net and Other (income) expense, net, plus
(Benefit) provision for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus
adjustments for Share-based compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and integration related
expenses, Goodwill impairment charges, Loss (gain) on sale of assets and other asset charges, certain legal charges and gains,
and certain other non-cash charges or other items, as determined by management.
Assessment of Our Business Results
The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated.
(in millions)
2024
(53 weeks)
2023
(52 weeks)
Increase
(Decrease)
Net sales
$
30,980 $
30,272
$
708
Cost of sales
26,779
26,141
638
Gross profit
4,201
4,131
70
Operating expenses
4,100
3,973
127
Restructuring, acquisition and integration related expenses
36
8
28
Loss on sale of assets and other asset charges
57
30
27
Operating income
8
120
(112)
Net periodic benefit income, excluding service cost
(15)
(29)
14
Interest expense, net
162
144
18
Other income, net
(2)
(2)
—
(Loss) income before income taxes
(137)
7
(144)
Benefit for income taxes
(27)
(23)
(4)
Net (loss) income including noncontrolling interests
(110)
30
(140)
Less net income attributable to noncontrolling interests
(2)
(6)
4
Net (loss) income attributable to United Natural Foods, Inc.
$
(112) $
24
$
(136)
Adjusted EBITDA
$
518 $
640
$
(122)
Table of Contents
32
The following table reconciles Net (loss) income including noncontrolling interests to Adjusted EBITDA.
(in millions)
2024
(53 weeks)
2023
(52 weeks)
Net (loss) income including noncontrolling interests
$
(110) $
30
Adjustments to net (loss) income including noncontrolling interests:
Less net income attributable to noncontrolling interests
(2)
(6)
Net periodic benefit income, excluding service cost
(15)
(29)
Interest expense, net
162
144
Other income, net
(2)
(2)
Benefit for income taxes
(27)
(23)
Depreciation and amortization
319
304
Share-based compensation
37
38
LIFO charge
7
119
Restructuring, acquisition and integration related expenses(1)
36
8
Loss on sale of assets and other asset charges(2)
57
30
Multiemployer pension plan withdrawal charges(3)
—
1
Other retail expense(4)
—
1
Business transformation costs(5)
52
25
Other adjustments(6)
4
—
Adjusted EBITDA
$
518
$
640
(1)
Fiscal 2024 and fiscal 2023 primarily reflects costs associated with certain employee severance.
(2)
Fiscal 2024 primarily includes a $21 million non-cash asset impairment charge related to one of our corporate-owned office
locations in the first quarter of fiscal 2024, a $7 million non-cash asset impairment charge related to the decision to close certain
retail store locations in the third quarter of fiscal 2024, a $15 million non-cash impairment charge related to the decision to close
certain leased and owned distribution center locations in the fourth quarter of fiscal 2024 and $21 million in losses on the sales of
receivables under the accounts receivable monetization program. Fiscal 2023 primarily includes a $25 million intangible asset
impairment charge attributable to a rationalization of our brands portfolio in an effort to focus on our core private brand offerings
and $14 million in losses on the sales of receivables. Refer to Note 3—Revenue Recognition, Note 5—Property and Equipment, Net
and Note 6—Goodwill and Intangible Assets, Net in Part II, Item 8 of this Annual Report for additional information.
(3)
Fiscal 2023 reflects adjustments to multiemployer pension plan withdrawal charge estimates.
(4)
Fiscal 2023 reflects store closure costs, operational wind-down and inventory charges.
(5)
Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing
costs, and third-party professional service fees related to the board-led financial review in fiscal 2024, all of which are included
within Operating expenses in the Consolidated Statements of Operations.
(6)
Primarily reflects third-party professional service fees related to shareholder negotiations in the first quarter of fiscal 2024.
Table of Contents
33
Within the following results of operations, we have estimated the impact of the additional week in fiscal 2024, where
applicable and estimable, to provide more comparable financial results on a year-over-year basis. The impact of the 53rd
week discussed below represents an estimate of the contribution from the additional week in fiscal 2024 and is calculated by
taking one-fifth of the respective metrics for the last five-week period within the 14-week fourth quarter of fiscal 2024. The
53rd week in fiscal 2024 had no impact on Restructuring, acquisition and integration related expenses or Loss on sale of
assets and other asset charges.
RESULTS OF OPERATIONS
Fiscal year ended August 3, 2024 (fiscal 2024) compared to fiscal year ended July 29, 2023 (fiscal 2023)
Net Sales
The following table sets forth our Net sales by customer channel. Within the following table, we have estimated the impact of
the additional 53rd week in fiscal 2024 to provide more comparable financial results on a year-over-year basis.
(in millions except percentages)
2024
(53 weeks)
2024
(53rd week
estimated
impact)
2024
(52 weeks)(2)
2023
(52 weeks)
Comparable 52-Week
Increase (Decrease)(2)
Customer Channel(1)
$
%
Chains
$
12,967 $
245 $
12,722 $
12,816 $
(94)
(0.7) %
Independent retailers
7,605
141
7,464
7,699
(235)
(3.1) %
Supernatural
6,941
133
6,808
6,374
434
6.8 %
Retail
2,436
45
2,391
2,480
(89)
(3.6) %
Other
2,555
44
2,511
2,477
34
1.4 %
Eliminations
(1,524)
(26)
(1,498)
(1,574)
76
(4.8) %
Total net sales
$
30,980 $
582 $
30,398 $
30,272 $
126
0.4 %
(1)
Refer to Note 3—Revenue Recognition in Part II, Item 8 of this Annual Report for our channel definitions and additional
information.
(2)
Excludes the estimated impact of the 53rd week in fiscal 2024.
Our Net sales for fiscal 2024 increased $708 million, or 2.3%, to $31.0 billion in fiscal 2024, from $30.3 billion in fiscal 2023.
The 53rd week in fiscal 2024 contributed an estimated $582 million to Net sales. Excluding the impact of the 53rd week, Net
sales were $30.4 billion, an increase of approximately 0.4% from fiscal 2023. The increase in Net sales was primarily driven by
inflation and new business with existing customers. These increases were partially offset by a decline in unit volumes.
Retail Net sales decreased $44 million in fiscal 2024 as compared to fiscal 2023. The 53rd week in fiscal 2024 contributed an
estimated $45 million to Retail Net sales. Excluding the impact of the 53rd week, Retail Net sales decreased $89 million, or
3.6%, primarily due to lower volume and store closures. Identical store sales decreased 3.7%.
Cost of Sales and Gross Profit
Our Gross profit increased $70 million, or 1.7%, to $4,201 million in fiscal 2024, from $4,131 million in fiscal 2023. Gross
profit increased by $82 million from the estimated impact of the 53rd week in fiscal 2024. Our Gross profit as a percentage of
Net sales was 13.6% in fiscal 2024, which was approximately flat compared to fiscal 2023. The LIFO charge was $7 million
and $119 million in fiscal 2024 and fiscal 2023, respectively. Excluding the non-cash LIFO charge, gross profit rate was 13.6%
of Net sales and 14.0% of Net sales for fiscal 2024 and fiscal 2023, respectively. The remaining decrease in gross profit rate of
46 basis points was primarily driven by lower levels of procurement gains resulting from decelerating inflation and a lower
retail gross profit rate, which were partially offset by the benefit of lower shrink expense.
Operating Expenses
Operating expenses increased $127 million, or 3.2%, to $4,100 million, or 13.2% of Net sales, in fiscal 2024 compared to
$3,973 million, or 13.1% of Net sales, in fiscal 2023. Operating expenses increased by $78 million from the estimated impact of
the 53rd week in fiscal 2024. The increase in Operating expenses as a percentage of Net sales was primarily driven by
approximately $49 million higher incentive compensation expense in fiscal 2024 and incremental transformation costs, which
were partially offset by lower transportation costs and other operational supply chain efficiencies.
Table of Contents
34
Restructuring, Acquisition and Integration Related Expenses
Restructuring, acquisition and integration related expenses were $36 million for fiscal 2024, compared to $8 million for fiscal
2023. The increase was primarily driven by costs associated with certain employee severance and other employee separation
costs in fiscal 2024.
Loss (Gain) on Sale of Assets and Other Asset Charges
Loss on sale of assets and other asset charges increased $27 million to $57 million for fiscal 2024, from $30 million for fiscal
2023. The increase in fiscal 2024 was primarily driven by higher asset impairment charges and losses on the sales of
receivables under the accounts receivable monetization program, which was entered into early in the second quarter of fiscal
2023. Fiscal 2024 primarily includes $43 million in asset impairment charges related to one of our corporate-owned office
locations, certain leased and owned distribution centers and certain retail store locations and $21 million in losses on the sales
of receivables. Fiscal 2023 primarily included a $25 million intangible asset impairment charge related to a rationalization of
our brands portfolio and $14 million in losses on the sales of receivables.
Operating Income
Reflecting the factors described above, Operating income decreased $112 million to $8 million for fiscal 2024, from $120
million in fiscal 2023. The decrease in Operating income was primarily driven by an increase in Operating expenses, an
increase in Restructuring, acquisition and integration related expenses and an increase in Loss on sale of assets and other asset
charges, partially offset by an increase in Gross profit.
Net Periodic Benefit Income, Excluding Service Cost
Net periodic benefit income, excluding service cost decreased $14 million to $15 million in fiscal 2024, from $29 million in
fiscal 2023. The decrease in Net periodic benefit income, excluding service cost was primarily driven by higher interest costs
from a higher discount rate utilized in the measurement of pension liabilities and $3 million of lower income from expected
returns on plan assets.
Interest Expense, Net
(in millions)
2024
(53 weeks)
2023
(52 weeks)
Increase
(Decrease)
Interest expense on long-term debt, net of capitalized interest
$
144 $
130 $
14
Interest expense on finance lease obligations
2
3
(1)
Amortization of financing costs and discounts
9
10
(1)
Loss on debt extinguishment
10
3
7
Interest income
(3)
(2)
(1)
Interest expense, net
$
162 $
144 $
18
The increase in Interest expense, net for fiscal 2024 compared to fiscal 2023 was primarily driven by higher average interest
rates, an increase in losses on debt extinguishment, and an estimated $3 million impact from the 53rd week in fiscal 2024.
(Benefit) Provision for Income Taxes
The effective tax rate was a benefit rate of 19.7% on a pre-tax loss for fiscal 2024 compared to a benefit rate of 328.6% on pre-
tax income for fiscal 2023. For fiscal 2024, the effective tax rate was impacted by non-deductible share-based compensation
and the establishment of valuation allowances against deferred tax assets with limited lives. For fiscal 2023, the effective tax
rate was impacted by solar credits, including the tax credit impact of a fiscal 2023 investment in an equity method partnership
and solar credits associated with a solar array installation at our Howell Township, New Jersey facility. The effective tax rate
was also impacted by the recognition of previously unrecognized tax benefits and excess tax deductions attributable to share-
based compensation. The combined impact of these fiscal 2023 tax benefits exceeded pre-tax income, generating an overall tax
benefit rate for fiscal 2023.
Table of Contents
35
Net (Loss) Income Attributable to United Natural Foods, Inc.
Reflecting the factors described in more detail above, Net loss attributable to United Natural Foods, Inc. was $112 million, or
$1.89 per diluted common share, for fiscal 2024, compared to Net income attributable to United Natural Foods, Inc. of $24
million, or $0.40 per diluted common share, for fiscal 2023.
Segment Results of Operations
In evaluating financial performance in each business segment, management primarily uses Net sales and Adjusted EBITDA of
its business segments as discussed and reconciled within Note 16—Business Segments in Part II, Item 8 of this Annual Report
and the above table within the Executive Overview section. The following tables set forth Net sales and Adjusted EBITDA by
segment for the periods indicated.
(in millions)
2024
(53 weeks)
2023
(52 weeks)
Increase
(Decrease)
Net sales:
Wholesale
$
29,853 $
29,142 $
711
Retail
2,436
2,480
(44)
Other
215
224
(9)
Eliminations
(1,524)
(1,574)
50
Total Net sales
$
30,980 $
30,272 $
708
Adjusted EBITDA:
Wholesale
$
476 $
540 $
(64)
Retail
8
70
(62)
Other
30
31
(1)
Eliminations
4
(1)
5
Total Adjusted EBITDA
$
518 $
640 $
(122)
Net Sales
Wholesale Net sales increased $152 million in fiscal 2024 as compared to fiscal 2023, excluding an estimated $559 million
benefit from the 53rd week in fiscal 2024. The increase in Wholesale Net sales, excluding the 53rd week, was primarily driven
by inflation and new business with existing customers. These increases were partially offset by a decline in unit volumes, as
discussed in Results of Operations - Fiscal year ended August 3, 2024 (fiscal 2024) compared to fiscal year ended July 29, 2023
(fiscal 2023) - Net Sales section above.
Retail Net sales decreased $89 million, or 3.6%, in fiscal 2024 as compared to fiscal 2023, excluding an estimated benefit of
$45 million from the 53rd week in fiscal 2024. The decrease in Retail Net sales, excluding the 53rd week, was primarily due to
lower volume and store closures. Identical store sales decreased 3.7%.
Lower eliminations of Net sales for fiscal 2024 as compared to fiscal 2023 were primarily due to a decrease in Wholesale to
Retail sales, which are eliminated upon consolidation.
Adjusted EBITDA
Wholesale Adjusted EBITDA decreased 11.9% for fiscal 2024 as compared to fiscal 2023. The decrease was driven by an
increase in operating expenses, partially offset by an increase in gross profit excluding the LIFO charge. Wholesale Gross profit
excluding the LIFO charge for fiscal 2024 decreased $57 million, when excluding an estimated $67 million benefit from the
53rd week in fiscal 2024. Wholesale gross profit rate decreased approximately 26 basis points primarily driven by lower levels
of procurement gains resulting from decelerating inflation, partially offset by lower shrink expense. Wholesale Operating
expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16
—Business Segments in Part II, Item 8 of this Annual Report, increased $15 million when excluding an estimated $59 million
impact from the 53rd week in fiscal 2024. Wholesale operating expense rate was approximately flat to fiscal 2023 primarily
driven by higher incentive compensation expense, offset by lower transportation costs and other operational supply chain
efficiencies. Wholesale depreciation and amortization expense increased $4 million for fiscal 2024 compared to fiscal 2023,
when excluding an estimated $5 million in additional expense from the 53rd week in fiscal 2024.
Table of Contents
36
Retail Adjusted EBITDA decreased 88.6% for fiscal 2024 as compared to fiscal 2023. Retail Gross profit excluding the LIFO
charge for fiscal 2024 decreased $55 million, when excluding an estimated $11 million benefit from the 53rd week in fiscal
2024. Retail gross profit rate decreased approximately 132 basis points from margin rate investments intended to drive traffic
and lower sales volume. Retail Operating expense, which excludes depreciation and amortization, share-based compensation
and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $10
million when excluding an estimated $11 million impact from the 53rd week in fiscal 2024. Retail operating expense rate
increased 129 basis points primarily driven by decreased leverage on higher fixed and variable costs against lower sales. Retail
depreciation and amortization expense decreased $2 million for fiscal 2024 compared to fiscal 2023, when excluding an
estimated $1 million in additional expense from the 53rd week in fiscal 2024.
LIQUIDITY AND CAPITAL RESOURCES
Highlights
•
Total liquidity as of August 3, 2024 was $1,275 million and consisted of the following:
◦
$1,235 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”) as of
August 3, 2024, which decreased $245 million from $1,480 million as of July 29, 2023, primarily due to increased
borrowings under the ABL Credit Facility utilized to fund voluntary prepayments on the Term Loan Facility (as
described below) and payments used in investing activities, partially offset by net cash flow from operating
activities and higher levels of availability under the ABL Credit Facility resulting from the First ABL Amendment
(defined below); and
◦
$40 million of cash and cash equivalents as of August 3, 2024, which increased $3 million from $37 million as of
July 29, 2023.
•
Total debt increased $122 million to $2,085 million as of August 3, 2024 from $1,963 million as of July 29, 2023,
primarily related to additional net borrowings under the ABL Credit Facility to fund payments used in investing
activities and for debt issuance costs, partially offset by net cash flow from operating activities.
•
Working capital decreased $21 million to $1,037 million as of August 3, 2024 from $1,058 million as of July 29, 2023,
primarily due to a decrease in inventory levels and an increase in accrued compensation and benefits, which were
partially offset by a decrease in accounts payable combined with an increase in accounts receivable.
•
In the fourth quarter of fiscal 2024, we entered into an amendment to the ABL Loan Agreement (the “First ABL
Amendment”) to execute on a First In, Last Out (“FILO”) tranche of incremental loans (the “ABL FILO Loan”) and
used the $130 million in proceeds from the ABL FILO Loan and borrowings under the ABL Credit Facility to fund a
$145 million voluntary prepayment on the Term Loan Facility.
•
Concurrent with the voluntary prepayment on the Term Loan Facility, we entered into an amendment to the Term
Loan Agreement (the “Fourth Term Loan Amendment”) to reduce the principal amount of the Term Loan Facility to
$500 million and extend the maturity to May 1, 2031.
•
In fiscal 2025, scheduled debt maturities are expected to be $6 million. Based on the Company’s Excess Cash Flow (as
defined in the Term Loan Agreement) in fiscal 2024, no prepayment from Excess Cash Flow in fiscal 2024 is required
to be made in fiscal 2025.
Sources and Uses of Cash
We expect to continue to replenish operating assets and pay down debt obligations with internally generated funds. A
significant reduction in operating earnings or the incurrence of operating losses could have a negative impact on our operating
cash flow, which may limit our ability to pay down our outstanding indebtedness as planned. Our credit facilities are secured by
a substantial portion of our total assets. We expect to be able to fund debt maturities and finance lease liabilities through fiscal
2025 with internally generated funds and borrowings under the ABL Credit Facility.
Our primary sources of liquidity are from internally generated funds and from borrowing capacity under the ABL Credit
Facility. We believe our short-term and long-term financing abilities are adequate as a supplement to internally generated cash
flows to satisfy debt obligations and fund capital expenditures as opportunities arise. Our continued access to short-term and
long-term financing through credit markets depends on numerous factors, including the condition of the credit markets and our
results of operations, cash flows, financial position and credit ratings.
Primary uses of cash include debt service, capital expenditures, working capital maintenance, investments in cloud technologies
and income tax payments. We typically finance working capital needs with cash provided from operating activities and short-
term borrowings. Inventories are managed primarily through demand forecasting and replenishing depleted inventories.
Table of Contents
37
We currently do not pay a dividend on our common stock. In addition, we are limited in the aggregate amount of dividends that
we may pay under the terms of our Term Loan Facility, ABL Credit Facility and our $500 million of unsecured 6.750% senior
notes due October 15, 2028 (the “Senior Notes”). Subject to certain limitations contained in our debt agreements and as market
conditions warrant, we may from time to time refinance indebtedness that we have incurred, including through the incurrence or
repayment of loans under existing or new credit facilities or the issuance or repayment of debt securities. Proceeds from the sale
of any properties mortgaged and encumbered under our Term Loan Facility are required to be used to make additional Term
Loan Facility payments or to be reinvested in the business.
Long-Term Debt
During fiscal 2024, we borrowed a net $301 million under the ABL Credit Facility, including $130 million from the creation of
the FILO tranche of incremental loans described above, and made voluntary prepayments on the Term Loan Facility totaling
$171 million. Refer to Note 9—Long-Term Debt in Part II, Item 8 of this Annual Report for a detailed discussion of the
provisions of our credit facilities and certain long-term debt agreements and additional information.
Our Term Loan Agreement and Senior Notes do not include any financial maintenance covenants. Our ABL Loan Agreement
subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a
rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210 million if
no ABL FILO Loans are then outstanding at such time and (ii) 10% of the aggregate borrowing base. We have not been subject
to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Annual
Report. The Term Loan Agreement, Senior Notes and ABL Loan Agreement contain certain operational and informational
covenants customary for debt securities of these types that limit our and our restricted subsidiaries’ ability to, among other
things, incur debt, declare or pay dividends or make other distributions to our stockholders, transfer or sell assets, create liens
on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of our and our
subsidiaries’ assets on a consolidated basis. We were in compliance with all such covenants for all periods presented. If we fail
to comply with any of these covenants, we may be in default under the applicable debt agreement, and all amounts due
thereunder may become immediately due and payable.
In the fourth quarter of fiscal 2024, we entered into an amendment to the ABL Loan Agreement to execute on a FILO tranche
of incremental loans under the ABL Loan Agreement. The First ABL Amendment provides for the creation of a FILO tranche
of $130 million with an applicable margin equal to Secured Overnight Financing Rate (“SOFR”) plus 2.50% per annum (or a
base rate plus 1.50% per annum). The ABL FILO Loan is subject to a borrowing base consisting of specified percentages of the
value of eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files.
Also in the fourth quarter of fiscal 2024, we entered into the Fourth Term Loan Amendment, which provides for the reduction
of the principal amount of the Term Loan Facility to $500 million, the extension of the maturity to May 1, 2031, subject to
certain springing maturity conditions, and a change in the applicable margin over a base rate from 2.25% to 3.75% per annum,
or over a SOFR rate from 3.25% to 4.75% per annum. In conjunction with the First ABL Amendment and the Fourth Term
Loan Amendment, we made a voluntary prepayment of $145 million on the Term Loan Facility funded with the $130 million of
ABL FILO Loan proceeds and incremental borrowings under the ABL Credit Facility. Refer to Note 9—Long-Term Debt in
Part II, Item 8 of this Annual Report for additional information.
Refer to Note 9—Long-Term Debt in Part II, Item 8 of this Annual Report for further detail of our scheduled debt maturities by
fiscal year and by debt instrument, which excludes debt prepayments that may be required from Excess Cash Flow (as defined
in the Term Loan Agreement) generated or sales of mortgaged properties in fiscal 2025 or beyond. Based on our Excess Cash
Flow (as defined in the Term Loan Agreement) in fiscal 2024, no prepayment from Excess Cash Flow in fiscal 2024 is required
to be made in fiscal 2025.
Derivatives and Hedging Activity
We enter into interest rate swap contracts from time to time to mitigate our exposure to changes in market interest rates as part
of our strategy to manage our debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and
floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and
do not constitute positions independent of those exposures.
Table of Contents
38
As of August 3, 2024, we had an aggregate of $750 million of floating rate notional debt subject to active interest rate swap
contracts, which effectively fix the SOFR component of our floating interest payments through pay fixed and receive floating
interest rate swap agreements. These fixed rates range from 2.403% to 4.130%, with maturities between October 2024 and June
2028. The fair values of these interest rate derivatives represent a total net asset of $0 million as of August 3, 2024, and are
subject to volatility based on changes in market interest rates. Refer to Note 8—Derivatives in Part II, Item 8 and Interest Rate
Risk in Part II, Item 7A of this Annual Report for additional information.
From time-to-time, we enter into fixed price fuel supply agreements and foreign currency hedges. As of August 3, 2024, we had
fixed price fuel contracts and foreign currency forward agreements outstanding. Gains and losses and the outstanding assets and
liabilities from these arrangements are insignificant.
Payments for Capital Expenditures and Cloud Technology Implementation Expenditures
Our capital expenditures for fiscal 2024 were $345 million compared to $323 million for fiscal 2023, an increase of $22
million. Our capital spending for fiscal 2024 and 2023 principally included supply chain and information technology
expenditures, including investments in growth initiatives and maintenance expenditures. Fiscal 2024 included $281 million of
distribution center improvements, technology and other expenditures, $41 million of investments in new distribution centers,
primarily the new Manchester, Pennsylvania distribution center, and $23 million of Retail expenditures. Fiscal 2023 included
$290 million of distribution center improvements, technology and other expenditures, and $33 million of Retail expenditures.
Cloud technology implementation expenditures, which are included in operating activities in the Consolidated Statements of
Cash Flows, were $25 million for fiscal 2024 compared to $21 million for fiscal 2023.
Fiscal 2025 capital and cloud implementation spending is expected to be approximately $300 million and includes projects that
automate, optimize and expand our distribution network, as well as our technology platform investments. The components of
capital and cloud implementation expenditures for fiscal 2025 will be primarily dependent on the nature of certain contracts to
be executed. We expect to finance fiscal 2025 capital and cloud implementation expenditures requirements with cash generated
from operations and borrowings under our ABL Credit Facility. Future investments may be financed through long-term debt or
borrowings under our ABL Credit Facility and cash from operations.
Cash Flow Information
The following summarizes our Consolidated Statements of Cash Flows:
(in millions)
2024
(53 weeks)
2023
(52 weeks)
Change
Net cash provided by operating activities
$
253 $
624 $
(371)
Net cash used in investing activities
(342)
(339)
(3)
Net cash provided by (used in) financing activities
92
(292)
384
Effect of exchange rate on cash
—
—
—
Net increase (decrease) in cash and cash equivalents
3
(7)
10
Cash and cash equivalents, at beginning of period
37
44
(7)
Cash and cash equivalents at end of period
$
40 $
37 $
3
Fiscal 2024 compared to Fiscal 2023
The decrease in net cash provided by operating activities was primarily due to lower levels of cash generated by net working
capital, including lower proceeds received from the monetization of certain receivables compared to fiscal 2023 and higher
receivables levels from sales growth in fiscal 2024. These decreases in cash provided by operating activities were partially
offset by higher levels of accrued incentive compensation net of related payments and lower inventory levels net of related
payables in fiscal 2024. In addition, lower cash was generated from net income in fiscal 2024.
The increase in net cash used in investing activities was primarily due to increased payments for capital expenditures in fiscal
2024.
The increase in net cash provided by financing activities was primarily due to an increase in net borrowings under the ABL
Credit Facility resulting from decreases in net cash provided by operating activities, increases in net cash used in investing
activities and the creation of the FILO tranche of incremental loans discussed above, and a decrease in cash used to repurchase
common stock.
Table of Contents
39
Other Obligations and Commitments
Our principal contractual obligations and commitments consist of obligations under our long-term debt, interest on long-term
debt, operating and finance leases, purchase obligations, self-insurance liabilities and multiemployer plan withdrawal liabilities.
Refer to Note 9—Long-Term Debt, Note 11—Leases, Note 13—Benefit Plans, Note 1—Significant Accounting Policies and
Note 17—Commitments, Contingencies and Off-Balance Sheet Arrangements in Part II, Item 8 of this Annual Report for more
information on the nature and timing of obligations for debt, leases, benefit plans, self-insurance and purchase obligations,
respectively. The future amount and timing of interest expense payments are expected to vary with the amount and then
prevailing contractual interest rates over our debt as discussed in Interest Rate Risk in Part II, Item 7A of this Annual Report.
Pension and Other Postretirement Benefit Obligations
We contributed $1 million and $1 million to our defined benefit pension and other postretirement benefit plans, respectively, in
fiscal 2024. In fiscal 2025, no minimum pension contributions are required to be made to the SUPERVALU INC. Retirement
Plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). An insignificant amount of
contributions are expected to be made to defined benefit pension plans and postretirement benefit plans in fiscal 2025. We fund
our defined benefit pension plan based on the minimum contribution required under ERISA, the Pension Protection Act of 2006
and other applicable laws and additional contributions made at our discretion. We may accelerate contributions or undertake
contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating
and financing needs or other factors as may be applicable. We assess the relative attractiveness of the use of cash to accelerate
contributions considering such factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required
Pension Benefit Guaranty Corporation variable rate premiums or in order to achieve exemption from participant notices of
underfunding.
Off-Balance Sheet Multiemployer Pension Arrangements
We contribute to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit
pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees typically are responsible
for determining the level of benefits to be provided to participants as well as the investment of the assets and plan
administration. Trustees are appointed in equal number by employers and unions that are parties to the relevant collective
bargaining agreements. Based on the assessment of the most recent information available from the multiemployer plans, we
believe that most of the plans to which we contribute are underfunded. We are only one of a number of employers contributing
to these plans and the underfunding is not a direct obligation or liability to us.
Our contributions can fluctuate from year to year due to store closures, employer participation within the respective plans and
reductions in headcount. Our contributions to these plans could increase in the near term. However, the amount of any increase
or decrease in contributions will depend on a variety of factors, including the results of our collective bargaining efforts,
investment returns on the assets held in the plans, actions taken by the trustees who manage the plans and requirements under
the Pension Protection Act of 2006, the Multiemployer Pension Reform Act and Section 412(e) of the Internal Revenue Code.
Furthermore, if we were to significantly reduce contributions, exit certain markets or otherwise cease making contributions to
these plans, we could trigger a partial or complete withdrawal that could require us to record a withdrawal liability obligation
and make withdrawal liability payments to the fund. Expense is recognized in connection with these plans as contributions are
funded, in accordance with GAAP. We made contributions to these plans, and recognized expense of $47 million, $48 million
and $45 million in fiscal 2024, 2023 and 2022, respectively. In fiscal 2025, we expect to contribute approximately $51 million
to multiemployer plans, subject to the outcome of collective bargaining and capital market conditions. We expect required cash
payments to fund multiemployer pension plans from which we have withdrawn to be insignificant in any one fiscal year, which
would exclude any payments that may be agreed to on a lump sum basis to satisfy existing withdrawal liabilities. Any future
withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance
with GAAP. Any triggered withdrawal obligation could result in a material charge and payment obligations that would be
required to be made over an extended period of time.
We also make contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining
agreements. A small minority of collective bargaining agreements contain reserve requirements that may trigger unanticipated
contributions resulting in increased healthcare expenses. If these healthcare provisions cannot be renegotiated in a manner that
reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.
Table of Contents
40
Refer to Note 13—Benefit Plans in Part II, Item 8 of this Annual Report for additional information regarding the plans in which
we participate.
Share Repurchases
In September 2022, our Board of Directors authorized a repurchase program for up to $200 million of our common stock over a
term of four years (the “2022 Repurchase Program”). Under the 2022 Repurchase Program, we repurchased approximately
1,888,000 shares of our common stock for a total cost of $62 million in fiscal 2023. We did not repurchase any shares of our
common stock in fiscal 2024. As of August 3, 2024, we had $138 million remaining authorized under the 2022 Repurchase
Program.
We will manage the timing of any repurchases of our common stock in response to market conditions and other relevant
factors, including any limitations on our ability to make repurchases under the terms of our ABL Credit Facility, Term Loan
Facility and Senior Notes. We may implement the 2022 Repurchase Program pursuant to a plan or plans meeting the conditions
of Rule 10b5-1 under the Exchange Act.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Management
believes the following critical accounting estimates reflect our more subjective or complex judgments and estimates used in the
preparation of our Consolidated Financial Statements.
Inventories
Inventories are valued at the lower of cost or market. Substantially all of our inventories consist of finished goods. Inventories
are recorded net of vendor allowances and cash discounts. We evaluate inventory shortages (shrink) throughout each fiscal year
based on physical counts in our facilities. The majority of our inventory is valued under the LIFO method, which allows for
matching of costs and revenues, as the current acquisition cost is used to value cost of goods sold as inventory is sold in an
inflationary environment. During fiscal 2024, inventory quantities in certain LIFO layers were reduced. These reductions
resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost
of fiscal 2024 purchases, the effect of which decreased Cost of sales by approximately $15 million in fiscal 2024. If the first-in,
first-out (“FIFO”) method had been used, Inventories, net, would have been higher by approximately $351 million and $344
million at August 3, 2024 and July 29, 2023, respectively. As of August 3, 2024, approximately $1.9 billion or 82% of
inventory was valued under the LIFO method, before the application of any LIFO reserve, and primarily included grocery,
frozen food and general merchandise products, with the remaining inventory valued under the first-in, first-out method and
primarily included meat, dairy and deli products. When holding inventory levels and mix constant, as of August 3, 2024, we
estimate a 50 basis point increase in the inflation rate on our ending LIFO-based inventory would result in an $8 million
increase in the LIFO charge on an annualized basis.
Vendor funds
We receive funds from many of the vendors whose products we buy for resale. These vendor funds are generally provided to
increase the purchasing and sell-through of the related products. We receive vendor funds for a variety of merchandising
activities: placement of the vendors’ products in our advertising; display of the vendors’ products in prominent locations in our
stores; support for the introduction of new products into our stores and distribution centers; exclusivity rights in certain
categories; and compensation for temporary price reductions offered on products held for sale. We also receive vendor funds
for buying activities such as volume commitment rebates, credits for purchasing products in advance of their need and cash
discounts for the early payment of merchandise purchases. The majority of our vendor fund contracts have terms of less than a
year, although some of the contracts have terms of longer than one year.
We recognize vendor funds for merchandising activities as a reduction of Cost of sales when the related products are sold,
unless it has been determined that a discrete identifiable benefit has been provided to the vendor, in which case the related
amounts are recognized within Net sales and represent less than 0.5% of total Net sales. Vendor funds that have been earned as
a result of completing the required performance under the terms of the underlying agreements but for which the product has not
yet been sold are recognized as reductions to the value of on-hand inventory.
Table of Contents
41
The amount and timing of recognition of vendor funds as well as the amount of vendor funds to be recognized as a reduction to
ending inventory requires management judgment and estimates. Management determines these amounts based on estimates of
current year purchase volume using forecast and historical data and a review of average inventory turnover data. These
judgments and estimates impact our reported Gross profit, Operating income and inventory amounts. The historical estimates
have been reliable in the past, and we believe our methodology will continue to be reliable in the future. Based on previous
experience, we do not expect significant changes in the level of vendor support. However, if such changes were to occur, Cost
of sales and Net sales could change, depending on the specific vendors involved. If vendor advertising allowances were
substantially reduced or eliminated, we would consider changing the volume, type and frequency of the advertising, which
could increase or decrease our advertising expense.
Benefit plans
We sponsor pension and other postretirement plans in various forms covering substantially all employees who meet eligibility
requirements. Pension benefits associated with these plans are generally based on each participant’s years of service,
compensation, and age at retirement or termination. Our defined benefit pension plan and certain supplemental executive
retirement plans are closed to new participants and service crediting ended for all participants.
While we believe the valuation methods used to determine the fair value of plan assets are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different estimate of fair value at the reporting date.
The determination of our obligation and related expense for Company-sponsored pension and other postretirement benefits is
dependent, in part, on management’s selection of certain actuarial assumptions used in calculating these amounts. These
assumptions include, among other things, the discount rate and the expected long-term rate of return on plan assets. We
measure our defined benefit pension and other postretirement plan obligations as of the nearest calendar month end. Refer
to Note 13—Benefit Plans in Part II, Item 8 of this Annual Report for information related to the actuarial assumptions used in
determining pension and postretirement healthcare liabilities and expenses.
Discount rates
We review and select the discount rate to be used in connection with our pension and other postretirement obligations annually.
The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year.
We set our rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows
sufficient in timing and amount to settle projected future benefits.
We utilize the “full yield curve” approach for determining the interest and service cost components of net periodic benefit cost
for defined benefit pension and other postretirement benefit plans. Under this method, the discount rate assumption used in the
interest and service cost components of net periodic benefit cost is built through applying the specific spot rates along the yield
curve used in the determination of the benefit obligation described above, to the relevant projected future cash flows of our
pension and other postretirement benefit plans. We believe the “full yield curve” approach reflects a greater correlation between
projected benefit cash flows and the corresponding yield curve spot rates and provides a more precise measurement of interest
and service costs. Each 25-basis point reduction in the discount rate would increase our projected pension benefit obligation by
$36 million, as of August 3, 2024, and for fiscal 2024 would increase Net periodic benefit income by approximately $2 million.
Expected rate of return on plan assets
Our expected long-term rate of return on plan assets assumption is determined based on the portfolio’s actual and target
composition, current market conditions, forward-looking return and risk assumptions by asset class, and historical long-term
investment performance. The assumed long-term rate of return on pension assets was 6.25% for fiscal 2024. The 10-year rolling
average annualized return for the SUPERVALU INC. Retirement Plan is approximately 7.6% based on returns from 2015 to
2024. Each 25-basis point reduction in expected return on plan assets would decrease Net periodic benefit income for fiscal
2024 by approximately $4 million.
Table of Contents
42
Amortizing gains and losses
In accordance with GAAP, actual results that differ from our assumptions are accumulated and amortized over future periods
and, therefore, affect expense and obligations in future periods. We recognize the amortization of net actuarial loss on the
SUPERVALU INC. Retirement Plan over the remaining life expectancy of inactive participants based on our determination that
almost all of the defined benefit pension plan participants are inactive and the plan is frozen to new participants. For the
purposes of inactive participants, we utilized a 90% threshold established under our policy.
Multiemployer pension plans
We contribute to various multiemployer pension plans based on obligations arising from collective bargaining agreements.
These multiemployer pension plans provide retirement benefits to participants based on their service to contributing employers.
The benefits are paid from assets held in trust for that purpose. Plan trustees are typically responsible for determining the level
of benefits to be provided to participants as well as such matters as the investment of the assets and the administration of the
plans.
We continue to evaluate and address our potential exposure to underfunded multiemployer pension plans as it relates to our
associates who are or were beneficiaries of these plans. In the future, we may consider opportunities to limit the Company’s
exposure to underfunded multiemployer pension obligations by moving our active associates in such plans to defined
contribution plans, and withdrawing from the pension plan or continuing to participate in the plans for prior obligations. As we
continue to work to find solutions to underfunded multiemployer pension plans, it is possible we could incur withdrawal
liabilities for certain additional multiemployer pension plan obligations in the future as we actively negotiate new collective
bargaining agreements with a number of our unions in due course.
The American Rescue Plan Act (“ARPA”) established the Special Financial Assistance (“SFA”) Program for financially
troubled multiemployer pension plans. Under ARPA, eligible multiemployer pension plans can apply to receive a cash payment
intended to keep the plan solvent and able to pay pension benefits through the plan year ending 2051. As of the end of fiscal
2024, one plan to which the Company contributes has received SFA, and two other plans to which the Company contributes are
currently on the waiting list to apply for SFA funding. Although these liabilities are not a direct obligation or liability of ours,
addressing these uncertainties requires judgment in the timing of expense recognition when we determine our commitment is
probable and estimable.
Refer to Note 13—Benefit Plans in Part II, Item 8 of this Annual Report for more information relating to our participation in
these multiemployer pension plans and to the actuarial assumptions used in determining pension and other postretirement
liabilities and expenses.
Self-insurance liabilities
We are primarily self-insured for workers’ compensation, general and automobile liability insurance. It is our policy to record
the self-insured portions of our workers’ compensation, general and automobile liabilities based upon actuarial methods of
estimating the future cost of claims and related expenses that have been reported but not settled, and that have been incurred but
not yet reported. Any projection of losses concerning these liabilities is subject to a considerable degree of variability. Among
the causes of this variability are unpredictable external factors affecting litigation trends, benefit level changes and claim
settlement patterns. If actual claims incurred are greater than those anticipated, our reserves may be insufficient and additional
costs could be recorded in our Consolidated Financial Statements. Accruals for workers’ compensation, general and automobile
liabilities totaled $89 million and $97 million as of August 3, 2024 and July 29, 2023, respectively.
Recoverability of long-lived assets
We review long-lived assets, including definite-lived intangible assets at least annually, and on an interim basis if events occur
or changes in circumstances indicate that the carrying value of the assets may not be recoverable. We evaluate these assets at
the asset-group level, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of
other assets and liabilities. Cash flows expected to be generated by the related assets are estimated over the assets’ useful lives
based on updated projections. When the undiscounted future cash flows are not sufficient to recover an asset’s carrying amount,
the fair value is compared to the carrying value to determine the loss to be recorded.
Estimates of future cash flows and expected sales prices are judgments based on the Company’s experience and knowledge of
operations. These estimates project cash flows several years into the future and include assumptions on variables such as
changes in supply contracts, macroeconomic impacts and market competition.
Table of Contents
43
As part of our quarterly procedures and annual impairment assessment, we recognized a $21 million non-cash asset impairment
charge related to one of our corporate-owned office locations in the first quarter of fiscal 2024, a $7 million non-cash asset
impairment charge related to the decision to close certain retail store locations in the third quarter of 2024 and a $15 million
non-cash impairment charge related to the decision to close certain leased and owned distribution center locations in the fourth
quarter of fiscal 2024.
Income taxes
The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized within the provision
for income tax in the period that includes the enactment date.
The calculation of the Company’s tax liabilities includes addressing uncertainties in the application of complex tax regulations
and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. Addressing these uncertainties requires judgment and estimates; however, actual results could differ, and we may be
exposed to losses or gains. Our effective tax rate in a given financial statement period could be affected based on favorable or
unfavorable tax settlements. Unfavorable tax settlements will generally require the use of cash and may result in an increase to
our effective tax rate in the period of resolution. Favorable tax settlements may be recognized as a reduction to our effective tax
rate in the period of resolution.
The Company regularly reviews its deferred tax assets for recoverability to evaluate whether it is more likely than not that they
will be realized. In making this evaluation, the Company considers the statutory recovery periods for the assets, along with
available sources of future taxable income, including reversals of existing and future taxable temporary differences, tax
planning strategies, history of taxable income and projections of future income. The Company gives more significance to
objectively verifiable evidence, such as the existence of deferred tax liabilities that are forecast to generate taxable income
within the relevant carryover periods and a history of earnings. A valuation allowance is provided when the Company
concludes, based on all available evidence, that it is more likely than not that the deferred tax assets will not be realized during
the applicable recovery period.
Recently Issued Financial Accounting Standards
For a discussion of recently issued financial accounting standards, refer to Note 2—Recently Adopted and Issued Accounting
Pronouncements in Part II, Item 8 of this Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to a number of market related risks, including changes in interest rates, fuel prices, foreign exchange rates and
changes in the market price of investments held in our master trust used to fund defined benefit pension obligations. We have
historically employed financial derivative instruments from time to time to reduce these risks. We do not use financial
instruments or derivatives for any trading or other speculative purposes. We currently utilize derivative financial instruments to
reduce the market risks related to changes in interest rates, fuel prices and foreign exchange rates.
Interest Rate Risk
We are exposed to market pricing risk consisting of interest rate risk related to certain of our debt instruments and notes
receivable outstanding. Our debt obligations are more fully described in Note 9—Long-Term Debt in Part II, Item 8 of this
Annual Report. Interest rate risk is managed through the strategic use of fixed and variable rate debt and derivative instruments.
As more fully described in Note 8—Derivatives in Part II, Item 8 of this Annual Report, we have used interest rate swap
agreements to mitigate our exposure to adverse changes in interest rates by effectively converting certain of our variable rate
obligations to fixed rate obligations. These interest rate swaps are derivative instruments designated as cash flow hedges on the
forecasted interest payments related to a certain portion of our debt obligations. Our variable rate borrowings consist primarily
of SOFR-based loans, which is the benchmark interest rate being hedged in our interest rate swap agreements.
Table of Contents
44
Changes in interest rates could also affect the interest rates we pay on future borrowings under our ABL Credit Facility and
Term Loan Facility, which rates are typically related to SOFR. As of August 3, 2024, we estimate that a 100-basis point
increase in the interest rates related to our variable rate borrowings would increase our annualized interest expense by
approximately $9 million, net of the floating interest rate receivable on our interest rate swaps. Changes in interest rates related
to our fixed rate debt instruments would not have an impact upon future results of operations or cash flows while outstanding;
however, if additional debt issuances at higher interest rates are required to fund fixed rate debt maturities, future results of
operations or cash flows may be impacted.
As of August 3, 2024, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate
swaps by approximately $11 million; while a 100-basis point decrease in forward SOFR interest rates would decrease the fair
value of the interest rate swaps by approximately $11 million. Refer to Note 8—Derivatives in Part II, Item 8 of this Annual
Report for further information on interest rate swap contracts.
The table below provides information about our financial instruments that are sensitive to changes in interest rates, including
debt obligations and interest rate swaps. For debt obligations, the table presents principal amounts due and related weighted
average interest rates by expected maturity dates using interest rates as of August 3, 2024, excluding any original issue and
purchase accounting discounts and deferred financing costs. For interest rate swaps, the table presents the notional amounts and
related weighted average interest rates by maturity.
August 3, 2024
Expected Fiscal Year of Maturity
Fair Value
Total
2025
2026
2027
2028
2029
Thereafter
(in millions, except interest rates)
Long-term Debt:
Variable rate—principal payments
$
1,613 $ 1,612
$
5
$
5
$ 1,118
$
5
$
5
$
474
Weighted average interest rate(1)
7.7 %
10.1 %
10.1 %
6.7 %
10.1 %
10.1 %
10.1 %
Fixed rate—principal payments
$
458 $
501
$
1
$
—
$
—
$
—
$
500
$
—
Weighted average interest rate
6.7 %
4.4 %
— %
— %
— %
6.8 %
— %
Interest Rate Swaps(2):
Notional amounts hedged under pay
fixed, receive variable swaps
$
— $
750
$
250
$
200
$
200
$
100
$
—
$
—
Weighted average pay rate
3.1 %
2.5 %
2.8 %
3.8 %
4.1 %
— %
— %
Weighted average receive rate
3.6 %
5.1 %
4.0 %
3.5 %
3.4 %
— %
— %
(1)
Excludes the effect of interest rate swaps effectively converting certain of our variable rate obligations to fixed rate obligations.
(2)
Refer to Note 8—Derivatives in Part II, Item 8 of this Annual Report for further information on interest rate swap contracts.
Table of Contents
45
Investment Risk
The SUPERVALU INC. Retirement Plan holds investments in fixed income securities, domestic equity securities, private
equity securities, international equity securities and real estate securities, which is described further in Note 13—Benefit Plans
in Part II, Item 8 of this Annual Report. Changes in SUPERVALU INC. Retirement Plan assets can affect the amount of our
anticipated future contributions. In addition, increases or decreases in SUPERVALU INC. Retirement Plan assets can result in a
related increase or decrease to our equity through Accumulated other comprehensive loss. In fiscal 2022, as the plan
administrator, we took additional steps to de-risk the investments in the plan assets as its funding level increased. This de-
risking included a further shift to fixed income investments. Given the relationships between discount rates that impact the
valuation of fixed income plan assets and the impact of discount rates in measuring plan obligations, the SUPERVALU INC.
Retirement Plan is subject to less volatility in the net plan assets. As of August 3, 2024, a 10% unfavorable change in the total
value of investments held by the SUPERVALU INC. Retirement Plan (entirely within the return-seeking portion of the plan
assets) would not have had an impact on our minimum contributions required under ERISA for fiscal 2024, but would have
resulted in an unfavorable change in net periodic pension income for fiscal 2025 of $2 million and would have reduced
Stockholders’ equity by $153 million on a pre-tax basis as of August 3, 2024.
Fuel Price and Foreign Exchange Risk
To reduce diesel price risk, we have entered into derivative financial instruments and/or forward purchase commitments for a
portion of our projected monthly diesel fuel requirements at fixed prices primarily related to inbound transportation. To reduce
foreign exchange risk, we have entered into derivative financial instruments for a portion of our projected monthly foreign
currency requirements at fixed prices. The fair values of fuel derivative and foreign exchange agreements are measured using
Level 2 inputs. As of August 3, 2024, the fair value and expected exposure risk based on aggregate notional values are
insignificant.
Table of Contents
46
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 185)
48
Consolidated Balance Sheets
50
Consolidated Statements of Operations
51
Consolidated Statements of Comprehensive (Loss) Income
52
Consolidated Statements of Stockholders’ Equity
53
Consolidated Statements of Cash Flows
54
Notes to Consolidated Financial Statements
55
All other schedules are omitted because they are not applicable or not required.
Table of Contents
47
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
United Natural Foods, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of United Natural Foods, Inc. and subsidiaries (the Company)
as of August 3, 2024 and July 29, 2023, the related consolidated statements of operations, comprehensive (loss) income,
stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended August 3, 2024, and the related
notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial
reporting as of August 3, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of August 3, 2024 and July 29, 2023, and the results of its operations and its cash flows for each of
the fiscal years in the three-year period ended August 3, 2024, in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of August 3, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over
financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Table of Contents
48
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the value of the defined benefit pension obligation
As discussed in Note 13 to the consolidated financial statements, the Company sponsors a defined benefit pension
plan, covering employees who meet certain eligibility requirements. The value of the defined benefit pension
obligation at year end was $1.50 billion, offset by plan assets totaling $1.53 billion. The determination of the
Company’s defined benefit pension obligation with respect to the plan is dependent, in part, on the selection of certain
actuarial assumptions, including the discount rate used.
We identified the assessment of the value of the defined benefit pension obligation as a critical audit matter because of
the subjectivity in evaluating the discount rate used, and the impact small changes in this assumption would have on
the measurement of the defined benefit pension obligation. Additionally, the audit effort associated with the evaluation
of the discount rate required specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s defined benefit pension
obligation process, including a control related to the development of the discount rate used. We compared the
methodology used in the current year to develop the discount rate to the methodology used in the prior period. In
addition, we involved an actuarial professional with specialized skills and knowledge, who assisted in the evaluation of
the Company’s discount rate by evaluating the methodology utilized by the Company and assessing the selected
discount rate against publicly available discount rate benchmark information.
/s/ KPMG LLP
We have served as the Company’s auditor since 1993.
Minneapolis, Minnesota
October 1, 2024
Table of Contents
49
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except for par values)
August 3,
2024
July 29,
2023
ASSETS
Cash and cash equivalents
$
40
$
37
Accounts receivable, net
953
889
Inventories, net
2,179
2,292
Prepaid expenses and other current assets
230
245
Total current assets
3,402
3,463
Property and equipment, net
1,820
1,767
Operating lease assets
1,370
1,228
Goodwill
19
20
Intangible assets, net
649
722
Deferred income taxes
87
32
Other long-term assets
181
162
Total assets
$
7,528
$
7,394
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
1,688
$
1,781
Accrued expenses and other current liabilities
288
283
Accrued compensation and benefits
197
143
Current portion of operating lease liabilities
181
180
Current portion of long-term debt and finance lease liabilities
11
18
Total current liabilities
2,365
2,405
Long-term debt
2,081
1,956
Long-term operating lease liabilities
1,263
1,099
Long-term finance lease liabilities
12
12
Pension and other postretirement benefit obligations
15
16
Other long-term liabilities
151
162
Total liabilities
5,887
5,650
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding
—
—
Common stock, $0.01 par value, authorized 100.0 shares; 62.0 shares issued and 59.5 shares
outstanding at August 3, 2024; 61.0 shares issued and 58.5 shares outstanding at July 29, 2023
1
1
Additional paid-in capital
635
606
Treasury stock at cost
(86)
(86)
Accumulated other comprehensive loss
(47)
(28)
Retained earnings
1,138
1,250
Total United Natural Foods, Inc. stockholders’ equity
1,641
1,743
Noncontrolling interests
—
1
Total stockholders’ equity
1,641
1,744
Total liabilities and stockholders’ equity
$
7,528
$
7,394
See accompanying Notes to Consolidated Financial Statements.
Table of Contents
50
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for per share data)
Fiscal Year Ended
August 3, 2024
(53 weeks)
July 29, 2023
(52 weeks)
July 30, 2022
(52 weeks)
Net sales
$
30,980
$
30,272
$
28,928
Cost of sales
26,779
26,141
24,746
Gross profit
4,201
4,131
4,182
Operating expenses
4,100
3,973
3,825
Restructuring, acquisition and integration related expenses
36
8
21
Loss (gain) on sale of assets and other asset charges
57
30
(87)
Operating income
8
120
423
Net periodic benefit income, excluding service cost
(15)
(29)
(40)
Interest expense, net
162
144
155
Other income, net
(2)
(2)
(2)
(Loss) income before income taxes
(137)
7
310
(Benefit) provision for income taxes
(27)
(23)
56
Net (loss) income including noncontrolling interests
(110)
30
254
Less net income attributable to noncontrolling interests
(2)
(6)
(6)
Net (loss) income attributable to United Natural Foods, Inc.
$
(112) $
24
$
248
Basic (loss) earnings per share
$
(1.89) $
0.41
$
4.28
Diluted (loss) earnings per share
$
(1.89) $
0.40
$
4.07
Weighted average shares outstanding:
Basic
59.3
59.2
58.0
Diluted
59.3
60.7
61.0
See accompanying Notes to Consolidated Financial Statements.
Table of Contents
51
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in millions)
Fiscal Year Ended
August 3, 2024
(53 weeks)
July 29, 2023
(52 weeks)
July 30, 2022
(52 weeks)
Net (loss) income including noncontrolling interests
$
(110) $
30
$
254
Other comprehensive (loss) income:
Recognition of pension and other postretirement benefit obligations, net of tax(1)
(1)
(18)
(40)
Recognition of interest rate swap cash flow hedges, net of tax(2)
(15)
14
60
Foreign currency translation adjustments
(3)
(2)
(3)
Recognition of other cash flow derivatives, net of tax(3)
—
(2)
2
Total other comprehensive (loss) income
(19)
(8)
19
Less comprehensive income attributable to noncontrolling interests
(2)
(6)
(6)
Total comprehensive (loss) income attributable to United Natural Foods, Inc.
$
(131) $
16
$
267
(1)
Amounts are net of tax (benefit) expense of $0 million, $(7) million and $(12) million, respectively.
(2)
Amounts are net of tax (benefit) expense of $(5) million, $5 million and $22 million, respectively.
(3)
Amounts are net of tax (benefit) expense of $0 million, $(1) million, and $1 million, respectively.
See accompanying Notes to Consolidated Financial Statements.
Table of Contents
52
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions)
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total United
Natural Foods,
Inc.
Stockholders’
Equity
Noncontrolling
Interests
Total
Stockholders’
Equity
Common Stock
Treasury Stock
Shares
Amount
Shares
Amount
Balances at July 31, 2021
57.0
$
1
0.6
$
(24) $
599
$
(39) $
978
$
1,515
$
(1) $
1,514
Restricted stock vestings
1.7
—
—
—
(41)
—
—
(41)
—
(41)
Share-based compensation
—
—
—
—
44
—
—
44
—
44
Other comprehensive income
—
—
—
—
—
19
—
19
—
19
Distributions to noncontrolling interests
—
—
—
—
—
—
—
—
(4)
(4)
Proceeds from issuance of common stock, net
0.2
—
—
—
8
—
—
8
—
8
Acquisition of noncontrolling interests
—
—
—
—
(2)
—
—
(2)
—
(2)
Net income
—
—
—
—
—
—
248
248
6
254
Balances at July 30, 2022
$
58.9
$
1
$
0.6
$
(24) $
608
$
(20) $
1,226
$
1,791
$
1
$
1,792
Restricted stock vestings
2.1
—
—
—
(40)
—
—
(40)
—
(40)
Share-based compensation
—
—
—
—
38
—
—
38
—
38
Repurchases of common stock
—
—
1.9
(62)
—
—
—
(62)
—
(62)
Other comprehensive loss
—
—
—
—
—
(8)
—
(8)
—
(8)
Distributions to noncontrolling interests
—
—
—
—
—
—
—
—
(6)
(6)
Net income
—
—
—
—
—
—
24
24
6
30
Balances at July 29, 2023
61.0
$
1
2.5
$
(86) $
606
$
(28) $
1,250
$
1,743
$
1
$
1,744
Restricted stock vestings
1.0
—
—
—
(7)
—
—
(7)
—
(7)
Share-based compensation
—
—
—
—
39
—
—
39
—
39
Other comprehensive loss
—
—
—
—
—
(19)
—
(19)
—
(19)
Distributions to noncontrolling interests
—
—
—
—
—
—
—
—
(4)
(4)
Acquisition of noncontrolling interests
—
—
—
—
(3)
—
—
(3)
1
(2)
Net (loss) income
—
—
—
—
—
—
(112)
(112)
2
(110)
Balances at August 3, 2024
62.0
$
1
2.5
$
(86) $
635
$
(47) $
1,138
$
1,641
$
—
$
1,641
See accompanying Notes to Consolidated Financial Statements.
Table of Contents
53
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income including noncontrolling interests
$
(110) $
30
$
254
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization
319
304
285
Share-based compensation
39
38
44
Gain on sale of assets
(7)
(9)
(87)
Long-lived asset impairment charges
43
25
—
Closed property and other restructuring charges
—
—
2
Net pension and other postretirement benefit income
(15)
(29)
(40)
Deferred income tax (benefit) expense
(49)
(36)
55
LIFO charge
7
119
158
Provision (recoveries) for losses on receivables
3
(1)
2
Non-cash interest expense and other adjustments
18
13
24
Changes in operating assets and liabilities, net of acquired businesses
Accounts and notes receivable
(68)
327
(108)
Inventories
104
(57)
(264)
Prepaid expenses and other assets
(157)
(108)
(155)
Accounts payable
(81)
53
86
Accrued expenses and other liabilities
207
(45)
75
Net cash provided by operating activities
253
624
331
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for capital expenditures
(345)
(323)
(251)
Proceeds from dispositions of assets
25
16
230
Payments for investments
(22)
(32)
(28)
Net cash used in investing activities
(342)
(339)
(49)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under revolving credit line
2,571
2,976
4,425
Proceeds from issuance of other loans
15
—
—
Repayments of borrowings under revolving credit line
(2,270)
(3,004)
(4,287)
Repayments of long-term debt and finance leases
(191)
(154)
(376)
Repurchases of common stock
—
(62)
—
Proceeds from the issuance of common stock and exercise of stock options
—
—
8
Payments of employee restricted stock tax withholdings
(7)
(40)
(41)
Payments for debt issuance costs
(18)
—
(6)
Distributions to noncontrolling interests
(4)
(6)
(4)
Repayments of other loans
(2)
(2)
—
Other
(2)
—
2
Net cash provided by (used in) financing activities
92
(292)
(279)
EFFECT OF EXCHANGE RATE ON CASH
—
—
—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
3
(7)
3
Cash and cash equivalents, at beginning of period
37
44
41
Cash and cash equivalents, at end of period
$
40
$
37
$
44
Supplemental disclosures of cash flow information:
Cash paid for interest
$
159
$
133
$
134
Cash (refunds) payments for federal, state and foreign income taxes, net
$
(14) $
(5) $
5
Additions of property and equipment included in Accounts payable
$
21
$
32
$
45
Fiscal Year Ended
(in millions)
August 3, 2024
(53 weeks)
July 29, 2023
(52 weeks)
July 30, 2022
(52 weeks)
See accompanying Notes to Consolidated Financial Statements.
Table of Contents
54
UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
United Natural Foods, Inc. and its subsidiaries (the “Company”, “we”, “us”, “UNFI”, or “our”) is a leading distributor of
natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services to
retailers. The Company sells its products primarily throughout the United States and Canada.
Fiscal Year
The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks. Fiscal 2024 contained 53
weeks with the fourth quarter of fiscal 2024 containing 14 weeks. References to fiscal 2024, fiscal 2023 and fiscal 2022, or
2024, 2023 and 2022, as presented in tabular disclosure, relate to the 53-week, 52-week and 52-week fiscal periods ended
August 3, 2024, July 29, 2023 and July 30, 2022, respectively.
Basis of Presentation
The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. The
Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United
States (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation.
Net Sales
Our Net sales consist primarily of product sales of natural, organic, specialty, produce, and conventional grocery and non-food
products, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional
services revenue. Net sales also include amounts charged by the Company to customers for shipping and handling and fuel
surcharges. Vendor incentives do not reduce sales in circumstances where the vendor tenders the incentive to the customer,
when the incentive is not a direct reimbursement from a vendor, when the incentive is not influenced by or negotiated in
conjunction with any other incentive arrangements and when the incentive is not subject to an agency relationship with the
vendor, whether expressed or implied.
The Company recognizes revenue in an amount that reflects the consideration that is expected to be received for goods or
services when its performance obligations are satisfied by transferring control of those promised goods or services to its
customers. Accounting Standards Codification (“ASC”) 606 defines a five-step process to recognize revenue that requires
judgment and estimates, including identifying the contract with the customer, identifying the performance obligations in the
contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and
recognizing revenue when or as the performance obligation is satisfied.
Revenues from wholesale product sales are recognized when control is transferred, which typically happens upon delivery,
depending on the contract terms with the customer. Typically, shipping and customer receipt of wholesale products occur on the
same business day. Discounts and allowances provided to customers are recognized as a reduction in Net sales as control of the
products is transferred to customers. The Company recognizes freight revenue related to transportation of its products when
control of the product is transferred, which is typically upon delivery.
Revenues from Retail product sales are recognized at the point of sale upon customer check-out. Advertising income earned
from our franchisees that participate in our Retail advertising program is recognized as Net sales. The Company recognizes
loyalty program expense in the form of fuel rewards as a reduction of Net sales.
Sales tax is excluded from Net sales. Limited rights of return exist with our customers due to the nature of the products we sell.
Refer to Note 3—Revenue Recognition for additional information regarding the Company’s revenue recognition policies.
Table of Contents
55
Cost of Sales
Cost of sales consist primarily of amounts paid to suppliers for product sold, plus transportation costs necessary to bring the
product to, or move product between, the Company’s distribution centers and retail stores, partially offset by consideration
received from suppliers in connection with the purchase, transportation or promotion of the suppliers’ products. Retail store
advertising expenses are components of Cost of sales and are expensed as incurred.
The Company receives allowances and credits from vendors for buying activities, such as volume incentives, promotional
allowances directed by the Company to customers, cash discounts and new product introductions (collectively referred to as
“vendor funds”), which are typically based on contractual arrangements covering a period of one year or less. The Company
recognizes vendor funds for merchandising activities as a reduction of Cost of sales when the related products are sold, unless it
has been determined that a discrete identifiable benefit has been provided to the vendor, in which case the related amounts are
recognized within Net sales. Vendor funds that have been earned as a result of completing the required performance under the
terms of the underlying agreements but for which the product has not yet been sold are recognized as a reduction to the cost of
inventory. When payments or rebates can be reasonably estimated and it is probable that the specified target will be met, the
payment or rebate is accrued. However, when attaining the target is not probable, the payment or rebate is recognized only
when and if the target is achieved. Any upfront payments received for multi-period contracts are generally deferred and
amortized over the life of the contracts. The majority of the vendor funds contracts have terms of less than a year, with a small
proportion of the contracts longer than one year.
Shipping and Handling Fees and Costs
The Company includes shipping and handling fees billed to customers in Net sales. Shipping and handling costs associated with
inbound freight are recorded in Cost of sales, whereas shipping and handling costs for receiving, selecting, quality assurance,
and outbound transportation are recorded in Operating expenses. Outbound shipping and handling costs, including allocated
employee benefit expenses that are recorded in Operating expenses, totaled $1,674 million, $1,745 million and $1,737 million
for fiscal 2024, 2023 and 2022, respectively.
Operating Expenses
Operating expenses include distribution expenses of warehousing, delivery, purchasing, receiving, selecting, and outbound
transportation expenses, and selling and administrative expenses. These expenses include salaries and wages, employee
benefits, occupancy, insurance, depreciation and amortization expense and share-based compensation expense.
Restructuring, Acquisition and Integration Related Expenses
Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including
severance costs, share-based compensation acceleration charges and acquisition and integration related expenses. Integration
related expenses include certain professional consulting expenses and incremental expenses related to combining facilities
required to optimize our distribution network as a result of acquisitions.
Loss (Gain) on Sale of Assets and Other Asset Charges
Loss (gain) on sale of assets and other asset charges primarily includes losses (gains) on sales of assets, losses on sales of
financial assets, and asset impairments. In fiscal 2024, the Company recorded impairment charges related to one of our
corporate-owned office locations, certain leased and owned distribution centers and certain retail store locations. Refer to Note
5—Property and Equipment, Net for additional information on these impairment charges. In fiscal 2023, the Company recorded
an impairment charge related to intangible assets associated with its Blue Marble Brands portfolio. Refer to Note 6—Goodwill
and Intangible Assets, Net for additional information on this impairment charge. In fiscal 2022, the Company recorded a gain
on sale related to our Riverside, California distribution center. Refer to Note 11—Leases for additional information on this gain
on sale.
Interest Expense, Net
Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt
extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest
income.
Table of Contents
56
Use of Estimates
The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Reclassifications
Within the Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current year
presentation. These reclassifications had no impact on reported net (loss) income, cash flows, or total assets and liabilities.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company’s banking
arrangements allow it to fund outstanding checks when presented to the financial institution for payment. The Company funds
all intraday bank balance overdrafts during the same business day. Checks outstanding in excess of bank balances create book
overdrafts, which are recorded in Accounts payable in the Consolidated Balance Sheets and are reflected as an operating
activity in the Consolidated Statements of Cash Flows. As of August 3, 2024 and July 29, 2023, the Company had net book
overdrafts of $243 million and $308 million, respectively.
Accounts Receivable, Net
Accounts receivable, net primarily consist of trade receivables from customers and net receivable balances from suppliers. In
determining the adequacy of the allowances, management analyzes customer creditworthiness, aging of receivables, payment
terms, the value of the collateral, customer financial statements, historical collection experience and other economic and
industry factors. In instances where a reserve has been recorded for a particular customer, future sales to the customer are
conducted using either cash-on-delivery terms, or the account is closely monitored so that as agreed upon payments are received
and then orders are released; a failure to pay results in held or canceled orders.
Inventories, Net
Substantially all of the Company’s inventories consist of finished goods. To value discrete inventory items at lower of cost or
net realizable value before application of any last-in, first-out (“LIFO”) reserve, the Company utilizes the weighted average cost
method, perpetual cost method, the retail inventory method and the replacement cost method. Allowances for vendor funds and
cash discounts received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales
upon the sale of the related products. Inventory quantities are evaluated throughout each fiscal year based on physical counts in
the Company’s distribution centers and stores. Allowances for inventory shortages are recorded based on the results of these
counts. During fiscal 2024, inventory quantities in certain LIFO layers were reduced. These reductions resulted in a liquidation
of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2024 purchases,
the effect of which decreased Cost of sales by approximately $15 million in fiscal 2024. As of August 3, 2024 and July 29,
2023, approximately $1.9 billion and $2.0 billion, respectively, of inventory was valued under the LIFO method, before the
application of a LIFO reserve, and primarily included grocery, frozen food and general merchandise products, with the
remaining inventory valued under the first-in, first-out (“FIFO”) method and primarily included meat, dairy and deli products.
The LIFO reserve was $351 million and $344 million as of August 3, 2024 and July 29, 2023, respectively, which is recorded
within Inventories, net on the Consolidated Balance Sheets.
Property and Equipment, Net and Amortizing Intangible Assets
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is based on the
estimated useful lives of the assets using the straight-line method. Applicable interest charges incurred during the construction
of new facilities are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives if certain
criteria are met. Refer to Note 5—Property and Equipment, Net for additional information.
Table of Contents
57
The Company reviews long-lived assets, including amortizing intangible assets, for indicators of impairment whenever events
or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Cash flows expected to be
generated by the related assets are estimated over the assets’ useful lives based on updated projections. The Company groups
long-lived assets with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows
of other assets. If the evaluation indicates that the carrying amount of an asset group may not be recoverable, the potential
impairment is measured based on a fair value discounted cash flow model or a market approach method. Refer to Note 5—
Property and Equipment, Net and Note 6—Goodwill and Intangible Assets, Net for additional information regarding the
Company’s long-lived asset impairment reviews and other information.
Cloud Computing Arrangements
The Company enters into certain cloud-based software hosting arrangements for internal use that are accounted for as service
contracts. The capitalized implementation costs associated with these cloud computing arrangements are included in Prepaid
expenses and other current assets and Other long-term assets within the Consolidated Balance Sheets, and the related cash flows
are included within operating activities in the Consolidated Statements of Cash Flows. Once a cloud computing arrangement is
ready for its intended use, the capitalized implementation costs are amortized on a straight-line basis over the term of the related
hosting agreement, including renewal periods that are reasonably certain to be exercised, and expensed in the same line item in
the Consolidated Statements of Operations as the associated hosting fees. The net book value of these capitalized
implementation costs was $51 million and $28 million as of August 3, 2024 and July 29, 2023, respectively. Amortization
expense was $4 million, $2 million and $1 million for fiscal 2024, 2023 and 2022, respectively.
Income Taxes
The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
The Company records liabilities to address uncertain tax positions we have taken in previously filed tax returns or that we
expect to take in a future tax return. The determination for required liabilities is based upon an analysis of each individual tax
position, taking into consideration whether it is more likely than not that our tax position, based on technical merits, will be
sustained upon examination. For those positions for which we conclude it is more likely than not it will be sustained, we
recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the
taxing authority. The difference between the amount recognized and the total tax position is recorded as a liability. The ultimate
resolution of these tax positions may be greater or less than the liabilities recorded.
The Company allocates tax expense among specific financial statement components using a “with-or-without” approach. Under
this approach, the Company first determines the total tax expense or benefit (current and deferred) for the period. The Company
then calculates the tax effect of pretax income. The residual tax expense is allocated on a proportional basis to other financial
statement components (i.e. other comprehensive income).
Goodwill and Intangible Assets, Net
The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets
acquired and liabilities assumed be recorded at the acquisition date at their respective estimated fair values. Goodwill represents
the excess acquisition cost over the fair value of net assets acquired in a business combination. Goodwill is assigned to the
reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill.
Goodwill reporting units exist at one level below the operating segment level unless they are determined to be economically
similar, and are evaluated for events or changes in circumstances indicating a goodwill reporting unit has changed. Relative fair
value allocations are performed when components of an aggregated goodwill reporting unit become separate reporting units or
move from one reporting unit to another.
Table of Contents
58
Goodwill is reviewed for impairment at least annually as of the first day of the fourth fiscal quarter and more frequently if
events occur or circumstances change that would indicate that the value of the reporting unit may be impaired. The Company
performs qualitative assessments of Goodwill for impairment. If the qualitative assessment indicates it is more likely than not
that a reporting unit’s fair value is less than the carrying value, or the Company bypasses the qualitative assessment, a
quantitative assessment would be performed. When a quantitative assessment is required, the Company estimates the fair values
of its reporting units by using the market approach, applying a multiple of earnings based on guidelines for publicly traded
companies, and/or the income approach, discounting projected future cash flows based on management’s expectations of the
current and future operating environment for each reporting unit. Refer to Note 6—Goodwill and Intangible Assets, Net for
additional information regarding the Company’s goodwill impairment reviews and other information.
Indefinite-lived intangible assets include the Tony’s Fine Foods tradename, and prior to July 23, 2023 included the Blue Marble
Brands portfolio. Indefinite-lived intangible assets are reviewed for impairment at least annually as of the first day of the fourth
fiscal quarter and more frequently if events occur or circumstances change that would indicate that the value of the asset may be
impaired. When a quantitative assessment is required, the Company estimates the fair value for intangible assets utilizing the
income approach, which discounts the projected future net cash flow using an appropriate discount rate that reflects the risks
associated with such projected future cash flow. Refer to Note 6—Goodwill and Intangible Assets, Net for additional
information regarding the Company’s intangible assets impairment reviews and other information.
Intangible assets with definite lives are amortized on a straight-line basis over the following years:
Customer relationships
10 - 20 years
Trademarks and tradenames
2 - 10 years
Favorable operating leases
2 - 8 years
Pharmacy prescription files
7 years
Fair Value of Financial Instruments
Financial assets and liabilities measured on a recurring basis, and non-financial assets and liabilities that are recognized on a
non-recurring basis, are recognized or disclosed at fair value on at least an annual basis. Fair value is defined as the price that
would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Company considers the principal or most advantageous market in which it would transact and considers
assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions,
and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of
inputs that may be used to measure fair value:
• Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 Inputs—Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through
correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing
methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and
volatility, can be corroborated by readily observable market data.
• Level 3 Inputs—One or more significant inputs that are unobservable and supported by little or no market activity, and that
reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value
measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques,
and significant management judgment or estimation.
The carrying amounts of the Company’s financial instruments including Cash and cash equivalents, Accounts receivable,
Accounts payable and certain Accrued expenses and Other assets and liabilities approximate fair value due to the short-term
nature of these instruments.
Table of Contents
59
Share-Based Compensation
Share-based compensation consists of time-based restricted stock units, performance-based restricted stock units and stock
options. Share-based compensation expense is measured by the fair value of the award on the date of grant. The Company
recognizes Share-based compensation expense on a straight-line basis over the requisite service period of the individual grants.
Forfeitures are recognized as reductions to Share-based compensation when they occur. The grant date closing price per share
of the Company’s stock is used to determine the fair value of restricted stock units. The Company’s executive officers and
members of senior management have been granted performance units which vest, when and if earned, in accordance with the
terms of the related performance unit award agreements. The Company recognizes Share-based compensation expense based on
the target number of shares of common stock and the Company’s stock price on the date of grant and subsequently adjusts
expense based on actual and forecasted performance compared to planned targets. Share-based compensation expense is
recognized within Operating expenses for ongoing employees and in certain instances is recorded within Restructuring,
acquisition and integration related expenses when an employee is notified of termination and their awards become accelerated.
Refer to Note 12—Share-Based Awards for additional information.
Benefit Plans
The Company recognizes the funded status of its Company-sponsored defined benefit plans in the Consolidated Balance Sheets
and gains or losses and prior service costs or credits not yet recognized as a component of Accumulated other comprehensive
loss, net of tax, in the Consolidated Balance Sheets. The Company measures its defined benefit pension and other
postretirement plan obligations as of the nearest calendar month end. The Company records Net periodic benefit income or
expense related to interest cost, expected return on plan assets and the amortization of actuarial gains and losses, excluding
service costs, in the Consolidated Statements of Operations within Net periodic benefit income, excluding service cost. Service
costs are recorded in Operating expenses in the Consolidated Statements of Operations.
The Company sponsors pension and other postretirement plans in various forms covering participants who meet eligibility
requirements. The determination of the Company’s obligation and related income or expense for Company-sponsored pension
and other postretirement benefits is dependent, in part, on management’s selection of certain actuarial assumptions in
calculating these amounts. These assumptions include, among other things, the discount rate, the expected long-term rate of
return on plan assets and the rates of increase in healthcare costs. These assumptions are disclosed in Note 13—Benefit Plans.
Actual results that differ from the assumptions are accumulated and amortized over future periods.
The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined
benefit pension plans. Pension expense for these plans is recognized as contributions are funded. In addition, the Company
provides postretirement health and welfare benefits for certain groups of union and non-union employees. See Note 13—
Benefit Plans for additional information on participation in multiemployer plans.
(Loss) Earnings Per Share
Basic (loss) earnings per share is calculated by dividing net (loss) income by the weighted average number of common shares
outstanding during the period. Diluted (loss) earnings per share is calculated by adding the dilutive potential common shares to
the weighted average number of common shares that were outstanding during the period. For purposes of the diluted earnings
per share calculation, outstanding stock options, restricted stock units and performance-based awards, if applicable, are
considered common stock equivalents, using the treasury stock method.
Treasury Stock
The Company records the repurchase of shares of common stock at cost based on the settlement date of the transaction. These
shares are classified as Treasury stock, which is a reduction to Stockholders’ equity. Treasury stock is included in authorized
and issued shares but excluded from outstanding shares.
On September 21, 2022, our Board of Directors authorized a repurchase program for up to $200 million of the Company’s
common stock over a term of four years (the “2022 Repurchase Program”). Under the 2022 Repurchase Program, the Company
repurchased approximately 1.9 million shares of its common stock for a total cost of $62 million in fiscal 2023. The Company
did not repurchase any shares of its common stock in fiscal 2024 or 2022. As of August 3, 2024, the Company had $138 million
remaining authorized under the 2022 Repurchase Program. Refer to Note 9—Long-Term Debt for information on the
Company’s credit facilities’ limitations on its ability to repurchase shares of common stock above certain levels unless certain
conditions and financial tests are met.
Table of Contents
60
Comprehensive (Loss) Income
Comprehensive (loss) income is reported in the Consolidated Statements of Comprehensive (Loss) Income. Comprehensive
(loss) income includes all changes in Stockholders’ equity during the reporting period, other than those resulting from
investments by and distributions to stockholders. The Company’s comprehensive (loss) income is calculated as Net (loss)
income including noncontrolling interests, plus or minus adjustments for foreign currency translation related to the translation
of UNFI Canada, Inc. (“UNFI Canada”) from the functional currency of Canadian dollars to U.S. dollar reporting currency,
changes in the fair value of cash flow hedges, net of tax, and changes in defined pension and other postretirement benefit plan
obligations, net of tax, less comprehensive income attributable to noncontrolling interests.
Accumulated other comprehensive loss represents the cumulative balance of Other comprehensive (loss) income, net of tax, as
of the end of the reporting period and relates to foreign currency translation adjustments, and unrealized gains or losses on cash
flow hedges, net of tax and changes in defined pension and other postretirement benefit plan obligations, net of tax.
Derivative Financial Instruments
The Company utilizes derivative financial instruments to manage its exposure to changes in interest rates, fuel costs, and with
the operation of UNFI Canada, foreign currency exchange rates. All derivatives are recognized on the Company’s Consolidated
Balance Sheets at fair value based on quoted market prices or estimates, and are recorded in either current or noncurrent assets
or liabilities based on their maturity. Changes in the fair value of derivatives are recorded in comprehensive (loss) income or net
earnings, based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge
transaction. Gains or losses on derivative instruments are recorded in Accumulated other comprehensive loss and are
reclassified to earnings in the period the hedged item affects earnings. If the hedged relationship ceases to exist, any associated
amounts reported in Accumulated other comprehensive loss are reclassified to earnings at that time. The Company measures
effectiveness of its hedging relationships both at hedge inception and on an ongoing basis.
Self-Insurance Liabilities
The Company is primarily self-insured for workers’ compensation, general and automobile liability insurance. It is the
Company’s policy to record the self-insured portion of workers’ compensation, general and automobile liabilities based upon
actuarial methods to estimate the future cost of claims and related expenses that have been reported but not settled, and that
have been incurred but not yet reported, discounted at a risk-free interest rate. The present value of such claims was calculated
using a discount rate of 4.8% and 3.5% as of August 3, 2024 and July 29, 2023, respectively.
Changes in the Company’s self-insurance liabilities consisted of the following:
(in millions)
2024
2023
2022
Beginning balance
$
97 $
98 $
103
Expense
57
52
44
Claim payments
(56)
(57)
(50)
Reclassifications
(9)
4
1
Ending balance
$
89 $
97 $
98
The current portion of the self-insurance liability was $33 million and $34 million as of August 3, 2024 and July 29, 2023,
respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. The long-
term portions were $56 million and $63 million as of August 3, 2024 and July 29, 2023, respectively, and are included in Other
long-term liabilities in the Consolidated Balance Sheets. The self-insurance liabilities as of the end of the fiscal year are net of
discounts of $12 million and $8 million as of August 3, 2024 and July 29, 2023, respectively. Amounts due from insurance
companies were $33 million and $26 million as of August 3, 2024 and July 29, 2023, respectively, and are recorded in Prepaid
expenses and other current assets and Other long-term assets.
Table of Contents
61
Leases
At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an
operating or finance lease at commencement. Subsequent to commencement, lease classification is only reassessed upon a
change to the expected lease term or contract modification. Finance and operating lease assets represent the Company’s right to
use an underlying asset as lessee for the lease term, and lease obligations represent the Company’s obligation to make lease
payments arising from the lease. These assets and obligations are recognized at the lease commencement date based on the
present value of lease payments, net of incentives, over the lease term. Incremental borrowing rates are estimated based on the
Company’s borrowing rate as of the lease commencement date to determine the present value of lease payments, when the rate
implicit in the lease is not readily determinable. Incremental borrowing rates are determined by using the yield curve based on
the Company’s credit rating adjusted for the Company’s specific debt profile and secured debt risk. The lease asset also reflects
any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms include optional
extension periods when it is reasonably certain that those options will be exercised. Leases with an initial expected term of 12
months or less are not recorded in the Consolidated Balance Sheets and the related lease expense is recognized on a straight-line
basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease
components from the fixed nonlease components.
The Company recognizes contractual obligations and receipts on a gross basis, such that the related lease obligation to the
landlord is presented separately from the sublease created by the lease assignment to the assignee. As a result, the Company
continues to recognize on its Consolidated Balance Sheets the operating lease assets and liabilities, and finance lease assets and
obligations, for assigned leases.
The Company records operating lease expense and income using the straight-line method within Operating expenses, and lease
income on a straight-line method for leases with its customers within Net sales. Finance lease expense is recognized as
amortization expense within Operating expenses, and interest expense within Interest expense, net. For operating leases with
step rent provisions whereby the rental payments increase over the life of the lease, and for leases with rent-free periods, the
Company recognizes expense and income on a straight-line basis over the expected lease term, based on the total minimum
lease payments to be made or lease receipts expected to be received. The Company is generally obligated for property tax,
insurance and maintenance expenses related to leased properties, which often represent variable lease expenses. For contractual
obligations on properties where the Company remains the primary obligor upon assignment of the lease and does not obtain a
release from landlords or retain the equity interests in the legal entities with the related rent contracts, the Company continues to
recognize rent expense and rent income within Operating expenses.
Operating and finance lease assets are reviewed for impairment based on an ongoing review of circumstances that indicate the
assets may no longer be recoverable, such as closures of retail stores, distribution centers and other properties that are no longer
being utilized in current operations, and other factors. The Company calculates operating and finance lease impairments using a
discount rate to calculate the present value of estimated subtenant rentals that could be reasonably obtained for the property.
Lease impairment charges for properties no longer used in operations are recorded as a component of Loss (gain) on sale of
assets and other asset charges in the Consolidated Statements of Operations.
The calculation of lease impairment charges requires significant judgments and estimates, including estimated subtenant rentals,
discount rates and future cash flows based on the Company’s experience and knowledge of the market in which the property is
located, previous efforts to dispose of similar assets and the assessment of existing market conditions. Impairments are
recognized as a reduction of the carrying value of the right of use asset and finance lease assets. Refer to Note 11—Leases for
additional information.
For transactions in which an owned property is sold and leased back from the buyer, the Company recognizes a sale, and lease
accounting is applied if the Company has transferred control of the property to the buyer. For such transactions, the Company
removes the transferred assets from the Consolidated Balance Sheets and a gain or loss on the sale is recognized for the
difference between the carrying amount of the asset and the fair value of the transaction as of the transaction date. If control of
the underlying asset is not transferred, the Company does not recognize an asset sale and recognizes a financing lease liability
for consideration received.
Table of Contents
62
NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements
In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820):
Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual
restriction on the sale of an equity security is not part of the unit of account of the equity security and, therefore, is not
considered in measuring fair value. The amendments in this update also require additional disclosures for equity securities
subject to contractual sale restrictions. The Company is required to adopt the amendments in this update in the first quarter of
fiscal 2025. The Company has evaluated equity securities within the scope of the provisions of the new standard and does not
expect the adoption to have a material impact on the Company’s consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating
decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of
its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.
The amendments in this update also expand the interim segment disclosure requirements. The Company is required to adopt the
amendments in this update in fiscal 2025, and the interim disclosure requirements will be effective for the Company in the first
quarter of fiscal 2026. Early adoption is permitted. The amendments in this update are required to be applied on a retrospective
basis. The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the
Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
ASU 2023-09 requires disclosure of specific categories in the rate reconciliation and additional information for reconciling
items that meet a quantitative threshold. The amendments also require disclosure on an annual basis of income taxes paid
disaggregated by federal, state and foreign taxes as well as the amount of income taxes paid by individual jurisdiction. In
addition, the amendments require disclosures of disaggregated pretax income and income tax expense and remove the
requirement to disclose certain items that are no longer considered cost beneficial or relevant. The Company is required to
adopt the amendments in this update in fiscal 2026. Early adoption is permitted. The amendments in this update should be
applied on a prospective basis, but can also be applied retrospectively. The Company is currently reviewing the provisions of
the amendments in this update and evaluating their impact on the Company’s consolidated financial statements.
NOTE 3—REVENUE RECOGNITION
Product sales
The Company enters into wholesale customer distribution agreements that provide terms and conditions of our order
fulfillment. The Company’s distribution agreements often specify levels of required minimum purchases in order to earn certain
rebates or incentives. Certain contracts include rebates and other forms of variable consideration, including consideration
payable to the customer up-front, over time or at the end of a contract term. Many of the Company’s contracts with customers
outline various other promises to be performed in conjunction with the sale of product. The Company determined that these
promises provided are immaterial within the overall context of the respective contract, and as such has not allocated the
transaction price to these obligations.
In transactions for goods or services where the Company engages third parties to participate in its order fulfillment process, it
evaluates whether it is the principal or an agent in the transaction. The Company’s analysis considers whether it controls the
goods or services before they are transferred to its customer, including an evaluation of whether the Company has the ability to
direct the use of, and obtain substantially all the remaining benefits from, the specified good or service before it is transferred to
the customer. Agent transactions primarily reflect circumstances where the Company is not involved in order fulfillment or
where it is involved in the order fulfillment but is not contractually obligated to purchase the related goods or services from
vendors, and instead extends wholesale customers credit by paying vendor trade accounts payable and does not control products
prior to their sale. Under ASC 606, if the Company determines that it is acting in an agent capacity, transactions are recorded on
a net basis. If the Company determines that it is acting in a principal capacity, transactions are recorded on a gross basis.
Table of Contents
63
The Company also evaluates vendor sales incentives to determine whether they reduce the transaction price with its customers.
The Company’s analysis considers which party tenders the incentive, whether the incentive reflects a direct reimbursement
from a vendor, whether the incentive is influenced by or negotiated in conjunction with any other incentive arrangements and
whether the incentive is subject to an agency relationship with the vendor, whether expressed or implied. Typically, when
vendor incentives are offered directly by vendors to the Company’s customers, require the achievement of vendor-specified
requirements to be earned by customers, and are not negotiated by the Company or in conjunction with any other incentive
agreement whereby the Company does not control the direction or earning of these incentives, then Net sales are not reduced as
part of the Company’s determination of the transaction price. In circumstances where the vendors provide the Company
consideration to promote the sale of their goods and the Company determines the specific performance requirements for its
customers to earn these incentives, Net sales and Cost of sales are reduced for these customer incentives as part of the
determination of the transaction price.
Certain customer agreements provide for the right to license one or more of the Company’s tradenames, such as FESTIVAL
FOODS®, SENTRY®, COUNTY MARKET®, FOODLAND®, and SUPERVALU®. In addition, the Company enters into
franchise agreements to separately charge its customers, who the Company also sells wholesale products to, for the right to use
its CUB® tradename. The Company typically does not separately charge for the right to license its tradenames. The Company
believes that these tradenames are capable of being distinct, but are not distinct within the context of the contracts with its
customers. Accordingly, the Company does not separately recognize revenue related to tradenames utilized by its customers.
The Company enters into distribution agreements with manufacturers to provide wholesale supplies to the Defense Commissary
Agency (“DeCA”) and other government agency locations. DeCA contracts with manufacturers to obtain grocery products for
the commissary system. The Company contracts with manufacturers to distribute products to the commissaries after being
authorized by the manufacturers to be a military distributor to DeCA. The Company must adhere to DeCA’s delivery system
procedures governing matters such as product identification, ordering and processing, information exchange and resolution of
discrepancies. DeCA identifies the manufacturer with which an order is to be placed, determines which distributor is contracted
by the manufacturer for a particular commissary or exchange location, and then places a product order with that distributor that
is covered under DeCA’s master contract with the applicable manufacturer. The Company supplies product from its existing
inventory, delivers it to the DeCA designated location, and bills the manufacturer for the product price plus a drayage fee. The
manufacturer then bills DeCA under the terms of its master contract. The Company has determined that it controls the goods
before they are transferred to the customer, and as such it is the principal in the transaction. Revenue is recognized on a gross
basis when control of the product passes to the DeCA designated location.
Customer incentives
The Company provides incentives to its wholesale customers in various forms established under the applicable agreement,
including advances, payments over time that are earned by achieving specified purchasing thresholds, and upon the passage of
time. The Company typically records customer advances within Other long-term assets and Prepaid expenses and other current
assets and typically recognizes customer incentive payments that are based on expected purchases over the term of the
agreement as a reduction to Net sales. To the extent that the transaction price for product sales includes variable consideration,
such as certain of these customer incentives, the Company estimates the amount of variable consideration that should be
included in the transaction price primarily by utilizing the expected value method. Variable consideration is included in the
transaction price if it is probable that a significant future reversal of cumulative revenue under the agreement will not occur.
The Company believes that there will not be significant changes to its estimates of variable consideration, as the uncertainty
will be resolved within a relatively short time and there is a significant amount of historical data that is used in the estimation of
the amount of variable consideration to be received. Therefore, the Company has not constrained its estimates of variable
consideration.
Customer incentive assets are reviewed for impairment when circumstances exist for which the Company no longer expects to
recover the applicable customer incentives.
Professional services and equipment sales
Separate from the services provided in conjunction with the sale of products described above, many of the Company’s
agreements with customers also include distinct professional services and other promises to customers, in addition to the sale of
the product itself, such as retail store support, advertising, store layout and design services, merchandising support, couponing,
eCommerce, network and data hosting solutions, training and certifications classes, and administrative back-office solutions.
These professional services may contain a single performance obligation for each respective service, in which case such
services revenues are recognized when delivered. Revenues from professional services are less than 1% of total Net sales.
Table of Contents
64
Wholesale equipment sales are recorded as direct sales to customers when control is transferred, which is typically upon
delivery, consistent with the recognition of product sales.
Disaggregation of Revenues
The Company records revenue to five customer channels within Net sales, which are described below:
•
Chains, which consists of customer accounts that typically have more than 10 operating stores and excludes stores
included within the Supernatural and Other channels defined below;
•
Independent retailers, which includes smaller size accounts including single store and multiple store locations, and
group purchasing entities that are not classified within Chains above or Other defined below;
•
Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and
currently consists solely of one customer;
•
Retail, which reflects the Company's Retail segment, including Cub® Foods and Shoppers® stores; and
•
Other, which includes international customers outside of Canada, foodservice, eCommerce, conventional military
business and other sales.
The following tables detail the Company’s Net sales for the periods presented by customer channel for each of its segments.
The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product
group, and it is therefore impracticable for it to report them accordingly.
(in millions)
Net Sales for Fiscal 2024
Customer Channel
Wholesale
Retail
Other
Eliminations(1)
Consolidated
Chains
$
12,967 $
— $
— $
— $
12,967
Independent retailers
7,605
—
—
—
7,605
Supernatural
6,941
—
—
—
6,941
Retail
—
2,436
—
—
2,436
Other
2,340
—
215
—
2,555
Eliminations
—
—
—
(1,524)
(1,524)
Total
$
29,853 $
2,436 $
215 $
(1,524) $
30,980
(in millions)
Net Sales for Fiscal 2023
Customer Channel
Wholesale
Retail
Other
Eliminations(1)
Consolidated
Chains
$
12,816 $
— $
— $
— $
12,816
Independent retailers
7,699
—
—
—
7,699
Supernatural
6,374
—
—
—
6,374
Retail
—
2,480
—
—
2,480
Other
2,253
—
224
—
2,477
Eliminations
—
—
—
(1,574)
(1,574)
Total
$
29,142 $
2,480 $
224 $
(1,574) $
30,272
(in millions)
Net Sales for Fiscal 2022
Customer Channel
Wholesale
Retail
Other
Eliminations(1)
Consolidated
Chains
$
12,562 $
— $
— $
— $
12,562
Independent retailers
7,360
—
—
—
7,360
Supernatural
5,719
—
—
—
5,719
Retail
—
2,468
—
—
2,468
Other
2,183
—
219
—
2,402
Eliminations
—
—
—
(1,583)
(1,583)
Total
$
27,824 $
2,468 $
219 $
(1,583) $
28,928
(1)
Eliminations primarily includes the net sales elimination of Wholesale to Retail sales and the elimination of sales from segments
included within Other to Wholesale.
Table of Contents
65
Sales to one customer in the Wholesale segment, which includes customers under common control, accounted for
approximately 23%, 22% and 20% of the Company’s net sales for fiscal 2024, 2023 and 2022, respectively. There were no
other customers that individually generated 10% or more of the Company’s net sales during those periods.
The Company serves customers in the United States and Canada, as well as customers located in other countries. However, all
of the Company’s revenue is earned in the United States and Canada, and international distribution occurs through freight-
forwarders. The Company does not have any performance obligations on international shipments subsequent to delivery to the
domestic port.
Contract Balances
The Company typically does not incur costs that are required to be capitalized in connection with obtaining a contract with a
customer. The Company typically does not have any performance obligations to deliver products under its contracts until its
customers submit a purchase order, as it stands ready to deliver product upon receipt of a purchase order under contracts with
its customers. These performance obligations are generally satisfied within a very short period of time. Therefore, the Company
has utilized the practical expedient that provides an exemption from disclosure of the transaction price allocated to remaining
performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or
less. The Company does not typically receive pre-payments from its customers.
Customer payments are due when control of goods or services are transferred to the customer and are typically not conditional
on anything other than payment terms, which typically are less than 30 days. Since no significant financing components exist
between the period of time the Company transfers goods or services to the customer and when it receives payment for those
goods or services, the Company generally does not adjust the transaction price to recognize a financing component. Customer
incentives are not considered contract assets as they are not generated through the transfer of goods or services to the
customers. No material contract asset or liability exists for any period reported within these Consolidated Financial Statements.
Accounts and Notes Receivable Balances
Accounts and notes receivable are as follows:
(in millions)
August 3, 2024
July 29, 2023
Customer accounts receivable
$
936 $
887
Allowance for uncollectible receivables
(21)
(17)
Other receivables, net
38
19
Accounts receivable, net
$
953 $
889
Notes receivable, net, included within Prepaid expenses and other current assets
$
3 $
3
Long-term notes receivable, net, included within Other long-term assets
$
7 $
7
The allowance for uncollectible receivables, and estimated variable consideration allowed for as sales concessions consists of
the following:
(in millions)
2024
2023
2022
Balance at beginning of year
$
17 $
18 $
28
Provision for losses in Operating expenses
9
2
2
(Increases) reductions to Net sales
(2)
6
1
Write-offs charged against the allowance
(3)
(9)
(13)
Balance at end of year
$
21 $
17 $
18
Table of Contents
66
In fiscal 2023, the Company entered into an agreement to sell, on a revolving basis, certain customer accounts receivable up to
a maximum amount outstanding of $350 million to a third-party financial institution. After these sales, the Company does not
retain any interest in the receivables. The Company’s continuing involvement in transferred receivables is limited to servicing
the receivables. Accounts receivable that the Company is servicing on behalf of the financial institution, which would have
otherwise been outstanding as of August 3, 2024 and July 29, 2023, was approximately $322 million and $310 million,
respectively. Net proceeds received are included within cash from operating activities in the Consolidated Statements of Cash
Flows in the period of sale. The loss on sale of receivables was $21 million and $14 million for fiscal 2024 and fiscal 2023,
respectively, and is recorded within Loss (gain) on sale of assets and other asset charges in the Consolidated Statements of
Operations.
NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES
Restructuring, acquisition and integration related expenses were as follows:
(in millions)
2024
2023
2022
Restructuring and integration costs
$
30 $
8 $
20
Closed property charges and costs
6
—
1
Total
$
36 $
8 $
21
Restructuring and Integration Costs
Restructuring and integration costs for fiscal 2024 and 2023 primarily relate to costs associated with certain employee
severance and other employee separation costs. Fiscal 2022 restructuring and integration costs primarily relate to the
finalization of integration costs related to the Supervalu acquisition.
Restructuring liabilities related to severance and other employee separation costs were $16 million and $5 million as of
August 3, 2024 and July 29, 2023, respectively, and are included in Accrued expenses and other current liabilities and Accrued
compensation and benefits in the Consolidated Balance Sheets. Changes in the liability included $27 million and $5 million
attributable to restructuring and severance-related charges for fiscal 2024 and fiscal 2023, respectively, and $16 million and $1
million attributable to cash settlements for fiscal 2024 and fiscal 2023, respectively.
Closed Property Charges and Costs
In fiscal 2024, closed property charges relate to lease terminations of non-operating distribution centers and stores.
NOTE 5—PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
(in millions)
Original
Estimated
Useful Lives
2024
2023
Land
$
123 $
136
Buildings and improvements
10 - 40 years
1,034
1,024
Leasehold improvements
10 - 20 years
303
284
Equipment
3 - 25 years
1,477
1,280
Motor vehicles
5 - 8 years
50
56
Finance lease assets
1 - 9 years
51
48
Construction in progress
215
186
Property and equipment
3,253
3,014
Less accumulated depreciation and amortization
1,433
1,247
Property and equipment, net
$
1,820 $
1,767
The Company capitalized $11 million, $5 million and $4 million of interest during fiscal 2024, 2023 and 2022, respectively.
Depreciation and amortization expense on property and equipment was $247 million, $232 million and $213 million for fiscal
2024, 2023 and 2022, respectively.
Table of Contents
67
In fiscal 2024, the Company determined that it was more likely than not that it would dispose of one of its corporate-owned
office locations before the end of its previously estimated useful life. As a result, the Company conducted an impairment review
and recorded a $21 million non-cash asset impairment charge in fiscal 2024. The fair value utilized in the Company’s
impairment review was determined based on the market approach. The impairment charge is recorded within Loss (gain) on
sale of assets and other asset charges in the Consolidated Statements of Operations. In the fourth quarter of fiscal 2024, the
Company sold certain long-lived assets related to this corporate-owned office location for an amount that approximated its net
book value at the time of the sale.
During the fourth quarter of fiscal 2024, the Company recorded a $15 million non-cash impairment charge related to the
decision to close certain leased and owned distribution center locations. During the third quarter of fiscal 2024, the Company
recorded a $7 million non-cash asset impairment charge related to the decision to close certain retail store locations. The
impairment charges are recorded within Loss (gain) on sale of assets and other asset charges in the Consolidated Statements of
Operations. There were no property and equipment impairment charges recorded for fiscal 2023 or 2022.
NOTE 6—GOODWILL AND INTANGIBLE ASSETS, NET
The Company has five goodwill reporting units: two of which represent separate operating segments and are aggregated within
the Wholesale reportable segment (U.S. Wholesale and Canada Wholesale); one of which is a separate Retail operating and
reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not
meet the criteria for being disclosed as separate reportable segments and are included in the Other segment. The Canada
Wholesale operating segment, which is aggregated with U.S. Wholesale, would not meet the quantitative thresholds for separate
reporting if it did not meet the aggregation criteria.
In the fourth quarter of fiscal 2024, 2023 and 2022 the Company performed its annual goodwill qualitative impairment review
and determined that a quantitative impairment test was not required for any of its reporting units.
Goodwill and Intangible Assets Changes
Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
(in millions)
Wholesale
Other
Total
Goodwill as of July 30, 2022(1)(2)
$
10 $
10 $
20
Change in foreign exchange rates
—
—
—
Goodwill as of July 29, 2023(1)(2)
10
10
20
Change in foreign exchange rates
(1)
—
(1)
Goodwill as of August 3, 2024(1)(2)
$
9 $
10 $
19
(1) Wholesale amounts are net of accumulated goodwill impairment charges of $717 million for fiscal 2022, 2023 and 2024.
(2) Other amounts are net of accumulated goodwill impairment charges of $10 million for fiscal 2022, 2023 and 2024.
Identifiable intangible assets, net consisted of the following:
2024
2023
(in millions)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Amortizing intangible assets:
Customer relationships
$
1,007
$
413
$
594
$
1,007
$
354
$
653
Pharmacy prescription files
33
27
6
33
22
11
Operating lease intangibles
6
5
1
6
5
1
Trademarks and tradenames
88
65
23
89
57
32
Total amortizing intangible assets
1,134
510
624
1,135
438
697
Indefinite lived intangible assets:
Trademarks and tradenames
25
—
25
25
—
25
Intangibles assets, net
$
1,159
$
510
$
649
$
1,160
$
438
$
722
Table of Contents
68
The Company performed annual qualitative reviews of its indefinite lived trademarks and tradenames in fiscal 2024 and 2022,
which indicated a quantitative assessment was not required.
In the fourth quarter of fiscal 2023, the Company decided to rationalize certain of its brands within its Blue Marble Brands
portfolio, resulting in an abandonment of certain brands and a shortened life of remaining brand-related intangible assets. These
changes were part of an effort for the Company to focus on its core private brand offerings. As a result, the Company recorded
a $25 million intangible asset impairment charge in fiscal 2023 and began amortizing the remaining intangible assets associated
with its Blue Marble Brands portfolio. The fair values utilized in the Company’s quantitative assessment were determined using
the income approach, discounting projected future net cash flows based on management’s expectations of the current and future
operating environment for each brand. The impairment charge is recorded within Loss (gain) on sale of assets and other asset
charges in the Consolidated Statements of Operations.
Amortization expense was $72 million for fiscal 2024, 2023 and 2022, respectively. The estimated future amortization expense
for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of August 3, 2024 is as shown
below:
Fiscal Year:
(in millions)
2025
$
71
2026
67
2027
64
2028
61
2029
51
Thereafter
310
$
624
NOTE 7—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Recurring Fair Value Measurements
The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
Fair Value at August 3, 2024
(in millions)
Consolidated Balance Sheets Location
Level 1
Level 2
Level 3
Assets:
Interest rate swaps designated as
hedging instruments
Prepaid expenses and other current assets
$
—
$
5
$
—
Foreign currency derivatives designated
as hedging instruments
Prepaid expenses and other current assets
$
—
$
1
$
—
Liabilities:
Fuel derivatives designated as hedging
instruments
Accrued expenses and other current liabilities
$
—
$
2
$
—
Interest rate swaps designated as
hedging instruments
Other long-term liabilities
$
—
$
5
$
—
Fair Value at July 29, 2023
(in millions)
Consolidated Balance Sheets Location
Level 1
Level 2
Level 3
Assets:
Interest rate swaps designated as
hedging instruments
Prepaid expenses and other current assets
$
—
$
17
$
—
Interest rate swaps designated as
hedging instruments
Other long-term assets
$
—
$
5
$
—
Liabilities:
Fuel derivatives designated as hedging
instruments
Accrued expenses and other current liabilities
$
—
$
1
$
—
Table of Contents
69
Interest Rate Swap Contracts
The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued
using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates,
Secured Overnight Financing Rate (“SOFR”) swap rates and credit default swap rates. Refer to Note 8—Derivatives for further
information on interest rate swap contracts.
Fuel Supply Agreements and Derivatives
To reduce diesel fuel price risk, the Company has entered into derivative financial instruments and/or forward purchase
commitments for a portion of our projected monthly diesel fuel requirements at fixed prices. The fair values of fuel derivative
agreements are measured using Level 2 inputs.
Foreign Exchange Derivatives
To reduce foreign exchange risk, the Company has entered into derivative financial instruments for a portion of our projected
monthly foreign currency requirements at fixed prices. The fair values of foreign exchange derivatives are measured using
Level 2 inputs.
Fair Value Estimates
For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued
vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to
their short maturities. The fair value of notes receivable is estimated by using a discounted cash flow approach prior to
consideration for uncollectible amounts and is calculated by applying a market rate for similar instruments using Level 3 inputs.
The fair value of debt is estimated based on market quotes, where available, or market values for similar instruments, using
Level 2 and 3 inputs. In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts
and debt issuance costs. Refer to Note 1—Significant Accounting Policies for additional information regarding the fair value
hierarchy.
August 3, 2024
July 29, 2023
(in millions)
Carrying Value
Fair Value
Carrying Value
Fair Value
Notes receivable, including current portion
$
14 $
8 $
15 $
8
Long-term debt, including current portion
$
2,085 $
2,072 $
1,963 $
1,903
NOTE 8—DERIVATIVES
Management of Interest Rate Risk
The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest
rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts
subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related
underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap
contracts are designated as cash flow hedges. Interest rate swap contracts are reflected at their fair values in the Consolidated
Balance Sheets. Refer to Note 7—Fair Value Measurements of Financial Instruments for further information on the fair value
of interest rate swap contracts.
Table of Contents
70
Details of active swap contracts as of August 3, 2024, which are all pay fixed and receive floating, are as follows:
Effective Date
Swap Maturity
Notional Value
(in millions)
Pay Fixed Rate
Receive Floating Rate
Floating Rate
Reset Terms
November 30, 2018
October 31, 2024
100
2.7385 % One-Month Term SOFR
Monthly
January 11, 2019
October 31, 2024
100
2.4025 % One-Month Term SOFR
Monthly
January 24, 2019
October 31, 2024
50
2.4090 % One-Month Term SOFR
Monthly
October 26, 2018
October 22, 2025
50
2.8725 % One-Month Term SOFR
Monthly
November 16, 2018
October 22, 2025
50
2.8750 % One-Month Term SOFR
Monthly
November 16, 2018
October 22, 2025
50
2.8380 % One-Month Term SOFR
Monthly
January 24, 2019
October 22, 2025
50
2.4750 % One-Month Term SOFR
Monthly
December 29, 2023
June 3, 2027
100
3.7525 % One-Month Term SOFR
Monthly
December 29, 2023
June 3, 2027
100
3.7770 % One-Month Term SOFR
Monthly
June 25, 2024
June 30, 2028
50
4.1175 % One-Month Term SOFR
Monthly
June 25, 2024
June 30, 2028
50
4.1300 % One-Month Term SOFR
Monthly
$
750
Subsequent to August 3, 2024, the Company entered into three forward starting interest rate swap agreements for an aggregate
notional amount of $250 million. These interest rate swaps will become effective on October 31, 2024 with a maturity date of
October 30, 2026.
The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in
the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each
hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash
flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for
quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty
default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair
value of the derivative is initially reported in Other comprehensive (loss) income (outside of earnings) in the Consolidated
Statements of Comprehensive (Loss) Income and subsequently reclassified to earnings in Interest expense, net in the
Consolidated Statements of Operations when the hedged transactions affect earnings.
The location and amount of gains or losses recognized in the Consolidated Statements of Operations for interest rate swap
contracts for each of the periods, presented on a pre-tax basis, are as follows:
Interest Expense, net
(In millions)
2024
2023
2022
Total amounts of expense line items presented in the Consolidated
Statements of Operations in which the effects of cash flow hedges are
recorded
$
162 $
144 $
155
Gain (loss) on cash flow hedging relationships:
Gain (loss) reclassified from comprehensive income into earnings
$
19 $
12 $
(36)
Table of Contents
71
NOTE 9—LONG-TERM DEBT
The Company’s long-term debt consisted of the following:
(in millions)
Average
Interest Rate at
August 3, 2024
Fiscal Maturity
Year
August 3, 2024
July 29, 2023
Term Loan Facility (1)
10.09%
2031
$
499 $
670
ABL Credit Facility (2)
6.66%
2027
1,113
812
Senior Notes (3)
6.75%
2029
500
500
Other secured loans
4.43%
2025
1
9
Debt issuance costs, net
(18)
(22)
Original issue discount on debt
(10)
(6)
Long-term debt, including current portion
2,085
1,963
Less: current portion of long-term debt
(4)
(7)
Long-term debt
$
2,081 $
1,956
(1) Debt issuance costs of $6 million and $7 million, respectively and an original issue discount on debt of $10 million and $6 million,
respectively.
(2) Debt issuance costs of $7 million and $8 million, respectively.
(3) Debt issuance costs of $5 million and $7 million, respectively.
Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on
debt, and contractual interest payments based on the face value and applicable interest rate as of August 3, 2024, consist of the
following (in millions):
Fiscal Year
Long-term
debt maturity
Interest on
long-term debt
2025
$
6 $
159
2026
5
159
2027
1,118
147
2028
5
83
2029
505
65
2030 and thereafter
474
85
$
2,113 $
698
Term Loan Facility
On May 1, 2024, the Company entered into an amendment (the “Fourth Term Loan Amendment”) to its term loan agreement
dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) with a group of lenders for which JPMorgan Chase
Bank, N.A. acts as administrative agent. The Term Loan Agreement provides for a $500 million senior secured first lien term
loan (the “Term Loan Facility”) which is scheduled to mature on May 1, 2031. The Fourth Term Loan Amendment, among
other things, (i) reduced the principal amount of Term Loan Facility to $500 million, (ii) extended the maturity to May 1, 2031,
but with a springing maturity of 91 days prior to the maturity of the Senior Notes, in the event that at least $100 million in
principal amount outstanding of such Senior Notes remains outstanding on such date and (iii) changed the applicable margin
over (a) a base rate from 2.25% to 3.75% per annum, or (b) a SOFR rate from 3.25% to 4.75% per annum.
Under the Term Loan Agreement, the Company may, at its option, increase the amount of the Term Loan Facility or add one or
more additional tranches of term loans or revolving credit commitments, without the consent of any lenders not participating in
such additional borrowings, up to an aggregate amount of $520 million plus additional amounts based on satisfaction of certain
leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional
funding. There can be no assurance that additional funding would be available.
Table of Contents
72
The obligations under the Term Loan Facility are guaranteed by most of the Company’s wholly-owned subsidiaries
(collectively, the “Guarantors”), subject to customary exceptions and limitations. The Term Loan Facility is secured by (i) a
first-priority lien on substantially all assets other than the ABL Assets (defined below) and (ii) a second-priority lien on
substantially all of the ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for
owned real property (other than distribution centers) with net book values of less than or equal to $10 million. As of August 3,
2024 and July 29, 2023, there was $686 million and $617 million, respectively, of owned real property pledged as collateral that
was included in Property and equipment, net in the Consolidated Balance Sheets.
The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an
aggregate principal amount equal to a specified percentage of Excess Cash Flow (as defined in the Term Loan Agreement),
minus certain types of voluntary prepayments of indebtedness made during such fiscal year. Based on the Company’s Excess
Cash Flow for the fiscal year ended August 3, 2024, no such prepayment will be required under the Term Loan Facility in fiscal
2025.
As of August 3, 2024, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option,
can be either: (i) a base rate plus a margin of 3.75% or (ii) a SOFR rate plus a margin of 4.75%, provided that the SOFR rate
shall never be less than 0.0%.
On May 1, 2024, in conjunction with the Fourth Term Loan Amendment, the Company made a voluntary prepayment of
$145 million on the Term Loan Facility with $130 million of proceeds from the ABL FILO Loan (described below) and
incremental borrowings under the ABL Credit Facility. In connection with the Fourth Term Loan Amendment and prepayment,
the Company incurred a loss on debt extinguishment of $10 million primarily related to unamortized debt issuance costs and
unamortized original issue discount, which was recorded within Interest expense, net in the Consolidated Statements of
Operations in the fourth quarter of fiscal 2024.
ABL Credit Facility
On May 1, 2024, the Company entered into an amendment (the “First ABL Amendment”) to its revolving credit agreement
dated as of June 3, 2022, (as amended, the “ABL Loan Agreement”) with a group of lenders for which Wells Fargo Bank, N.A.
acts as administrative agent. Pursuant to the First ABL Amendment, the ABL Loan Agreement provides for a secured asset-
based revolving credit facility (the “ABL Credit Facility”) with an aggregate principal amount available of up to $2,730 million,
including Revolver Loans (as defined in the ABL Loan Agreement) of up to $2,600 million and a First In, Last Out (“FILO”)
tranche of incremental ABL loans of $130 million (the “ABL FILO Loan”). The ABL Credit Facility is scheduled to mature on
June 3, 2027.
Under the ABL Loan Agreement, the aggregate amount of the ABL Credit Facility may be increased in an amount of up to
$620 million without the consent of any lenders not participating in such increase, subject to certain customary conditions and
applicable lenders committing to provide the increase in funding. There can be no assurance that additional funding would be
available.
The ABL Loan Agreement utilizes Term SOFR and Prime rates as the benchmark interest rates. Revolver Loans and ABL
FILO Loans under the ABL Credit Facility bear interest at rates that, at the Company’s option, can be either at a base rate or
Term SOFR plus an applicable margin. The applicable interest rates and letter of credit fees under the ABL Credit Facility are
variable and are dependent upon the prior fiscal quarter’s daily average Availability (as defined in the ABL Loan Agreement),
and were as follows:
Range of Facility Rates and
Fees (per annum)
August 3, 2024
Applicable margin for revolver base rate loans
0.00% - 0.25%
0.00 %
Applicable margin for revolver SOFR and BA loans(1)
1.00% - 1.25%
1.00 %
Applicable margin for FILO base rate loans
1.50%
1.50 %
Applicable margin for FILO SOFR loans
2.50%
2.50 %
Unutilized commitment fees
0.20%
0.20 %
Letter of credit fees
1.125% - 1.375%
1.125 %
(1) The Company utilizes SOFR-based loans and UNFI Canada utilizes bankers’ acceptance rate-based loans.
Table of Contents
73
The ABL Credit Facility is guaranteed by the Guarantors, subject to customary exceptions and limitations. The ABL Credit
Facility is secured by (i) a first-priority lien on certain accounts receivable, inventory and certain other assets (collectively, the
“ABL Assets”) and (ii) a second-priority lien on all other assets that do not constitute ABL Assets, in each case, subject to
customary exceptions and limitations.
Availability under the ABL Credit Facility is subject to a borrowing base consisting of specified percentages of the value of
eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files, after
adjusting for customary reserves, but at no time shall exceed the aggregate commitments plus the outstanding ABL FILO Loans
under the ABL Credit Facility (currently $2,730 million).
The assets included in the Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a
first-priority basis were as follows:
(in millions)
August 3, 2024
July 29, 2023
Certain inventory assets included in Inventories, net
$
1,915 $
1,861
Certain receivables included in Accounts receivable, net
611
571
Pharmacy prescription files included in Intangible assets, net
6
11
Total
$
2,532 $
2,443
As of August 3, 2024, the borrowing base was $2,524 million, reflecting the advance rates described above and $101 million of
reserves, which is below the $2,730 million limit of availability. This resulted in total availability of $2,524 million for loans
and letters of credit under the ABL Credit Facility. The Company’s unused credit under the ABL Credit Facility was as follows:
(in millions)
August 3, 2024
Total availability for ABL loans and letters of credit
$
2,524
ABL loans outstanding
1,113
Letters of credit outstanding
176
Unused credit
$
1,235
Senior Notes
On October 22, 2020, the Company issued $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior
Notes”). The Senior Notes are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the
ABL Credit Facility or the Term Loan Facility (defined above).
Debt Covenants
Our debt agreements contain certain customary operational and informational covenants. These include, among other things,
restrictions on our ability to incur additional indebtedness, create liens on assets, make loans or investments, or return capital to
stockholders through share repurchases or paying dividends. If the Company fails to comply with any of these covenants, it
may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and
payable.
The ABL Loan Agreement also subjects the Company to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end
of each of the Company’s fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than
the greater of (i) $220 million, or $210 million if no ABL FILO Loans are then outstanding at such time, and (ii) 10% of the
borrowing base. The Term Loan Agreement and Senior Notes do not include any financial maintenance covenants.
Table of Contents
74
NOTE 10—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2024, 2023 and 2022 are as follows:
(in millions)
Other Cash
Flow
Derivatives
Benefit
Plans
Foreign
Currency
Swap
Agreements
Total
Accumulated other comprehensive income (loss) at July 31, 2021
$
—
$
37
$
(16) $
(60) $
(39)
Other comprehensive (loss) income before reclassifications
—
(42)
(3)
34
(11)
Amortization of amounts included in net periodic benefit income
—
2
—
—
2
Amortization of cash flow hedges
2
—
—
26
28
Net current period Other comprehensive income (loss)
2
(40)
(3)
60
19
Accumulated other comprehensive income (loss) at July 30, 2022
$
2
$
(3) $
(19) $
—
$
(20)
Other comprehensive (loss) income before reclassifications
—
(20)
(2)
23
1
Amortization of amounts included in net periodic benefit income
—
2
—
—
2
Amortization of cash flow hedges
(2)
—
—
(9)
(11)
Net current period Other comprehensive (loss) income
(2)
(18)
(2)
14
(8)
Accumulated other comprehensive (loss) income at July 29, 2023
$
—
$
(21) $
(21) $
14
$
(28)
Other comprehensive (loss) income before reclassifications
(2)
(3)
(3)
(1)
(9)
Amortization of amounts included in net periodic benefit income
—
2
—
—
2
Amortization of cash flow hedges
2
—
—
(14)
(12)
Net current period Other comprehensive (loss) income
—
(1)
(3)
(15)
(19)
Accumulated other comprehensive loss at August 3, 2024
$
—
$
(22) $
(24) $
(1) $
(47)
Items reclassified out of Accumulated other comprehensive (loss) income had the following impact on the Consolidated
Statements of Operations:
(in millions)
2024
2023
2022
Affected Line Item on the Consolidated
Statements of Operations
Pension and postretirement benefit plan obligations:
Amortization of amounts included in net periodic
benefit cost (income)(1)
$
2
$
3
$
4
Net periodic benefit income,
excluding service cost
Income tax benefit
—
(1)
(2)
(Benefit) provision for income taxes
Total reclassifications, net of tax
$
2
$
2
$
2
Swap agreements:
Reclassification of cash flow hedge
$
(19) $
(12) $
36
Interest expense, net
Income tax expense (benefit)
5
3
(10)
(Benefit) provision for income taxes
Total reclassifications, net of tax
$
(14) $
(9) $
26
Other cash flow hedges:
Reclassification of cash flow hedge
$
2
$
(3) $
2
Cost of sales
Income tax expense
—
1
—
(Benefit) provision for income taxes
Total reclassifications, net of tax
$
2
$
(2) $
2
(1)
Reclassification of amounts included in net periodic benefit income include reclassification of prior service cost and reclassification
of net actuarial (gain) loss as reflected in Note 13—Benefit Plans.
As of August 3, 2024, the Company expects to reclassify $6 million related to unrealized derivative gains out of Accumulated
other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.
Table of Contents
75
NOTE 11—LEASES
The Company leases certain of its distribution centers, retail stores, office facilities, transportation equipment and other
operating equipment from third parties. Many of these leases include renewal options. The Company’s lease agreements do not
contain any material residual value guarantees or material restrictive covenants.
Lease assets and liabilities, net, are as follows (in millions):
Lease Type
Consolidated Balance Sheets Location
August 3, 2024
July 29, 2023
Operating lease assets
Operating lease assets
$
1,370 $
1,228
Finance lease assets
Property and equipment, net
16
14
Total lease assets
$
1,386 $
1,242
Operating liabilities
Current portion of operating lease liabilities
$
181 $
180
Finance liabilities
Current portion of long-term debt and finance lease
liabilities
7
11
Operating liabilities
Long-term operating lease liabilities
1,263
1,099
Finance liabilities
Long-term finance lease liabilities
12
12
Total lease liabilities
$
1,463 $
1,302
The Company’s lease cost under ASC 842 is as follows (in millions):
Lease Expense Type
Consolidated Statements of Operations
Location
2024
2023
2022
Operating lease cost
Operating expenses
$
298 $
261 $
241
Short-term lease cost
Operating expenses
10
17
19
Variable lease cost
Operating expenses
87
73
73
Sublease income
Operating expenses
(5)
(8)
(8)
Sublease income
Net sales
(10)
(14)
(17)
Other sublease income, net
Restructuring, acquisition and
integration related expenses(1)
—
(1)
(2)
Net operating lease cost
380
328
306
Amortization of leased assets
Operating expenses
6
7
10
Interest on lease liabilities
Interest expense, net
2
3
11
Finance lease cost
8
10
21
Total net lease cost
$
388 $
338 $
327
(1)
Includes $28 million, $27 million and $29 million of lease expense in fiscal 2024, 2023 and 2022, respectively, and $(28) million,
$(28) million, and $(31) million of lease income in fiscal 2024, 2023 and 2022, respectively, that is recorded within Restructuring,
acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating
properties for which the Company is restructuring its obligations.
During fiscal 2023, the Company entered into a lease agreement for a new distribution facility in Manchester, Pennsylvania,
which commenced in the second quarter of fiscal 2024 resulting in the recognition of a $205 million right-of-use asset and
operating lease liability in the Consolidated Balance Sheets.
During fiscal 2022, the Company acquired the real property of a previously leased distribution center in Riverside, California,
which was classified as a finance lease, for approximately $153 million. Immediately following this acquisition, the Company
monetized this property through a sale-leaseback transaction, pursuant to which the Company received $225 million in
aggregate proceeds for the sale of the property, which reflected the fair value of the property. Under the terms of the sale-
leaseback agreement, the Company entered into a lease for the distribution center for a term of 15 years, which was classified as
an operating lease. The Company recorded a pre-tax gain on sale of approximately $87 million in fiscal 2022 as a result of the
transactions, which primarily represented the pre-tax net proceeds.
Table of Contents
76
The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases,
including assigned leases for which the Company has future minimum lease payment obligations. Future minimum lease
payments (“Lease Liabilities”) include payments to be made by the Company or certain third parties in the case of assigned
noncancellable operating leases and finance leases. Future minimum lease and subtenant rentals (“Lease Receipts”) include
expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to
third parties, which they operate. As of August 3, 2024, these Lease Liabilities and Lease Receipts consisted of the following
(in millions):
Lease Liabilities
Lease Receipts
Net Lease Obligations
Fiscal Year
Operating
Leases(1)
Finance
Leases (2)
Operating
Leases
Finance
Leases
Operating
Leases
Finance
Leases
2025
$
304 $
9 $
(33) $
— $
271 $
9
2026
261
5
(25)
—
236
5
2027
218
2
(18)
—
200
2
2028
208
2
(14)
—
194
2
2029
175
2
(8)
—
167
2
Thereafter
1,141
3
(19)
—
1,122
3
Total undiscounted lease liabilities
and receipts
$
2,307 $
23 $
(117) $
— $
2,190 $
23
Less interest(3)
(863)
(4)
Present value of lease liabilities
1,444
19
Less current lease liabilities
(181)
(7)
Long-term lease liabilities
$
1,263 $
12
(1)
Excludes $340 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced. There
were no operating leases for which the extension options are reasonably certain of being exercised.
(2)
There were no finance leases for which the extension options are reasonably certain of being exercised, nor were there any excluded
legally binding minimum lease payments for leases signed but not yet commenced.
(3)
Calculated using the interest rate for each lease.
The following tables provide other information required by ASC 842:
Lease Term and Discount Rate
August 3, 2024
July 29, 2023
Weighted-average remaining lease term (years)
Operating leases
9.9 years
9.7 years
Finance leases
4.1 years
2.9 years
Weighted-average discount rate
Operating leases
9.4 %
8.9 %
Finance leases
9.9 %
9.8 %
Other Information
(in millions)
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
284 $
249 $
224
Operating cash flows from finance leases
$
2 $
2 $
7
Financing cash flows from finance leases
$
12 $
10 $
160
Leased assets obtained in exchange for new finance lease liabilities
$
8 $
— $
1
Leased assets obtained in exchange for new operating lease liabilities
$
361 $
237 $
292
Table of Contents
77
NOTE 12—SHARE-BASED AWARDS
As of August 3, 2024, the Company has restricted stock awards and performance share units and stock options outstanding
under two equity incentive plans: the 2012 Equity Incentive Plan, as amended and restated (the “2012 Plan”), and the 2020
Equity Incentive Plan, as amended and restated from time to time (the “2020 Equity Incentive Plan”). The terms of each stock-
based award will be determined by the Board of Directors or the Compensation Committee thereof. As of August 3, 2024, the
Company has 2.1 million shares authorized and available for grant under the 2020 Equity Incentive Plan. The authorization for
new grants under the 2012 Plan has expired.
Share-Based Compensation Expense
The following table presents information regarding share-based compensation expenses and the related tax impacts:
(in millions)
2024
2023
2022
Restricted stock awards
$
33 $
35 $
36
Performance-based share awards
4
3
7
Share-based compensation expense recorded in Operating expenses
37
38
43
Income tax benefit
(10)
(10)
(12)
Share-based compensation expense, net of tax
$
27 $
28 $
31
Share-based compensation expense recorded in Restructuring, acquisition
and integration related expenses
$
2 $
— $
1
Income tax benefit
(1)
—
—
Share-based compensation expense recorded in Restructuring, acquisition
and integration related expenses, net of tax
$
1 $
— $
1
Vesting requirements for awards are generally at the discretion of the Company’s Board of Directors or the Compensation
Committee thereof. Time-based vesting awards for employees typically vest in three equal installments. The Board of Directors
has adopted a policy in connection with the 2020 Equity Incentive Plan that sets forth grant, vesting and settlement dates for
equity awards, a one-year vesting period for awards issued to non-employee directors, and a three-year equal installment
vesting period for designated employee restricted stock awards. Performance awards have a three-year cliff vest, subject to
achievement of the performance objective. As of August 3, 2024, there was $51 million of total unrecognized compensation
cost related to outstanding share-based compensation arrangements (including restricted stock units and performance-based
restricted stock units). This cost is expected to be recognized over a weighted-average period of 2.0 years.
Table of Contents
78
Restricted Stock Awards
The fair value of restricted stock units and performance share units are determined based on the number of units granted and the
quoted price of the Company’s common stock as of the grant date. The following summary presents information regarding
restricted stock units and performance share units:
Number
of Shares
(in millions)
Weighted
Average
Grant-Date
Fair Value
Outstanding at July 31, 2021
6.8 $
17.33
Granted
1.2
45.46
Vested
(2.8)
42.06
Forfeited/Canceled
(0.3)
37.68
Outstanding at July 30, 2022
4.9
20.02
Granted
1.7
35.01
Vested
(3.1)
35.48
Forfeited/Canceled
(0.3)
21.55
Outstanding at July 29, 2023
3.2
32.11
Granted
3.7
15.99
Vested
(1.5)
14.56
Forfeited/Canceled
(0.8)
10.42
Outstanding at August 3, 2024
4.6 $
22.66
(in millions)
2024
2023
2022
Intrinsic value of restricted stock units vested
$
22 $
113 $
125
Performance-Based Share Awards
During fiscal 2024, the Company granted 0.8 million performance share units, included in the granted number in the above
table, to its executives and other senior leaders (subject to the issuance of up to 1.0 million additional shares if the Company’s
performance exceeds specified targeted levels) with a weighted average grant-date fair value of $16.38. These performance
units are tied to fiscal 2024, 2025 and 2026 performance metrics, including adjusted earnings per share (“EPS”) growth and
adjusted return on invested capital (“ROIC”). An insignificant amount of performance share units granted in fiscal 2024 were
forfeited during fiscal 2024.
During fiscal 2023, the Company granted 0.4 million performance share units, included in the granted number in the above
table, to its executives and other senior leaders (subject to the issuance of up to 0.4 million additional shares if the Company’s
performance exceeds specified targeted levels) with a weighted average grant-date fair value of $36.87. These performance
units are tied to fiscal 2023, 2024 and 2025 performance metrics, including adjusted EPS growth and adjusted ROIC. An
insignificant amount of performance share units granted in fiscal 2023 were forfeited during fiscal 2024.
During fiscal 2022, the Company granted 0.3 million performance share units, included in the granted number in the above
table, to its executives and other senior leaders (subject to the issuance of up to 0.3 million additional shares if the Company’s
performance exceeds specified targeted levels) with a weighted average grant-date fair value of $49.31. These performance
units were tied to fiscal 2022, 2023 and 2024 performance metrics, including adjusted EPS growth and adjusted ROIC. An
insignificant amount of performance share units granted in fiscal 2022 were forfeited during fiscal 2024.
Table of Contents
79
Stock Options
The Company did not grant options in fiscal 2024, 2023 or 2022. The following summary presents information regarding
outstanding stock options as of August 3, 2024 and changes during the fiscal year then ended:
Number
of Options
(in millions)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding at beginning of year
0.3 $
55.46
1.1 years
Exercised
—
—
Canceled
(0.2)
53.45
Outstanding at end of year
0.1
—
0.6 years
$
—
Exercisable at end of year
0.1 $
58.45
0.6 years
$
—
The aggregate intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $0 million, $0 million and $2 million,
respectively.
NOTE 13—BENEFIT PLANS
The Company’s employees who participate are covered by various contributory and non-contributory pension, 401(k) plans,
and other health and welfare benefits. The Company’s primary defined benefit pension plans are the SUPERVALU INC.
Retirement Plan and certain supplemental executive retirement plans. These plans were closed to new participants and service
crediting ended for all participants as of December 31, 2007. Pay increases were reflected in the amount of benefits accrued in
these plans until December 31, 2012. Approximately 70% of the 10,704 union employees participate in multiemployer defined
benefit pension plans under collective bargaining agreements. The remaining either participate in plans sponsored by the
Company or are not currently eligible to participate in a retirement plan. In addition to sponsoring both defined benefit and
defined contribution pension plans, the Company provides healthcare and life insurance benefits for eligible retired employees
under postretirement benefit plans. The Company also provides certain health and welfare benefits, including short-term and
long-term disability benefits, to inactive disabled employees prior to retirement. The terms of the postretirement benefit plans
vary based on employment history, age and date of retirement. For many retirees, the Company provides a fixed dollar
contribution and retirees pay contributions to fund the remaining cost.
Defined Benefit Pension and Other Postretirement Benefit Plans
For the defined benefit pension plans, the accumulated benefit obligation is equal to the projected benefit obligation. The
benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans and other postretirement
benefit plans consisted of the following:
2024
2023
(in millions)
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
Changes in Benefit Obligation
Benefit obligation at beginning of year
$
1,545
$
11
$
1,706
$
12
Actuarial gain
(14)
—
(121)
(1)
Benefits paid
(100)
(1)
(103)
—
Interest cost
74
1
63
—
Benefit obligation at end of year
1,505
11
1,545
11
Changes in Plan Assets
Fair value of plan assets at beginning of year
1,559
—
1,716
—
Actual return on plan assets
74
—
(55)
—
Benefits paid
(100)
(1)
(103)
(1)
Employer contributions
1
1
1
1
Fair value of plan assets at end of year
1,534
—
1,559
—
Funded (unfunded) status at end of year
$
29
$
(11) $
14
$
(11)
Table of Contents
80
The actuarial gain on projected pension benefit obligations in fiscal 2024 was primarily the result of an 8 basis point increase in
the discount rate on the SUPERVALU INC. Retirement Plan. The actuarial gain on projected pension benefit obligations in
fiscal 2023 was primarily the result of an 81 basis point increase in the discount rate on the SUPERVALU INC. Retirement
Plan.
The funded status of our pension benefits contains plans with individually funded and underfunded statuses. Our other
postretirement benefits consist of one plan as shown above. The following table provides the funded status of individual
projected pension benefit plan obligations and the fair value of plan assets for these plans:
(in millions)
SUPERVALU INC.
Retirement Plan
Other Pension Plan
Total Pension
Benefits
August 3, 2024:
Fair value of plan assets at end of year
$
1,534 $
— $
1,534
Benefit obligation at end of year
(1,499)
(6)
(1,505)
Funded (unfunded) status at end of year
$
35 $
(6) $
29
SUPERVALU INC.
Retirement Plan
Other Pension Plan
Total Pension
Benefits
July 29, 2023:
Fair value of plan assets at end of year
$
1,559 $
— $
1,559
Benefit obligation at end of year
(1,539)
(6)
(1,545)
Funded (unfunded) status at end of year
$
20 $
(6) $
14
Net periodic benefit (income) cost and other changes in plan assets and benefit obligations recognized consist of the following:
2024
2023
2022
(in millions)
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
Net Periodic Benefit (Income) Cost
Expected return on plan assets
$
(92) $
—
$
(95) $
—
$
(82) $
—
Interest cost
74
1
63
—
38
—
Amortization of prior service cost
—
3
—
3
—
3
Amortization of net actuarial (gain) loss
—
(1)
—
—
1
—
Net periodic benefit (income) cost
(18)
3
(32)
3
(43)
3
Other Changes in Plan Assets and
Benefits Obligations Recognized in
Other Comprehensive (Loss) Income
Net actuarial loss (gain)
3
—
29
(1)
59
(3)
Amortization of prior service cost
—
(3)
—
(3)
—
(3)
Amortization of net actuarial loss
—
1
—
—
—
—
Total expense (benefit) recognized in
Other comprehensive (loss) income
3
(2)
29
(4)
59
(6)
Total (benefit) expense recognized in net
periodic benefit cost (income) and
Other comprehensive (loss) income
$
(15) $
1
$
(3) $
(1) $
16 $
(3)
Amounts recognized in the Consolidated Balance Sheets as of August 3, 2024 and July 29, 2023 consist of the following:
August 3, 2024
July 29, 2023
(in millions)
Pension
Benefits
Other
Postretirement
Benefits
Pension
Benefits
Other
Postretirement
Benefits
Other long-term assets
$
35 $
— $
20 $
—
Pension and other postretirement benefit obligations
(5)
(10)
(6)
(10)
Accrued compensation and benefits
(1)
(1)
—
(1)
Total
$
29 $
(11) $
14 $
(11)
Table of Contents
81
Benefit Plan Assumptions
Weighted average assumptions used to determine benefit obligations and net periodic benefit (income) cost consisted of the
following:
2024
2023
2022
Benefit obligation assumptions:
Discount rate
5.09% - 5.12%
5.01% - 5.03%
4.20% - 4.26%
Net periodic benefit (income) cost assumptions:
Discount rate
5.01% - 5.03%
4.20% - 4.26%
2.62% - 2.75%
Rate of compensation increase
—
—
—
Expected return on plan assets(1)
6.25 %
6.00%
4.25% - 4.50%
Interest credit
5.00 %
5.00 %
5.00 %
(1) Expected return on plan assets is estimated by utilizing forward-looking, long-term return, risk and correlation assumptions
developed and updated annually by the Company. These assumptions are weighted by the actual or target allocation to each
underlying asset class represented in the pension plan master trust. The Company also assesses the expected long-term return on
plan assets assumption by comparison to long-term historical performance on an asset class basis to ensure the assumption is
reasonable. Long-term trends are also evaluated relative to market factors such as inflation, interest rates, and fiscal and monetary
policies in order to assess the capital market assumptions.
The Company reviews and selects the discount rate to be used in connection with measuring its pension and other
postretirement benefit obligations annually. In determining the discount rate, the Company uses the yield on corporate bonds
(rated AA or better) that coincides with the cash flows of the plans’ estimated benefit payouts. The model uses a yield curve
approach to discount each cash flow of the liability stream at an interest rate specifically applicable to the timing of each
respective cash flow. The model totals the present values of all cash flows and calculates the equivalent weighted average
discount rate by imputing the singular interest rate that equates the total present value with the stream of future cash flows. This
resulting weighted average discount rate is then used in evaluating the final discount rate to be used.
For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used
in measuring the accumulated postretirement benefit obligation before age 65 was 8.50% as of August 3, 2024. The assumed
healthcare cost trend rate for retirees before age 65 will decrease each year through fiscal 2034, until it reaches the ultimate
trend rate of 4.50%. For those retirees whose health plans provide for variable employer contributions, the assumed healthcare
cost trend rate used in measuring the accumulated postretirement benefit obligation after age 65 was 6.40% as of August 3,
2024.
Pension Plan Assets
Pension plan assets are held in a master trust and invested in separately managed accounts and other commingled investment
vehicles holding fixed income securities, domestic equity securities, private equity securities, international equity securities and
real estate securities. The Company employs a liability hedging approach, targeting a level of risk commensurate with keeping
pace with the long-term cost of funding plan liabilities. Risk is managed through diversification across asset classes, multiple
investment manager portfolios and both general and portfolio-specific investment guidelines. Risk tolerance is established
through careful consideration of the plan liabilities, plan funded status and the Company’s financial condition. This asset
allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-
needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed”
strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plan’s active
investment strategies employ multiple investment management firms. Managers within each asset class cover a range of
investment styles and approaches and are combined in a way that controls for capitalization, and style biases (equities) and
interest rate exposures (fixed income) versus benchmark indices. Monitoring activities to evaluate performance against targets
and measure investment risk take place on an ongoing basis through annual liability measurements, periodic asset/liability
studies and quarterly investment portfolio reviews.
Table of Contents
82
The asset allocation targets and the actual allocation of pension plan assets are as follows:
Asset Category
Target
2024
2023
Fixed income
85.0 %
85.9 %
85.1 %
Domestic equity
5.8 %
5.5 %
5.3 %
Private equity
4.0 %
3.3 %
4.0 %
International equity
3.2 %
3.7 %
3.5 %
Real estate
2.0 %
1.6 %
2.1 %
Total
100.0 %
100.0 %
100.0 %
The following is a description of the valuation methodologies used for investments measured at fair value:
Common stock - Valued at the closing price reported in the active market in which the individual securities are traded.
Common collective trusts - Investments in common/collective trust funds are stated at net asset value (“NAV”) as
determined by the issuer of the common/collective trust funds and is based on the fair value of the underlying investments
held by the fund less its liabilities. The majority of the common/collective trust funds have a readily determinable fair value
and are classified as Level 2. Other investments in common/collective trust funds determine NAV on a less frequent basis
and/or have redemption restrictions. For these investments, NAV is used as a practical expedient to estimate fair value.
Corporate bonds - Valued based on yields currently available on comparable securities of issuers with similar credit
ratings. When quoted prices are not available for identical or similar bonds, the fair value is based upon an industry
valuation model, which maximizes observable inputs.
Government securities - Certain government securities are valued at the closing price reported in the active market in which
the security is traded. Other government securities are valued based on yields currently available on comparable securities
of issuers with similar credit ratings.
Mortgage backed securities - Valued based on yields currently available on comparable securities of issuers with similar
credit ratings. When quoted prices are not available for identical or similar securities, the fair value is based upon an
industry valuation model, which maximizes observable inputs.
Private equity and real estate partnerships - Valued based on NAV provided by the investment manager, updated for any
subsequent partnership interests’ cash flows or expected changes in fair value. The NAV is used as a practical expedient to
estimate fair value.
Other - Consists primarily of options, futures, and money market investments priced at $1 per unit.
The valuation methods described above may produce a fair value calculation that may not be indicative of net realizable value
or reflective of future fair values. Furthermore, while the Company believes our valuation methods are appropriate and
consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of
certain financial instruments could result in a different fair value measurement.
Table of Contents
83
The fair value of assets held in the master trust for defined benefit pension plans as of August 3, 2024, by asset category,
consisted of the following (in millions):
Level 1
Level 2
Level 3
Measured at
NAV as a
Practical
Expedient
Total
Common stock
$
45 $
— $
— $
— $
45
Common collective trusts
—
538
—
—
538
Corporate bonds
—
603
—
—
603
Government securities
—
146
—
—
146
Mortgage-backed securities
—
25
—
—
25
Other
97
5
—
—
102
Private equity and real estate partnerships
—
—
—
75
75
Total plan assets at fair value
$
142 $
1,317 $
— $
75 $
1,534
The fair value of assets held in the master trust for defined benefit pension plans as of July 29, 2023, by asset category,
consisted of the following (in millions):
Level 1
Level 2
Level 3
Measured at
NAV as a
Practical
Expedient
Total
Common stock
$
46 $
— $
— $
— $
46
Common collective trusts
—
541
—
—
541
Corporate bonds
—
582
—
—
582
Government securities
—
161
—
—
161
Mortgage-backed securities
—
30
—
—
30
Other
100
3
—
—
103
Private equity and real estate partnerships
—
—
—
96
96
Total plan assets at fair value
$
146 $
1,317 $
— $
96 $
1,559
Contributions
No minimum pension contributions were required to be made under the SUPERVALU INC. Retirement Plan under the
Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2024. The Company expects to contribute
approximately $1 million to its other defined benefit pension plans and $1 million to its postretirement benefit plans in fiscal
2025.
The Company funds its defined benefit pension plans based on the minimum contribution required under the Internal Revenue
Code, ERISA, the Pension Protection Act of 2006 and other applicable laws, as determined by our external actuarial consultant,
and additional contributions made at its discretion. The Company may accelerate contributions or undertake contributions in
excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing
needs or other factors as may be applicable. The Company assesses the relative attractiveness of the use of cash including such
factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required Pension Benefit Guaranty
Corporation variable rate premiums or the ability to achieve exemption from participant notices of underfunding.
Table of Contents
84
Estimated Future Benefit Payments
The estimated future benefit payments to be made from our defined benefit pension and other postretirement benefit plans,
which reflect expected future service, are as follows (in millions):
Fiscal Year
Pension Benefits
Other
Postretirement
Benefits
2025
$
112 $
1
2026
113
1
2027
115
1
2028
115
1
2029
115
1
Years 2030-2034
562
4
Defined Contribution Plan
The Company sponsors a defined contribution and profit sharing plan pursuant to Section 401(k) of the Internal Revenue Code.
Employees may contribute a portion of their eligible compensation to the plan on a pre-tax or after-tax Roth basis. The
Company matches a portion of certain employee contributions by contributing cash into the investment options selected by the
employees. The total amount contributed by the Company to the plan is determined by plan provisions or at the Company’s
discretion. Total employer contribution expenses for this plan were $30 million, $30 million and $29 million for fiscal 2024,
2023 and 2022, respectively.
Post-Employment Benefits
The Company recognizes an obligation for benefits provided to former or inactive employees. The Company is self-insured for
certain disability plan programs, which comprise the primary benefits paid to inactive employees prior to retirement.
As of August 3, 2024 there was $3 million of Accrued compensation and benefits and $2 million of Other long-term liabilities
recognized in the Consolidated Balance Sheets. As of July 29, 2023 there was $4 million of Accrued compensation and benefits
and $4 million of Other long-term liabilities.
Multiemployer Pension Plans
The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined
benefit pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees are typically responsible
for determining the level of benefits to be provided to participants as well as the investment of the assets and plan
administration. Trustees are appointed in equal number by employers and the unions that are parties to the relevant collective
bargaining agreements.
Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP. The risks of
participating in these multiemployer plans are different from the risks associated with single-employer plans in the following
respects:
•
Assets contributed to the multiemployer plan by one employer are held in trust and may be used to provide benefits to
employees of other participating employers.
•
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers.
•
If the Company chose to stop participating in some multiemployer plans, or make market exits or closures or otherwise
have participation in the plan drop below certain levels, it may be required to pay those plans an amount based on the
underfunded status of the plan, referred to as a withdrawal liability.
Table of Contents
85
The Company’s participation in these plans is outlined in the table below. The EIN-Pension Plan Number column provides the
Employer Identification Number (“EIN”) and the three-digit plan number, if applicable. Unless otherwise noted, the most recent
Pension Protection Act (“PPA”) zone status relates to the plans’ most recent fiscal year-end for which information is available.
The zone status is based on information that we received from the plan or that the plan otherwise makes available and is
annually certified by each plan’s actuary. Among other factors, deep red zone status or critical and declining plans are generally
less than 65% funded and are projected to become insolvent within 15 to 20 years, red zone status plans are generally less than
65% funded and are considered in critical status, yellow zone status plans are less than 80% funded and are considered in
endangered or seriously endangered status, and green zone plans are at least 80% funded. The FIP/RP Status Pending/
Implemented column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either
pending or has been implemented by the trustees of each plan. The American Rescue Plan Act of 2021 (“ARPA”) established
the Special Financial Assistance (“SFA”) Program to permit financially troubled multiemployer plans to apply for a cash
payment intended to keep plans solvent and able to pay benefits through 2051. As of August 3, 2024, one plan in which the
Company participates has applied for and received SFA, and two other plans in which the Company participates are on the
waiting list to apply for SFA funding.
Certain plans have been aggregated in the All Other Multiemployer Pension Plans line in the following table, as the
contributions to each of these plans are not individually material. None of our collective bargaining agreements require that a
minimum contribution be made to these plans.
At the date the financial statements were issued, Form 5500 for these plans were generally not available for the plan years
ending in 2023.
The following table contains information about the Company’s significant multiemployer plans from which the Company has
not withdrawn (in millions):
Pension
Protection
Act Zone
Status
Contributions
Pension Fund
EIN-Pension
Plan
Number
Plan
Month/Day
End Date
Most Recent
Available
FIP/RP Status
Pending/
Implemented
2024
2023
2022
Surcharges
Imposed(1)
Minneapolis Food Distributing
Industry Pension Plan
416047047-
001
12/31
Green
No
$
11 $
12
$
11
No
Minneapolis Retail Meat Cutters
and Food Handlers Pension Fund
410905139-
001
2/28
Red
Implemented
11
13
10
No
Minneapolis Retail Meat Cutters
and Food Handlers Variable
Annuity Pension Plan
832598425-
001
12/31
NA
NA
3
3
4
NA
Central States, Southeast &
Southwest Areas Pension Plan
366044243-
001
12/31
Red
Implemented
5
5
5
No
UFCW Unions and Participating
Employers Pension Plan
526117495-
002
12/31
Red
Implemented
3
3
3
No
Western Conference of Teamsters
Pension Plan
916145047-
001
12/31
Green
No
12
10
10
No
All Other Multiemployer Pension
Plans(2)
2
2
2
Total
$
47 $
48
$
45
(1)
PPA surcharges are 5% or 10% of eligible contributions and may not apply to all collective bargaining agreements or total
contributions to each plan.
(2) All Other Multiemployer Pension Plans includes 5 plans, none of which are individually significant when considering contributions
to the plan, severity of the underfunded status or other factors.
Table of Contents
86
The following table describes the expiration of the Company’s collective bargaining agreements associated with the significant
multiemployer plans in which we participate:
Most Significant Collective
Bargaining Agreement
Pension Fund
Range of Collective
Bargaining Agreement
Expiration Dates
Total Collective
Bargaining
Agreements
Expiration
Date
% of Associates
under Collective
Bargaining
Agreement (1)
Over 5%
Contributions 2023
Minneapolis Food Distributing Industry
Pension Plan
5/31/2026
1
5/31/2026
100.0 %
☒
Minneapolis Retail Meat Cutters and Food
Handlers Pension Fund
3/4/2025
1
3/4/2025
100.0 %
☒
Minneapolis Retail Meat Cutters and Food
Handlers Variable Annuity Pension Fund
3/4/2025
1
3/4/2025
100.0 %
☒
Central States, Southeast and Southwest
Areas Pension Fund
9/15/2024 -
5/31/2027
4
5/31/2027
42.1 %
☐
UFCW Unions and Participating
Employers Pension Fund
07/11/2026
2
7/11/2026
75.0 %
☒
Western Conference of Teamsters Pension
Plan Trust
4/22/2025-
4/30/2027
16
3/20/2027
34.2 %
☐
(1)
Company participating employees in the most significant collective bargaining agreement as a percent of all Company employees
represented under the applicable collective bargaining agreements.
As of August 3, 2024, accrued multiemployer pension plan withdrawal liabilities included in Other long-term liabilities and
Accrued compensation and benefits were $66 million and $6 million, respectively, for 13 multiemployer plans. As of July 29,
2023 amounts included in Other long-term liabilities and Accrued compensation and benefits were $73 million and $7 million,
respectively. Payments associated with these liabilities are required to be made over varying time periods, but principally over
the next 20 years.
Multiemployer Benefit Plans Other than Pensions
The Company also makes contributions to multiemployer health and welfare plans in amounts set forth in the related collective
bargaining agreements. These plans provide medical, dental, pharmacy, vision and other ancillary benefits to active employees
and retirees as determined by the trustees of each plan. The vast majority of the Company’s contributions benefit active
employees and as such, may not constitute contributions to a postretirement benefit plan. However, the Company is unable to
separate contribution amounts to postretirement benefit plans from contribution amounts paid to benefit active employees.
The Company contributed $88 million, $85 million and $81 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, to
multiemployer health and welfare plans. If healthcare provisions within these plans cannot be renegotiated in a manner that
reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.
Collective Bargaining Agreements
As of August 3, 2024, we had approximately 28,333 employees. Approximately 10,704 employees are covered by 48 collective
bargaining agreements, including existing agreements under negotiation. During fiscal 2024, 15 collective bargaining
agreements covering approximately 4,191 employees were renegotiated, including 2 collective bargaining agreements that had
expired in fiscal 2023 but were negotiated in fiscal 2024. Additionally, 2 new collective bargaining agreements covering
approximately 410 employees were negotiated, and 1 collective bargaining agreement covering approximately 130 employees
expired with a tentative agreement in place, pending ratification. During fiscal 2025, 10 collective bargaining agreements
covering approximately 3,804 employees are scheduled to expire.
NOTE 14—INCOME TAXES
Income Tax (Benefit) Expense
For fiscal 2024, (loss) income before income taxes consists of $(145) million from U.S. operations and $8 million from foreign
operations. (Loss) income before income taxes for fiscal 2023 consists of $(1) million from U.S. operations and $8 million from
foreign operations. Income before income taxes for fiscal 2022 consists of $302 million from U.S. operations and $8 million
from foreign operations.
Table of Contents
87
The income tax (benefit) expense was allocated as follows:
(in millions)
2024
2023
2022
Income tax (benefit) expense
$
(27) $
(23) $
56
Other comprehensive (loss) income
(6)
(2)
11
Total
$
(33) $
(25) $
67
Total federal, state and foreign income tax (benefit) expense consists of the following:
(in millions)
Current
Deferred
Total
Fiscal 2024
U.S. Federal
$
15 $
(41) $
(26)
State and Local
5
(8)
(3)
Foreign
2
—
2
$
22 $
(49) $
(27)
Fiscal 2023
U.S. Federal
$
23 $
(36) $
(13)
State and Local
(11)
(1)
(12)
Foreign
1
1
2
$
13 $
(36) $
(23)
Fiscal 2022
U.S. Federal
$
(7) $
45 $
38
State and Local
6
9
15
Foreign
2
1
3
$
1 $
55 $
56
Total income tax (benefit) expense was different than the amounts computed by applying the statutory federal income tax rate
to income before income taxes because of the following:
(in millions)
2024
2023
2022
Computed “expected” tax expense
$
(29) $
1 $
66
State and local income tax, net of Federal income tax benefit
(9)
(1)
18
Non-deductible expenses
2
3
13
Tax effect of share-based compensation
5
(9)
(31)
General business credits
(2)
(8)
(3)
Unrecognized tax benefits
—
(16)
(6)
Enhanced inventory donations
(1)
(1)
(2)
Changes in valuation allowance
6
4
1
Other, net
1
4
—
Total income tax (benefit) expense
$
(27) $
(23) $
56
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
(in millions)
2024
2023
2022
Unrecognized tax benefits at beginning of period
$
11 $
19 $
27
Unrecognized tax benefits added during the period
1
5
—
Decreases in unrecognized tax benefits due to statute expiration
(3)
(5)
(7)
Decreases in unrecognized tax benefits due to settlements
(2)
(8)
(1)
Unrecognized tax benefits at end of period
$
7 $
11 $
19
Table of Contents
88
In addition, the Company has nothing paid on deposit to various governmental agencies to cover the above liability. The
Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For fiscal 2024, 2023
and 2022, total accrued interest and penalties was $2 million, $1 million and $6 million, respectively.
The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute
of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the
Company. As of August 3, 2024, the Company is no longer subject to federal income tax examinations for fiscal years before
2016 and in most states is no longer subject to state income tax examinations for fiscal years before 2016 for Supervalu and the
Company. Due to the implementation of the CARES Act, NOLs were carried back into fiscal years 2014 and 2015, which
extends the federal statute of limitations on those years up to the amount of the carryback claim.
Based on the possibility of the closing of pending audits and appeals, or expiration of the statute of limitations, the Company
does not anticipate that the amount of unrecognized tax benefits will change significantly during the next 12 months.
Deferred Tax Assets and Liabilities
The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax
liabilities at August 3, 2024 and July 29, 2023 are presented below:
(in millions)
August 3,
2024
July 29,
2023
Deferred tax assets:
Compensation and benefits related
$
35 $
29
Accounts receivable, principally due to allowances for uncollectible accounts
4
4
Accrued expenses
27
27
Capitalized research and development
49
25
Net operating loss carryforwards
13
10
Other tax carryforwards (interest, charitable contributions)
59
32
Foreign tax credits
1
1
Intangible assets
45
50
Lease liabilities
381
333
Other deferred tax assets
1
6
Total gross deferred tax assets
615
517
Less valuation allowance
(9)
(7)
Net deferred tax assets
$
606 $
510
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation
$
133 $
141
Inventories
25
15
Lease right of use assets
361
317
Interest rate swap agreements
—
5
Total deferred tax liabilities
519
478
Net deferred tax assets
$
87 $
32
Table of Contents
89
Tax Credits and Valuation Allowances
At August 3, 2024, the Company had gross deferred tax assets of approximately $615 million. The Company regularly reviews
its deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized. In making this
evaluation, the Company considers the statutory recovery periods for the assets, along with available sources of future taxable
income, including reversals of existing taxable temporary differences, tax planning strategies, history of taxable income, and
projections of future income. The Company gives more significance to objectively verifiable evidence, such as the existence of
deferred tax liabilities that are forecast to generate taxable income within the relevant carryover periods, and a history of
earnings. A valuation allowance is provided when the Company concludes, based on all available evidence, that it is more
likely than not that the deferred tax assets will not be realized during the applicable recovery period. The Company has
reviewed these factors in evaluating the recoverability of its deferred tax assets. As of August 3, 2024, the Company anticipates
sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception
of certain foreign tax credits, charitable contribution carryovers and state net operating losses. Accordingly, the Company has
established valuation allowances against that portion of its charitable contribution carryovers, state net operating losses and
foreign tax credits that, in the Company’s judgment, are not likely to be realized within the applicable recovery periods.
At August 3, 2024, the Company had net operating loss carryforwards of approximately $0.3 million for federal income tax
purposes that are subject to an annual limitation of approximately $0.3 million under Internal Revenue Code Section 382. These
Section 382-limited carryforwards expire at various times through fiscal year 2027. As of August 3, 2024, the Company
anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized. The Company
also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the
future. Therefore, the ultimate realization of net operating losses for federal purposes appears more likely than not at August 3,
2024 and correspondingly no valuation allowance has been established.
At August 3, 2024, the Company had disallowed charitable contribution carryforwards of approximately $57 million that are
available for carryforward over five years. As of August 3, 2024, the Company anticipates sufficient future taxable income to
utilize $45 million of these charitable contribution carryovers within the applicable five-year carryforward periods. The
Company has established a valuation allowance against the $12 million of charitable contribution carryovers that, in the
Company’s judgement, are not likely to be realized within the applicable recovery period.
The retained earnings of the Company’s non-U.S. subsidiary were subject to deemed U.S. repatriation and taxation during fiscal
2017 pursuant to the Tax Cuts and Jobs Act, and existing foreign tax credits were utilized to offset the resulting liability. We
have established a deferred tax asset for the remaining U.S. foreign tax credits of $1 million. Such credits are offset by a
valuation allowance.
Effective Tax Rate
The Company’s effective tax rate was a benefit rate of 19.7% on pre-tax loss for fiscal 2024 as compared to benefit rate of
328.6% and an expense rate of 18.6% on pre-tax income for fiscal 2023 and 2022, respectively. For fiscal 2022, the effective
tax rate was reduced by the impact of discrete tax benefits related to employee stock awards and the release of unrecognized tax
positions, partially offset by non-deductible executive compensation. For fiscal 2023, the effective tax rate was impacted by
solar credits, including the tax credit impact of a fiscal 2023 investment in an equity method partnership and solar credits
associated with a solar array installation at the Company’s Howell Township, New Jersey facility. The effective tax rate was
also impacted by the recognition of previously unrecognized tax benefits and excess tax deductions attributable to share-based
compensation. The combined impact of these fiscal 2023 tax benefits exceeded pre-tax income, generating an overall tax
benefit rate for fiscal 2023. For fiscal 2024, the effective tax rate was impacted by non-deductible share-based compensation
and the establishment of valuation allowances against deferred tax assets with limited lives.
Table of Contents
90
NOTE 15—(LOSS) EARNINGS PER SHARE
The following is a reconciliation of the basic and diluted number of shares used in computing (loss) earnings per share:
(in millions, except per share data)
2024
2023
2022
Basic weighted average shares outstanding
59.3
59.2
58.0
Net effect of dilutive stock awards based upon the treasury stock method
—
1.5
3.0
Diluted weighted average shares outstanding
59.3
60.7
61.0
Basic (loss) earnings per share(1)
$
(1.89) $
0.41 $
4.28
Diluted (loss) earnings per share(1)
$
(1.89) $
0.40 $
4.07
Anti-dilutive share-based awards excluded from the calculation of diluted
(loss) earnings per share
2.1
0.8
0.5
(1) (Loss) earnings per share amounts are calculated using actual unrounded figures.
NOTE 16—BUSINESS SEGMENTS
The Company has two reportable segments: Wholesale and Retail. These reportable segments are two distinct businesses, each
with a different customer base, marketing strategy and management structure. The Company organizes and operates the
Wholesale reportable segment through three U.S geographic regions: East, Central and West, and Canada Wholesale, which is
operated separately from the U.S. Wholesale business. The U.S. Wholesale and Canada Wholesale operating segments have
similar products and services, customer channels, distribution methods and economic characteristics, and therefore have been
aggregated into a single reportable segment. Reportable segments are reviewed on an annual basis, or more frequently if events
or circumstances indicate a change in reportable segments has occurred.
The Wholesale reportable segment is engaged in the distribution of grocery and non-food products, and provides support
services to retailers in the United States and Canada. The Retail reportable segment derives revenues from the sale of groceries
and other products at retail locations operated by the Company. The Company has additional operating segments that do not
meet the quantitative thresholds for reportable segments and are therefore aggregated under the caption of Other. Other includes
a single location food manufacturing business, which engages in the importing, roasting, packaging and distributing of nuts,
dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s natural branded
product lines, primarily Blue Marble Brands. Other also includes certain corporate operating expenses that are not allocated to
operating segments, which include, among other expenses, restructuring, acquisition and integration related expenses, share-
based compensation, and salaries, retainers, and other related expenses of certain officers and all directors. Wholesale records
revenues related to sales to Retail at gross margin rates consistent with sales to other similar wholesale customers.
Segment earnings include revenues and costs attributable to each of the respective business segments and certain allocated
corporate overhead, based on the segment’s estimated consumption of corporately managed resources. The Company’s measure
of segment profit is Adjusted EBITDA, as disclosed below. The Company allocates certain corporate capital expenditures and
identifiable assets to its business segments and retains certain depreciation expense related to those assets within Other. Non-
operating expenses that are not allocated to the operating segments are included in the Other segment.
Table of Contents
91
The following table provides information by reportable segment, including Net sales, Adjusted EBITDA, with a reconciliation
to (Loss) income before income taxes, depreciation and amortization, and payments for capital expenditures:
(in millions)
2024
2023
2022
Net sales:
Wholesale(1)
$
29,853
$
29,142
$
27,824
Retail
2,436
2,480
2,468
Other
215
224
219
Eliminations
(1,524)
(1,574)
(1,583)
Total Net sales
$
30,980
$
30,272
$
28,928
Adjusted EBITDA:
Wholesale
$
476
$
540
$
696
Retail
8
70
98
Other
30
31
44
Eliminations
4
(1)
(9)
Adjustments:
Net income attributable to noncontrolling interests
2
6
6
Net periodic benefit income, excluding service cost
15
29
40
Interest expense, net
(162)
(144)
(155)
Other income, net
2
2
2
Depreciation and amortization
(319)
(304)
(285)
Share-based compensation
(37)
(38)
(43)
LIFO charge
(7)
(119)
(158)
Restructuring, acquisition, and integration related expenses
(36)
(8)
(21)
(Loss) gain on sale of assets and other asset charges
(57)
(30)
87
Multi-employer pension plan withdrawal (charges) benefit
—
(1)
8
Other retail expense
—
(1)
—
Business transformation costs
(52)
(25)
—
Other adjustments
(4)
—
—
(Loss) income before income taxes
$
(137) $
7
$
310
Depreciation and amortization:
Wholesale
$
272
$
263
$
254
Retail
35
36
29
Other
12
5
2
Total depreciation and amortization
$
319
$
304
$
285
Payments for capital expenditures:
Wholesale
$
322
$
290
$
224
Retail
23
33
27
Total capital expenditures
$
345
$
323
$
251
(1)
For fiscal 2024, 2023 and 2022, as presented in Note 3—Revenue Recognition, the Company recorded $1,272 million, $1,331
million and $1,358 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail
sales that have been eliminated upon consolidation.
Table of Contents
92
Total assets by reportable segment were as follows:
(in millions)
August 3,
2024
July 29,
2023
Assets:
Wholesale
$
6,563 $
6,405
Retail
606
648
Other
401
377
Eliminations
(42)
(36)
Total assets
$
7,528 $
7,394
NOTE 17—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS
Guarantees and Contingent Liabilities
The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various
retailers as of August 3, 2024. These guarantees were generally made to support the business growth of wholesale customers.
The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining
terms that range from less than one year to six years, with a weighted average remaining term of approximately four years. For
each guarantee issued, if the wholesale customer or other third-party defaults on a payment, the Company would be required to
make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal
guarantees. The Company reviews performance risk related to its guarantee obligations based on internal measures of credit
performance. As of August 3, 2024, the maximum amount of undiscounted payments the Company would be required to make
in the event of default of all guarantees was $9 million ($8 million on a discounted basis). Based on the indemnification
agreements, personal guarantees and results of the reviews of performance risk, as of August 3, 2024, a total estimated loss of
less than $1 million is recorded in the Consolidated Balance Sheets.
The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for
certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise. These
agreements primarily relate to the Company’s commercial contracts, service agreements, contracts entered into for the purchase
and sale of stock or assets, operating leases and other real estate contracts, financial agreements, agreements to provide services
to the Company and agreements to indemnify officers, directors and employees in the performance of their work. While the
Company’s aggregate indemnification obligations could result in a material liability, the Company is not aware of any matters
that are expected to result in a material liability. The Company has recorded the de minimis fair value of these guarantees and
contingent obligations, when applicable, in the Consolidated Balance Sheets.
Other Contractual Commitments
In the ordinary course of business, the Company enters into supply contracts to purchase products for resale and service
contracts for fixed asset and information technology systems. These contracts typically include either volume commitments or
fixed expiration dates, termination provisions and other standard contractual considerations. As of August 3, 2024, the
Company had approximately $365 million of non-cancelable future purchase obligations, most of which will be paid and
utilized in the ordinary course within one year.
Legal Proceedings
The Company is one of dozens of companies that have been named in various lawsuits alleging that drug manufacturers,
retailers and distributors contributed to the national opioid epidemic. Currently, UNFI, primarily through its subsidiary,
Advantage Logistics, is named in approximately 43 suits pending in the United States District Court for the Northern District of
Ohio where thousands of cases have been consolidated as Multi-District Litigation (“MDL”). In accordance with the Stock
Purchase Agreement dated January 10, 2013, between New Albertson’s Inc. (“New Albertson’s”) and the Company (the “Stock
Purchase Agreement”), the Company believes that New Albertson’s has an obligation to defend and indemnify UNFI in a
majority of the cases. New Albertson’s originally agreed to do so under a reservation of rights, however, New Albertson’s is
disputing its obligation to do so. In one of the MDL cases, MDL No. 2804 filed by The Blackfeet Tribe of the Blackfeet Indian
Reservation, all defendants were ordered to Answer the Complaint, which UNFI did on July 26, 2019. To date, no discovery
has been conducted against UNFI in any of the actions. On October 7, 2022, the MDL Court issued an order directing the
Company and numerous other non-litigating defendants to submit by November 1, 2022, a list of opioid cases where the
Company is named and opioid dispensing and distribution data. The Company produced the data in compliance with the order.
Table of Contents
93
On March 8, 2023, the Company received a subpoena from the Consumer Protection Division of the Maryland Attorney
General’s Office seeking records related to the distribution and dispensing of opioids. On May 19, 2023, the Company provided
an initial production in response to the subpoena and is waiting for further direction from the Maryland Attorney General on
additional documents requested. At an April 24, 2024 status conference, the MDL Court directed that the plaintiffs and non-
litigating defendants, which includes the Company, determine whether the cases will be dismissed, litigated or mediated. At the
status conference on June 10, 2024, the Company indicated it is open to exploring mediation. The Company believes these
claims are without merit and intends to vigorously defend this matter.
On January 21, 2021, various health plans filed a complaint in Minnesota state court against the Company, Albertson’s
Companies, LLC (“Albertson’s”) and Safeway, Inc. alleging the defendants committed fraud by improperly reporting inflated
prices for prescription drugs for members of health plans. The Plaintiffs assert six causes of action against the defendants:
common law fraud, fraudulent nondisclosure, negligent misrepresentation, unjust enrichment, violation of the Minnesota
Uniform Deceptive Trade Practices Act and violation of the Minnesota Prevention of Consumer Fraud Act. The plaintiffs allege
that between 2006 and 2016, Supervalu overcharged the health plans by not providing the health plans, as part of usual and
customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that Supervalu
match competitor prices. Plaintiffs seek an unspecified amount of damages. Similar to the above case, for the majority of the
relevant period Supervalu and Albertson’s operated as a combined company. In March 2013, Supervalu divested Albertson’s
and pursuant to the Stock Purchase Agreement, Albertson’s is responsible for any claims regarding its pharmacies. On February
19, 2021, Albertson’s and Safeway removed the case to Minnesota Federal District Court, and on March 22, 2021, plaintiffs
filed a motion to remand to state court. On February 26, 2021, defendants filed a motion to dismiss. The hearing on the remand
motion and motions to dismiss occurred on May 20, 2021. On September 21, 2021, the Federal District Court remanded the
case to Minnesota state court and did not rule on the motion to dismiss, which was refiled in state court. On February 1, 2022,
the state court denied the motion to dismiss. On November 27, 2023, the court held a scheduling conference and thereafter
entered a scheduling order setting various discovery and expert deadlines. The trial date is set for July 21, 2025. The Company
believes these claims are without merit and is vigorously defending this matter.
UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”). In United States ex rel.
Schutte and Yarberry v. Supervalu, New Albertson’s, Inc., et al, which is pending in the U.S. District Court for the Central
District of Illinois, the relators allege that defendants overcharged government healthcare programs by not providing the
government, as a part of usual and customary prices, the benefit of discounts given to customers purchasing prescription
medication who requested that defendants match competitor prices. The complaint was originally filed under seal and amended
on November 30, 2015. The government previously investigated the relators’ allegations and declined to intervene. Violations
of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim. The relators elected to
pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s in excess of $100 million,
not including trebling and statutory penalties. For the majority of the relevant period Supervalu and New Albertson’s operated
as a combined company. In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant to the Stock
Purchase Agreement. Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a
potential award (at the currently claimed value by the relators) would be approximately $24 million, not including trebling and
statutory penalties. Both sides moved for summary judgment. On August 5, 2019, the Court granted one of the relators’
summary judgment motions finding that the defendants’ lower matched prices are the usual and customary prices and that
Medicare Part D and Medicaid were entitled to those prices. On July 2, 2020, the Court granted the defendants’ summary
judgment motion and denied the relators’ motion, dismissing the case. On July 9, 2020, the relators filed a notice of appeal with
the Seventh Circuit Court of Appeals. On August 12, 2021, the Seventh Circuit affirmed the District Court’s decision granting
summary judgment in defendants’ favor. On June 1, 2023, the Supreme Court reversed and vacated the lower court’s judgment
and remanded the case to the Seventh Circuit for further proceedings. On July 27, 2023, the Seventh Circuit vacated the
summary judgment order and remanded the case to the District Court. On August 22, 2023, the District Court set the trial date
for April 29, 2024. On October 11, 2023, each of the Company and the relators filed a motion for summary judgment. On
February 16, 2024, the defendants filed a motion to reconsider the Court’s August 5, 2019 partial grant of summary judgment to
the relators and to continue the trial date. On February 27, 2024, the Court granted the defendants’ motion for a trial date
continuance and vacated the April 29, 2024 trial date. On April 26, 2024, the Court denied the defendants’ motion to reconsider
the partial grant of summary judgment. On May 20, 2024, the District Court heard oral argument on the pending motions for
summary judgment and on September 30, 2024, the Court denied both parties’ motions for summary judgment on scienter and
granted relators’ motion for summary judgment on materiality. The trial is now scheduled to begin February 3, 2025.
Table of Contents
94
The Company, J. Alexander Miller Douglas, John Howard and Chris Testa are named in a putative securities class action that
was originally filed on March 29, 2023. In Dan Sills, et al. v. United Natural Foods, Inc., et al., pending in the U.S. District
Court for the Southern District of New York, the plaintiffs allege that defendants violated federal securities laws by making
materially false and/or misleading statements and failing to disclose material facts about UNFI’s business, operations and
prospects. The defendants filed a Motion to Dismiss on December 21, 2023, and on September 13, 2024, the court issued an
opinion granting in part and denying in part the motion. The Company intends to vigorously defend this matter.
From time to time, the Company receives notice of claims or potential claims or becomes involved in litigation, alternative
dispute resolution, such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business,
including investigations and claims regarding employment law, including wage and hour (including class actions); pension
plans; labor union disputes, including unfair labor practices, such as claims for back-pay in the context of labor contract
negotiations and other matters; supplier, customer and service provider contract terms and claims, including matters related to
supplier or customer insolvency or general inability to pay obligations as they become due; product liability claims, including
those where the supplier may be insolvent and customers or consumers are seeking recovery against the Company; real estate
and environmental matters, including claims in connection with its ownership and lease of a substantial amount of real property,
both retail and warehouse properties; and antitrust. Other than as described above, there are no pending material legal
proceedings to which the Company is a party or to which its property is subject.
Predicting the outcomes of claims and litigation and estimating related costs and exposures involves substantial uncertainties
that could cause actual outcomes, costs and exposures to vary materially from current expectations. Management regularly
monitors the Company’s exposure to the loss contingencies associated with these matters and may from time to time change its
predictions with respect to outcomes and estimates with respect to related costs and exposures. As of August 3, 2024, no
material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.
Although management believes it has made appropriate assessments of potential and contingent loss in each of these cases
based on current facts and circumstances, and application of prevailing legal principles, there can be no assurance that material
differences in actual outcomes from management’s current assessments, costs and exposures relative to current predictions and
estimates, or material changes in such predictions or estimates will not occur. The occurrence of any of the foregoing could
have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Table of Contents
95
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and President and
Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this
Annual Report (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and President and Chief
Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of
1934, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officers
and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that:
•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;
•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our Chief Executive Officer and President and Chief Financial Officer, assessed the effectiveness
of our internal control over financial reporting as of August 3, 2024. In making this assessment, our management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the Internal Control-
Integrated Framework (2013 framework). Based on its assessment, our management concluded that, as of August 3, 2024, our
internal control over financial reporting was effective based on those criteria at the reasonable assurance level.
Report of the Independent Registered Public Accounting Firm.
The effectiveness of our internal control over financial reporting as of August 3, 2024 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in its attestation report which is included in Financial Statements and
Supplementary Data in Part II, Item 8 of this Annual Report.
Changes in Internal Controls Over Financial Reporting
No change in our internal control over financial reporting (as such term is defined in Securities Exchange Act of 1934, as
amended Rule 13a-15(f) or 15d-15(f)) occurred during the fiscal quarter ended August 3, 2024 that materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.
Table of Contents
96
ITEM 9B. OTHER INFORMATION
On June 7, 2024, Danielle Benedict, our Chief Human Resources Officer, entered into a 10b5-1 sales plan intended to satisfy
the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The plan
provides for the potential sale, on the dates and at the prices set forth in the plan, of up to 24,202 shares of our common stock
from October 4, 2024 through the plan’s end date of June 6, 2025.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Table of Contents
97
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item will be contained, in part, in our Definitive Proxy Statement on Schedule 14A for our
Annual Meeting of Stockholders to be held on December 17, 2024 (the “Proxy Statement”) under the captions “Directors and
Nominees for Director,” “Executive Officers of the Company,” “Delinquent Section 16(a) Reports,” if applicable, “Anti-
Hedging and Insider Trading Policies,” “Committees of the Board of Directors,” “Nomination of Directors” and “Stockholder
Director Recommendations and Proxy Access” and is incorporated herein by this reference.
We have adopted a code of conduct and ethics that applies to all employees, including our Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer. Our code of conduct and ethics is publicly available on our website at
www.unfi.com and is available free of charge by writing to United Natural Foods, Inc., 313 Iron Horse Way, Providence, RI
02908, Attn: Investor Relations. We intend to make any legally required disclosures regarding amendments to, or waivers of,
the provisions of the code of conduct and ethics on our website at www.unfi.com. Please note that our website address is
provided as an inactive textual reference only.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be contained in the Proxy Statement under the captions “Director Compensation,”
“Executive Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation Tables,” “Potential Payments
Upon Termination or Change-in-Control,” “CEO Pay Ratio,” “Compensation Risk Assessment,” “Compensation Committee
Interlocks and Insider Participation,” if applicable, and “Report of the Compensation Committee” and is incorporated herein by
this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item will be contained in the Proxy Statement under the caption “Stock Ownership of Certain
Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” and is
incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be contained in the Proxy Statement under the captions “Certain Relationships and
Related Transactions” and “Director Independence” and is incorporated herein by this reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be contained in the Proxy Statement under the captions “Fees Paid to KPMG LLP”
and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services,” and is incorporated herein by
this reference.
Table of Contents
98
PART IV.
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a)1.
Financial Statements:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive (Loss) Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a)2.
Financial Statement Schedules:
All schedules have been omitted because they are either not required or the information required is included
in our consolidated financial statements or the notes thereto included in Item 8 hereof.
(a)3.&(b)
Exhibits:
2.1
Agreement and Plan of Merger, dated July 25, 2018, by and among SUPERVALU INC., SUPERVALU
Enterprises, Inc., the Registrant and Jedi Merger Sub, Inc. (incorporated by reference to the Registrant’s Current
Report on Form 8-K, filed on July 26, 2018).
2.2
First Amendment to Agreement and Plan of Merger, dated as of October 10, 2018, by and among United Natural
Foods, Inc., Jedi Merger Sub, Inc., SUPERVALU INC. and SUPERVALU Enterprises, Inc. (incorporated by
reference to the Registrant’s Current Report on Form 8-K, filed on October 10, 2018).
3.1
Certificate of Incorporation of the Registrant, as amended (restated for SEC filing purposes only) (incorporated
by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2015).
3.2
Fifth Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended April 29, 2023).
4.1
Specimen Certificate for shares of Common Stock, $0.01 par value, of the Registrant (incorporated by reference
to the Registrant’s Annual Report on Form 10-K for the year ended August 1, 2009).
4.2
Description of the Registrant’s Securities Registered Under Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.1+
Amended and Restated Agreement for the Distribution of Products, dated May 21, 2024, between Whole Foods
Market Services, Inc. and the Registrant (incorporated by reference to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended April 27, 2024).
10.2
Loan Agreement, dated June 3, 2022, by and among the Registrant, UNFI Canada, Inc., the financial institutions
that are parties thereto as lenders, Wells Fargo Bank, National Association and the other parties thereto
(incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30,
2022).
10.3
Amendment No. 1 to Loan Agreement, dated May 1, 2024, by and among the Registrant, UNFI Canada, Inc., the
financial institutions that are parties thereto as lenders, Wells Fargo Bank, National Association and the other
parties thereto (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended April 27, 2024).
10.4
Term Loan Agreement, dated October 22, 2018, by and among United Natural Foods, Inc., SUPERVALU INC.,
Goldman Sachs Bank USA, as administrative agent for the lenders, and the lenders party thereto (incorporated
by reference to Registrant’s Current Report on Form 8-K filed on October 25, 2018).
10.5
Amendment No. 1 to Term Loan Agreement, dated as of February 11, 2021, by and among the Registrant and
SUPERVALU INC., Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA and the other lender
parties thereto (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended January 30, 2021).
10.6
Amendment No. 2 to Term Loan Agreement, dated as of November 10, 2021, by and among the Registrant and
SUPERVALU INC., Credit Suisse AG, Cayman Islands Branch and the other lender parties thereto
(incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended October 30,
2021).
10.7
Amendment No. 3 to Term Loan Agreement, dated June 3, 2022, by and among the Registrant and
SUPERVALU INC., Credit Suisse AG, Cayman Islands Branch and the other lender parties thereto
(incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 30,
2022).
Exhibit No.
Description
Table of Contents
99
10.8
Amendment No. 4 to Term Loan Agreement, dated May 1, 2024, by and among the Registrant, UNFI
Wholesale, Inc., UNFI Distribution Company, LLC and SUPERVALU INC., Credit Suisse AG, Cayman Islands
Branch and other lender parties thereto (incorporated by reference to the Registrant’s Quarterly Report on Form
10-Q for the quarter ended April 27, 2024).
10.9**
Form of Second Amended and Restated Change in Control Agreement (incorporated by reference to the
Registrant’s Current Report on Form 8-K filed on November 8, 2018).
10.10**
Amended and Restated Indemnification Agreement (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed on November 8, 2018).
10.11
Indenture, dated October 22, 2020, among the Registrant, its subsidiary guarantors named therein and U.S. Bank
National Association, as trustee (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed
on October 26, 2020).
10.12**
Amended and Restated CEO Severance Agreement, dated June 3, 2024, between the Registrant and J. Alexander
Miller Douglas (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended April 27, 2024).
10.13**
CEO Change in Control Agreement, dated effective August 9, 2021, between the Registrant and J. Alexander
Miller Douglas (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended
July 31, 2021).
10.14**
CEO Indemnification Agreement, dated effective August 9, 2021, between the Registrant and J. Alexander
Miller Douglas (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended
July 31, 2021).
10.15**
Form of RSU Award Agreement (CEO) pursuant to the Registrant’s Amended and Restated 2020 Equity
Incentive Plan (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended October 30, 2021).
10.16**
Form of PSU Award Agreement (CEO) pursuant to the Registrant’s Amended and Restated 2020 Equity
Incentive Plan (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended October 30, 2021).
10.17**
Form of Inducement RSU Award Agreement (CEO) (incorporated by reference to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended October 30, 2021).
10.18**
Form of Inducement PSU Award Agreement (CEO) (incorporated by reference to the Registrant’s Quarterly
Report on Form 10-Q for the quarter ended October 30, 2021).
10.19**
Waiver and Release Agreement, by and between the Registrant and Jill E. Sutton (incorporated by reference to
the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 29, 2022).
10.20**
Amended and Restated 2020 Equity Incentive Plan, as amended on June 3, 2021 (incorporated by reference to
the Registrant’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2021).
10.21**
Form of RSU Award Agreement pursuant to the Registrant’s Amended and Restated 2020 Equity Incentive Plan
(incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended May 1,
2021).
10.22**
Form of PSU Award Agreement pursuant to the Registrant’s Amended and Restated 2020 Equity Incentive Plan
(incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended May 1,
2021).
10.23**
Form of Inducement RSU Award Agreement (incorporated by reference to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended January 30, 2021).
10.24**
Form of Amended and Restated Severance Agreement, effective as of October 23, 2022 (incorporated by
reference to the Registrant’s Annual Report on Form 10-K for the year ended July 30, 2022).
10.25**
Second Amended and Restated United Natural Foods, Inc. 2020 Equity Incentive Plan, effective as of March 3,
2023 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
January 28, 2023).
10.26**
Form of RSU Award Agreement pursuant to Registrant’s Second Amended and Restated 2020 Equity Incentive
Plan (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
January 28, 2023).
10.27**
Form of PSU Award Agreement pursuant to the Registrant’s Second Amended and Restated 2020 Equity
Incentive Plan (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended January 28, 2023).
10.28**
Form of RSU Award Agreement (CEO) (for grants made after September 21, 2023) pursuant to the Registrant’s
Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual
Report on Form 10-K for the year ended July 29, 2023).
10.29**
Form of PSU Award Agreement (CEO) (for grants made after September 21, 2023) pursuant to the Registrant’s
Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual
Report on Form 10-K for the year ended July 29, 2023).
Exhibit No.
Description
Table of Contents
100
10.30**
Form of RSU Award Agreement (for grants made after September 21, 2023) pursuant to the Registrant’s Second
Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report
on Form 10-K for the year ended July 29, 2023).
10.31**
Form of PSU Award Agreement (for grants made after September 21, 2023) pursuant to the Registrant’s Second
Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report
on Form 10-K for the year ended July 29, 2023).
10.32**
Form of RSU Award Agreement (Director) (for grants made after September 21, 2023) pursuant to the
Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the
Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.33**
Form of Indemnification Agreement (incorporated by reference to the Registrant’s Annual Report on Form 10-K
for the year ended July 29, 2023).
10.34**
United Natural Foods, Inc. Annual Incentive Plan, as further amended, effective as of September 21, 2023
(incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.35
Cooperation Agreement, dated as of September 25, 2023, by and among JCP Investment Partnership, LP, a
Texas limited partnership, JCP Investment Partners, LP, a Texas limited partnership, JCP Investment Holdings,
LLC, a Texas limited liability company, JCP Investment Management, LLC, a Texas limited liability company,
and James C. Pappas, and United Natural Foods, Inc., a Delaware corporation (incorporated by reference to the
Registrant’s Current Report on Form 8-K filed on September 26, 2023).
10.36**
Third Amended and Restated United Natural Foods, Inc. 2020 Equity Plan Incentive (Filed as Annex A to the
Registrant’s Proxy Statement on FORM DEF14A filed on November 8, 2023).
10.37**
Form of Indemnification Agreement (for agreements entered into after February 29, 2024) (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 27, 2024).
10.38**
Offer Letter, dated February 29, 2024, between the Company and Giorgio Matteo Tarditi (incorporated by
reference to the Registrant’s Current Report on Form 8-K filed on March 6, 2024).
10.39* **
United Natural Foods, Inc. Annual Incentive Plan, as further amended, effective as of September 26, 2024.
10.40* **
Form of RSU Award Agreement (CEO, Retail).
10.41* **
Form of PSU Award Agreement (CEO, Retail).
19*
UNFI Amended and Restated Policy Regarding Trading in Company Securities.
21*
Subsidiaries of the Registrant.
23.1*
Consent of Independent Registered Public Accounting Firm.
31.1*
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
32.2*
Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
97.1
Erroneously Awarded Incentive-Based Compensation Clawback Policy, effective October 2, 2023 (incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
101*
The following materials from the United Natural Foods, Inc.’s Annual Report on Form 10-K for the fiscal year
ended August 3, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive
(Loss) Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash
Flows, and (vi) Notes to Consolidated Financial Statements.
104
The cover page from the Registrant’s Annual Report on Form 10-K for the year ended August 3, 2024, filed with
the SEC on October 1, 2024, formatted in Inline XBRL (included in Exhibit 101).
Exhibit No.
Description
* Filed herewith.
** Denotes a management contract or compensatory plan or arrangement.
+ Portions of this exhibit have been omitted in compliance with Regulation S-K Item 601(b)(10)(iv) because the Company has
determined that the information is not material and is the type that the Company treats as private or confidential.
ITEM 16. FORM 10-K SUMMARY
None.
Table of Contents
101
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNITED NATURAL FOODS, INC.
/s/ GIORGIO MATTEO TARDITI
Giorgio Matteo Tarditi
President and Chief Financial Officer
(Principal Financial Officer)
Dated: October 1, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ J. ALEXANDER MILLER DOUGLAS
Chief Executive Officer (Principal Executive
Officer) and Director
October 1, 2024
J. Alexander Miller Douglas
/s/ GIORGIO MATTEO TARDITI
President and Chief Financial Officer (Principal
Financial Officer)
October 1, 2024
Giorgio Matteo Tarditi
/s/ R. ERIC ESPER
Chief Accounting Officer (Principal Accounting
Officer)
October 1, 2024
R. Eric Esper
/s/ JACK L. STAHL
Chairman
October 1, 2024
Jack L. Stahl
/s/ LYNN S. BLAKE
Director
October 1, 2024
Lynn S. Blake
/s/ GLORIA R. BOYLAND
Director
October 1, 2024
Gloria R. Boyland
/s/ DENISE M. CLARK
Director
October 1, 2024
Denise M. Clark
/s/ DAPHNE J. DUFRESNE
Director
October 1, 2024
Daphne J. Dufresne
/s/ MICHAEL S. FUNK
Director
October 1, 2024
Michael S. Funk
/s/ JAMES M. LOREE
Director
October 1, 2024
James M. Loree
/s/ JAMES L. MUEHLBAUER
Director
October 1, 2024
James L. Muehlbauer
/s/ JAMES C. PAPPAS
Director
October 1, 2024
James C. Pappas
/s/ MOHAMMAD SHAMIM
Director
October 1, 2024
Mohammad Shamim
Table of Contents
102
United Natural Foods, Inc.
Annual Incentive Plan
Effective September 25, 2019; most recently amended September 26, 2024
Exhibit 10.39
1
Administration of Incentive Plan
This Annual Incentive Plan (the “Incentive Plan”) of United Natural Foods, Inc. (the “Company”) is
administered by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of
the Directors (the “Board”). The Compensation Committee may delegate to certain associates or committees
the authority to manage the day-to-day administrative operations of the Incentive Plan as it may deem
advisable, and does hereby delegate to the Company’s Senior Leadership Team (which shall include the
Chief Executive Officer, Chief Human Resources Officer, President and Chief Financial Officer, and General
Counsel and Corporate Secretary) the administration of the Incentive Plan as to all associates that are not
executive officers as designated by the Company’s Board. Any references to the Compensation Committee’s
administrative authority hereunder is understood to include such delegated authority to the Senior Leadership
Team
The Compensation Committee (but not including the Senior Leadership Team) reserves the right to amend,
modify, or terminate the Incentive Plan at any time in its sole discretion.
The Compensation Committee shall have the authority to establish and modify the terms of any individual’s
participation in the Incentive Plan, to determine the amount of any incentive payments for which a participant
is eligible and the performance period to which such payments relate, to establish performance objectives in
respect of such performance periods and to determine whether such performance objectives were attained.
The Compensation Committee is authorized to interpret the Incentive Plan, to establish, amend and rescind
any rules and regulations relating to the Incentive Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Incentive Plan. The Compensation Committee may
correct any defect or omission or reconcile any inconsistency in the Incentive Plan in the manner and to the
extent the Compensation Committee deems necessary or desirable. Any decision of the Compensation
Committee in the interpretation and administration of the Incentive Plan, as described herein, shall be subject
to its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.
Determinations made by the Compensation Committee under the Incentive Plan need not be uniform and
may be made selectively among participants in the Incentive Plan, whether or not such participants are
similarly situated. Any and all changes will be communicated to those associates participating in the Incentive
Plan that are affected by the changes.
I. Incentive Plan Eligibility
The Compensation Committee shall determine the U.S. associates of the Company or its Subsidiaries who
are eligible for participation in the Incentive Plan.
Participants in the Incentive Plan hired or promoted in the applicable fiscal year will be eligible for a prorated
payout at the end of such fiscal year if the required performance objectives are achieved and the participant
is actively employed with the Company on the date the payment is made. Additionally, if any participant
receives a change in annual base salary (in the case of a participant who is classified as a salaried associate)
or Specified Earnings (defined below) (in the case of an associate who is classified as an hourly associate) or
bonus target during the performance period, the amount payable under the Incentive Plan, if any, will be
prorated accordingly. In the case of a new hire, the prorated payment shall be calculated based on the
number of days the participant was employed by the Company in such fiscal year compared to the total
number of days in such fiscal year. In the case of a promotion, bonus target, or other change to annual base
salary or Specified Earnings, the prorated payment shall be calculated based on the number of days at each
rate of pay in such fiscal year, compared to the number of days in such fiscal year.
For purposes of the Incentive Plan, “Specified Earnings” means regular, incentive, overtime, and premium
pay.
2
All Incentive Plan participants must accept the commitment and responsibility to perform all duties in
compliance with the Company’s Code of Conduct. Any participant who manipulates or attempts to manipulate
the Incentive Plan for personal gain at the expense of customers, other associates, or Company objectives
will be subject to appropriate disciplinary actions.
Participants must not divulge to any outsider (other than the Company’s financial, accounting and legal
advisors) any non-public information regarding this Incentive Plan or any specific performance objectives
applicable to the participant or any other participant.
Participation in the Incentive Plan does not constitute a contract or promise of employment between the
Company and any participant in the Incentive Plan, and nothing in the Incentive Plan shall be construed as
conferring on a participant any right to continue in the employment of the Company or any of its subsidiaries.
Any promise or representations, oral or written, which are inconsistent with or different from the terms of the
Incentive Plan are invalid.
Participation in and receipt of payment under the Incentive Plan requires that participants comply with the
covenants in Part IV below.
II. Termination Provisions
Participants in the Incentive Plan must be actively employed with the Company on the date that payment
under the Incentive Plan is to be made to be eligible for such payment, except as described below or as
otherwise set forth in any written agreement between the Company and the participant. Payment under the
Incentive Plan is made as soon as administratively practicable after the Company’s Board of Directors has
approved the calculation of payments hereunder, which will generally be 10 to 12 weeks following the end of
the Company’s fiscal year.
If a participant’s employment is terminated due to death, the Company shall pay to the participant’s estate,
subject to applicable withholding and deductions, any Earned Incentive Compensation (as hereinafter
defined) when such Earned Incentive Compensation would otherwise be payable if the participant’s
employment was not terminated, but no later than December 31 of the calendar year following the end of the
Company’s fiscal year in which the termination date occurred.
If a participant’s employment is terminated due to Retirement (as defined below), or by the Company without
Cause (as hereinafter defined) under circumstances that would qualify the participant for benefits under the
United Natural Foods, Inc. Severance Pay Plan for Non-Union Associates (as amended from time to time)
(“Severance Plan”), or a participant resigns for Good Reason (as hereinafter defined), then, subject to any
limitation imposed under applicable law, and any other agreement between the Company and the participant,
the Company shall pay to the participant, subject to applicable withholding and deductions, any Earned
Incentive Compensation (as hereinafter defined), when such Earned Incentive Compensation would
otherwise be payable if the participant’s employment was not terminated, but no later than December 31 of
the calendar year following the end of the Company’s fiscal year in which the termination date occurred.
For purposes of the Incentive Plan, “Retirement” means the termination of the participant’s employment with
the Company and all of its Subsidiaries on or after the date on which both of the following have occurred: (i)
the participant has attained fifty-nine (59) years of age and (ii) the date the participant has provided ten (10)
years of service to the Company or any of its Subsidiaries. Years of service will be calculated as full years
since the participant’s most recent “hire date” or “rehire date,” which means the applicable date on file for the
participant in the Company’s human resources books and records, determined in the Company’s sole
discretion.
3
“Earned Incentive Compensation” consists of: (a) to the extent not previously paid, the incentive
compensation that the participant would otherwise receive based on the Company’s actual performance for
the most recent fiscal year ended before the participant’s termination date and (b) the Pro-Rated Portion (as
hereinafter defined) of any incentive compensation that the participant would otherwise receive, based on the
Company’s actual performance for the fiscal year during which the participant’s employment is terminated.
The “Pro-Rated Portion” shall be the portion represented by the number of days in such fiscal year prior to
the participant’s termination date, compared to the total number of days in such fiscal year.
If a participant is terminated for Cause at any time, he or she will not be eligible for any payment under the
Incentive Plan and shall forfeit any payments that may have been due to the participant under the Incentive
Plan prior to or subsequent to the participant’s employment being terminated for Cause. “Cause” means,
unless otherwise defined in a written agreement between the participant and the Company, (i) conviction of
the participant under applicable law of (A) any felony or (B) any misdemeanor involving moral turpitude; (ii)
unauthorized acts intended to result in the participant’s personal enrichment at the material expense of the
Company or any subsidiary or affiliate or their reputation; (iii) any violation of the participant’s duties or
responsibilities to the Company or a subsidiary or affiliate of the Company which constitutes willful
misconduct or dereliction of duty; or (iv) material breach of the Company’s Code of Conduct or the covenants
described in Section IV of this Plan.
In addition, if a participant is terminated other than for Cause and under circumstances that do not qualify the
participant for benefits under the Severance Plan, he or she will not be eligible for any payment under the
Incentive Plan except to the extent that such termination results in an a separation agreement between the
participant and the Company, and the participant is entitled to Earned Incentive Compensation (or such other
amount as may be mutually agreed) pursuant to the terms of such separation agreement.
If a participant becomes disabled or is granted a leave of absence for any other reason in any fiscal year,
amounts owed hereunder shall be governed by the provisions of the United Natural Foods, Inc. Leave of
Absence Policy (Long-Term and Annual Incentive Plans) (or any replacement policy) as in effect at the time
such leave of absence commenced. Except as otherwise provided in a written agreement between the
Company and a participant, if a participant voluntarily terminates his or her employment under circumstances
that do not qualify as a Retirement or resignation for Good Reason before the date that payment under the
Incentive Plan is to be made, the participant will not be eligible for any payment under the Incentive Plan.
Unless otherwise specified by any applicable severance plans or severance, employment, change in control
or other written agreement to which a participant is subject (in which case, there shall be no duplication of
benefits) or by the Compensation Committee at the time when performance objectives are established with
respect to the applicable fiscal year, in the event of a Change in Control (as hereinafter defined), then, subject
to the Compensation Committee’s ability to exercise negative discretion to reduce the size of any payments
hereunder pursuant to the first paragraph of Section V, each participant eligible to receive incentive
compensation hereunder shall receive an amount of incentive compensation based upon achievement at the
“target” level of the applicable performance objectives for the full fiscal year, with such payments being due
and payable on a date selected by the Company that is not later than the first payroll date following the
Change in Control.
“Change in Control” means, unless otherwise provided in the applicable award agreement, the happening
of one of the following:
(I) any “person”, including a “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) but excluding the Company,
any of its affiliates, or any employee benefit plan of the Company or any of its affiliates) is or becomes the
“beneficial owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of
the Company representing the greater of 30% or more of the combined voting power of the Company’s then
outstanding securities;
4
(ii) the stockholders of the Company shall approve a definitive agreement and a
transaction is consummated (1) for the merger or other business combination of the Company with or into
another corporation if (A) a majority of the directors of the surviving corporation were not directors of the
Company immediately prior to the effective date of such merger or (B) the stockholders of the Company
immediately prior to the effective date of such merger own less than 60% of the combined voting power in the
then outstanding securities in such surviving corporation or (2) for the sale or other disposition of all or
substantially all of the assets of the Company;
(iii) the purchase of 30% or more of the combined voting power of the Company’s
then outstanding securities pursuant to any tender or exchange offer made by any “person”, including a
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company,
any of its affiliates, or any employee benefit plan of the Company or any of its affiliates; or
(iv) the disposal of any line of business representing at least 15% of the Company’s
consolidated net sales for the then-most recently completed fiscal year; provided, however, that such disposal
shall only be deemed a “Change in Control” for participants primarily employed in the line of business
disposed of, who cease to be employed by the Company following the disposition.
“Good Reason” means, unless otherwise provided in a written agreement between the participant and the
Company, the occurrence of any one or more of the following without the participant’s express written
consent: (i) the assignment of duties to a participant that are materially adversely inconsistent with the
participant’s duties immediately prior to thereto and failure to rescind such assignment within thirty (30) days
of receipt of notice from the participant; (ii) a material reduction in a participant’s title, authority or reporting
status as compared to such title, authority or reporting status immediately prior to thereto, (iii) the Company’s
requirement that a participant relocate more than fifty (50) miles from the participant’s place of employment
prior to the place the participant performed such duties prior thereto; (iv) a reduction in the participant’s base
salary as in effect immediately prior to a Change in Control or the failure of the Company to pay or cause to
be paid any compensation or benefits when due, and failure to restore such annual base salary or make such
payments within five (5) days of receipt of notice from the participant; (v) the failure to include the participant
in any new employee benefit plans proposed by the Company or a material reduction in the participant’s level
of participation in any existing plans of any type; provided that a Company-wide reduction or elimination of
such plans shall not constitute “Good Reason” for purposes of this Incentive Plan; or (vi) the failure of the
Company to obtain a satisfactory agreement from the acquiring party in a Change in Control to assume and
provide the payments contemplated hereunder ; provided that, in each case, (A) within sixty (60) days of the
initial occurrence of the specified event the participant has given the Company or any successor to the
Company at least thirty (30) days to cure the Good Reason, (B) the Company or any such successor has not
cured the Good Reason within the thirty (30) day period and (C) the participant resigns within ninety (90)
days from the initial occurrence of the event giving rise to the Good Reason.
III Performance Measures
Participants in the Incentive Plan may receive a cash payment upon the attainment of performance
objectives which may be corporate and/or individual objectives and which will be communicated to the
participant by the Compensation Committee. The percentage of any amount payable pursuant to the
Incentive Plan shall be based on the weights assigned to the applicable performance objective by the
Compensation Committee. Each participant’s target incentive payment is based on a designated percentage
of the participant’s annual base salary (in the case of a participant who is classified as a salaried associate)
or Specified Earnings (in the case of a participant who is classified as an hourly associate) and is
established by the Compensation Committee. The Compensation Committee shall determine whether and to
what extent each performance objective has been met. In determining whether and to what extent a
5
performance objective has been met, the Compensation Committee may consider such matters as the
Compensation Committee deems appropriate.
IV. Confidential Information
(a) Confidential Information. For purposes of this Incentive Plan, “Confidential Information” means all
business-related information belonging to the Company that is proprietary and confidential in nature,
regardless of whether the information is reduced to writing or is simply in the participant’s memory, that has
been provided or accessible to the participant during the participant’s employment with the Company, or was
developed by the participant during the participant’s employment with the Company. “Confidential
Information” includes trade secrets, as defined by applicable law, and information or documents that do not
meet the legal definition of a “trade secret” but are still proprietary, confidential, and otherwise meet the
definition of “Confidential Information”. “Confidential Information” includes, without limitation, any customer
lists, customer needs, price and performance information, processes, specifications, hardware, software,
devices, supply sources and characteristics, business opportunities, potential business interests, marketing,
promotional pricing and financing techniques, or other information relating to the business of the Company
that the participant knows or should know is confidential and proprietary. The participant confirms that
Confidential Information constitutes the exclusive property of the Company. “Confidential Information” does
not include information which (i) is readily ascertainable to the general public; (ii) is disclosed through no fault
of the participant; or (iii) is required to be disclosed pursuant to applicable law or regulation or the order of a
governmental or regulatory body. Both during and after the participant’s employment with the Company, the
participant shall not, except as required to fulfill the participant’s duties to the Company, either directly or
through the actions of others, retain, transfer, acquire, email, download, upload, use, sell, communicate,
furnish, or disclose to any other person or entity any of the Company’s Confidential Information. This
prohibition includes, without limitation: (a) using Confidential Information, directly or in concert with others, to
solicit or attempt to solicit the customers or personnel of the Company; (b) emailing Confidential Information
to a personal, private, or third-party email account; (c) downloading Confidential Information to a personal,
private, or third-party thumb drive or other external storage device; (d) taking photographs or videos of
Confidential Information for competitive purposes; or (e) saving Confidential Information to a personal,
private, or third-party cloud storage account. The participant agrees that Participant will immediately return to
the Company upon request, but in any event upon termination of employment, any physical or electronic
embodiment of any Confidential Information and/or any summaries containing any Confidential Information, in
whole in part, in any media. It shall be a material breach of this Incentive Plan for the participant to retain any
of the Company’s property, including Confidential Information in physical or electronic form, after termination
of the participant’s employment with the Company.
(b) Permitted Disclosures. The participant understands that nothing contained in Section IV(a) restricts or
limits the participant’s right to discuss or disclose information about unlawful acts in the workplace, at work-
related events, or between Company employees or Company and the participant, such as harassment,
discrimination, retaliation, sexual assault, or any other conduct that the participant has reason to believe is
unlawful, nor does Section IV(a) prohibit the participant from discussing the participant’s employment or
reporting possible violations of law or regulation with the Department of Justice, the Congress, any Inspector
General, the Equal Employment Opportunity Commission, United States Department of Labor, the
Occupational Safety and Health Administration, the National Labor Relations Board, the Securities and
Exchange Commission, or other federal government agency or state or local government agency. The
participant further understands that Section IV(a) does not prohibit the participant from discussing the terms
and conditions of the participant’s employment with others to the extent expressly permitted by Section 7 of
the National Labor Relations Act or to the extent that such disclosure is protected under the applicable
provisions of law or regulation, including but not limited to “whistleblower” statutes or other similar provisions
that protect such disclosure. Nor does Section IV(a) require the participant not to disclose or discuss conduct
or the existence of a settlement involving conduct relating to a dispute: (1) involving a nonconsensual sexual
act or sexual contact, as such terms are defined in section 2246 or title 18, United States Code, or similar
applicable tribal or state law; or (2) relating to conduct that is alleged to constitute sexual harassment under
applicable federal, tribal, or state law.
6
Participant acknowledges and agrees that the Company has provided the participant with written
notice below that the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides an immunity for the disclosure
of a trade secret to report suspected violations of law and/or in an anti-retaliation lawsuit, as follows:
(1) IMMUNITY. — An individual shall not be held criminally or civilly liable under any Federal
or State trade secret law for the disclosure of a trade secret that —
(A) is made —
(i) in confidence to a Federal, State or local government official, either directly or
indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a suspected violation of law; or
(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal.
(2) USE OF TRADE SECRET INFORMATION IN ANTI-RETALIATION LAWSUIT.— An
individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law
may disclose the trade secret to the attorney of the individual and use the trade secret information in
the court proceeding, if the individual—
(A) files any document containing the trade secret under seal; and
(B) does not disclose the trade secret, except pursuant to court order.
(c) If the participant primarily resides in Wisconsin, the restrictions set forth in Section IV(a) shall
apply during the participant’s employment with the Company and for two years after termination of the
participant’s employment.
(d) If the participant primarily resides in Washington, nothing herein shall be used to prevent the
participant from disclosing or discussing: (i) conduct that the participant reasonably believes under
Washington state, federal, or common law to be illegal discrimination, illegal harassment, illegal retaliation, a
wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy;
and (ii) the existence of a settlement involving the conduct described in Section IV(d)(i), but the amount paid
in settlement of a claim is strictly confidential.
(e) Participant hereby acknowledges that Participant will treat as for the Company’s sole benefit,
and fully and promptly disclose and assign to the Company without additional compensation, all ideas,
information, discoveries, inventions and improvements which are based upon or related to any Confidential
Information protected under Section IV(a) herein, and which are made, conceived or reduced to practice by
Participant during Participant’s period of employment by the Company and the Restricted Period. The
provisions of this subsection (e) shall apply whether such ideas, discoveries, inventions, improvements or
knowledge are conceived, made or gained by Participant alone or with others, whether during or after usual
working hours, either on or off the job, directly or indirectly related to the Company’s business interests
(including potential business interests), and whether or not within the realm of Participant’s duties.
(f) Participant shall, upon request of the Company, but at no expense to participant, at any time
during or after employment by the Company, sign all instruments and documents and cooperate in such other
acts reasonably required to protect rights to the ideas, discoveries, inventions, improvements and knowledge
referred to above, including applying for, obtaining and enforcing patents and copyrights thereon in any and
all countries.
(g) Sections IV (e) and (f) are subject to the state-specific notifications identified in Exhibit A.
7
(h) During the one-year period following termination of the participant’s employment, upon
reasonable request of the Company, the participant shall cooperate in any internal or external investigation,
litigation or any dispute relating to any matter in which he or she was involved during his or her employment
with the Company; provided, however, that the participant shall not be obligated to spend time and/or travel in
connection with such cooperation to the extent that it would unreasonably interfere with the participant’s other
commitments and obligations. The Company shall reimburse the participant for all expenses the participant
reasonably incurs in so cooperating.
(i) Participant recognizes that the possible restrictions on the participant’s activities which may
occur as a result of the participant’s performance of the participant’s obligations under Section IV are required
for the reasonable protection of the Company’s legitimate business interests, including, but not limited to, its
Confidential Information, trade secrets, and investments, and the participant expressly acknowledges that
such restrictions are fair and reasonable for that purpose. Participant acknowledges that money damages
would not be an adequate or sufficient remedy for any breach of Section IV, and that in the event that the
participant breaches or threatens to breach, or the Company reasonably believes the participant is about to
breach, Section IV, the Company will be entitled to injunctive relief as well as an equitable accounting of all
earnings, profits, and other benefits arising from the participant’s breach, which rights will be cumulative and
in addition to any other rights or remedies to which the Company may be entitled in law or equity in addition
to other rights and remedies existing in its favor, The terms of this Section shall not prevent the Company
from pursuing any other available remedies for any breach or threatened breach hereof, including but not
limited to the recovery of damages from the participant.
(j) If any portion of this Section IV is found unenforceable (despite, and after application of, any
applicable right to reformation that could add or renew enforceability), then any provision(s) of any prior
agreement between the parties that would provide for restriction(s) on the same or substantially similar post-
employment conduct of the participant will not be considered superseded and will remain in effect, to the
extent enforceable.
(k) Participant expressly agrees that all payments and benefits due the participant herein shall be
subject to Participant’s compliance with the provisions set forth in Section IV.
V.
Miscellaneous Provisions
Notwithstanding anything to the contrary herein, the Compensation Committee, in its sole discretion and
subject to any applicable requirements of Section 409A (as defined below), may, unless otherwise provided
for in a written agreement between the Company and the participant, (i) reduce any amounts otherwise
payable to a participant hereunder in order to satisfy any liabilities owed to the Company or any of its
Subsidiaries by the participant and (ii) modify (upward or downward) the amount of any incentive payment
based on such criteria it shall determine, including, but not limited to, financial results, individual performance,
or other factors, and may base such modification on the recommendation of a participant’s manager, the
performance of the participant’s business unit, the Company performance, or any other factors that the
Compensation Committee, in its sole discretion, shall deem appropriate.
In the event of any material change in the business assets, liabilities or prospects of the Company, any
division or any Subsidiary, the Compensation Committee in its sole discretion and without liability to any
person may make such adjustments, if any, as it deems to be equitable as to any affected terms of
outstanding awards.
The Company is the sponsor and legal obligor under the Incentive Plan and shall make all payments
hereunder, other than any payments to be made by any of the Company’s subsidiaries (in which case
payment shall be made by such subsidiary, as appropriate). The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to ensure the payment of any
amounts under the Incentive Plan, and the participant’s rights to the payment hereunder shall be not greater
8
than the rights of the Company’s (or its subsidiary’s) unsecured creditors. All expenses involved in
administering the Incentive Plan shall be borne by the Company.
Except as provided in Exhibit B, the Incentive Plan shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be performed in the State of Delaware.
Each participant agrees that payouts under this Incentive Plan are subject to the Company’s Recoupment
(Clawback) Policy for performance-based incentive compensation or any other similar policy that may be
adopted or amended thereafter by the Board or Compensation Committee from time to time, to conform to
regulations related to recoupment or clawback of compensation adopted pursuant to the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 and also further agrees to promptly return to the
Company, if the Company shall so request, all or a portion of any incentive amounts paid to such participant
pursuant to this Incentive Plan based upon financial information or performance objectives later found to be
materially inaccurate and/or otherwise in accordance with the terms of the Company’s clawback policy, a
copy of which will be made available to participants. The amount to be recovered shall be equal to the excess
amount paid out over the amount that would have been paid out had such financial information or
performance objective been fairly stated at the time the payout was made and/or otherwise in accordance
with the Company’s clawback policy.
Notwithstanding anything herein to the contrary, the Compensation Committee, in its sole discretion, may
make payments (including pro rata payments) to participants who do not meet the eligibility requirements of
the Incentive Plan, including, but not limited to, the length of service requirements described in Section II
above if the Compensation Committee determines that such payments are in the best interest of the
Company.
The Incentive Plan is intended to comply with or be exempt from Section 409A of the Code and any rules,
regulations or other official guidance promulgated thereunder (“Section 409A”) and will be interpreted in a
manner intended to comply with Section 409A. Notwithstanding anything herein to the contrary, if at the time
of the participant’s separation from service with the Company or any of its Subsidiaries the participant is a
“specified employee” as defined in Section 409A, and the deferral of the commencement of any payments or
benefits otherwise payable hereunder as a result of such separation from service is necessary in order to
prevent the imposition of any accelerated or additional tax under Section 409A, then the Company will defer
the commencement of the payment of any such payments or benefits hereunder (without any reduction in
such payments or benefits ultimately paid or provided to the participant) until the date that is six months and
one day following the participant’s separation from service with the Company or any of its Subsidiaries (or the
earliest date as is permitted under Section 409A), if such payment or benefit is payable upon a separation
from service with the Company or any of its Subsidiaries. Each payment made under the Incentive Plan shall
be designated as a “separate payment” within the meaning of Section 409A.
If any provision of the Incentive Plan is, or becomes, or is deemed to be invalid, illegal or unenforceable in
any jurisdiction or as to any participant, such provision shall be construed or deemed amended to conform to
the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Incentive Plan, such provision shall be stricken as to such
jurisdiction or participant and the remainder of the Incentive Plan shall remain in full force and effect.
9
EXHIBIT A
STATE SPECIFIC INVENTION ASSIGNMENT NOTIFICATIONS (AS APPLICABLE)
For California Employees Only
THIS IS TO NOTIFY you in accordance with Cal. Lab. Code §2870 that no provision in Sections IV(e) and
IV(f) of this Incentive Plan requires you to assign any of your rights to an invention if that invention qualifies
for exclusion under California Labor Code §2870 which states: (a) Any provision in an employment
agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the employee developed entirely on his or
her own time without using the employer’s equipment, supplies, facilities, or trade secret information except
for those inventions that either: (1) relate at the time of conception or reduction to practice of the invention to
the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) result from any work performed by the employee for the employer, (b) to the extent a provision in an
employment agreement purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (a), the provision is against the public policy of this state and
is unenforceable.
For Delaware Employees Only
THIS IS TO NOTIFY you in accordance with Del. Code Ann., Title 19, § 805 that Sections IV(e) and IV(f) of
the Incentive Plan between you and the Company do not require you to assign or offer to assign to the
Company any of your rights in an invention that you develop entirely on your own time without using the
Company’s equipment, supplies, facilities or trade secret information, except for those inventions that either:
(1) Relate to the Company’s business, or actual or demonstrably anticipated research or development; or
(2) Result from any work performed by you for the Company.
For Illinois Employees Only
THIS IS TO NOTIFY you in accordance with Chapter 765 Section 1060/2 of the Illinois Compiled Statutes
that Sections IV(e) and IV(f) of the foregoing Incentive Plan between you and the Company do not require
you to assign or offer to assign to the Company any invention that you developed entirely on your own time
without using the Company’s equipment, supplies, facilities or trade secret information except for those
inventions that either:
(1) Relate to the Company’s business, or actual or demonstrably anticipated research or development of the
Company; or
(2) Result from any work performed by you for the Company.
For Kansas Employees Only
THIS IS TO NOTIFY you in accordance with K.S.A. § 44-130(a), that Sections IV(e) and IV(f) of the foregoing
Incentive Plan between you and the Company do not apply to an invention for which no equipment, supplies,
facilities, or trade secret information of the Company was used and that you developed entirely on your own
time, unless the invention either:
10
(1) Relates to the Company’s business, or actual or demonstrably anticipated research or development; or
(2) Results from any work you perform for the Company.
For Minnesota Employees Only
THIS IS TO NOTIFY you in accordance with Section 181.78 of the Minnesota Statutes that Sections IV(e)
and IV(f) of the foregoing Incentive Plan between you and the Company shall not apply to an invention for
which no equipment, supplies, facility or trade secret information of the Company was used and which was
developed entirely on your own time, and:
(1) Does not relate (a) directly to the business of the Company or (b) to the Company’s actual or
demonstrably anticipated research or development, or
(2) Does not result from any work performed by you for the Company.
For Nevada Employees Only
THIS IS TO NOTIFY you in accordance with Nev. Rev. Stat. § 600.500 that, except as otherwise provided by
express written agreement, the Company is the sole owner of any patentable invention or trade secret
developed by you during the course and scope of your employment that relates directly to work performed
during the course and scope of the employment.
For New Jersey Employees Only
THIS IS TO NOTIFY you in accordance with Section 34:1B-265 of the New Jersey Statutes that Sections
IV(e) and IV(f) of the foregoing Incentive Plan between you and the Company shall not apply to an invention
that you developed entirely on your own time without using Company equipment, supplies, facilities, or trade
secret information, except for those inventions that either:
(1) Relate to the Company’s business, or actual or demonstrably anticipated research or development; or
(2) Result from any work performed by you on behalf of the Company.
For New York Employees Only
THIS IS TO NOTIFY you in accordance with New York Labor Law Section 203-f that Sections IV(e) and IV(f)
of the foregoing Incentive Plan between you and the Company do not require you to assign or offer to assign
to the Company any invention that you developed entirely on your own time without using the Company’s
equipment, supplies, facilities or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the Company’s business, or
actual or demonstrably anticipated research or development of the Company; or
(2) Result from any work performed by you for the Company.
For North Carolina Employees Only
THIS IS TO NOTIFY you in accordance with North Carolina General Statute §§ 66.57.1 and 66.57.2 that
Sections IV(e) and IV(f) of the foregoing Incentive Plan between you and the Company do not require you
11
to assign or offer to assign to the Company any invention that you developed entirely on your own time
without using the Company’s equipment, supplies, facilities or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the Company’s business, or
actual or demonstrably anticipated research or development of the Company; or
(2) Result from any work performed by you for the Company.
For Utah Employees Only
THIS IS TO NOTIFY you in accordance with Utah Code §§ 34-39-1 to 34-39-3 that Sections IV(e) and IV(f) of
the foregoing Incentive Plan between you and the Company shall not apply to an invention that is both (i)
created by you on your own time, and (ii) not an “employment invention.”
An “employment invention” means an invention or any part that is:
•
Conceived, developed, or reduced to practice or created by you:
o
within the scope of your employment;
o
on the Company’s time; or
o
with the aid, assistance, or use of any of the Company’s property, equipment, facilities,
supplies, resources, or intellectual property.
•
The result of any work, services, or duties performed by you for the Company.
•
Related to the Company’s industry or trade.
•
Related to the Company’s current or demonstrably anticipated business, research, or development.
For Washington Employees Only
THIS IS TO NOTIFY you in accordance with Section 49.44.140 of the Revised Codes of Washington that
Sections IV(e) and IV(f) of the foregoing Incentive Plan between you and the Company do not apply to an
invention for which no equipment, supplies, facilities, or trade secret information of the Company was used,
and which was developed entirely on your own time, unless:
(1) The invention relates (a) directly to the business of the Company, or (b) to the Company’s actual or
demonstrably anticipated research or development; or
(2) The invention results from any work performed by you for the Company.
12
EXHIBIT B
STATE SPECIFIC MODIFICATIONS
Notwithstanding anything to the contrary stated in Section V (“Miscellaneous Provisions”) of the Incentive
Plan:
For California Employees Only
Section IV (“Confidential Information”) shall be governed by and construed in accordance with California law
during any period in which Employee primarily works or primarily resides in California.
For Colorado Employees Only
Section IV (“Confidential Information”) shall be governed, construed, and enforced in accordance with
Colorado law, and the state and/or federal courts of Colorado shall be the sole and exclusive jurisdiction and
venue for resolution of any disputes arising under this Agreement, during any time in which Employee
primarily resides or works in Colorado.
13
UNITED NATURAL FOODS, INC.
2020 EQUITY INCENTIVE PLAN
RESTRICTED SHARE UNIT AWARD AGREEMENT
[time vesting for President, Retail]
This Restricted Share Unit Award Agreement (this “Agreement”) effective as of [ ] __, 20__
(the “Grant Date”), between United Natural Foods, Inc. (the “Company”) and __________________ (the
“Participant”), evidences an Award denominated in Restricted Share Units to the Participant under the
United Natural Foods, Inc. 2020 Equity Incentive Plan (as amended from time to time, the “Plan”).
Except in the preceding sentence and where the context otherwise requires, the term “Company” shall
include the Company and all present and future Subsidiaries. All capitalized terms that are used in this
Agreement without definition shall have the meanings set forth in the Plan.
1.
Definitions.
(a)
“Participant,” solely for the purpose of this Agreement, means the employee designated
above.
(b)
“Restricted Share Unit” means a right to receive a payment in the form of any one Share
of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth
in this Agreement and in the Plan.
(c)
“Vesting Period” means the period beginning on [ ] and ending on [ ].
(d)
“Transaction” means a sale, transfer or other disposition of all or substantially all of the
Company’s equity interests, assets, or business under the Company’s Cub Foods banner (including the
related franchise, pharmacy and liquor operations), in which the Participant uses his best efforts to effect
such Transaction, as finally determined by the Company in its sole discretion.
2.
Grant of Restricted Share Units. In consideration of services to be rendered by the
Participant to the Company, the Company hereby grants to the Participant [______] Restricted Share
Units, on the terms and conditions and subject to the restrictions set forth in this Agreement and the Plan.
The grant of Restricted Share Units shall be subject to adjustment as provided in Section 4.3 of the Plan.
This grant is conditional upon the Participant signing a counterpart of this Agreement and delivering such
signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic
means if provided by the Company pursuant to Section 18.
3.
Vesting & Effect of Separation from Service.
(a)
Except as otherwise provided herein or in the Plan, if the Participant remains
continuously employed by the Company through the applicable vesting date, the Restricted Share Units
will vest in accordance with the following schedule:
Vesting Date
Restricted Share Units
[Vesting date]
[Number or % of shares that vest on the vesting date]
Exhibit 10.40
1
[Vesting date]
[Number or % of shares that vest on the vesting date]
[Vesting date]
[Number or % of shares that vest on the vesting date]
(b)
Retirement: In the event the Participant has a Separation from Service on account of
Retirement in the 365-day period beginning on the Grant Date (the “Grant Year”), the Pro-Rated Number
of Restricted Share Units will continue to vest through the Vesting Period. The “Pro-Rated Number”
shall be the product of (i) the total number of Restricted Share Units granted under this Agreement and
(ii) the quotient of (A) the number of days beginning with the Grant Date and ending on the date of the
Participant’s Separation from Service as a result of Retirement and (B) 365, the number of days in the
Grant Year. In the event that the Participant has a Separation from Service on account of Retirement
before the end of the Vesting Period but after the Grant Year, all of the then-unvested Restricted Share
Units granted under this Agreement will continue to vest through the Vesting Period. The rights of the
Participant in the event of Retirement with respect to any then-unvested Restricted Share Units shall
become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock
Units would have been issued pursuant to Section 4 hereof had the Participant continued to be employed
through the end of the Vesting Period.
(c)
Death and Disability: In the event that the Participant dies or has a Separation from
Service on account of Disability at any time after grant, all of the then-unvested Restricted Share Units
shall fully vest.
(d)
Change in Control: In the event the Participant’s employment with the Company or any
successor to the Company is terminated without Cause, or the Participant terminates his or her
employment for Good Reason, within twelve months after a Change in Control (and before the Restricted
Share Units otherwise have become vested under Section 3(a), (b) or (c)), the Participant shall vest in all
of the Restricted Share Units granted under Section 2 of this Agreement and the Participant’s rights to
such Restricted Share Units shall become non-forfeitable as of the date on which the Participant’s
employment with the Company or its successor is terminated. In the event that this Award is not assumed
by the Acquiror in connection with a Change in Control, all of the Restricted Share Units shall vest
immediately prior to the Change in Control and shall settle immediately following the Change in Control
(notwithstanding the longer period of time for settlement provided in Section 4 below). In the event that
settlement of the Restricted Share Units at the time described above would result in the imposition of tax
on the Participant (if the Participant is eligible for Retirement) pursuant to the operation of Code Section
409A (as defined below), such settlement shall take place on the earliest date upon which settlement may
be made without resulting in the imposition of such tax.
(e)
Separation from Service Following a Transaction. In the event the Company causes
the Participant’s Separation from Service after consummation of a Transaction and without Cause (and
before the Restricted Share Units otherwise have become vested under Section 3(a), (b), (c) or (d)), the
Participant shall vest in all of the Restricted Share Units granted under Section 2 of this Agreement and
the Participant’s rights to such Restricted Share Units shall become non-forfeitable as of the Release
Finalization Date.
(f)
Separation from Service without Cause: If the Participant has a Separation from Service
without Cause (as defined in the Plan), then:
(i) any unvested Restricted Share Units that were scheduled to vest within 365 days from the date
of separation and were granted more than 365 days preceding the date of separation, shall vest effective as
of the Release Finalization Date;
2
(ii) the Separation Pro-Rated Number of Restricted Share Units that were scheduled to vest within
365 days from the date of separation, and were granted less than 365 days prior to the date of separation,
shall vest effective as of the Release Finalization Date; and
(iii) any remaining Restricted Share Units not vesting as provided above shall be forfeited
effective as of the date of Separation from Service without Cause.
Notwithstanding the foregoing, the vesting and payout of any Restricted Share Units pursuant to
this Section 3(e) shall be subject to the satisfaction of any conditions required for payout of the Restricted
Share Units pursuant to this Agreement and the Plan. In no event shall the accelerated vesting pursuant to
this Section 3(e) accelerate the settlement of any Restricted Share Units if such Restricted Share Units are
otherwise subject to Section 409A of the Code.
The “Separation Pro-Rated Number” shall be the product of (A) the total number of Restricted
Share Units granted under this Agreement less than 365 days prior to the date of Separation from Service
without Cause and (B) the quotient of (1) the number of days from the Grant Date to the date of
Separation from Service without Cause and (2) 365.
(f)
Except as provided in Section 3(b),(c), (d), (e) or (f) above or as otherwise provided in
any written agreement by and between the Company and the Participant, if the Participant’s employment
with the Company terminates for any reason prior to the expiration of the Vesting Period, all then-
unvested Restricted Share Units shall be canceled immediately and shall not be payable to the Participant.
4.
Payment. The Company shall issue to the Participant one Share for each Restricted Share
Unit which has become vested with respect to the vesting schedule pursuant to Section 3 of this
Agreement. The payment of the Shares shall be made to the Participant (or the Participant’s assignee or
beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and
award policy no later than March 15th of the calendar year next following the calendar year in which the
vesting period ends and may be made as a book-entry confirmation or through the issuance of a certificate
evidencing such Shares; provided, however, that if the Participant is eligible for Retirement at any point
during the Vesting Period, payment of the Shares shall be made as soon as practicable following the
applicable vesting date set forth in Section 3, but in no event later than December 31 of the calendar year
in which such vesting date occurs.
5.
Rights as a Stockholder. The Participant shall have no rights as a stockholder with
respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including,
without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect
to such Shares) unless and until the Shares have been issued to the Participant. No adjustment shall be
made for dividends or other rights for which the record date is prior to the date such Shares are issued.
6.
Withholding. The Company’s obligation to make payment of vested Restricted Share
Units shall be subject to the Participant’s satisfaction of any applicable federal, state, local and foreign
withholding obligations or withholding taxes, including any employer minimum statutory withholding
(“Withholding Taxes”), and the Participant shall pay the amount of any such Withholding Taxes to the
Company as set forth in this Section 6. The Participant may satisfy his or her obligation to pay the
Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Participant
pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the
Company shares of Common Stock already owned by the Participant; provided that the amount of such
Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the
Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by
the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding
3
Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from
compensation or other amounts owing to the Participant an amount not to exceed the Withholding Taxes.
7.
Covenants. As a condition to the receipt of the Award (which shall be forfeited in the
event of noncompliance with this Section 7), the Participant hereby covenants with the Company as
follows:
(a) Confidential Information. The Participant shall not disclose or reveal to any unauthorized
person or knowingly use for the Participant’s own benefit, or another person or entity’s benefit, any trade
secret or other confidential information relating to the Company, or to any of the businesses operated by
it, including, without limitation, any customer lists, customer needs, price and performance information,
processes, specifications, hardware, software, devices, supply sources and characteristics, business
opportunities, potential business interests, marketing, promotional pricing and financing techniques, or
other information relating to the business of the Company (“Confidential Information”), and the
Participant confirms that Confidential Information constitutes the exclusive property of the Company.
Such restrictions shall not apply to information which is (i) generally available in the industry, or (ii)
disclosed through no fault of the Participant, or (iii) required to be disclosed pursuant to applicable law or
regulation or the order of a governmental or regulatory body (provided that the Company is given
reasonable notice of any such required disclosure). The Participant agrees that Participant will
immediately return to the Company upon request, but in any event upon Separation from Service, any
physical embodiment of any Confidential Information and/or any summaries containing any Confidential
Information, in whole in part, in any media. For the avoidance of doubt, nothing in this Agreement
prohibits the Participant from reporting possible violations of federal law or regulation to any
governmental agency or entity, including but not limited to the Department of Justice, the Securities and
Exchange Commission, the Congress, and any Inspector General, or making other disclosures that are
protected under the whistleblower provisions of applicable law or regulation. The Participant does not
need the prior authorization of the Company to make any such reports or disclosures, and the Participant
is not required to notify the Company that the Participant has made such reports or disclosure.
The Participant acknowledges and agrees that the Company has provided the Participant with
written notice below that the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides an immunity for
the disclosure of a trade secret to report suspected violations of law and/or in an anti-retaliation lawsuit, as
follows:
(1) IMMUNITY — An individual shall not be held criminally or civilly liable under any Federal
or State trade secret law for the disclosure of a trade secret that —
(A) is made —
(i) in confidence to a Federal, State or local government official, either directly or
indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a suspected violation of law; or
(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing
is made under seal.
(2) USE OF TRADE SECRET INFORMATION IN ANTI-RETALIATION LAWSUIT — An
individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law
may disclose the trade secret to the attorney of the individual and use the trade secret information in the
court proceeding, if the individual—
(A) files any document containing the trade secret under seal; and
4
(B) does not disclose the trade secret, except pursuant to court order.
(b) Non-Competition. Except with the prior written consent of the Company’s Board of
Directors, during the term of employment, and, unless otherwise prohibited by law, for a period of one
year following the Participant’s Separation from Service for any reason (the “Restricted Period”), the
Participant shall not engage, directly or indirectly, in Competition with the Company. “Competition”
means providing services in the Restricted Area in any capacity (whether as an employee, independent
contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a
shareholder of less than five (5%) percent of a publicly traded company) to a Competitor of the Company
that: (i) are the same or similar in function or purpose to the services the Participant provided to the
Company or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use
of Confidential Information on behalf of a Competitor. The “Restricted Area” means the geographic area
the Participant served at any time during the previous two years of the Participant’s employment. For
avoidance of doubt, if the Participant’s job duties encompassed the United States, the Restricted Area
shall be the United States. “Competitor” means any person, corporation, joint venture or other entity that
provides one or more of the business offerings of the Company, including new products or services under
active consideration by the Company at the time of the Participant’s Separation from Service.
(c)
Non-Solicitation – Business Partners. During the Restricted Period, the Participant shall
not interfere with the Company’s relationship with its Business Partners by soliciting or communicating
(regardless of who initiates the communication) with a Business Partner to: (i) induce or encourage the
Business Partner to stop doing business or reduce its business with the Company, or (ii) buy a product or
service that competes with a product or service offered by the Company’s business. “Business Partner”
means: a customer (person or entity), prospective customer (person or entity), supplier or manufacturer
with which the Company has a business relationship and with which the Participant had business-related
contact or dealings, or about which the Participant received Confidential Information, in the two years
prior to the Participant’s Separation from Service.
(d)
Non-Solicitation – Employees/Contractors. During the Restricted Period, the Participant
shall not interfere with the Company’s relationship with any employee or contractor of the Company by:
(i) soliciting or communicating with the employee or contractor to induce or encourage him or her to
leave the Company’s employ or engagement (regardless of who first initiates the communication); (ii)
helping another person or entity evaluate such employee or contractor as an employment or contractor
candidate; or (iii) otherwise helping any person or entity hire an employee or contractor away from the
Company.
(e) The Participant hereby acknowledges that the Participant will treat as for the Company’s
sole benefit, and fully and promptly disclose and assign to the Company without additional compensation,
all ideas, information, discoveries, inventions and improvements which are based upon or related to any
Confidential Information protected under Section 7(a) herein, and which are made, conceived or reduced
to practice by the Participant during the Participant’s period of employment by the Company and the
Restricted Period. The provisions of this Section 7(e) shall apply whether such ideas, discoveries,
inventions, improvements or knowledge are conceived, made or gained by the Participant alone or with
others, whether during or after usual working hours, either on or off the job, directly or indirectly related
to the Company’s business interests (including potential business interests), and whether or not within the
realm of the Participant’s duties.
(f) The Participant shall, upon request of the Company, but at no expense to the Participant, at
any time during or after employment by the Company, sign all instruments and documents and cooperate
in such other acts reasonably required to protect rights to the ideas, discoveries, inventions, improvements
and knowledge referred to above, including applying for, obtaining and enforcing patents and copyrights
thereon in any and all countries.
5
(g)
During the Restricted Period, upon reasonable request of the Company, the Participant
shall cooperate in any internal or external investigation, litigation or any dispute relating to any matter in
which he or she was involved during his or her employment with the Company; provided, however, that
the Participant shall not be obligated to spend time and/or travel in connection with such cooperation to
the extent that it would unreasonably interfere with the Participant’s other commitments and obligations.
The Company shall reimburse the Participant for all expenses the Participant reasonably incurs in so
cooperating.
(h)
Before accepting employment with any other person, organization or entity while
employed by the Company and during the Restricted Period, the Participant will inform such person,
organization or entity of the restrictions contained in this Section 7. The Participant further consents to
notification by the Company to the Participant’s subsequent employer or other third party of the
Participant’s obligations under this Agreement.
(i) The Participant recognizes that the possible restrictions on the Participant’s activities which
may occur as a result of the Participant’s performance of the Participant’s obligations under Sections 7(a)
through (d) of this Agreement are required for the reasonable protection of the Company and its
investments, and the Participant expressly acknowledges that such restrictions are fair and reasonable for
that purpose. The Participant acknowledges that money damages would not be an adequate or sufficient
remedy for any breach of Sections 7(a) through (d), and that in the event of a breach or threatened breach
of Sections 7(a) through (d), the Company, in addition to other rights and remedies existing in its favor,
shall be entitled, as a matter of right, to injunctive relief, including specific performance, from a court of
competent jurisdiction in order to enforce, or prevent any violations of, the provisions of Sections 7(a)
through (d). The terms of this Section 7(i) shall not prevent the Company from pursuing any other
available remedies for any breach or threatened breach hereof, including but not limited to the recovery of
damages from the Participant. If any of the provisions of this Agreement are held to be in any respect an
unreasonable restriction upon the Participant then they shall be deemed to extend only over the maximum
period of time, geographic area, and/or range of activities as to which they may be enforceable. The
Participant expressly agrees that all payments and benefits due the Participant under this Agreement shall
be subject to the Participant’s compliance with the provisions set forth in Sections 7(a) through (d).
8.
No Guarantee of Employment. Nothing in this Agreement or in the Plan shall confer
upon the Participant any right to continue in the employ of the Company, or shall interfere with or restrict
in any way the rights of the Company, which are hereby expressly reserved, to discharge the Participant at
any time for any reason whatsoever, with or without Cause.
9.
Amendment. Subject to the restrictions contained in the Plan, the Committee may waive
any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this
Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with
Section 409A of the Code with regard to awards subject thereto); provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and
adversely affect the rights of the Participant or any holder or beneficiary of the Restricted Share Units
shall not to that extent be effective without the consent of the Participant, holder or beneficiary; and
provided further that no consent of the Participant or any holder or beneficiary shall be required for any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent
necessary to conform this Agreement to mandatory provisions of applicable federal or state laws,
regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary
to avoid tax penalties to the Participant. The Committee is authorized to make equitable and proportionate
adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted
Share Units as set forth in the Plan.
6
10.
Determinations by the Committee. Except as otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or with respect to the Plan or
this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive, and binding upon all Persons.
11.
Provisions of the Plan. The Participant hereby acknowledges receipt of a copy of the
Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan. This
Agreement is governed by the terms of the Plan, and in the case of any inconsistency between this
Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together
with the Plan, represents the entire understanding and agreement between the Company and the
Participant, and shall supersede any prior agreement and understanding between the parties with respect
to the matters contained herein. This Agreement, and any payment of Shares in settlement of the
Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or
clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.
12.
Nontransferability of Restricted Share Units. Except as otherwise provided in the
Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge,
attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by
the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the
Restricted Share Units for value is not permitted under the Plan or this Agreement.
13.
Notices. Any notice required or permitted to be given to the Participant under this
Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the
United States mail with postage and fees prepaid. Any notice or communication required or permitted to
be given to the Company under this Agreement shall be in writing and shall be deemed effective only
upon receipt by the Secretary of the Company at the Company’s principal office.
14.
Waiver. The waiver by the Company of any provision of this Agreement at any time or
for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of
this Agreement at any subsequent time or for any other purpose.
15.
Section 409A.
(a)
For the avoidance of doubt, the Restricted Share Units granted under this Agreement are
intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and
guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith.
In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be
imposed on the Participant by Code Section 409A or damages for failing to comply with Code Section
409A.
(b)
Notwithstanding any other payment schedule provided herein to the contrary, if the
Participant is deemed on the date of Separation from Service to be a “specified employee” within the
meaning of that term under Section 409A(a)(2)(B) of the Code, then any payment due under this
Agreement that is considered “deferred compensation” under Section 409A of the Code payable on
account of a Participant’s Separation from Service shall not be made until the date which is the earlier of
(A) the expiration of the six (6) month period measured from the date of such Separation from Service of
the Participant, and (B) the date of the Participant’s death (the “Delay Period”) to the extent required under
7
Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this
Section 15(b) shall be paid to the Participant in a lump sum in accordance with the Agreement.
(c)
For the avoidance of doubt, any payment due under this Agreement within a period
following the Participant’s Separation from Service, death, Disability, Retirement or other event, shall be
made on a date during such period as determined by the Company in its sole discretion.
16.
Governing Law. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws
principles.
17.
Successors. This Agreement shall inure to the benefit of and be binding upon any
successor to the Company and shall inure to the benefit of the Participant's legal representative. All
obligations imposed upon the Participant and all rights granted to the Company under this Agreement
shall be binding upon the Participant's heirs, executors, administrator and successors.
18.
Electronic Communication. The Company may, in its sole discretion, decide to deliver
any document related to current or future participation in the Plan by electronic means. The Participant
hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan
through an online or electronic system established and maintained by the Company or a third party
designated by the Company.
[signature page follows]
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an
officer of the Company, and the Participant has accepted and signed this Agreement, all on the day and
year first mentioned above.
UNITED NATURAL FOODS, INC.
By: __________________________
PARTICIPANT
______________________________
9
UNITED NATURAL FOODS, INC.
2020 EQUITY INCENTIVE PLAN
PERFORMANCE-BASED VESTING
RESTRICTED SHARE UNIT AWARD AGREEMENT
[cliff-vesting for President, Retail]
This Performance-Based Vesting Restricted Share Unit Award Agreement (this “Agreement”)
effective as of [ ] __, 20__, (the “Grant Date”) between United Natural Foods, Inc. (the “Company”)
and __________________ (the “Participant”), evidences a Performance Award denominated in
Restricted Share Units to the Participant under the United Natural Foods, Inc. 2020 Equity Incentive Plan
(as amended from time to time, the “Plan”). Except in the preceding sentence and where the context
otherwise requires, the term “Company” shall include the Company and all present and future
Subsidiaries. All capitalized terms that are used in this Agreement without definition shall have the
meanings set forth in the Plan.
1.
Definitions.
(a)
“Participant,” solely for the purpose of this Agreement, means the employee designated
above.
(b)
“Performance Criteria” means the performance targets related to one or more
performance goals set forth on Exhibit A hereto.
(c)
“Performance Period” means the period beginning on [ ] and ending on [ ].
(d)
“Restricted Share Unit” means a right to receive a payment in the form of any one Share
of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth
in this Agreement and in the Plan, following the successful attainment of the Performance Criteria to the
satisfaction of the Committee.
(e)
“Transaction” means a sale, transfer or other disposition of all or substantially all of the
Company’s equity interests, assets, or business under the Company’s Cub Foods banner (including the
related franchise, pharmacy and liquor operations), in which the Participant uses his best efforts to effect
such Transaction, as finally determined by the Company in its sole discretion.
2.
Grant of Restricted Share Units. In consideration of services to be rendered by the
Participant to the Company, the Company hereby grants to the Participant, subject to the terms and
conditions set forth in this Agreement and in the Plan, [______] Restricted Share Units (the “Target
Amount”). The Target Amount shall be subject to adjustment as provided in Section 4.3 of the Plan.
This grant is conditional upon the Participant signing a counterpart of this Agreement and delivering such
signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic
means if provided by the Company pursuant to Section 18.
3.
Vesting & Effect of Separation from Service.
Exhibit 10.41
1
(a)
Performance Criteria: Exhibit A hereto identifies the Performance Criteria and the
levels of performance that must be achieved in order to receive payment of Shares at the percentage of the
Target Amount specified in Exhibit A, based on achievement of the Performance Criteria, as determined
in accordance with this Agreement and the Plan. The percentage of the Target Amount based on actual
achievement of the Performance Criteria as of the last day of the Performance Period is referred to herein
as the “Earned Amount.” Except as otherwise provided herein or in the Plan, if the Participant remains
continuously employed by the Company throughout the Performance Period, the Participant will vest in
the Earned Amount, and any amount in excess of the Earned Amount will be forfeited. Prior to the
issuance of any Shares in settlement of any Restricted Share Units, the Committee shall determine and
certify in writing (which may be set forth in the minutes of a meeting of the Committee) the extent to
which the Performance Criteria and all other material terms of this Agreement have been met. In making
such determination, the Committee shall have the right to adjust the number of Shares payable at a given
level of performance to take into account additional factors that the Committee may deem relevant in its
sole discretion to the assessment of individual or corporate performance.
(b)
Retirement, Death, or Disability: In the event the Participant has a Separation from
Service on account of Retirement in the 365-day period beginning on the Grant Date (the “Grant Year”),
the Pro-Rated Number of Restricted Share Units will vest at the end of the Performance Period. The “Pro-
Rated Number” shall be the product of (i) the Earned Amount that the Participant would have earned if
he or she did not have a Separation from Service on account of Retirement and (ii) the quotient of (A) the
number of days beginning with the first day of the Performance Period and ending on the date of the
Participant’s Separation from Service as a result of Retirement and (B) 365, the number of days in the
Grant Year (and, for the avoidance of doubt, no additional Restricted Share Units in which the Participant
may have been entitled to vest in accordance with the Performance Criteria shall vest). In the event that
the Participant has a Separation from Service on account of Retirement before the end of the Performance
Period but after the Grant Year, or in the event that the Participant dies or has a Separation from Service
on account of Disability at any time after the Grant Date then, at the conclusion of the Performance
Period, the Participant (or the Participant’s estate or beneficiaries in the event of Participant’s death) will
vest in the Earned Amount that the Participant would have earned had had his or her employment
continued through the end of the Performance Period. The rights of the Participant (or the Participant’s
estate or beneficiaries in the event of Participant’s death) in any event described in this Section 3(b) shall
become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock
Units would have been issued pursuant to Section 4 hereof had the Participant continued to be employed
through the end of the Performance Period.
(c)
Change in Control: In the event this Award is assumed in connection with a Change in
Control, the Committee shall make such adjustments to the Performance Criteria as are necessary to
equitably account for the Change in Control. In the event the Participant’s employment with the Company
or any successor to the Company is terminated without Cause, or the Participant terminates his or her
employment for Good Reason, within twelve months after a Change in Control (and before the Restricted
Share Units otherwise have become vested under Section 3(a) or (b)), the Participant shall vest in the
Restricted Share Units at the Target Amount granted under Section 2 of this Agreement and the
Participant’s rights to such vested amount of Restricted Share Units shall become non-forfeitable as of the
date on which the Participant’s employment with the Company or its successor is terminated. In the event
that this Award is not assumed by the Acquiror in connection with a Change in Control, the Participant
shall vest in the Restricted Share Units at the Target Amount immediately prior to the Change in Control
and shall settle immediately following the Change in Control (notwithstanding the longer period of time
for settlement provided in Section 4 below).
2
(d)
Separation from Service Following a Transaction. In the event the Company causes
the Participant’s Separation from Service after consummation of a Transaction and without Cause (and
before the Restricted Share Units otherwise have become vested under Section 3(a), (b), or (c)), at the
conclusion of the Performance Period, the Participant will vest in the Earned Amount that the Participant
would have earned had had his or her employment continued through the end of the Performance Period
provided, however, that if the vesting date under such terms is earlier than the Release Finalization Date,
the performance-based Restricted Share Units shall vest effective as of the Release Finalization Date.
The rights of the Participant in any event described in this Section 3(d) shall become non-forfeitable only
at such time as the Shares issuable in settlement of such Restricted Stock Units would have been issued
pursuant to Section 4 hereof had the Participant continued to be employed through the end of the
Performance Period.
(e)
Separation from Service without Cause: If the Participant has a Separation from Service
without Cause (as defined in the Plan), then:
(i) the PSU Separation Pro-Rated Number of performance-based Restricted Share Units
shall continue to vest, on the same terms that such performance-based Restricted Share Units
would have vested had the Participant remained an employee, but without the requirement of
continued employment provided, however, that if the vesting date under such terms is earlier than
the Release Finalization Date, the performance-based Restricted Share Units shall vest effective
as of the Release Finalization Date; and
(ii) any remaining performance-based Restricted Share Units not vesting as provided
above shall be forfeited effective as of the date of Separation from Service without Cause.
Notwithstanding the foregoing, the vesting and payout of any performance-based Restricted
Share Units pursuant to this Section 3(e) shall be subject to the satisfaction of any conditions required for
payout of the performance-based Restricted Share Units pursuant to this Agreement and the Plan. In no
event shall the vesting treatment pursuant to this Section 3(e) accelerate the settlement of any Restricted
Share Units if such Restricted Share Units are otherwise subject to Section 409A of the Code.
The “PSU Separation Pro-Rated Number” for performance-based Restricted Share Units shall
be the product of (A) the total number of performance-based Restricted Share Units and (B) the quotient
of (1) the number of days beginning on the first day of the Performance Period and ending on the date of
the Participant’s Separation from Service without Cause, and (2) the total number of days in the
Performance Period (for example 1,095 days for a three-year performance period).
(e)
Except as provided in Section 3(b), (c), (d) or (e) above or as otherwise provided in any
written agreement by and between the Company and the Participant, if the Participant has a Separation
from Service for any reason prior to the expiration of the Performance Period, all then-unvested
Restricted Share Units shall be canceled immediately and shall not be payable to the Participant.
(f)
In case of any conflict between the terms of this Section 3 and any written employment
agreement between the Company and the Participant, the terms of such written employment agreement
shall control.
4.
Payment. The Company shall issue to the Participant one Share for each Restricted Share
Unit which has become vested with respect to the Performance Period pursuant to Section 3 of this
Agreement. The payment of the Shares shall be made to the Participant (or the Participant’s assignee or
beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and
award policy no later than March 15th of the calendar year next following the calendar year in which the
3
Performance Period ends and may be made as a book-entry confirmation or through the issuance of a
certificate evidencing such Shares.
5.
Rights as a Stockholder. The Participant shall have no rights as a stockholder with
respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including,
without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect
to such Shares) unless and until the Shares have been issued to the Participant. No adjustment shall be
made for dividends or other rights for which the record date is prior to the date such Shares are issued.
6.
Withholding. The Company’s obligation to make payment of vested Restricted Share
Units shall be subject to the Participant’s satisfaction of any applicable federal, state, local and foreign
withholding obligations or withholding taxes, including any employer minimum statutory withholding
(“Withholding Taxes”), and the Participant shall pay the amount of any such Withholding Taxes to the
Company as set forth in this Section 6. The Participant may satisfy his or her obligation to pay the
Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Participant
pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the
Company shares of Common Stock already owned by the Participant; provided that the amount of such
Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the
Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by
the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding
Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from
compensation or other amounts owing to the Participant an amount not to exceed the Withholding Taxes.
7.
Covenants. As a condition to the receipt of the Award (which shall be forfeited in the
event of noncompliance with this Section 7 ), the Participant hereby covenants with the Company as
follows:
(a) Confidential Information. The Participant shall not disclose or reveal to any unauthorized
person or knowingly use for the Participant’s own benefit, or another person or entity’s benefit, any trade
secret or other confidential information relating to the Company, or to any of the businesses operated by
it, including, without limitation, any customer lists, customer needs, price and performance information,
processes, specifications, hardware, software, devices, supply sources and characteristics, business
opportunities, potential business interests, marketing, promotional pricing and financing techniques, or
other information relating to the business of the Company (“Confidential Information”), and the
Participant confirms that Confidential Information constitutes the exclusive property of the Company.
Such restrictions shall not apply to information which is (i) generally available in the industry, or (ii)
disclosed through no fault of the Participant, or (iii) required to be disclosed pursuant to applicable law or
regulation or the order of a governmental or regulatory body (provided that the Company is given
reasonable notice of any such required disclosure). The Participant agrees that Participant will
immediately return to the Company upon request, but in any event upon Separation from Service, any
physical embodiment of any Confidential Information and/or any summaries containing any Confidential
Information, in whole in part, in any media. For the avoidance of doubt, nothing in this Agreement
prohibits the Participant from reporting possible violations of federal law or regulation to any
governmental agency or entity, including but not limited to the Department of Justice, the Securities and
Exchange Commission, the Congress, and any Inspector General, or making other disclosures that are
protected under the whistleblower provisions of applicable law or regulation. The Participant does not
need the prior authorization of the Company to make any such reports or disclosures, and the Participant
is not required to notify the Company that the Participant has made such reports or disclosure.
The Participant acknowledges and agrees that the Company has provided the Participant with
written notice below that the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), provides an immunity for the
4
disclosure of a trade secret to report suspected violations of law and/or in an anti-retaliation lawsuit, as
follows:
(1) IMMUNITY — An individual shall not be held criminally or civilly liable under any Federal
or State trade secret law for the disclosure of a trade secret that —
(A) is made —
(i) in confidence to a Federal, State or local government official, either directly or
indirectly, or to an attorney; and
(ii) solely for the purpose of reporting or investigating a suspected violation of law; or
(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing
is made under seal.
(2) USE OF TRADE SECRET INFORMATION IN ANTI-RETALIATION LAWSUIT — An
individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law
may disclose the trade secret to the attorney of the individual and use the trade secret information in the
court proceeding, if the individual—
(A) files any document containing the trade secret under seal; and
(B) does not disclose the trade secret, except pursuant to court order.
(b) Non-Competition. Except with the prior written consent of the Company’s Board of
Directors, during the term of employment, and, unless otherwise prohibited by law, for a period of one
year following the Participant’s Separation from Service for any reason (the “Restricted Period”), the
Participant shall not engage, directly or indirectly, in Competition with the Company. “Competition”
means providing services in the Restricted Area in any capacity (whether as an employee, independent
contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a
shareholder of less than five (5%) percent of a publicly traded company) to a Competitor of the Company
that: (i) are the same or similar in function or purpose to the services the Participant provided to the
Company or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use
of Confidential Information on behalf of a Competitor. The “Restricted Area” means the geographic area
the Participant served at any time during the previous two years of the Participant’s employment. For
avoidance of doubt, if the Participant’s job duties encompassed the United States, the Restricted Area
shall be the United States. “Competitor” means any person, corporation, joint venture or other entity that
provides one or more of the business offerings of the Company, including new products or services under
active consideration by the Company at the time of the Participant’s Separation from Service.
(c)
Non-Solicitation – Business Partners. During the Restricted Period, the Participant shall
not interfere with the Company’s relationship with its Business Partners by soliciting or communicating
(regardless of who initiates the communication) with a Business Partner to: (i) induce or encourage the
Business Partner to stop doing business or reduce its business with the Company, or (ii) buy a product or
service that competes with a product or service offered by the Company’s business. “Business Partner”
means: a customer (person or entity), prospective customer (person or entity), supplier or manufacturer
with which the Company has a business relationship and with which the Participant had business-related
contact or dealings, or about which the Participant received Confidential Information, in the two years
prior to the Participant’s Separation from Service.
(d)
Non-Solicitation – Employees/Contractors. During the Restricted Period, the Participant
shall not interfere with the Company’s relationship with any employee or contractor of the Company by:
5
(i) soliciting or communicating with the employee or contractor to induce or encourage him or her to
leave the Company’s employ or engagement (regardless of who first initiates the communication); (ii)
helping another person or entity evaluate such employee or contractor as an employment or contractor
candidate; or (iii) otherwise helping any person or entity hire an employee or contractor away from the
Company.
(e) The Participant hereby acknowledges that the Participant will treat as for the Company’s
sole benefit, and fully and promptly disclose and assign to the Company without additional compensation,
all ideas, information, discoveries, inventions and improvements which are based upon or related to any
Confidential Information protected under Section 7(a) herein, and which are made, conceived or reduced
to practice by the Participant during the Participant’s period of employment by the Company and the
Restricted Period. The provisions of this Section 7(e) shall apply whether such ideas, discoveries,
inventions, improvements or knowledge are conceived, made or gained by the Participant alone or with
others, whether during or after usual working hours, either on or off the job, directly or indirectly related
to the Company’s business interests (including potential business interests), and whether or not within the
realm of the Participant’s duties.
(f) The Participant shall, upon request of the Company, but at no expense to the Participant, at
any time during or after employment by the Company, sign all instruments and documents and cooperate
in such other acts reasonably required to protect rights to the ideas, discoveries, inventions, improvements
and knowledge referred to above, including applying for, obtaining and enforcing patents and copyrights
thereon in any and all countries.
(g)
During the Restricted Period, upon reasonable request of the Company, the Participant
shall cooperate in any internal or external investigation, litigation or any dispute relating to any matter in
which he or she was involved during his or her employment with the Company; provided, however, that
the Participant shall not be obligated to spend time and/or travel in connection with such cooperation to
the extent that it would unreasonably interfere with the Participant’s other commitments and obligations.
The Company shall reimburse the Participant for all expenses the Participant reasonably incurs in so
cooperating.
(h)
Before accepting employment with any other person, organization or entity while
employed by the Company and during the Restricted Period, the Participant will inform such person,
organization or entity of the restrictions contained in this Section 7. The Participant further consents to
notification by the Company to the Participant’s subsequent employer or other third party of the
Participant’s obligations under this Agreement.
(i) The Participant recognizes that the possible restrictions on the Participant’s activities which
may occur as a result of the Participant’s performance of the Participant’s obligations under Sections 7(a)
through (d) of this Agreement are required for the reasonable protection of the Company and its
investments, and the Participant expressly acknowledges that such restrictions are fair and reasonable for
that purpose. The Participant acknowledges that money damages would not be an adequate or sufficient
remedy for any breach of Sections 7(a) through (d), and that in the event of a breach or threatened breach
of Sections 7(a) through (d), the Company, in addition to other rights and remedies existing in its favor,
shall be entitled, as a matter of right, to injunctive relief, including specific performance, from a court of
competent jurisdiction in order to enforce, or prevent any violations of, the provisions of Sections 7(a)
through (d). The terms of this Section 7(i) shall not prevent the Company from pursuing any other
available remedies for any breach or threatened breach hereof, including but not limited to the recovery of
damages from the Participant. If any of the provisions of this Agreement are held to be in any respect an
unreasonable restriction upon the Participant then they shall be deemed to extend only over the maximum
period of time, geographic area, and/or range of activities as to which they may be enforceable. The
Participant expressly agrees that all payments and benefits due the Participant under this Agreement shall
be subject to the Participant’s compliance with the provisions set forth in Sections 7(a) through (d).
6
8.
No Guarantee of Employment. Nothing in this Agreement or in the Plan shall confer
upon the Participant any right to continue in the employ of the Company, or shall interfere with or restrict
in any way the rights of the Company, which are hereby expressly reserved, to discharge the Participant at
any time for any reason whatsoever, with or without Cause.
9.
Amendment. Subject to the restrictions contained in the Plan, the Committee may waive
any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this
Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with
Section 409A of the Code with regard to awards subject thereto); provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and
adversely affect the rights of the Participant or any holder or beneficiary of the Restricted Share Units
shall not to that extent be effective without the consent of the Participant, holder or beneficiary; and
provided further that no consent of the Participant or any holder or beneficiary shall be required for any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent
necessary to conform this Agreement to mandatory provisions of applicable federal or state laws,
regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary
to avoid tax penalties to the Participant. The Committee is authorized to make equitable and proportionate
adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted
Share Units as set forth in the Plan.
10.
Determinations by the Committee. Except as otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or with respect to the Plan or
this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive, and binding upon all Persons.
11.
Provisions of the Plan. The Participant hereby acknowledges receipt of a copy of the
Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan. This
Agreement is governed by the terms of the Plan, and in the case of any inconsistency between this
Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together
with the Plan, represents the entire understanding and agreement between the Company and the
Participant, and shall supersede any prior agreement and understanding between the parties with respect
to the matters contained herein. This Agreement, and any payment of Shares in settlement of the
Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or
clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.
12.
Nontransferability of Restricted Share Units. Except as otherwise provided in the
Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge,
attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by
the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the
Restricted Share Units for value is not permitted under the Plan or this Agreement.
13.
Notices. Any notice required or permitted to be given to the Participant under this
Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the
United States mail with postage and fees prepaid. Any notice or communication required or permitted to
be given to the Company under this Agreement shall be in writing and shall be deemed effective only
upon receipt by the Secretary of the Company at the Company’s principal office.
7
14.
Waiver. The waiver by the Company of any provision of this Agreement at any time or
for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of
this Agreement at any subsequent time or for any other purpose.
15.
Section 409A.
(a)
For the avoidance of doubt, the Restricted Share Units granted under this Agreement are
intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and
guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith.
In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be
imposed on the Participant by Code Section 409A or damages for failing to comply with Code Section
409A.
(b)
Notwithstanding any other payment schedule provided herein to the contrary, if the
Participant is deemed on the date of Separation from Service to be a “specified employee” within the
meaning of that term under Section 409A(a)(2)(B) of the Code, then any payment due under this
Agreement that is considered “deferred compensation” under Section 409A of the Code payable on
account of a Participant’s Separation from Service shall not be made until the date which is the earlier of
(A) the expiration of the six (6) month period measured from the date of such Separation from Service of
the Participant, and (B) the date of the Participant’s death (the “Delay Period”) to the extent required
under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this
Section 15(b) shall be paid to the Participant in a lump sum in accordance with the Agreement.
(c)
For the avoidance of doubt, any payment due under this Agreement within a period
following the Participant’s Separation from Service, death, Disability, Retirement or other event, shall be
made on a date during such period as determined by the Company in its sole discretion.
16.
Governing Law. The validity, construction and effect of this Agreement shall be
determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws
principles.
17.
Successors. This Agreement shall inure to the benefit of and be binding upon any
successor to the Company and shall inure to the benefit of the Participant's legal representative. All
obligations imposed upon the Participant and all rights granted to the Company under this Agreement
shall be binding upon the Participant's heirs, executors, administrator and successors.
18.
Electronic Communication. The Company may, in its sole discretion, decide to deliver
any document related to current or future participation in the Plan by electronic means. The Participant
hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan
through an online or electronic system established and maintained by the Company or a third-party
designated by the Company.
[signature page follows]
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an
officer of the Company, and the Participant has accepted and signed this Agreement, all on the day and
year first mentioned above.
UNITED NATURAL FOODS, INC.
By: __________________________
PARTICIPANT
______________________________
9
EXHIBIT A
Performance criteria and levels required to be achieved for payout;
payout percentage of Target Amount
[TO BE DETERMINED ON OR PRIOR TO GRANT]
10
Exhibit 19
UNITED NATURAL FOODS, INC.
AMENDED AND RESTATED
POLICY REGARDING TRADING IN COMPANY SECURITIES
Adopted: September 26, 2019; Most Recently Amended September 21, 2023
I.
INTRODUCTION
This Insider Trading Policy (this “Policy”) provides guidelines with respect to transactions in the
securities of United Natural Foods, Inc. (the “Company”) and the handling of certain confidential
information about the Company, its subsidiaries and third parties with which the Company does
business.
This Policy is designed to help you comply with insider trading laws, handle confidential
information properly, avoid potentially embarrassing public disclosures and avoid the appearance
of impropriety in connection with your purchase and sale of Company Securities (as defined
below). This Policy includes the following key elements:
•
a prohibition of trading while aware of, and “tipping” others concerning,
Material Nonpublic Information (as defined below);
•
preclearance procedures that Insiders (as defined below) must follow
before transacting in Company Securities;
•
“blackout periods” during which Restricted Insiders (as defined below)
may not transact in Company Securities;
•
provisions relating to the reporting of acquisitions or dispositions of
Company Securities by directors and Section 16 Officers;
•
provisions relating to pre-arranged trading pursuant to Rule 10b5-1 Plans
(as defined below); and
•
penalties for violations.
The Company has adopted this Policy to promote compliance by Covered Persons (as defined
below) with applicable laws that prohibit persons who are aware of Material Nonpublic
Information about a company (i) trading in securities of that company, or (ii) providing Material
Nonpublic Information to other persons who may trade on the basis of that information.
If you have any questions about the application of this Policy, or if you would like to make a
request for an exception, please contact our General Counsel. Although our General Counsel
generally is responsible for the implementation of this Policy, he or she may designate associates
Policy Regarding Trading in Company Securities
Page 1 of 10
to carry out any of the duties described in this Policy. Please direct your questions and requests
to [email address].
II.
WHO IS SUBJECT TO THIS POLICY?
This Policy applies to the following individuals (collectively, “Covered Persons”): (i) members
of the Company’s board of directors (“directors”), (ii) officers and associates of the Company
and its subsidiaries, (iii) contractors, consultants and advisors of the Company and its
subsidiaries who have Material Nonpublic Information concerning the Company or its
subsidiaries, and (iv) Related Persons (as defined below). All Covered Persons are responsible
for reading this Policy and complying with it.
This Policy also includes a section called “Additional Policies and Procedures for Insiders” (the
“Additional Policies”), which applies to the Company’s directors and executive officers,
associates with a title of “Vice President” or higher, Internal Audit, Accounting/Finance, and
Legal personnel with a title of “Director” or higher, and certain other associates who may
periodically have access to Material Nonpublic Information (collectively, “Insiders”). The
Additional Policies contain provisions applicable to all Insiders relating to the Company’s
preclearance and broker interface procedures.
The Additional Policies also contain provisions relating to “blackout periods” during which
Restricted Insiders may not transact in Company Securities (other than pursuant to Rule 10b5-1
Plans). “Restricted Insiders” are a subset of Insiders consisting of the Company’s directors and
executive officers, associates with a title of “Vice President” or higher, Accounting/Finance
department personnel with a title of “Director” or higher who are involved in financial reporting
or financial planning & analysis, and certain other associates who routinely have access to
Material Nonpublic Information.
The Additional Policies also contains provisions relating to the reporting of acquisitions or
dispositions of Company Securities by directors and Section 16 Officers of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
Guidelines and requirements for adopting Rule 10b5-1 Plans applicable to all Covered Persons
are attached to this Policy as Exhibit A.
The following table summarizes the applicability of certain portions of this Policy to certain
Covered Persons:
Policy
Regarding
Trading in
Company
Securities
Additional Policies for Insiders
Exhibit A
Preclearance
and Broker
Interface
Procedures
Rules for
Specific
Transactions
Blackout
Periods
Exchange Act
Section 16
Reporting
Guidelines for
Rule 10b5-1
Plans
Covered
Persons
(1)
ü
û
û
û
û
ü
Insiders
(2)
ü
ü
ü
û
û
ü
Restrict
ed
Insiders
(3)
ü
ü
ü
ü
û
ü
Policy Regarding Trading in Company Securities
Page 2 of 10
Directors
& Section 16
Officers
ü
ü
ü
ü
ü
ü
(1)
Applies to Covered Persons who are not Insiders.
(2)
Applies to Insiders who are not Restricted Insiders.
(3)
Applies to Restricted Insiders who are not Directors or Section 16 Officers.
This Policy applies to all Covered Persons, permanent or temporary, salaried or hourly, both in
and outside the United States. This Policy also applies to immediate family members of Covered
Persons and persons who share the same household with a Covered Person, and any person or
entity over which a Covered Person has control or influence with respect to a transaction in
Company Securities (collectively, “Related Persons”).
Further, even after you are no longer employed by or affiliated with the Company, you must
maintain the confidentiality of any confidential or proprietary information obtained during your
employment or affiliation with the Company. This Policy continues to apply to transactions in
Company Securities even after your separation from the Company. If an individual is in
possession of Material Nonpublic Information when his or her service terminates, that individual
may not trade in Company Securities until that information has become public or is no longer
material.
III.
WHAT TRANSACTIONS ARE SUBJECT TO THIS POLICY?
This Policy applies to all transactions in the securities of the Company, including (but not limited
to) common stock, preferred stock, options for the purchase of common stock, restricted stock,
restricted stock units, and any other securities the Company may issue from time to time, such as
debt securities, warrants and convertible debentures, and derivative securities relating to the
Company’s capital stock, such as puts, calls and futures contracts, whether or not issued by the
Company (collectively, “Company Securities”).
IV.
YOU ARE INDIVIDUALLY RESPONSIBLE FOR COMPLYING
WITH THIS POLICY AND APPLICABLE SECURITIES LAWS
Covered Persons have ethical and legal obligations to maintain the confidentiality of information
about the Company and to not engage in transactions in Company Securities while in possession
of Material Nonpublic Information. Each individual is responsible for making sure that he or she
complies with this Policy, and that Related Persons, as discussed below, also comply with this
Policy. In all cases, the responsibility for determining whether an individual is in possession of
Material Nonpublic Information rests with that individual, and any action on the part of the
Company, the General Counsel or any other employee or director pursuant to this Policy (or
otherwise) does not in any way constitute legal advice or insulate an individual from liability
under applicable securities laws. You could be subject to severe legal penalties (including
criminal prosecution) and disciplinary action by the Company for any conduct prohibited
by applicable securities laws or this Policy, including as described in more detail in Section
VII (Penalties) below.
V.
POLICY AGAINST INSIDER TRADING
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated pursuant to the Exchange Act
(“Rule 10b-5”) prohibit any Covered Person from (i) purchasing or selling any Company
Policy Regarding Trading in Company Securities
Page 3 of 10
Securities if he or she has knowledge of any Material Nonpublic Information concerning the
Company and (ii) disclosing to any other person any Material Nonpublic Information concerning
the Company if it is reasonably foreseeable that such person may use that information in
purchasing or selling Company Securities. Under this Policy, these same restrictions apply to
Related Persons.
In addition, these same restrictions apply to Covered Persons and Related Persons with respect to
Material Nonpublic Information concerning any other company that a Covered Person learns of
in the course of his or her employment or affiliation with the Company. For example, you may
not trade in the securities of other companies, such as vendors or suppliers of the Company or
those companies with which the Company may be negotiating a major transaction, while in
possession of Material Nonpublic Information about that company. Information that is not
Material Nonpublic Information with respect to the Company may still be material to these other
companies.
A.
General Prohibition
Any Covered Person or any Related Persons who has Material Nonpublic Information relating to
the Company may not, until the information becomes public, (i) buy or sell, directly or indirectly,
Company Securities, (ii) engage in any other action to take personal advantage of that
information, or (iii) pass that information on to others. In addition, any Covered Person or any
Related Person who learns of Material Nonpublic Information about another entity with whom
the Company does business may not trade in that entity’s securities until 12:00 p.m. on the third
full trading day after the information becomes public. The only exceptions to this prohibition are
those described in Section VI (Specific Policies).
You may, from time to time, have to forego a proposed transaction in Company Securities
even if you had planned to make the transaction before learning of the Material Nonpublic
Information and even though it might result in a financial loss. The appearance of
impropriety must be avoided to preserve the Company’s reputation for adhering to the
highest standards of conduct.
To ensure compliance with this Policy, all Covered Persons must:
•
protect the confidentiality of Material Nonpublic Information by, for
example, avoiding conversations about such information in public areas
and by storing files containing Material Nonpublic Information in secure
locations;
•
not disclose (“tip”) Material Nonpublic Information to any other person
(including family members) if that information could be used by that
person for his or her direct or indirect profit by trading in the securities of
companies (including the Company) to which the information relates or
make recommendations or express opinions concerning transactions in the
Company’s (or any other company’s) securities on the basis of Material
Nonpublic Information;
Policy Regarding Trading in Company Securities
Page 4 of 10
•
not trade in a company’s securities when they learn, in the course of
working for the Company, some Material Nonpublic Information about
that company with which the Company does business, including a
customer or supplier of the Company;
•
decline comment and refer all inquiries concerning the Company which
may be received from the media to the principal leader of the Company’s
Communications Department or from the financial community to the
principal leader of the Company’s Investor Relations Department; and
•
report any unauthorized disclosure of Material Nonpublic Information,
whether inadvertent or otherwise, immediately to our General Counsel.
The prohibition on “tipping” set out above includes supposedly “anonymous” communications
such as in Internet chat rooms, blogs, and bulletin or message boards. Tipping may subject the
tipper to criminal and civil penalties, even when the tipper does not profit by the prohibited
disclosure.
In addition, any Covered Person who is no longer employed by, or affiliated with, the Company,
but who has Material Nonpublic Information must continue to comply with this Policy and may
not trade in Company Securities until 12:00 p.m. on the third full trading day after the Material
Nonpublic Information in his or her possession has become public or until such information is no
longer material.
Because securities laws regarding insider trading are complex, you should contact our General
Counsel if you have any questions about whether information in your possession is Material
Nonpublic Information or if a proposed transaction or communication would violate the
securities laws or the terms of this Policy. Our General Counsel will determine the appropriate
action. Please direct your questions and requests to [email address].
B.
What is Material Nonpublic Information?
“Material Nonpublic Information” is information about a company that is both material and
nonpublic.
For purposes of this Policy, information about a company is material if there is a substantial
likelihood that a reasonable investor would consider the information important in deciding to
buy, sell or hold a security of that company. Information may also be material if a reasonable
investor would view the information as having significantly altered the “total mix” of
information available about a particular investment or security. In other words, materiality may
depend in part upon the context of other information that is available concerning the applicable
company. Information that is not material in and of itself but which, when combined with other
information, significantly alters the total mix of information available concerning a particular
company, that seemingly unimportant piece of information may be material.
Policy Regarding Trading in Company Securities
Page 5 of 10
Information is “nonpublic” unless and until it has been broadly disseminated or made widely
available to the investing public generally, such as by means of a press release carried over a
major news service or a public filing with the U.S. Securities and Exchange Commission (the
“SEC”).
C.
What Information is “Material”?
Although it is not possible to list all types of material information, the following are examples of
the types of information that are particularly sensitive and should be treated as material:
•
financial performance, especially quarterly or annual earnings information
and guidance, including estimates or revisions;
•
performance against or changes to externally communicated financial,
sales or other performance targets
•
performance against or changes to financial, sales or other internal budgets
forecasts;
•
discussions, even if preliminary in nature, proposals or agreements for a
merger, acquisition or divestiture or a tender offer for another company’s
securities;
•
the loss or gain of a significant contract, sale, order or customer affiliation;
•
liquidity problems or significant increases and decreases in total assets;
•
management problems or any actual or potential change in control or
changes in key members of management;
•
judgments,
threatened
litigation,
government
investigations
or
administrative actions, or material developments in such matters;
•
a major cybersecurity breach;
•
significant food safety issues or major recalls;
•
significant labor negotiations or disputes, including possible strikes;
•
significant changes in business strategies, pricing strategies, sales
volumes, mix of sales or market share, accounting or marketing;
•
significant changes or developments in products or products lines;
•
the public or private sale of additional securities;
•
changes in debt ratings or analyst upgrades or downgrades of securities;
Policy Regarding Trading in Company Securities
Page 6 of 10
•
the establishment, commencement or discontinuation of a program to
repurchase securities; and
•
stock splits or changes in dividend policies.
The list above does not include all of the information that could be deemed to be material.
Further, the courts and the SEC have declined to identify all information that could be deemed to
be material. If you are uncertain whether you are in possession of Material Nonpublic
Information, you should consult with our General Counsel. All types of information can be
considered material. It is only upon specific judgment, based on all the evidence available, as to
whether the information does constitute Material Nonpublic Information.
D.
What Information is “Nonpublic”?
Information is “nonpublic” unless and until it has been broadly disseminated or made widely
available to the investing public generally, such as by means of a press release carried over a
major news service or a public filing with the SEC.
There also must be adequate time after the release of a press release or the filing of a report with
the SEC for the market, as a whole, to digest the information; as a general rule, information
should not be considered fully absorbed by the marketplace until 12:00 p.m. on the third full
trading day after the information is released. The distribution of information through narrower
channels, such as postings on websites that are not widely viewed, may be insufficient to make it
public. Also, the fact that nonpublic information is reflected in rumors in the marketplace or on
the Internet does not mean that the information has been publicly disseminated. It is important to
note that even after information becomes public, many aspects relating to a matter may remain
nonpublic. Information that is available to the public is public information – one may need to
know where to look or whom to ask for it, but information that is available to anyone is
considered public information.
If you are uncertain whether certain information has been publicly disseminated, you should
consult with our General Counsel or assume that the information is nonpublic and material and
treat it as confidential. In general, it is better to be safe than sorry.
VI.
SPECIFIC POLICIES
To clarify the Company’s policies regarding certain frequently occurring situations in which the
Covered Persons may trade in Company Securities, the Company has established the following
policies. If you are not certain whether a proposed transaction complies with the policies
described below, you should contact our General Counsel.
A.
Employee Benefit Plans
Covered Persons who participate in the Company’s employee benefit plans (including the
Company’s deferred compensation plan(s) and 401(k) retirement plan(s)) may not engage in any
transactions under these plans to the extent the transactions involve (i) changes in contribution
elections to a plan’s Company stock fund, and (ii) intra-plan transfers into or out of Company stock
Policy Regarding Trading in Company Securities
Page 7 of 10
funds, during either blackout periods (for Restricted Insiders who are subject to the Company’s
blackout periods, as described in the Additional Polices) or at any time while they possess
Material Nonpublic Information. The mere receipt by a Covered Person of an equity award
during any such period, would not, however, violate this Policy. In addition, the following
transactions would not violate this Policy:
•
automatic payroll deductions that (i) are used to purchase Company common
stock under Company benefit plans (such as the Company’s 401(k) retirement
plan(s)) and (ii) are made in accordance with a contribution election made when
you were not aware of Material Nonpublic Information; and
•
elections to have the Company withhold shares to satisfy tax withholding
requirements on the exercise or vesting of equity awards, provided that your
award agreement or the underlying equity incentive or benefit plan permits shares
to be withheld for this purpose.
B.
Option Exercises
Restricted Insiders who have options or other rights granted by the Company to purchase
Company Securities from the Company may exercise the options or purchase rights only during
the established quarterly open trading window. Covered Persons may not effect a net exercise
(or other exercise in which you deliver Company Securities to the Company in order to pay the
exercise price) with respect to options to purchase shares of the Company’s common stock
during a blackout period (if you are a Restricted Insider who is subject to the Company’s
blackout periods, as described in the Additional Polices) or at any time while you possess
Material Nonpublic Information. Please be aware that any subsequent sale of securities
purchased in accordance with this Policy (including sales made pursuant to a broker-assisted
cashless exercise of stock options) must be (i) made during an open trading window (if you are a
Restricted Insiders who are subject to the Company’s blackout periods, as described in the
Additional Policies), (ii) made pursuant to a Rule 10b5-l Plan or (iii) otherwise approved by our
General Counsel.
C.
Restricted Stock Awards
This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding
right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax
withholding requirements upon the vesting of any restricted stock. This Policy does, however,
apply to any market sale of restricted stock.
D.
Employee Stock Purchase Plan
From time to time, the Company may adopt employee stock purchase plans. This Policy does not
apply to purchases of Company Securities in such an employee stock purchase plan resulting from
your periodic or lump sum contribution of money into the plan pursuant to the election you made
at the time of your enrollment in the plan. This Policy does apply, however, to your initial election
to participate in a Company employee stock purchase plan, changes to your election to participate
Policy Regarding Trading in Company Securities
Page 8 of 10
in the plan for any enrollment period and to your sales of Company Securities purchased pursuant
to the plan.
E.
Dividend Reinvestment Plan
From time to time, the Company may adopt dividend reinvestment plans. This Policy does not
apply to purchases of Company Securities under such a dividend reinvestment plan resulting
from your reinvestment of dividends paid on Company Securities. This Policy does apply,
however, to voluntary purchases of Company Securities resulting from additional contributions
you choose to make in a Company dividend reinvestment plan, and to your election to participate
in the plan or increase your level of participation in the plan.
F.
Gifts
Covered Persons and Related Persons may at any time make bona fide gifts of Company
Securities (such as charitable donations, family gifts or estate planning transfers). Charitable gifts
that give rise to preferential tax outcomes, however, are prohibited while a Covered Person has
Material Nonpublic Information. Depending on the circumstances, recipients of gifts may be
subject to restrictions on subsequent sales of such securities. Gifts that are designed to
circumvent the insider trading rules are not permitted. Restricted Insiders must consult with,
and obtain prior approval from, our General Counsel or a member of our securities laws
group prior to making any gifts or contributions of Company Securities.
Directors and Section 16 Officers (defined below) are required to report gifts on Form 4
within two days of such gift.
G.
Approved Pre-Planned Trading Programs
Covered Persons and Related Persons may buy or sell Company Securities pursuant to certain
pre-planned trading programs that comply with Rule 10b-5 and this Policy (including the
“10b5-1 Trading Plan Guidelines” attached hereto as Exhibit A) (a “Rule 10b5-1 Plan”). Once
a Rule 10b5-1 Plan has been put in place, purchases or sales of Company Securities may proceed
in accordance with that plan even if you become aware of Material Nonpublic Information
following the adoption of the Rule 10b5-1 Plan.
Additional Rule 10b5-1 Plan policies apply to Insiders (who are subject to the Company’s
preclearance procedures) and Restricted Insiders (who are subject to the Company’s blackout
periods), as described in the Additional Policies.
VII.
PENALTIES
A.
Criminal and Civil Penalties
A violation of the foregoing responsibilities may expose the Company and the individuals
involved to severe adverse consequences, including jail terms, criminal fines of several times the
amount of profits gained or losses avoided, disgorgement of profits, treble damages, imposition
of an injunction, monetary damages and suspension of public trading in Company Securities.
Given the severity of the potential penalties, compliance with this Policy is absolutely
mandatory.
Policy Regarding Trading in Company Securities
Page 9 of 10
Federal criminal authorities may seek penalties that include fines of up to $5,000,000 and 20
years in prison. In addition, current law authorizes enforcement authorities to award substantial
dollar “bounties” to persons who provide information leading to the imposition of an insider
trading penalty.
The SEC can also seek substantial civil penalties from any person who, at the time of an insider
trading violation, directly or indirectly controlled the person who committed such violation. SEC
penalties include fines of up to three times the gains received or losses avoided and can be
imposed upon the trader and the tipper (i.e., the person who disclosed Material Nonpublic
Information to the person who actually made the trade), even when the tipper did not profit from
the transaction. The SEC has been granted broad authority to seek “any equitable relief that may
be appropriate or necessary for the benefit of investors” for violations of any provisions of the
securities laws. The SEC also may bar a violator from future service as a director or officer of a
public company.
Finally, private lawsuits also may be brought against illegal traders by persons who traded
without access to the Material Nonpublic Information and incurred losses.
B.
Company Imposed Penalties
The Company reserves the right to penalize Covered Persons for violations of this Policy by the
Covered Person, or any Related Person, including termination of employment.
VIII.
COMPANY ASSISTANCE
Compliance with this Policy is of the utmost importance both for the Covered Persons and the
Company. Any person who has a question about this Policy, or its application to any proposed
transaction, may obtain additional guidance from the General Counsel. A Covered Person shall
not try to resolve uncertainties he or she encounters as the rules relating to insider trading are
often complex, not always intuitive and carry severe consequences. Please direct your questions
and requests to [email address].
* * * * *
Policy Regarding Trading in Company Securities
Page 10 of 10
ADDITIONAL POLICIES AND PROCEDURES FOR INSIDERS
I.
INTRODUCTION
The Company has adopted these Additional Policies and Procedures for Insiders (these
“Additional Policies”) with respect to trading in Company Securities by Insiders and Restricted
Insiders. These Additional Policies supplement the Company’s “Policy Regarding Trading in
Company Securities” (the “Base Policy” and together with the Additional Policies, collectively
this “Policy”). Capitalized terms used in these Additional Policies and not otherwise defined
have the meanings ascribed to such terms in the Base Policy.
These Additional Policies are designed to help Insiders transact in Company Securities in a
manner that protects the Insiders and the Company because of the extra public scrutiny faced by
Insiders as a result of their positions with the Company. These Additional Policies are also
designed to help members of the Company’s board of directors and Section 16 Officers (as
defined below) comply with the requirements of the Exchange Act.
All persons subject to these Additional Policies are responsible for reading these policies and
procedures and complying with them. You should direct any questions about the application of
these Additional Policies, or requests for exceptions, to our General Counsel. Although our
General Counsel generally is responsible for the implementation of these Additional Policies, he
or she may designate associates to carry out any of the duties described below.
II.
WHO IS SUBJECT TO THESE ADDITIONAL POLICIES?
Section III (Preclearance and Broker Interface Procedures) and Section IV (Rules for Specific
Transactions) of these Additional Policies apply to all Insiders (i.e., the Company’s directors and
executive officers, associates with a title of “Vice President” or higher, Internal Audit,
Accounting/Finance, and Legal personnel with a title of “Director” or higher and certain other
associates who may periodically have access to Material Nonpublic Information, including
members of the corporate finance external reporting and internal audit departments).
Section V (Blackout Periods) of these Additional Policies applies to Insiders who are Restricted
Insiders (i.e., the Company’s directors and executive officers, associates with a title of “Vice
President” or higher, Accounting/Finance department personnel with a title of “Director” or
higher who are involved in financial reporting or financial planning & analysis, and certain other
associates who routinely have access to Material Nonpublic Information).
Section VI (Reporting and Other Trading Restrictions Under Section 16 of the Exchange Act)
applies to the Company’s directors and Section 16 Officers.
For purposes of these Additional Policies, the Company generally considers the following
persons to be “Section 16 Officers”:
Additional Policies and Procedures for Insiders
Page 1 of 8
•
the Company’s principal executive officer,
•
the Company’s principal financial officer,
•
the Company’s principal accounting officer,
•
the Company’s Chief Human Resources Officer,
•
the Company’s General Counsel,
•
any vice president of the Company in charge of a principal business unit, division
or function, and
•
any other officer who performs a policy making function.
The Board of Directors determines the Company’s Section 16 Officers from time to time. The
General Counsel may also determine that certain associates are Insiders or Restricted Insiders
from time to time. You are receiving these Additional Policies because you are an Insider for
purposes of these Additional Policies.
III.
PRECLEARANCE AND BROKER INTERFACE PROCEDURES
A.
Preclearance Requirement
All Insiders and Related Persons must obtain preclearance from our General Counsel or a
member of the Company’s securities law group for any transaction involving Company
Securities (including a securities plan transaction such as an option exercise, a gift, a loan or
pledge, a contribution to a trust or any other transfer). This includes transactions by entities over
which an Insider exercises control. The preclearance requirement applies regardless of whether a
“blackout period” is in effect at the time of the intended transaction, but does not apply to trades
pursuant to an approved Rule 10b5-l Plan.
B.
Preclearance Procedure
A request for preclearance must be submitted to our General Counsel or a member of Company’s
securities law group prior to consummation of an intended transaction. It is recommended that
associates request an interview at least 24 hours in advance of the intended transaction to allow
time to schedule an interview. The request must be in writing and can be sent to [email address].
Following receipt of the request, the General Counsel, or his or her designee will conduct a
preclearance interview with the Insider. You must speak to a member of the Company’s
securities law group to obtain preclearance authorization before trading in Company
Securities.
The General Counsel will then advise the applicable Insider whether the transaction is permitted
and whether he or she may proceed with the transaction. If preclearance is denied, the fact of
such denial must be kept confidential by the person requesting such preclearance. Unless
revoked, preclearance of a transaction is valid only for a two-trading day period. If the
transaction order is not placed within that period, clearance of the transaction must be re-
requested.
Additional Policies and Procedures for Insiders
Page 2 of 8
IV.
RULES FOR SPECIFIC TRANSACTIONS
A.
Prohibited Transactions
The Company considers it inappropriate for Insiders to engage in speculative transactions in
Company Securities or in certain other transactions in Company Securities that may lead to
inadvertent violations of insider trading laws or that create a conflict of interest for the Insider.
Therefore, Insiders may not engage in any of the following transactions with respect to Company
Securities:
•
short sales;
•
buying or selling options to purchase Company Securities (other than
options granted pursuant to the Company’s equity-based compensation
plans), including puts or calls;
•
holding Company Securities in margin accounts and/or pledging Company
Securities as collateral;
•
hedging transactions (including with respect to any Rule 10b5-1 Plan); and
•
placing standing orders with a broker to buy or sell Company Securities
that have a duration in excess of three business days (other than when such
orders are made pursuant to a Rule 10b5-1 Plan).
In addition, from time to time, the Company may determine that other types of
transactions by Insiders in Company Securities shall be prohibited or shall be permitted
only with the prior written consent of the General Counsel.
B.
Awards Under Equity-Based Compensation Plans
The Company’s policy is not to make equity awards during a blackout period. However, if the
Company were to make an equity award to you during any such period, your receipt of that
award would not be in violation of this Policy. In addition, the vesting, during a blackout period
or at any other time in which the recipient has Material Nonpublic Information, of an equity
award granted by the Company would not violate this Policy, provided that the vesting schedule
for such equity award was determined in accordance with the applicable equity-based
compensation plan and the recipient’s award agreement and the recipient could not control when
such vesting occurred. The exercise, during a blackout period or at any other time in which you
have Material Nonpublic Information, of tax withholding rights pursuant to which you elect to
have the Company withhold shares to satisfy tax withholding requirements also would not
violate this Policy, provided that your award agreement or equity incentive plan pursuant to
which the award was granted permits the shares to be withheld for this purpose.
You may not, however, do any of the following during a blackout period or at any other time in
which you have Material Nonpublic Information:
Additional Policies and Procedures for Insiders
Page 3 of 8
•
except as otherwise permitted under this Policy, enter into any transactions
under the Company’s deferred compensation plans, and any other benefit
plans adopted by the Company from time to time, to the extent the
transactions involve an investment in Company Securities; or
•
elect to participate in a Company benefit plan if that election involves a
decision to invest in Company Securities.
Please be aware that, notwithstanding the foregoing, any subsequent sale of securities received
under the Company’s equity-based compensation plans in accordance with this section
(including in connection with a broker-assisted cashless exercise of stock options) must be made
in a manner that complies with these Additional Policies (e.g., all Insiders must obtain
preclearance and Restricted Insiders may not transact during “blackout periods”).
V.
BLACKOUT PERIODS
A.
Blackout Periods
The Company prohibits Restricted Insiders from trading in Company Securities during the
blackout periods described below. The prohibition from trading during these blackout periods
does not apply to certain transactions described in Section VI (Specific Policies) in the Base
Policy or certain transactions described above in Section IV.B (Awards Under Equity-Based
Compensation Plans). However, please be aware that you must consult our General
Counsel before trading in Company Securities if you think you may have any Material
Nonpublic Information, even during periods that are not blackout periods (except as
provided under “Rule 10b5-1 Plan Trading” below). Our General Counsel, in consultation
with our outside legal counsel (as appropriate), will make the final determination as to whether
you may trade in Company Securities given your knowledge of such information.
1.
Quarterly Blackout Periods
The Company prohibits Restricted Insiders from trading in Company Securities during the
quarterly “blackout periods” scheduled in advance and set out in a memorandum provided to
such persons at the beginning of each quarterly open window period. Our scheduled quarterly
blackout periods shall commence on the date set in advance by the Company’s General Counsel,
which will generally be no later than the fifteenth business day of the last accounting period
during each fiscal quarter and end at 12:00 p.m. on the third full trading day following the public
disclosure of our financial results for such fiscal quarter. During these periods, Restricted
Insiders generally possess, or are presumed to possess, Material Nonpublic Information about the
Company’s financial results. If you have questions regarding the quarterly blackout periods for
the current fiscal year, please contact [email address].
The trading restrictions imposed in quarterly blackout periods do not apply to transactions made
under an approved Rule 10b5-l Plan, although Rule 10b5-l Plans may not be adopted during a
quarterly blackout period.
Additional Policies and Procedures for Insiders
Page 4 of 8
2.
Special Event Blackout Periods
In addition, from time to time Material Nonpublic Information regarding the Company may be
pending and not publicly disclosed, including but not limited to the gain or loss of a significant
customer, entry into merger or asset purchase agreements, significant personnel changes, results
of certain negotiations or interim earnings guidance. Prior to public disclosure of this Material
Nonpublic Information, the Company may impose a special event blackout period during which
Restricted Insiders, and any other individuals notified by the Company, will be prohibited from
trading in Company Securities. These special event blackout periods will be announced orally,
by email or by other appropriate communication. The existence of a special event blackout
period will not be announced broadly within the Company; rather, the announcement will be
made only to those individuals who are aware of the Material Nonpublic information which
requires the trading blackout.
The trading restrictions imposed in special event blackout periods do not apply to transactions
made under an approved Rule 10b5-l Plan, although Rule 10b5-l Plans may not be adopted
during a special event blackout period.
3.
Administrative Blackout Periods
The Company’s Restricted Insiders are prohibited from discretionary trading in Company
Securities during administrative blackout periods under its 401(k) plan and other Company
retirement plans that include Company Securities. Our General Counsel will advise you
whenever an administrative blackout period is imposed with respect to the Company’s 401(k)
and other retirement plans.
Limited exceptions apply to administrative blackout periods, and Restricted Insiders should
consult with our General Counsel prior to attempting to trade in Company Securities during any
such period. Please be aware that any profit realized from a transaction during an administrative
blackout period is recoverable by the Company without regard to intent. In addition, unlike
Section 16 of the Exchange Act, no matching transaction is required in order to impose the
disgorgement penalty.
4.
Applicability to Family Members
The Company also requires Related Persons of Restricted Insiders to refrain from trading in
Company Securities during blackout periods. While there is no violation of insider trading rules
if it can be shown that a family member or other person associated with a Restricted Insider acted
independently when trading and without knowledge of Material Nonpublic Information, a strong
presumption may arise that Material Nonpublic Information has been shared with such person by
the Restricted Insider.
B.
Open Trading Windows
Upon receiving preclearance from the General Counsel or a member of the Company’s securities
law group (see Section III above), Restricted Insiders are permitted to trade in Company Securities
when no blackout period is in effect. Generally, that means that Restricted Insiders may trade
during the period beginning on the first day after a quarterly blackout period ends and ending on
Additional Policies and Procedures for Insiders
Page 5 of 8
the day that the next quarterly blackout period begins (see Section V.A.1 above). However, even
during this trading window, a Restricted Insider who is in possession of any Material Nonpublic
Information should not trade in Company Securities until (a) the information has been made
publicly available or is no longer material and (b) the General Counsel or a member of the
Securities Law group has approved preclearance pursuant to Section III above. In addition, the
Company may close this trading window if a special blackout period under Section V.A.2 or
V.A.3 is imposed and will re-open the trading window once the special blackout period has
ended.
VI.
REPORTING
AND
OTHER
TRADING
RESTRICTIONS
UNDER SECTION 16 OF THE EXCHANGE ACT
A.
Section 16(a) Reporting Requirements
Section 16(a) of the Exchange Act requires the Company’s directors, Section 16 Officers and
10% beneficial owners (collectively “Section 16 Persons”) to file beneficial ownership reports in
connection with their purchases and sales of Company Securities. SEC rules require that all
filings be made with the SEC electronically and posted on the Company’s website.
The consequences for failure to file a Form 3, 4 or 5 or failure to file on a timely basis could
result in civil penalties, including substantial monetary penalties and cease and desist orders
prohibiting the Section 16 Person from trading in Company Securities for a certain period of
time. Criminal penalties could be imposed for a willful failure to comply with reporting
provisions. Further, the Company is required to disclose in its annual proxy statement the names
of all Section 16 Persons who have failed to timely file all required Section 16(a) reports.
1.
Form 3
A Section 16 Person must file a Form 3 (entitled “Initial Statement of Beneficial Ownership of
Securities”) with the SEC to report that he or she is a Section 16 Person and his or her ownership
interests in the Company. Anyone becoming a Section 16 Person must file a Form 3 within 10
days after becoming a Section 16 Person.
2.
Forms 4 and 5
A Section 16 Person must file a Form 4 (entitled “Statement of Changes in Beneficial
Ownership”) with the SEC to report a transaction within two business days after the date of such
transaction if it results in a change in his or her beneficial ownership of the Company’s equity
securities. Such transactions now include the disposition through a bona fide gift. There are three
general exceptions to the two-business day reporting requirement.
First, the following types of transactions may be reported on a Form 4 within two business days
following the date the Section 16 Person receives notice of the transaction (but in no event later
than five business days following the transaction), rather than two business days following the
date on which the transaction occurs:
•
a transaction pursuant to a Rule 10b5-l plan under which the Section 16
Person does not select the date on which the purchases or sales take place;
and
Additional Policies and Procedures for Insiders
Page 6 of 8
•
a “discretionary transaction” (as defined in Rule 16b-3) pursuant to an
employee benefit plan for which the Section 16 Person does not select the
date on which transactions take place (such as transfers in or out of, or
cash withdrawals from, a Company stock fund in a 401(k) plan or other
employee benefit plan).
Second, certain transactions may, and in a few instances must, be reported on a year-end Form 5.
A Form 5 must be filed with the SEC within 45 days after the end of such fiscal year by each
person who was a Section 16 Person for any part of a company’s fiscal year (unless he or she has
no transactions to report on the Form 5). Section 16 Persons also must report on a Form 5 all
transactions that occurred during the fiscal year that should have been, but were not, reported
earlier on Form 4.
Third, the following types of transactions do not trigger any Form 4 or Form 5 filing
requirement:
•
an acquisition under an employee stock purchase plan;
•
a transaction (other than a “discretionary transaction”) under certain
employee benefit plans, such as pension plans, 40l(k) plans or related
excess benefit plans;
•
an acquisition through a stock split, stock dividend or other pro rata
distribution to stockholders of the Company;
•
an acquisition under certain dividend or interest reinvestment plans; and
•
an acquisition or disposition as a result of a domestic relations orders
(such as a divorce decree).
Although these transactions do not require the filing of a Form 4 or Form 5, the next Form 4 or
Form 5 filed after the occurrence of one of these transactions should reflect the effects of these
transactions in the column reporting post-transaction security ownership.
3.
Preparation of Forms 3, 4 and 5
Although the responsibility for the timely filing of reports and compliance with trading
restrictions rests with each individual required to report or comply, the Company will prepare
and file Forms 3, 4 and 5 on behalf of Section 16 Persons. All Forms 3, 4 and 5 prepared on
behalf of a Section 16 Person will be based on information provided by the Section 16 Person.
Accordingly, all Section 16 Persons must proactively communicate with the securities law group
regarding any transaction or proposed transaction in Company securities.
In order to enable the Company to prepare and file the Forms 3, 4 and 5 on a timely basis, we must
have on file an executed power of attorney authorizing the designated individuals to sign and file
Section 16 reports on your behalf. Execution of this power of attorney will not preclude you from
preparing, filing and signing these Section 16 reports if you choose to do so. However, having the
form on file with the Company will enable the designated individuals to sign and timely file the
Section 16 reports on your behalf if you are not available, thus preventing a violation of the
Additional Policies and Procedures for Insiders
Page 7 of 8
securities laws. Please contact our [email address] to obtain a blank form of power of attorney if
we do not already have an executed power of attorney on file for you.
B.
Section 16(b) Short-Swing Profit Liability
Section16(b) of the Exchange Act allows a Company to recover any profit realized by one of its
Section 16 Persons resulting from any combination of purchases and sales of the Company’s
equity securities within a period of less than six months. Such liability arises without regard to
whether any such transactions occur outside of the blackout periods referred to above. Profits
are determined for this purpose by matching the highest sales price during the period with the
lowest purchase price and are to be recovered even if the Section 16 Person realized no actual
profit for the period or he or she sustained a net loss. Although the purpose of the statute is to
prevent trading on the basis of Material Nonpublic Information, the recovery provision operates
without regard to the intent of the Section 16 Person or the actual possession of Material
Nonpublic Information and may not be waived by the Company.
The restrictions on “short-swing” trading apply not only to trading in Company Securities but
also to any “derivative security.” Thus, for example, a grant or exercise of options (other than
grants or exercises made under a plan that is exempt from Section 16(b)) would be considered to
be a “purchase” or sale of Company Securities under Section 16. Other transactions not
necessarily thought to involve purchases, such as corporate mergers, also may be covered. The
SEC has exempted certain transactions, such as purchases under employee benefit plans that
have been approved by stockholders or the board of directors, from the “short-swing” profit
recovery provisions of Section 16 (but not the reporting provisions). The Company’s Amended
and Restated 2020 Equity Incentive Plan, Amended and Restated 2012 Equity Incentive Plan,
Amended and Restated 2004 Equity Incentive Plan and 2002 Stock Incentive Plan and Employee
Stock Ownership Plan have all been approved by the Company’s Board of Directors and
stockholders. Section 16 Persons remain subject to these Section 16 requirements and
restrictions for a period of up to six months after terminating their positions with the Company.
VII.
INTERPRETATION AND AMENDMENT
The Company’s General Counsel and Corporate Secretary is authorized, empowered and
directed to oversee the administration of the Insider Trading Policy, including rendering
conclusive interpretations of the Insider Trading Policy and any modifications to the Insider
Trading Policy that such officer deems necessary, appropriate and in the best interests of the
Company (provided such modifications do not substantively change the Insider Trading Policy).
* * * * *
Additional Policies and Procedures for Insiders
Page 8 of 8
EXHIBIT A
GUIDELINES FOR RULE 10b5-1 PLANS
I.
INTRODUCTION
To avoid potential liability for insider trading, a Covered Person may wish to rely upon the
affirmative defenses established by Rule 10b5-l under the Exchange Act. Rule 10b5-l is
available to an individual or entity who purchases or sells a security under a binding contract,
specific instruction or written plan that the person or entity put into place before becoming aware
of Material Nonpublic Information. This is referred to as a Rule 10b5-l Plan.
Rule 10b5-1 provides a defense from insider trading liability. In order to be eligible to rely on
this defense, a person must enter into a Rule 10b5-1 Plan that meets the conditions specified in
Rule 10b5-1. Rule 10b5-1 presents an opportunity for Covered Persons to establish plans to sell
or purchase Company Securities even when in possession of Material Nonpublic Information
concerning the Company. Rule 10b5-1 only provides an “affirmative defense” if there is an
insider trading lawsuit. It does not prevent anyone from bringing a lawsuit, nor does it prevent
the media from reporting on any transactions executed pursuant to a Rule 10b5-l Plan.
You have the ultimate and exclusive responsibility for adhering to these guidelines and the
requirements set forth herein. Any action on the part of the Company, any member of the
Company’s legal department, or any other employee pursuant to these guidelines (or otherwise)
does not in any way constitute legal advice or insulate you from liability under applicable
securities laws. As such, if you violate these guidelines, the Company may take disciplinary
action, including dismissal for cause. You must notify the General Counsel if you become aware
of a breach of these guidelines, either by you or by another person subject to these guidelines.
II.
CREATING A RULE 10B5-1 PLAN
Insiders who participate in a Company stock incentive plan have accounts maintained by
[broker]. Covered Persons may also have accounts with other traditional brokers. Most
traditional brokers offer a form of Rule 10b5-1 Plan that Covered Persons can use to establish
arrangements to purchase or sell Company Securities. Insiders who wish to adopt such a Rule
10b5-1 Plan must submit the plan to the General Counsel for review and approval. The General
Counsel may require that your broker modify its form of Rule 10b5-1 Plan to comply with these
guidelines. Please direct your Rule 10b5-1 requests to [email address].
To create a Rule 10b5-l Plan, you must enter into a written plan for trading securities that has the
following attributes. The plan must:
•
Be entered into in good faith at a time when you do not possess Material
Nonpublic Information concerning the Company. Your Rule 10b5-1
Plan may not be entered into as part of a plan or scheme to otherwise trade
Guidelines for 10b5-1 Plans
EXHIBIT A – Page 1 of 4
on the basis of Material Nonpublic Information concerning the Company. To
comply with these requirements, all Insiders must complete the preclearance
process prior to entering into a Rule 10b5-1 Plan. Restricted Insiders may not
enter into a Rule 10b5-1 Plan during a blackout period. Additionally, Directors
and Section 16 Officers must personally certify pursuant to a representation in a
Rule 10b5-1 plan that (i) they are not aware of any Material Nonpublic
Information about the security or issuer and (ii) they are adopting the plan in
good faith and not as part of a plan or scheme to evade the prohibitions of this
section. You must act in good faith for the duration of the plan. For example,
you should not improperly influence the timing of a corporate disclosure to
benefit a trade scheduled to occur under your Rule 10b5-1 plan.
•
Be in writing and preapproved by the General Counsel. The General
Counsel must approve your written Rule 10b5-1 Plan before you may
enter into it.
•
Include appropriate trading instructions. You may either specify the
price, number of shares and date of trades ahead of time or provide a
formula or other instructions by which your broker can determine the
price, amount and date of trades. Alternatively, you may simply authorize
your broker to make purchase and sale decisions on your behalf without
any control or influence by you.
•
Limitation on multiple plans. Generally, multiple overlapping plans are
prohibited. You may maintain two, separate Rule 10b5-1 plans, so long as
trading under the later plan is not authorized to begin until after all trades
under the earlier plan are completed or expire without execution, and
provided that the later plan observes an “effective cooling-off period” (i.e.,
the applicable cooling-off period that would apply if the later plan were
deemed to be put in place the day the earlier plan was terminated and the
applicable cooling-off period were then observed).
•
Prohibit you from exercising any influence over the amount of
securities to be traded, the price at which they are to be traded, or the
date of the trade. You may delegate discretionary authority to your
broker, but in no event may you consult with your broker regarding
executing transactions, or otherwise disclose information to your broker
concerning the Company that might influence the execution of
transactions, under your Rule 10b5-1 Plan after it commences.
•
Include a 30-day cooling off period between your adoption or
modification of your Rule 10b5-1 Plan and the first possible
transactions thereunder.
Guidelines for 10b5-1 Plans
EXHIBIT A – Page 2 of 4
•
For Directors and Section 16 Officers, include a cooling off period
between your adoption or modification of your Rule 10b5-1 Plan and
the first possible transactions thereunder that lasts until the later of:
o
the 90th day following the plan adoption or modification, or
o
two business days following the disclosure in Form 10-K or 10-Q of
the Company’s financial results for the first quarter in which the plan
was adopted or modified,
but in no case is the cooling-off period required to exceed 120 days.
The cooling off period is designed to minimize the risk that a claim will be made that you
were aware of Material Nonpublic Information concerning the Company when you
entered into the Rule 10b5-1 Plan and that the plan was not entered into in good faith.
•
Include an expiration date that is at least six months but not more
than 18 months from the effective date of your Trading Plan. We will
not approve plans with terms less than 6 months or in excess of 18
months. Shorter-term plans may be viewed as an attempt to make
advantageous short-term trades, and longer-term plans are likely to have to
be amended or terminated, which defeats the ultimate purpose of Rule
10b5-1 Plans.
III.
TRADING OUTSIDE YOUR RULE 10B5-1 PLAN
You may only purchase or sell Company Securities outside of your Rule 10b5-1 Plan in
accordance with the Policy Regarding Trading in Company Securities. In addition, you may not
buy or sell Company Securities in an effort to use a hedging strategy to offset your plan trades
while a plan is in effect. Any trading outside of your Rule 10b5-1 Plan will be subject to
heightened scrutiny for potential hedging and, depending on the circumstances, it is generally
advisable not to engage in any trading outside the plan.
IV.
AMENDING, SUSPENDING OR TERMINATING YOUR RULE
10B5-1 PLAN
Amendments, including suspensions, and terminations will be viewed in hindsight and could call
into question whether the Rule 10b5-1 Plan was entered into in good faith. As a result, amendments
and terminations of Rule 10b5-1 Plans require preapproval of the General Counsel or a member of
the Company’s securities law group following a preclearance interview, which will inquire into the
change in circumstances that has occurred since the inception of the Rule 10b5-1 Plan that is giving
rise to the requested amendment or termination. Scheduled sales or purchases of Company
Securities pursuant to your Rule 10b5-1 Plan will not be halted during the pendency of your
amendment or termination request. The Company has the right at any time to require additional
and/or different requirements in connection with the amendment or termination of a trading plan in
order to protect you and the Company from potential liability. Further, your Rule 10b5-1 Plan
Guidelines for 10b5-1 Plans
EXHIBIT A – Page 3 of 4
may be terminated or suspended by the Company at any time and for any reason. In addition, you
may voluntarily amend or terminate your Rule 10b5-1 Plan, subject to the following conditions:
•
You may not amend or terminate your Rule 10b5-1 Plan while in
possession of Material Nonpublic Information;
•
You must sign a certificate in favor of the Company and your broker
affirmatively stating you do not possess Material Nonpublic Information
concerning the Company at the time of the amendment or termination;
•
Restricted Insiders may not amend or terminate Rule 10b5-1 Plans during
blackout periods;
•
Your amendment must include a cooling off period consistent with those
required of a new plan as outlined above between your commitment to
such amendment and any trades under the amended plan; and
•
You will be limited to one amendment or suspension of your Rule 10b5-1
Plan during its term.
V.
ADDITIONAL COMPANY GUIDELINES
None of the requirements or plan terms currently contemplated by these guidelines are
exhaustive or limiting on the Company. The Company has the right to require the inclusion of
additional provisions in your Rule 10b5-1 Plan designed to protect you and/or the Company,
whether before or after the Rule 10b5-1 Plan has been approved by the General Counsel, or to
delete or amend existing provisions.
* * * * *
Guidelines for 10b5-1 Plans
EXHIBIT A – Page 4 of 4
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
NAME
JURISDICTION OF
INCORPORATION/FORMATION
Advantage Logistics Southwest, Inc.
Arizona
Advantage Logistics USA East L.L.C.
Delaware
Advantage Logistics USA West L.L.C.
Delaware
Albert’s Organics, Inc.
California
American Commerce Centers, Inc.
Florida
Arden Hills 2003 LLC
Delaware
Associated Grocers of Florida, Inc.
Florida
Blaine North 1996 L.L.C.
Delaware
Bloomington 1998 L.L.C.
Delaware
Blue Marble Brands, LLC
Delaware
Blue Nile Advertising, Inc.
Florida
Burnsville 1998 L.L.C.
Delaware
Cambridge 2006 L.L.C.
Delaware
Centralia Holdings, LLC
Delaware
Champlin 2005 L.L.C.
Delaware
Coon Rapids 2002 L.L.C.
Delaware
Cub Foods, Inc.
Delaware
Cub Stores, LLC
Delaware
Cub Stores Holdings, LLC
Delaware
DS & DJ Realty, LLC
Florida
Eagan 2008 L.L.C.
Delaware
Eagan 2014 L.L.C.
Delaware
Eastern Beverages, Inc.
Maryland
FF Acquisition, L.L.C.
Virginia
Foodarama LLC
Delaware
Forest Lake 2000 L.L.C.
Delaware
Fridley 1998 L.L.C.
Delaware
Green Eagle Solar X, LLC
Delaware
Hastings 2002 L.L.C.
Delaware
Hazelwood Distribution Company, Inc.
Delaware
Hazelwood Distribution Holdings, Inc.
Delaware
Hopkins Distribution Company, LLC
Delaware
Hornbacher’s, Inc.
Delaware
International Distributors Grand Bahama Limited
Bahama
Inver Grove Heights 2001 L.L.C.
Delaware
Iron Valley Logistic Services, LLC
Delaware
Lakeville 2014 L.L.C.
Delaware
Maplewood East 1996 L.L.C.
Delaware
Market Improvement Company
Florida
Monticello 1998 L.L.C.
Delaware
NAFTA Industries, LTD
Texas
Natural Retail Group, Inc.
Delaware
Nevada Bond Investment Corp.
Nevada
Nor-Cal Produce, Inc.
California
Northfield 2002 L.L.C.
Delaware
Plymouth 1998 L.L.C.
Delaware
Savage 2002 L.L.C.
Delaware
SCTC, LLC
Florida
SFW Holding Corp.
Delaware
Shakopee 1997 L.L.C.
Delaware
Shop ‘N Save East, LLC
Delaware
Shop ‘N Save East Prop, LLC
Delaware
Shop ‘N Save Prop, LLC
Delaware
Shop 'N Save St. Louis, Inc.
Missouri
Shop 'N Save Warehouse Foods, Inc.
Missouri
Shoppers Food Warehouse Corp.
Ohio
Shorewood 2001 L.L.C.
Delaware
Silver Lake 1996 L.L.C.
Delaware
Southstar LLC
Delaware
SUPERVALU Gold, LLC
Delaware
SUPERVALU INC.
Delaware
SUPERVALU India, Inc.
Minnesota
SUPERVALU Licensing, LLC
Delaware
SUPERVALU Pharmacies, Inc.
Minnesota
SUPERVALU Receivables Funding Corporation
Delaware
SUPERVALU Transportation, Inc.
Minnesota
SVU Legacy, LLC
Delaware
Tony’s Fine Foods
California
Trent River Solar Mile Fund, LLC
Delaware
Trent River Solar Mile Lessee, LLC
North Carolina
UNFI Canada, Inc.
Canada
UNFI Distribution Company, LLC
Delaware
UNFI Nexamp Solar Fund, LLC
Delaware
UNFI Transport, LLC
Delaware
UNFI Grocers Distribution, Inc.
California
UNFI Wholesale, Inc.
Delaware
United Natural Foods West, Inc.
California
United Natural Trading, LLC
Delaware
W. Newell & Co., LLC
Delaware
Wetterau Insurance Co. Ltd.
Bermuda
Woodford Square Associates Limited Partnership
Virginia
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (No. 333-230570) on Form S-3 and
(Nos. 333-185637, 333-208695, 333-222257, 333-227918, 333-235583, 333-252407, and 333-276167) on Form
S-8 of our report dated October 1, 2024, with respect to the consolidated financial statements of United Natural
Foods, Inc. and subsidiaries and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Minneapolis, Minnesota
October 1, 2024
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, J. Alexander Miller Douglas, certify that:
1.
I have reviewed this annual report on Form 10-K of United Natural Foods, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Dated: October 1, 2024
/s/ J. ALEXANDER MILLER DOUGLAS
J. Alexander Miller Douglas
Chief Executive Officer
Note: A signed original of this written statement has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Giorgio Matteo Tarditi, certify that:
1.
I have reviewed this annual report on Form 10-K of United Natural Foods, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Dated: October 1, 2024
/s/ Giorgio Matteo Tarditi
Giorgio Matteo Tarditi
President and Chief Financial Officer
Note: A signed original of this written statement has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, in his capacity as the Chief Executive Officer of United Natural Foods, Inc., a Delaware corporation
(the "Company"), hereby certifies that the Annual Report of the Company on Form 10-K for the fiscal year ended August 3,
2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the
information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ J. ALEXANDER MILLER DOUGLAS
J. Alexander Miller Douglas
Chief Executive Officer
October 1, 2024
Note: A signed original of this written statement has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, in his capacity as the President and Chief Financial Officer of United Natural Foods, Inc., a Delaware
corporation (the "Company"), hereby certifies that the Annual Report of the Company on Form 10-K for the fiscal year ended
August 3, 2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that
the information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of the Company.
/s/ Giorgio Matteo Tarditi
Giorgio Matteo Tarditi
President and Chief Financial Officer
October 1, 2024
Note: A signed original of this written statement has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.