United Natural Foods Annual Report 2019 Form 10-K (NYSE:UNFI) Published: October 1st, 2019 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 3, 2019 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 05-0376157 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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: Name of each exchange on which Title of each class Trading Symbol registered Common Stock, par value $0.01 per share 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 ¨ No x 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 x 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $660.9 million based upon the closing price of the registrant’s common stock on the New York Stock Exchange on January 25, 2019. The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of September 26, 2019 was 53,434,241. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on December 18, 2019 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 2. Properties 22 Item 3. Legal Proceedings 24 Item 4. Mine Safety Disclosures 25 Part II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 Item 6. Selected Financial Data 26 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8. Financial Statements and Supplementary Data 56 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 117 Item 9A. Controls and Procedures 118 Item 9B. Other Information 118 Part III Item 10. Directors, Executive Officers and Corporate Governance 119 Item 11. Executive Compensation 119 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 119 Item 13. Certain Relationships and Related Transactions, and Director Independence 119 Item 14. Principal Accounting Fees and Services 119 Part IV Item 15. Exhibits, Financial Statement Schedules 121 Item 16. Form 10-K Summary 121 Signatures 126 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 and Eden Prairie, Minnesota. 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. Overview As a leading distributor of natural, organic, specialty, produce, and conventional grocery and non-food products, and provider of support services 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. We offer more than 250,000 products consisting of national, regional and private label brands grouped into six product categories: grocery and general merchandise; produce; perishables and frozen foods; nutritional supplements and sports nutrition; bulk and food service products and personal care items. Through our October 2018 acquisition of SUPERVALU INC. (“Supervalu”), we are transforming into North America’s premier wholesaler with 63 distribution centers and warehouses representing approximately 32 million square feet of warehouse space. We believe our total product assortment and service offerings are unmatched by our wholesale competitors. We plan to aggressively pursue new business opportunities to independent retailers who operate diverse formats, regional and national chains, military commissaries, as well as international customers with wide-ranging needs. Our Values and Impact We believe that better food comes from a healthy planet. We are focused on doing our part to protect the environment, conserve natural resources and promote sustainability. We invest in the efficiency of our transportation fleet and warehouses, generate on-site solar power for operational use, and focus on diverting waste from landfills. The communities where we live and work are part of who we are as a company. We believe that part of doing the right thing includes supporting these communities and helping those in need where we can. The UNFI Foundation makes grants to nonprofits to inspire better food systems and nurture everyday health. We also encourage our associates to make a difference by volunteering their time in their communities. We believe that freedom of food choice matters, and every day we strive to deliver better food options to more tables across North America. We are a pioneer in the distribution of high-quality natural and organic and specialty food products. We believe that through the acquisition of Supervalu, we have increased opportunities to deliver better food options to new communities and customers. Social and environmental responsibility is integral to our overall business strategy, and we believe these practices deliver significant value to our stakeholders, including our shareholders, associates, customers, suppliers and communities. In addition, we focus on developing and maintaining practices and procedures to keep our workplaces safe. Our Strategic Priorities We are focused on five strategic priorities that we believe will contribute to our future success: 1) Embracing our core mission to transform the world of food and recognizing that our culture of safety and integrity is at the forefront of everything we do. 2) Delivering on our financial commitments, driving performance to achieve financial targets. Financially, we are focused on the successful integration of Supervalu into UNFI, realizing cost synergies, optimizing our distribution center network, driving cross-selling of products and services across our businesses, and generating cash to pay down debt. 3) Building out the store through effectively selling our entire portfolio of products and services, which provide differentiated solutions for our customers. 4) Deploying Thrive2, our project to drive integrated work streams, which provide better experiences for our customers, associates and suppliers and allow us to realize synergy benefits from simplification. The implementation of an efficient, standardized operating model powers better experiences for associates, customers and suppliers. 5) Divesting our retail assets in a thoughtful and economic manner. Our Customers We maintain long-standing relationships with our customers. We serve approximately 30,000 unique customer locations, including customers acquired from the Supervalu acquisition, primarily located across the United States and Canada, which we classify into four