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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Commission File Number: 0-21531

UNITED NATURAL FOODS, INC.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

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 þý No o

          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 o No þý

          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 þý No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ý No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þý

          The aggregate market value of the common stock held by non-affiliates of the registrant was $1,028,862,216$1,779,987,744 based upon the closing price of the registrant's common stock on the Nasdaq Global Select Market® on January 25, 2008.28, 2011. The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of September 25, 20089, 2011 was 42,902,697.48,494,565.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on December 4, 200813, 2011 are incorporated herein by reference into Part III of this Annual Report on Form 10-K.

UNITED NATURAL FOODS, INC.

FORM 10-K

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PART I.

ITEM 1.    BUSINESS

Overview

        We believe we are athe leading national distributor based on sales of natural, organic and specialty foods and non-food products in the United States.States and Canada, and that our twenty-eight distribution centers, representing approximately 7.6 million square feet of warehouse space, provide us with the largest capacity of any North American-based distributor in the natural, organic and specialty products industry. We carry more than 60,000 high-quality natural, organic and specialty foods and non-food products, consisting of national, brand, regional brand,and private label and master distribution products,brands in six product categories: grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and food servicefoodservice products and personal care items. We serve more than 17,000 customers23,000 customer locations primarily located across the United States the majority ofand Canada which can be classified into one of the following categories: as follows:

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independently owned natural products retailers; retailers, which include buying clubs;



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supernatural chains, which consistsconsist solely of Whole Foods Market, Inc. ("Whole Foods Market");



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conventional supermarkets and conventional supermarkets. Our mass market chains; and



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other, distribution channels include food service,which includes foodservice and international and buying clubs.

customers outside of Canada.

        We were the first organic food distribution network in the United States designated as a "Certified Organic Distributor" by Quality Assurance International, Inc. ("QAI"), an organic certifying agency accredited by the United States Department of Agriculture ("USDA"). This process involved a comprehensive review by QAI of our operating and purchasing systems and procedures. This certification covers all of our broadline distribution centers in the United States, except for our primarily specialty product distribution centers.

        We have beencenters in Harrison, Arkansas and Leicester, Massachusetts. Four of our Canadian distribution centers are certified by either QAI or Ecocert Canada, while the primary distributor to Whole Foods Market, for more than 10 years. Our relationship with Whole Foods Market was expanded to cover the former Wild Oats Markets, Inc. ("Wild Oats Market") stores retained by Whole Foods Market following Whole Foods Market's merger with Wild Oats Markets in August 2007. We had served as the primary distributor of natural and organicremaining Canadian distribution center sells only Kosher foods and non-food products to Wild Oats Market prior tois therefore not certified organic.

        Since the merger. The Henry's and Sun Harvest stores divested by Whole Foods Market, and acquired by a subsidiary of Smart & Final, Inc., remain our customers.

        On November 2, 2007, we acquired Distribution Holdings, Inc. ("DHI") and its wholly-owned subsidiary Millbrook Distribution Services, Inc. ("Millbrook"), which we now refer to as UNFI Specialty Distribution. Through UNFI Specialty Distribution, we distribute specialty food items (including ethnic, kosher, gourmet, organic and natural foods), health and beauty care items and other non-food items to more than 9,000 retail locations. We believe that the acquisition of DHI and Millbrook accomplishes certainformation of our strategic objectives, including acceleratingpredecessor in 1976, we have grown our expansion intobusiness both organically and through acquisitions which have expanded our distribution network, product selection and customer base. Since fiscal 2001, our net sales have increased at a numbercompounded annual growth rate ("CAGR") of high-growth business segments and establishing immediate market share in the fast-growing specialty foods market. We believe that UNFI Specialty Distribution's customer base enhances our conventional supermarket business channel and that the organizations' complementary product lines present opportunities for cross-selling. See "—Our Operating Structure—Wholesale Division" for further information regarding this acquisition and our new specialty distribution business.

16.1%. In recent years, our sales to existing and new customers have increased through the continued growth of the natural products industry in general, increased market share as a result of our high-quality service and broader product selection, the acquisition of, or merger with, natural and specialty products distributors, the expansion of our existing distribution centers, the construction of new distribution centers and the development of our own line of natural and organic branded products. Through these efforts, we believe that we have been able to broadenbroadened our geographic penetration, expandexpanded our customer base, enhanceenhanced and diversifydiversified our product selectionsselection and increaseincreased our market share.

        We also ownhave been the primary distributor to Whole Foods Market, for more than 13 years. Effective June 2010, we amended our distribution agreement with Whole Foods Market to extend the term of the agreement for an additional seven years. Under the terms of the amended agreement, we will continue to serve as the primary wholesale natural grocery distributor to Whole Foods Market in its United States regions where we were serving as the primary distributor at the time of the amendment. The amendment extended the expiration date of the agreement from September 25, 2013 to September 25, 2020. On July 28, 2010, we announced that we had entered into an asset purchase agreement under which we agreed to acquire certain assets of Whole Foods Distribution, Inc. previously used for their self-distribution of non-perishables in their Rocky Mountain and Southwest regions, and to become the primary distributor in these regions. We closed this transaction in late September 2010 in the case of the Southwest region and early October 2010 in the case of the Rocky Mountain region. We now serve as the primary distributor to Whole Foods Market in all of its regions

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in the United States, and have amended our distribution agreement with Whole Foods Market effective October 11, 2010 to include these regions.

        In June 2010, we acquired certain Canadian food distribution assets (the "SDG assets") of the SunOpta Distribution Group business ("SDG") of SunOpta Inc. ("SunOpta"), through our wholly-owned subsidiary, UNFI Canada, Inc. ("UNFI Canada"). With the acquisition, we became the largest distributor of natural, organic and specialty foods, including kosher foods, in Canada. This was a strategic acquisition as UNFI Canada provides us with an immediate platform for growth in the Canadian market.

        The ability to distribute specialty food items (including ethnic, kosher and gourmet) has accelerated our expansion into a number of high-growth business segments and provided immediate market share in the fast-growing specialty foods market. Due to our expansion into specialty foods, during fiscal 2010 and 2011 we gained new business with a number of conventional supermarkets that previously had not done business with us because we did not distribute specialty products, including our recently announced distribution agreement with Safeway, Inc. ("Safeway"). We believe that the distribution of these products enhances our conventional supermarket business channel and that our complementary product lines present opportunities for cross-selling.

        On June 9, 2011, we entered into an asset purchase agreement with L&R Distributors, Inc. ("L&R") pursuant to which we have agreed to sell our conventional non-foods and general merchandise lines of business, including certain inventory related to these product lines. This divestiture will allow us to concentrate on our core business of the distribution of natural, organic, and specialty foods and products, which have now been fully transitioned throughout our national distribution footprint. We expect this divestiture and related closure of the Harrison, Arkansas facility will be accretive to net income, excluding the restructuring and impairment charges that were incurred in fiscal 2011 and that we expect to incur in fiscal 2012 as described below in more detail, by approximately $1.5 to $2.0 million annually. See "Our Operating Structure—Wholesale Division" for further information regarding our distribution business.

        We operate 1312 natural products retail stores within the United States, located primarily in Florida (with two locations in Maryland and one in Massachusetts), through our subsidiary Natural Retail Group, Inc.doing business as Earth Origins Market ("NRG"EOM"). We also operate one natural product retail store, Drive Organics, in Vancouver, British Columbia. We believe that our retail business serves as a natural complement to our distribution business because it enables us to develop new marketing programs and improve customer service. In

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addition, our subsidiary Hershey Imports Company, Inc. ("Hershey Imports")doing business as Woodstock Farms Manufacturing specializes in the international importation, roasting, packaging and packagingdistribution of nuts, dried fruit, seeds, dried fruitstrail mixes, granola, natural and organic snack items.items and confections.

        We are a Delaware corporation based in Dayville, ConnecticutProvidence, Rhode Island and we conduct business through our various wholly owned subsidiaries. We operated twentytwenty-eight distribution centers at 20082011 fiscal year end.end, including our Harrison, Arkansas facility which we will be closing following the completion of the divestiture of our conventional non-foods and general merchandise lines of business. We believe that our distribution centers provide us with the largest capacity of any distributor in theof natural, organic and specialty products industry.in the United States or Canada. In September 2010, our distribution center located in Lancaster, Texas commenced operations. In October 2010 we assumed the past six years,operations at a distribution center located in Aurora, Colorado in connection with our asset purchase agreement with Whole Foods Distribution. With the opening of these two facilities and following our acquisition in Canada in June 2010, we have invested over $175 million in distribution capacity and infrastructure improvements. We have increased our distribution capacity to approximately 5.87.6 million square feet.

Unless otherwise specified, references to "United Natural Foods," "we," "us," "our" or "the Company" in this Annual Report on Form 10-K include our consolidated subsidiaries. We operate in one reportable segment, the wholesale segment. See the financial statements and notes thereto included in "Item 8. Financial Statements and Supplementary Data" of this Report for information regarding our financial performance.

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The Natural Products Industry

        The natural products industry encompasses a wide range of products in addition to food products (includingincluding organic foods). These other product categories includeand non-organic foods, nutritional, herbal and sports supplements;supplements, toiletries and personal care items;items, naturally-based cosmetics;cosmetics, natural/homeopathic medicines;medicines, pet products and cleaning agents. According to the June 2008 issue ofThe Natural Foods Merchandiser, a leading trade publication for the natural products industry trade publication, sales revenues for all types of natural products rose to $62.4were $81 billion in 2007, an increase2010, a growth of $5 billion or approximately 9.8% over 2006. According toThe Natural Foods Merchandiser, this increase in sales,7% from a total dollar perspective, was driven primarily by2009. We believe the growth in the following categories:

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personal care products;



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packaged grocery;



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fresh produce;



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dairy products; and



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pet products.

        The fastest growing categories, although not necessarily the largest dollar volume categories, inrate of the natural products industry were pet products, housewares, books, fresh meat/seafood and beer/wine.

        According toThe Natural Foods Merchandiser,has outpaced the continuing growth trend is drivenof the overall food-at-home industry as a result of the increasing demand by consumer demandconsumers for a healthy lifestyle, food safety concerns and concerns aboutenvironmental sustainability. More than half of American households represent "mid-level" organic customers; that is, they regularly purchase organic and natural products and want to learn more about nutrition as concerns about health claims, food safety, irradiation and genetically modified organisms continue to mount.

Our Operating Structure

        Our operations are comprised of three principal operating divisions. These operating divisions are:

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our wholesale division, which includes our broadline distribution business; ournatural, organic and specialty distribution business;business in the United States; UNFI Canada, which is our natural, organic and specialty business in Canada; Albert's Organics, Inc. ("Albert's"), which is a leading distributor within the United States of organically grown produce and perishable items; and Select Nutrition, which distributes vitamins, minerals and supplements;



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our retail division, consisting of NRG,EOM, which operates our 1312 natural products retail stores;stores within the United States; and

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•

our manufacturing division, consisting of Woodstock Farms Manufacturing, which is comprised of Hershey Imports, one ofspecializes in the leading importers, processors, packagers,international importation, roasting, packaging and wholesale distributorsdistribution of nuts, dried fruit, seeds, trail mixes, granola, natural and organic products,snack items and confections, in the United States, and our brandedBlue Marble Brands product lines.

Wholesale Division

        Our broadline distribution business is organized into twothree regions—our Eastern Region, our Western Region and our Western Region.Canadian region. We distribute natural, organic and organicspecialty products in all of our product categories to customers in the Eastern and Midwestern portions of the United States through our Eastern Region and to customers in the westernWestern and centralCentral portions of the United States through our Western Region. SevenOur Canadian Region distributes natural, organic and specialty products in all of our twenty distribution centers at 2008product categories to all of our customers in Canada. As of our 2011 fiscal year end, our Eastern Region operated nine distribution centers, which provideprovided approximately 2.63.1 million square feet of warehouse space, wereour Western Region operated in our Eastern Region, and five of ournine distribution centers, which provideprovided approximately 1.52.7 million square feet of warehouse space wereand our Canadian Region operated in our Western Region.

        We acquired our specialty distribution business through our acquisition of DHI and Millbrook on November 2, 2007. Our UNFI Specialty Distribution division operates distribution centers located in Massachusetts, New Jersey, and Arkansas, with customers throughout the United States. Through our specialty distribution division's threefive distribution centers, which provideprovided approximately 1.60.3 million square feet of warehouse space, we distribute specialty food items (including ethnic, kosher, gourmet, organic and natural foods), health and beauty care items and other non-food items.space.

        Through Albert's, we distribute organically grown produce and non-produce perishables, such as organic milk, dressings, eggs, juices, poultry and various other refrigerated specialty items. Albert's operates out of sixseven distribution centers providing approximately 0.2 million square feet of warehouse space, strategically located in all regions of the United States, and is designated as a "Certified Organic Distributor" by QAI.

        Through Select Nutrition, we distribute more than 14,000 health and beauty aids, vitamins, minerals and supplements from distribution centers in CaliforniaPennsylvania and Pennsylvania.California.

        Certain of our distribution centers are shared by multiple operations inwithin our wholesale division.

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Retail Division

        We own and operate 1312 natural products retail stores through EOM within the United States, nine of which are located primarily in Florida, (with two locations in Maryland and one in Massachusetts), through NRG.Massachusetts. We also operate a retail store in Vancouver, British Columbia that is reflected within our wholesale division. We believe that our retail business serves as a natural complement to our distribution business because it enables us to develop new marketing programs and improve customer service.

        We believe our retail stores have a number of advantages over their competitors, including our financial strength and marketing expertise, the purchasing power resulting from group purchasing by stores within NRGEOM and the breadth of our product selection.

        We believe that we benefit from certain advantages in acting as a distributor to our retail stores, including our ability to:

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control the purchases made by these stores;



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expand the number of high-growth, high-margin product categories, such as produce and prepared foods, within these stores; and



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keep current withstay abreast of the demands of and trends in the retail marketplace, which enables us to better anticipate and serve the needs of our wholesale customers.

        Additionally, as the primary natural products distributor to our retail locations, we realize significant economies of scale and operating and buying efficiencies. As an operator of retail stores, we

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also have the ability to test market select products prior to offering them nationally. We can then evaluate consumer reaction to the product without incurring significant inventory risk. We also are able to test new marketing and promotional programs within our stores prior to offering them to our broaderwholesale customer base.

Manufacturing Division

        Our subsidiary Hershey ImportsWoodstock Farms Manufacturing specializes in the international importation, roasting, packaging and packagingdistribution of nuts, dried fruit, seeds, dried fruitstrail mixes, granola, natural and organic snack items.items and confections. We sell these items in bulk in our own packaged snack lines, EXPRESSnacks, Woodfield Farms and Woodstock Farms, and through private label packaging arrangements we have established with large health food, supermarket and convenience store chains.chains and independent owners. We operate our manufacturing operations out ofan organic (USDA and QAI) and kosher (Circle K) certified packaging, roasting, and processing facilitiesfacility in New Jersey and a warehouse in Los Angeles, California.Jersey.

        Our brandedBlue Marble Brands product lines address certain needs or preferences of customers of our wholesale division, which are not otherwise being met by other suppliers. We carry over 2015 brand names, representing over 700600 unique products. Our Blue Marble products are sold through our wholesale division, through third-party distributors in the natural, organic and specialty industry and directly to retailers. Our Field Day® brand is only sold to customers in our independent channel, and is meant to serve as a private label brand for independent retailers to allow them to compete with conventional supermarkets which often have their own private label store brands.

Our Competitive AdvantagesStrengths

        We believe we distinguish ourselves from our competitors through the following strengths:

We are the market leader with a nationwide presence in the United States and Canada.

        We believe that we benefit from a numberare the largest distributor of significant competitive advantages, includingnatural, organic and specialty products by sales in the following.

We are a market leader with a nationwide presence.

        We areUnited States and Canada, and one of the few distributors capable of servingmeeting the natural, organic and specialty product needs of local and regional customers, as well assupermarket chains, and the rapidly

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growing national supernatural and supermarket chains.chain. We completed the build-out of our distribution system in September 2010 with the opening of our facility in Lancaster, Texas. We believe we havethat our network of twenty-eight distribution centers (including five in Canada) creates significant advantages over smaller and regional natural, organicdistributors. Our nationwide presence across the United States and specialty products distributors as a result of our ability to:

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expandCanada allows us to offer marketing and customer service programs across regions;



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expand national purchasing opportunities;



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regions, offer a broader product selection;



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consolidate systems applications among physical locationsselection and regions;



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invest in people, facilities, equipmentprovide operational excellence with high service levels and technology; and



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reduce geographic overlap between regions.

We are an efficient distributor.

        In addition toWe believe that our scale affords us significant benefits within a highly fragmented industry including volume purchasing opportunities a critical component of being an efficient distributor is our management ofand warehouse and distribution costs.efficiencies. Our continued growth has created the needallowed us to expand our existing facilities and open new facilities as we seek to achieve maximum operating efficiencies, including by reducingreduced fuel and other transportation costs, and to assure adequate spacehas created sufficient capacity for future needs.growth. Recent efficiency improvements include the centralization of general and administrative functions, the consolidation of systems applications among physical locations and regions and the optimization of customer distribution routes, all of which reduced expenses. We have made significant capital expendituresinvestments in our people, facilities, equipment and have incurred considerable expenses in connection withtechnology to broaden our footprint and enhance the opening and expansionefficiency of distribution facilities, and we expect to continue to do so. In August 2005, we expanded our Midwest operations by opening a 311,000 square foot distribution center in Greenwood, Indiana, which serves as a distribution hub for our customers in Illinois, Indiana, Ohio and other Midwest states. In October 2005, we opened our Rocklin, California distribution center and moved our Auburn, California operations to this facility. The Rocklin distribution center is 487,000 square feet in size and serves as a distribution hub for customers in California and surrounding states. operations. Key examples include the following:

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Our new 237,000 square foot distribution center in Ridgefield, Washington commenced operations in




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December 2007 and serves as a regional distribution hub for customers in Portland, Oregon and other Northwest markets. We opened our Sarasota, Florida warehouse in the first quarter of fiscal 2008 in order to reduce the geographic area served by our Atlanta, Georgia facility. Our new, 613,000597,000 square foot distribution center in Moreno Valley, California commenced operations in September 2008 and serves our customers in Southern California, Arizona, Southern Nevada, Southern Utah, and Hawaii. Finally, in April 2008, we announced plans to lease a new 675,000



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Our 654,000 square foot distribution center in York, Pennsylvania to servecommenced operations in 2009 and replaced our New Oxford, Pennsylvania facility serving customers in New York, New Jersey, Pennsylvania, Delaware, Maryland, Ohio, Virginia, and West Virginia. Operations are scheduled



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In 2009, we successfully relocated our former DHI specialty distribution facility in East Brunswick, New Jersey to commenceour York, Pennsylvania distribution center, creating our first fully integrated facility offering a full assortment of natural, organic, and specialty foods.



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In 2009, we commenced operations at a new facility in January 2009.

Charlotte, North Carolina serving Albert's customers in North Carolina, South Carolina, Georgia, Tennessee, and Virginia.



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In connection with the acquisition of the SDG assets in June 2010, we acquired five distribution facilities which provided a nationwide presence in Canada with approximately 286,000 square feet of distribution space and the ability to serve all major markets in Canada.



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In September 2010, we commenced operations at a new facility in Lancaster, Texas serving customers throughout the Southwestern United States, including Texas, Oklahoma, New Mexico, Arkansas and Louisiana.



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In October 2010 we began operating the former Whole Foods Distribution facility in Aurora, Colorado.



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Finally, during July 2011 we completed the integration of specialty food products into our nationwide platform.

We have extensive and long-standing customer relationships and provide superior service.

        We serve more than 17,000 customers primarily located acrossThroughout the United States. We35 years of our, and our predecessors' operations, we have developed long-standing customer relationships, which we believe are among the strongest in our industry. In particular, we have been the primary supplier of natural and organic products to the largest supernatural chain in the United States, Whole Foods Market, for more than ten13 years.

A key driver of our strong customer loyalty is our superior service levels, which include accurate fulfillment of orders, timely product delivery, competitive prices and a high level of product marketing support. Our average

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distribution in-stock service level for fiscal 2008 was approximately 97%, which we believe is the highest in our industry. Distribution service levels refer to2011, measured as the percentage of items ordered by customers that are delivered by the requested delivery date excluding manufacturers' "out of stocks."(excluding manufacturer out-of-stocks and discontinued items), was approximately 98%. We believe that our high distribution service levels are attributable to our experienced purchasing departments and sophisticated warehousing, inventory control and distribution systems. WeFurthermore, we offer next-day delivery service to a majority of our active customers and offer multiple deliveries each week to our largest customers. Wecustomers, which we believe that customer loyalty is dependent upon excellent customer service, including accurate fulfillmentdifferentiates us from many of orders, timely product delivery, low prices and a high level of product marketing support.our competitors.

We have an experienced, motivated management team and our employees are incentivized to perform through equity ownership.employee base.

        Our management team has extensive experience in the retail and distribution business, including the natural and specialty product industries. On average, our ten executive officers have over eighteen years of experience in the retail, natural products industries and has been successful in identifying, consummating and integrating multiple acquisitions. Since 2000, we have successfully completed seven acquisitions of distributors, manufacturers and suppliers, two acquisitions of retail stores and eight acquisitions of branded product lines.or food distribution industry. In addition, we believe our executive officers and directors, andemployee base is highly motivated as our Employee Stock Ownership Trust beneficially own in the aggregateowns approximately 6.7%4.5% of our common stock. Accordingly,stock outstanding. Furthermore, a significant portion of our senior managementemployees' compensation is equity based or performance based, and, employees havetherefore, there is a significantsubstantial incentive to continue to generate strong growth in operating results in the future.

Our Growth Strategy

        Our growth strategy isWe seek to maintain and enhance our position as a leading national distributor towithin the natural and organic industry in the United States and Canada and to increase our market share in the specialty products industry. Since our formation, we have grown our business through the acquisition of a number of distributors and suppliers, which has expanded our distribution network, product selection and customer base. For example, we acquired our Albert's, NRGEOM, Woodstock Farms Manufacturing, and Hershey Importsspecialty businesses and, during fiscal 2008,2010, we acquired DHI and Millbrook, whichthe assets that comprise our specialty distribution business, and three branded product lines.UNFI Canada.

        To implement our growth strategy, we intend to continue to increaseincreasing our leading market share of the growing natural and organic products industry by expanding our customer base, increasing our share of existing customers' business and continuing to expand and further penetrate new distribution territories, particularly in the Mid-Atlantic Southern Pennsylvania and South CentralSouthwestern United States markets and Canadian markets. We plan to expand outour presence within the specialty industry by offering new and existing

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customers a single wholesale distributor capable of meeting their specialty and natural and organic product needs on a national or regional basis. Key elements of our strategy include:

Expanding Our Customer Base

        As of August 2, 2008,July 30, 2011, we served more than 17,000 customers23,000 customer locations primarily located throughoutin the United States.States and Canada. We plan to continue expandingexpand our coverage of the highly fragmented natural and organic and specialty products industry by cultivating new customer relationships within the industry and by further developing otherour existing channels of distribution, such as traditionalindependent natural products retailers, conventional supermarkets, mass market outlets, institutional food servicefoodservice providers, international, buying clubs hotels and gourmet stores. With the coordinated distribution of our specialty products with our natural and organic products, which commenced with the integration of our York, Pennsylvania facility in April 2009, we believe that we have the opportunity to continue gaining market share in the conventional supermarket channel as the result of our ability to offer an integrated and efficient distribution solution for our customers. In fiscal 2010 we gained new business from a number of conventional supermarket customers, including Giant-Landover, Shop-Rite and Kings, partially as a result of our complementary product selection. In part as a result of our product breadth, in fiscal 2011 we were awarded new business from several other supermarket customers, including Giant Eagle and Safeway. We expect to begin shipping to Safeway nationally in October 2011.

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Increasing Our Market Share of Existing Customers' Business

        We believe that we are the primary distributor of natural and organic products to the majority of our natural products customer base, including to Whole Foods Market, our largest customer. We intend to maintain our position as the primary supplier for a majority of our customers, and to add to the number of customers tofor which we serve as primary supplier by offering the broadest product selection in our industry at competitive prices. With the acquisitionexpansion of UNFI Specialty Distribution,specialty product offerings, we further believe that we have the ability to further meet our existing customers' needs for specialty foods and products, as well as certain general merchandise. We believe this representsrepresenting an opportunity to accelerate our sales growth within the conventional supermarket, channel and potentially our supernatural and independent channels.

Continuing to ExpandImprove the Efficiency of Our Branded Products BusinessNationwide Distribution Network

        We have launched a number of private label or branded product linesinvested approximately $226 million in order to provide our customers with a broader selection of product offerings. Indistribution network and infrastructure over the past five fiscal 2008, our branded product revenues were approximately 3.3%years. We completed the build-out of our overall net sales. Wenationwide distribution system in September 2010 with the opening of our facility in Lancaster, Texas. Our Lancaster facility is the first facility to use our national supply chain platform and warehouse management system which we plan to increaseimplement throughout our branded product business through organic growthnetwork by the end of fiscal 2013 and through brand acquisitions. Wewhich we believe this initiative differentiates us from other distributors withinwill further enhance the efficiency of our industry, enables usnetwork. Although our distribution network services all markets in the United States and Canada, we will continue to selectively evaluate opportunities to build long-term brand equity for the Companyor lease new facilities or to acquire distributors to better serve existing markets. Further, we will maintain our focus on realizing efficiencies and allows useconomies of scale in purchasing, warehousing, transportation and general and administrative functions, which, combined with incremental fixed cost leverage, should lead to generate higher gross margins, as branded product revenues generally yield higher margins than do third party branded product revenues.continued improvements in our operating margin.

Expanding into Other Distribution Channels and Geographic Markets

        We believe that we will be successful in expanding into the food servicefoodservice channel as well as further enhancing our presence inoutside of the international channel.United States and Canada. We will continue to seek to develop regional relationships and alliances with companies such as Aramark Corporation, the Compass Group North America, and Sodexho Inc. in the food servicefoodservice channel and seek other alliances inoutside the international channel.United States and Canada.

Continuing to Expand into and Penetrate New Regions of Distribution and Improve the Efficiency of Our Nationwide Distribution NetworkSelectively Pursue Opportunistic Acquisitions

        As discussed under "—Our Competitive Advantages" above,Throughout our history, we have made significant capital expendituressuccessfully identified, consummated and incurred considerable expenses in connection with the constructionintegrated multiple acquisitions. Since 2000, we have successfully completed nine acquisitions of new or the expansiondistributors, manufacturers and suppliers, two acquisitions of existing distribution facilities.retail stores and eleven acquisitions of branded product lines. We willintend to continue to selectively evaluate opportunitiespursue opportunistic acquisitions to build new facilities or to acquire distributors to better serve existing markets and expand into new markets. Further, we will maintainthe breadth of our focus on integrating these new or acquired facilities into our nationwide distribution network, in order to improveincrease our economies of scale in purchasing, warehousing, transportationefficiency or add additional products and general and administrative functions, which we believe will lead to continued improvements in our operating margin.

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Continuing to Provide the Leading Distribution Solution

        We believe that we provide the leading distribution solution to the natural, organic and specialty products industry through our national presence, regional responsiveness,preferences, focus on customer service and breadth of product offerings. Our service levels, which we believe to be the highest in our industry, are attributable to our experienced purchasing departments and our sophisticated warehousing, inventory control and distribution systems. See "—Our Focus on Technology" below for more information regarding our use of technology in our warehousing, inventory control and distribution systems.

        Among the benefits we provide to our customers is access, at preferred rates and terms, to the suite of products developed by Living Naturally, LLC, a leading provider of marketing promotion and electronic ordering systems to the natural and organic products industry. We have maintained a strategic alliance with Living Naturally since 2002. The products provided by Living Naturally include an intelligent electronic ordering system and turnkey retailer website services, which create new opportunities for our retailers to increase their inventory turns, reduce their costs and enhance their profits. We also offer our customers a selection of inventory management, merchandising, marketing, promotional and event management services designed to increase sales and enhance customer satisfaction. These marketing services, which primarily are utilized by customers in our independently

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owned natural products retailers channel and many of which are co-sponsored with suppliers, include monthly and thematic circular programs, in-store signage and assistance in product display.

Our Customers

        We maintain long-standing customer relationships with independently-owned natural products retailers, supernatural chains and supermarket chains. In addition, we emphasize our relationships with new customers, such as national conventional supermarkets, mass market outlets and gourmet stores, which are continually increasing their natural product offerings. The following were included among our wholesale customers for fiscal 2008:
2011:

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Whole Foods Market, the largest supernatural chain in the United States;States and Canada;



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conventional supermarket chains, including Kroger, Wegman's, Haggen's, Stop and Shop, Giant, Peapod, Quality Food Centers, Hannaford, Food Lion, Bashas', Lunds, Byerly's,Shop-Rite, Rainbow, Lowe's, King's, Publix, Fred Meyer and United Supermarkets; and



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mass market chains, including Target, BJ's Wholesale Club and Costco.

        On a combined basis and excluding sales to Henry's and Sun Harvest store locations (which remain our customers), Whole Foods Market and Wild Oats Markets accounted for approximately 31.0%is our only customer that represented more than 10% of ourtotal net sales in fiscal 2008.2011, and accounted for approximately 36% of our net sales. In October 2006, we announced a seven-year distribution agreement with Whole Foods Market, which commenced on September 26, 2006, under which2006. In June 2010 we amended our distribution agreement with Whole Foods Market to extend the term of the agreement for an additional seven years. Under the terms of the amended agreement, we will continue to serve as the primary U.S.wholesale natural grocery distributor to Whole Foods Market in theits United States regions where we currently serve as the primary distributor. The amendment extended the expiration date of the agreement from September 25, 2013 to September 25, 2020.

        On July 28, 2010, we announced that we had entered into an asset purchase agreement under which we agreed to acquire certain assets of Whole Foods Distribution, Inc. previously served. In January 2007, we expanded ourused for their self-distribution of non-perishables in their Rocky Mountain and Southwest regions, and to become the primary distributor in these regions. We closed this transaction in late September 2010 in the case of the Southwest region and early October 2010 in the case of the Rocky Mountain region. We now serve as the primary distributor to Whole Foods Market relationshipin all of its regions in the Southern Pacific region of the United States. Our relationshipStates, and have amended our distribution agreement with Whole Foods Market was further expanded in August 2007, when Whole Foods Market completed its merger with Wild Oats Markets. We had served as the primary distributor of natural and organic foods and non-food productseffective October 11, 2010 to Wild Oats Markets prior to the merger, and we continue to serve the former Wild Oats Markets stores retained by Whole Foods Market under our distribution arrangement with Whole Foods Market. We also continue to serve as a primary distributor to the Henry's and Sun Harvest store locations previously owned by Wild Oats Markets and sold by Whole Foods Market to a subsidiary of Smart & Final Inc. on September 30, 2007.

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        The following table lists the percentage of sales by customer type for the fiscal years ended July 30, 2011, July 31, 2010 and August 2, 2008 and July 28, 2007:1, 2009:

        We distribute natural, organic and specialty foods and non-food products to customers internationally,located in the United States and Canada, as well as to customers located in other foreign countries. Our total international sales, including those by UNFI Canada, represented approximately five percent and one percent of our business in fiscal 2011 and 2010, respectfully. We believe that our sales outside the United States. Our sales to international customers representStates, as a de minimis portionpercentage of our business.total sales, will expand as we seek to grow our Canadian operations.

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Our Marketing Services

        We have developedoffer a variety of supplier-sponsored 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 which cater to a broad range of retail formats. These programs 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 independentlyindependently.

        Our consumer marketing programs include:

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multiple monthly, region-specific, consumer circular programs, which feature the logo and address of the participating retailer imprinted on a circular that advertises products sold by the retailer to its customers. The monthly circular programs are structured to pass through to the retailer the benefit of our negotiated discounts and advertising allowances to the retailer, and also provide retailers with posters window banners and shelf tags to coincide with each month's promotions;promotions. We also offer a web-based tool which retailers can use to produce highly customized circulars and other marketing materials for their stores.



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our supplier-focused Most Valued Partner program, which we believe helps build incremental, mutually profitable salesquarterly coupon programs featuring supplier sponsored coupons, for suppliersdisplay and us, while fostering a sense of partnership;distribution by participating retailers.



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other retailer initiative programs, such as a coupon booklet and separate supplement and personal care product-themedbi-annual themed "Celebration" sales and educational brochures we offer to independent retailers, which allow us to explore new marketing avenues;drive sales and educate consumers. Brochures are imprinted with participating retailers' store logo and information.



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a truck advertising program that allows our suppliers to purchase ad space on the sides of our hundreds of trailers traveling throughout the United States and Canada, increasing brand exposure to consumers.

        Our trade marketing programs include:

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a variety of programs designed to feature suppliers, highlight new products and generate volume sales.



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a website for retailers with category management tools, retail staff development resources and other resources designed to help our customers succeed.



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specialized catalogs for holiday promotions and special dietary needs.

        Our supplier marketing programs include:

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SIS, an information-sharing program that helps our suppliers better understand our customers' businesses, in order to generate mutually beneficial incremental sales in an efficient manner; andmanner.



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a truck advertisingClearVue, an information sharing program that allowsdesigned to improve the transparency of information and drive efficiency within the supply chain. With the availability of in-depth data and tailored reporting tools, participants are able to reduce inventory balances with the elimination of forward buys, while improving service levels.



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Growth Incentive programs, supplier-focused high-level sales and marketing support for selected brands, which foster our partnership by building incremental, mutually profitable sales for suppliers to purchase ad space on the sides of our hundreds of trailers nationally, which we believe increases their potential consumer ad impressions;and us.

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        We keep current with the latest trends in the industry. Periodically, we conduct focus group sessions with certain key retailers and suppliers in order to ascertain their needs and allow us to better service them. We also:

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produce a quarterly report of trends in the natural and organic industry;

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offer in-store signage and promotional materials, including shopping bags and end-cap displays;



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provide assistance with planning and setting up product displays;



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provide shelf tags for products;



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provide assistance with store layout designs; new store design and equipment procurement;



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provide planogramming, shelf and category management support;



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provide product data information such as best seller lists, store usage reports and easy-to-use product catalogs; and



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maintainprovide a website on which retailers can access various individual retailer-specific reports and product information.

Our Products

        Our extensive selection of high-quality natural, organic and specialty products enables us to provide a primary source of supply to a diverse base of customers whose product needs vary significantly. We carry more than 60,000 high-quality natural, organic and specialty products, consisting of national brand, regional brand, private label and master distribution products, in six product categories: grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements, bulk and food service products and personal care items. Our branded product lines address certain needs or preferences of our customers, which are not otherwise being met by other suppliers.

        We continuously evaluate potential new private branded and other products based on both existing and anticipated trends in consumer preferences and buying patterns. Our buyers regularly attend regional and national natural, organic, specialty, ethnic and gourmet product shows to review the latest products that are likely to be of interest to retailers and consumers. We also actively solicit suggestions for new products from our customers. We make the majority of our new product decisions at the regional level. We believe that our decentralized purchasing practices allow our regional buyers to react quickly to changing consumer preferences and to evaluate new products and new product categories regionally. Additionally, many of the new products that we offer are marketed on a regional basis or in our own retail stores prior to being offered nationally, which enablesenable us to evaluate local consumer reaction to the products without incurring significant inventory risk. Furthermore, by exchanging regional product sales information between our regions, we are able to make more informed and timely new product decisions in each region.

        We maintain a comprehensive quality assurance program. All of the 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 all organic commodities and produce in order to verify the authenticity of the product. All potential suppliers of organic products are required to provide such third-party certifications to us before they are approved as suppliers.

Our Suppliers

        We purchase our products from approximately 4,3004,600 suppliers. The majority of our suppliers are based in the United States and Canada, but we also source products from suppliers throughout Europe, Asia, Central America, South America, Africa and Australia. We believe the reason suppliers of natural and organic products seek to distribute their products through us is because we provide access to a large and growing national 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 the suppliers' products. Substantially all product categories that

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we distribute are available from a number of suppliers and, therefore, we are not dependent on any single source of supply for any product category.

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Our largest supplier, Hain Celestial Group, Inc. ("Hain"), accounted for approximately 7.5%6% of our total purchases in fiscal 2008.2011. However, the product categories we purchase from Hain can be purchased from a number of other suppliers. In addition, although we have exclusive distribution arrangements and vendor support programs with several suppliers, none of theseour suppliers accountsaccount for more than 10% of our total purchases.

        We have positioned ourselves as the largest purchaser 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, many of our purchase arrangements include the right of return to the supplier with respect to products that we aredo not able to sell in a certain period of time. As described under "—Our"Our Products" above, 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 outstanding commitments for the purchase of inventory were approximately $31.8$17.2 million as of August 2, 2008.July 30, 2011.

Our Distribution System

        We have carefully chosen the sites for our distribution centers to provide direct access to our regional markets. 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 several hundreds of miles away. The opening of our Lancaster, Texas distribution center has significantly reduced the miles driven associated with servicing the customers of that facility as many of those customers were previously serviced from our Denver, Colorado facility. We believe that we incur lower inbound freight expense than our regional competitors, because our national presencescale allows us to buy full and partial truckloads of products. Whenever possible,When financially advantageous, we backhaul between our distribution centers and satellite, staging facilities using our own trucks. Additionally, we generally can redistribute overstocks and inventory imbalances between distribution centers if needed, which helps us ensure products are sold prior to their expiration date and more appropriately balance inventories.date.

        Products are delivered to our distribution centers primarily by our fleet of leased trucks, contract carriers and the suppliers themselves. We lease our trucks from national leasing companies such as Ryder Truck Leasing and Penske Truck Leasing, which in some cases maintain facilities on our premises for the maintenance and service of these vehicles. Other trucks are leased from regional firms that offer competitive services.

        We ship certain orders for supplements or for items that are destined for areas outside of regular delivery routes through United Parcel Service and other independent carriers. Deliveries to areas outside the continental United States and Canada are typically shipped by ocean-going containers on a weekly basis.

Our Focus on Technology

        We have made a significant investment in distribution, financial, information and warehouse management systems. We continually evaluate and upgrade our management information systems at our regional operations based on the best practices in the distribution industry in order to make the systems more efficient, cost-effective and responsive to customer needs. These systems include functionality in radio frequency inventory control, pick-to-voice systems, pick-to-light systems, computer-assisted order processing and slot locator/retrieval assignment systems. At our receiving docks, warehouse associates attach computer-generated, preprinted locator tags to inbound products. These tags contain the expiration date, locations, quantity, lot number and other information about the products in bar code format. Customer returns are processed by scanning the UPC bar codes. We also employ a

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management information system that enables us to lower our inbound transportation costs by making optimum use of our own fleet of trucks or by consolidating deliveries into full truckloads.

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Orders from multiple suppliers and multiple distribution centers are consolidated into single truckloads for efficient use of available vehicle capacity and return-haul trips. In addition, we utilize route efficiency software that assists us in developing the most efficient routes for our trucks. During fiscal 2012 and 2013, we will continue the roll-out of our new national supply chain platform and warehouse management system, which was launched in our new Lancaster, Texas facility and is now being implemented distribution center by distribution center.

Intellectual Property

        We do not own or have the right to use any patent, trademark, tradename, license, franchise, or concession which upon loss would have a material adverse effect on our results of operations or financial condition.

Competition

        Our largest competition comes from direct distribution, whereby a customer reaches a product volume level that justifies distribution directly from the manufacturer. Our major nationalwholesale distribution competitor in both the United States and Canada is KeHE Distributors, LLC ("Kehe"), which acquired Tree of Life Distribution, Inc. (a subsidiary of Koninklijke Wessanen N.V.) ("Tree of Life"). in January 2010. In addition to its natural and organic products, Tree of LifeKehe distributes specialty food products, thereby diversifying its product selection, and markets its own private label program. Kehe's subsidiary, Tree of Life has also earned QAI certification and has a European presence.certification. We also compete in the United States with over 200 smaller regional and local distributors of natural, ethnic, kosher, gourmet and other specialty foods that focus on niche or regional markets, and with national, regional and local distributors of conventional groceries and companies that distribute to their own retail facilities.

        We believe that distributors in the natural and specialty products industries primarily compete on distribution service levels, product quality, depth of inventory selection, price and quality of customer service. We believe that we currently compete effectively with respect to each of these factors.

        Our retail stores compete against other natural products outlets, conventional supermarkets and specialty stores. We believe that retailers of natural products compete principally on product quality and selection, price, customer service, knowledge of personnel and convenience of location. We believe that we currently compete effectively with respect to each of these factors.

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 U.S. Department of AgricultureUSDA and the United States Food and Drug Administration, which generally impose standards for product quality and sanitation and are responsible for the administration of recent bioterrorism legislation. OurIn the United States, our facilities generally are inspected at least once annually by state or federal authorities.

        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 U.S.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.

        WeOur operations do not generally are not subject us to many of the federal, provincial, state and local environmental laws and regulations that have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.regulations. However, certain of our distribution facilities have above-ground storage tanks for

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hydrogen fuel, diesel fuel and other petroleum products, which are subject to laws regulating such storage tanks.

        We believe that we are in material compliance with all federal, provincial, state and local laws applicable to our operations.

Employees

        As of August 2, 2008,July 30, 2011, we had approximately 6,3006,900 full and part-time employees. An aggregateemployees, 390 of approximately 6.6% of our total employees, or approximately 415 of the employees at our Auburn, Washington, East Brunswick, New Jersey, Edison, New Jersey, Iowa City, Iowa and Leicester, Massachusetts facilities,whom (approximately 5.9%) are covered by collective bargaining agreements.agreements at our Edison, New Jersey, Auburn, Washington, Leicester, Massachusetts and Iowa City, Iowa facilities. The Edison, New Jersey, Auburn, Washington, East Brunswick, New Jersey, Leicester, Massachusetts and Iowa City, Iowa agreements expire in June 2011,2014, February 2009, June 2009,2012, March 2013 and June 2014, respectively. On June 8, 2010, the National Labor Relations Board issued a certification of representative notice to us with respect to our Dayville, Connecticut drivers, resulting from an election there in May 2010. Subsequently, we entered into negotiations with Teamsters' representatives to reach a collective bargaining agreement. On June 14, 2011, with no collective bargaining agreement having been reached, the Dayville facility drivers petitioned for decertification of union representation. A decertification election took place on July 2009, respectively.14 – 15, 2011, and the petition failed to achieve decertification by one vote. We reached agreement on a collective bargaining agreement for those workers on August 1, 2011. In September of 2010, we received a petition for union representation of our Iowa City, Iowa distribution center's drivers and dispatchers by the Teamsters. An election was held in October of 2010, which was favorable to management, the results of which were certified in October 2010. On October 18, 2010, the National Labor Relations Board issued a petition for union representation of the warehouse associates at our Greenwood, Indiana distribution center by the Teamsters. An election was held in November 2010, and the National Labor Relations Board issued its certification of results of election in favor of management on December 1, 2010. We have never experienced a work stoppage by our unionized employees and we believe that our relations with our employees are good.

Seasonality

Table of Contents        Generally, we do not experience any material seasonality. However, our sales and operating results may vary significantly from quarter to quarter due to factors such as changes in our operating expenses, management's ability to execute our operating and growth strategies, personnel changes, demand for natural products, supply shortages and general economic conditions.

Available Information

        Our internet address is http://www.unfi.com. The contents of our website are not part of this Annual Report on Form 10-K, and our internet address is included in this document as an inactive textual reference only. We make our Annual ReportsReport on Form 10-K, 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 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.

        We have adopted a code of conduct and ethics for certain employees pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. A copy of our code of conduct and ethics is posted on our website, and is available free of charge by writing to United Natural Foods, Inc., 260 Lake Road, Dayville, Connecticut 06241,313 Iron Horse Way, Providence, Rhode Island, 02908, Attn: Investor Relations.

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Executive Officers of the Registrant

        Our executive officers are elected on an annual basis and serve at the discretion of our Board of Directors. Our executive officers and their ages as of September 15, 2011 are listed below:

Steven L. Spinner has served as our President and Chief Executive Officer and as a member of our Board of Directors since September 2008. Mr. Spinner served as the Interim President of our Eastern Region, after David Matthews became President of UNFI International in September 2010 and prior to the hiring of Craig H. Smith in December 2010. Prior to joining us in September 2008, Mr. Spinner served as a director and as Chief Executive Officer of Performance Food Group Company ("PFG") from October 2006 to May 2008, when PFG was acquired by affiliates of The Blackstone Group and Wellspring Capital Management. Mr. Spinner previously had served as PFG's President and Chief Operating Officer beginning in May 2005. Mr. Spinner served as PFG's Senior Vice President and Chief Executive Officer—Broadline Division from February 2002 to May 2005 and as PFG's Broadline Division President from August 2001 to February 2002.

Mark E. Shamber has served as Senior Vice President, Chief Financial Officer and Treasurer since October 2006. Mr. Shamber previously served as our Vice President, Chief Accounting Officer and Acting Chief Financial Officer and Treasurer from January 2006 until October 2006, as Vice President and Corporate Controller from August 2005 to October 2006 and as our Corporate Controller from June 2003 until August 2005. From February 1995 until June 2003, Mr. Shamber served in various positions of increasing responsibility up to and including senior manager within the assurance and advisory business systems practice at the international accounting firm of Ernst & Young LLP.

Joseph J. Traficanti has served as our Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary since April 2009. Prior to joining us, Mr. Traficanti served as Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary of PFG from November 2004 until April 2009.

Sean Griffin has served as our Senior Vice President, National Distribution since January 2010. Prior to joining us, Mr. Griffin was East Region Broadline President of PFG. In this role he managed over 10 divisions and $2 Billion in sales. Previously he served as President of PFG—Springfield, MA from 2003 until 2008. He began his career with Sysco Corporation in 1986 and has held various leadership positions in the foodservice distribution industry with U.S. Foodservice, Alliant Foodservice and Sysco Corporation.

Eric Dorne has served as our Senior Vice President and Chief Information Officer since September 2011. Prior to joining us, Mr. Dorne was Senior Vice President and Chief Information Officer for The

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Great Atlantic & Pacific Tea Company, Inc., the parent company of the A&P, Pathmark, SuperFresh, Food Emporium and Waldbaum's supermarket chains located in the Eastern United States from January 2011 to August 2011, and Vice President and Chief Information Officer from August 2005 to January 2011. In his more than 30 years at The Great Atlantic & Pacific Tea Company, Mr. Dorne held various executive positions including Vice President of Enterprise IT Application Management and Development, Vice President of Store Operations Systems and Director of Retail Support Services.

Thomas A. Dziki has served as our Senior Vice President, Chief Human Resource and Sustainability Officer since August 2010. Prior to August 2010, Mr. Dziki served as our Senior Vice President of Sustainable Development since January 2010, as our Vice President of Sustainable Development since June 2009, and as National Vice President of Real Estate and Construction since August 2006. Prior to that time, Mr. Dziki had served as President of Woodstock Farms Manufacturing and Select Nutrition from December 2004 until August 2006, Corporate Vice President of Special Projects from December 2003 to November 2004 and as our Manager of Special Projects from May 2002 to December 2003. Prior to joining us, Mr. Dziki served as a private consultant to our company, our subsidiaries, Woodstock Farms Manufacturing, EOM, Albert's, and our predecessor company, Cornucopia Natural Foods, Inc., from 1995 to May 2002.

Kurt Luttecke has served as our President of the Western Region since June 2009. Mr. Luttecke served as our President of Albert's Organics from June 2007 to June 2009. Prior to joining us, Mr. Luttecke spent 16 years at Wild Oats serving as its Vice President of Perishables from 2006 to June 2007, Vice President of Meat/Seafood & Food Service Supply Chain from 2004 to 2006, Director of Perishables from 2001 to 2004, and Director of Operations from 1995 to 2001.

Craig H. Smith has served as our President of the Eastern Region since December 2010. Prior to joining us, Mr. Smith was Atlantic Region President of U.S. Foodservice, a leading broadline foodservice distributor of national, private label, and signature brand items in the United States from May 2008 to December 2010. From April 2006 to May 2008, Mr. Smith was Senior Vice President of Street Sales of U.S. Foodservice. In his 17 years at U.S. Foodservice, Mr. Smith held various other executive positions including North Region Zone President, Detroit Market President and Boston Market President. Prior to U.S. Foodservice, Mr. Smith held several positions at food service industry manufacturer and distributor Rykoff-Sexton, Inc. from 1982 until 1993.

David A. Matthews has served as our President of UNFI International with responsibility for our Canadian and other international operations since September 2010. From June 2009 to September 2010 he was our President of the Eastern Region. Prior to joining us, Mr. Matthews served as President and CEO of Progressive Group Alliance ("ProGroup"), a wholly owned subsidiary of PFG from January 2007 to May 2009, as Chief Financial Officer of ProGroup from December 2004 to January 2007, and as Senior Vice President of Finance and Technology of ProGroup from July 2000 to December 2004.

Thomas Grillea has served as our President of Woodstock Farms Manufacturing since May 2009, President of Earth Origins Market since May 2008, and President of Select Nutrition Distributors since September 2007. Mr. Grillea served as our General Manager for Select Nutrition Distributors from September 2006 to September 2007. Prior to joining us, Mr. Grillea served in a management capacity for Whole Foods Market from 2004 through 2005, and in various management capacities for American Health and Diet Centers and the Vitamin Shoppe from 1998 through 2003.

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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 on Form 10-K. This section discusses factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. Our business, financial condition or results of operations could be materially adversely affected by any of these risks.

        We note these factors for investors as permitted by 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 "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Forward-Looking Statements."

We depend heavily on our principal customer and our success is heavily dependent on our principal customer's ability to grow its business.

        Whole Foods Market accounted for approximately 36% of our net sales in fiscal 2011. We serve as the primary distributor of natural, organic and specialty non-perishable products to Whole Foods Market in all of its regions in the United States under the terms of our amended distribution agreement which expires on September 25, 2020. Our ability to maintain a close mutually beneficial relationship with our largest customer, Whole Foods Market is an important element to our continued growth. In October 2006, we announced a seven-year distribution agreement with Whole Foods Market, which commenced on September 26, 2006, under which we serve as the primary U.S. distributor to Whole Foods Market in the regions where we previously served. In January 2007, we expanded our Whole Foods Market relationship in the Southern Pacific region of the United States. In August 2007, Whole Foods Market and Wild Oats Markets completed their merger, as a result of which, Wild Oats Markets became a wholly-owned subsidiary of Whole Foods Market. We service all of the stores previously owned by Wild Oats Markets and now owned by Whole Foods Market under the terms of our distribution agreement with Whole Foods Market. On a combined basis, and excluding sales to Wild Oats Markets' former Henry's and Sun Harvest store locations (which were sold by Whole Foods Market to a subsidiary of Smart & Final Inc. on September 30, 2007), Whole Foods Market and Wild Oats Markets accounted for approximately 31.0% of our net sales in fiscal 2008. As a result of this concentration of our customer base, the

        The loss or cancellation of business from Whole Foods Market, including from increased distribution to their own facilities or closures of stores, previously owned by Wild Oats Markets, could materially and adversely affect our business, financial condition or results of operations. Similarly, if Whole Foods Market is not able to grow its business, including as a result of a reduction in the level of discretionary spending by its customers, our business, financial condition or results of operations may be materially and adversely affected.

Our operations are sensitive to economic downturns.

        The grocery industry is sensitive to national and regional economic conditions and the demand for the products that we distribute, particularly our specialty products, may be adversely affected from time to time by economic downturns that impact consumer spending, including discretionary spending. Future economic conditions such as employment levels, business conditions, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. Among these changes could be a reduction in the number of natural and organic products that consumers purchase where there are non-organic, which we refer to as conventional, alternatives, given that many natural and organic products, and particularly natural and organic foods, often have higher retail prices than do their conventional counterparts.

Our business is a low margin business and our profit margins may decrease due to consolidation in the grocery industry.

        The grocery distribution industry generally is characterized by relatively high volume of sales with relatively low profit margins. The continuing consolidation of retailers in the natural products industry and the growth of supernatural chains may reduce our profit margins in the future as more customers qualify for greater volume discounts, and we experience pricing pressures from suppliers and retailers. Over the last two fiscal years, we have increased our sales to our supernatural chain and conventional supermarket customers in relation to our total sales. In the fourth quarter of fiscal 2011, we announced that we had entered into a three-year distribution arrangement to supply Safeway with nonproprietary natural, organic and specialty products, which will further increase the percentage of our total sales to conventional supermarkets. Sales to these customers within our supernatural chain and conventional

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supermarket channels generate a lower gross margin than do sales to our independent customers. Many of these customers, including our largest customer, have agreements with us that include volume discounts. As the amounts these customers purchase from us increase, the price that they pay for the products they purchase is reduced, putting downward pressure on our gross margins on these sales. To compensate for these lower gross margins, we must reduce the expenses we incur to service these customers. If we are unable to reduce our expenses, including our expenses related to servicing this lower gross margin business, our business, financial condition or results of operations could be adversely impacted.

Our business may be sensitive to inflationary and deflationary pressures.

        Many of our sales are at prices that are based on our product cost plus a percentage markup. As a result, volatile food costs have a direct impact upon our profitability. Prolonged periods of product cost 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. In addition, product cost inflation may negatively impact the consumer discretionary spending trends of our customers' customers, which could adversely affect our sales. Conversely, because many of our sales are at prices that are based upon product cost plus a percentage markup, our profit levels may be negatively impacted during periods of product cost deflation even though our gross profit as a percentage of net sales may remain relatively constant. To compensate for lower gross margins, we, in turn, must reduce expenses that we incur to service our customers.

Our customers generally are not obligated to continue purchasing products from usus.

        We generally sell productsMany of our customers buy from us under purchase orders, and we generally do not have agreements with or commitments from ourthese customers for the purchase of products. We cannot assure you that our customers will maintain or increase their sales volumes or orders for the products supplied by us or that we will be able to maintain or add to our existing customer base. Decreases in our customers' sales

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volumes or orders for products supplied by us may have an adverse affect on our business, financial condition or results of operations.

Our profit margins may decrease due to consolidation in the grocery industry

        The grocery distribution industry generally is characterized by relatively high volume with relatively low profit margins. The continuing consolidation of retailers in the natural products industry and the growth of supernatural chains may reduce our profit margins in the future as more customers qualify for greater volume discounts, and we experience pricing pressures from both ends of the supply chain.

Our acquisition strategy may adversely affect our business

        We continually evaluate opportunities to acquire other companies. To the extent that our future growth includes acquisitions, we cannot assure you that we will successfully identify suitable acquisition candidates, consummate such potential acquisitions, integrate any acquired entities or successfully expand into new markets as a result of our acquisitions. We believe that there are risks related to acquiring companies, including overpaying for acquisitions, losing key employees of acquired companies and failing to achieve potential synergies. Additionally, our business could be adversely affected if we are unable to integrate the companies acquired in our acquisitions and mergers.

        A significant portion of our past growth has been achieved through acquisitions of or mergers with other distributors of natural products. The successful integration of any acquired entity is critical to our future operating and financial performance. Integration requires, among other things:

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maintaining the customer base;



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optimizing delivery routes;



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coordinating administrative, distribution and finance functions; and



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integrating management information systems and personnel.

        The integration process has diverted and could divert the attention of management and any difficulties or problems encountered in the transition process could have a material adverse effect on our business, financial condition or results of operations. In particular, the integration process may temporarily redirect resources previously focused on reducing product cost, resulting in lower gross profits in relation to sales. In addition, the process of combining companies has caused and could cause the interruption of, or a loss of momentum in, the activities of the respective businesses, which could have an adverse effect on their combined operations. For example, our acquisition of Millbrook has diverted the attention of management away from our core business, not yet produced the purchasing efficiencies and other synergies we expect to result from the acquisition and negatively affected our operating expenses. Although we expect to achieve efficiencies from this acquisition in future periods, we cannot assure you that we will realize any of the anticipated benefits of this or other mergers.

We may have difficulty managing our growth

        The growth in the size of our business and operations has placed, and is expected to continue to place, a significant strain on our management. Our future growth may be limited by our inability to acquire new distribution facilities or expand our existing distribution facilities, make acquisitions, successfully integrate acquired entities, implement information systems or adequately manage our personnel. Our future growth is limited in part by the size and location of our distribution centers. We cannot assure you that we will be able to successfully expand our existing distribution facilities or open new distribution facilities in new or existing markets to facilitate growth. Even if we are able to expand our distribution network, our ability to compete effectively and to manage future growth, if any, will depend on our ability to continue to implement and improve operational, financial and management

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information systems on a timely basis and to expand, train, motivate and manage our work force. We cannot assure you that our existing personnel, systems, procedures and controls will be adequate to support the future growth of our operations. Our inability to manage our growth effectively could have a material adverse effect on our business, financial condition or results of operations.

We have significant competition from a variety of sourcessources.

        We operate in competitive markets and our future success will be largely dependent on our ability to provide quality products and services at competitive prices. Bidding for contracts or arrangements with customers, particularly within the supernatural chain and conventional supermarket channels, is highly competitive and distributors may market their services to a particular customer over a long period of time before they are invited to bid. Our competition comes from a variety of sources, including other distributors of natural products as well as specialty grocery and mass market grocery distributors.distributors and retail customers that have their own distribution channels. We cannot assure you that mass market grocery distributors will not increase their emphasis on natural products and more directly compete with us including through self-distribution of particular items or purchases of particular items directly from suppliers or that new competitors will not enter the market. These distributors may have been in business longer than we have, may have substantially greater financial and other resources than we have and may be better established in their markets. We cannot assure you that our current or potential competitors will not 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 rapidly acquire significant market share or that certain of our customers will increase distribution to their own retail facilities. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which could materially adversely affect our business, financial condition or results of operations. We cannot assure you that we will be able to compete effectively against current and future competitors.

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Our operations are sensitive to economic downturnsinvestment in information technology may not result in the anticipated benefits.

        The grocery industryMuch of our sales growth is sensitiveoccurring in our lower gross margin supernatural and conventional supermarket channels. In our attempt to nationalreduce operating expenses and regional economic conditionsincrease operating efficiencies, we have aggressively invested in the development and implementation of new information technology. Due to start-up inefficiencies associated with the demandinitial implementation of our technological initiatives in our Lancaster, Texas distribution facility, we have revised the timeline for the broader implementation of our productsproposed technological developments. While we currently believe this revised timeline will be met, we may not be able to implement these technological changes in the time frame that we have planned and delays in implementation could negatively impact our business, financial condition or results of operations. In addition, the costs to make these changes may exceed our estimates and will exceed the benefits during the early stages of implementation. Even if we are able to implement the changes in accordance with our revised plans, and within our current cost estimates, we may not be able achieve the expected efficiencies and cost savings from this investment, which could have an adverse effect on our business, financial condition or results of operations.

Failure by us to develop and operate a reliable technology platform could negatively impact our business.

        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 generate and select orders, to load and route trucks and to monitor and manage our business on a day-to-day basis. Any disruption to these computer systems could adversely affectedimpact our customer service, decrease the volume of our business and result in increased costs negatively affecting our business, financial condition or results of operations.

We have experienced losses due to the uncollectability of accounts receivable in the past and could experience increases in such 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 and/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 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, 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 material adverse effect on our business, financial condition, results of operations or cash flows. During periods of economic downturns thatweakness like those we experienced during fiscal 2009 and the first half of fiscal 2010, small to medium-sized businesses, like many of our independently owned natural products retailer customers, may be impacted more severely and more quickly than larger businesses. Consequently, the ability of such businesses to repay their obligations to us may deteriorate, and in some cases this deterioration may occur quickly, which could adversely impact consumer spending, including discretionary spending. Future economic conditions such as employment levels,our business, conditions, interest rates, energyfinancial condition or results of operations.

Our acquisition strategy may adversely affect our business and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. Among these changes couldour recent expansion into Canada may not be a reduction in the number of organic products that consumers purchase where there are non-organic (or "conventional") alternatives, given that many organic products, and particularly organic foods, often have higher retail prices than do their conventional counterparts.successful.

        In addition, our operating results are particularly sensitiveJune 2010, we entered the Canadian market with UNFI Canada's acquisition of the SDG assets of SunOpta, which we refer to and may be materially adversely affected by:

•

difficulties withas the collectability of accounts receivable;



•

difficulties with inventory control;



•

competitive pricing pressures; and



•

unexpected increases in fuel or other transportation-related costs.

SunOpta Transaction. We cannot assure you that oneour subsequent growth, if any, in the Canadian market will enhance our financial performance. Our ability to achieve

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the expected benefits of this acquisition will depend on, among other things, our ability to effectively translate our business strategies into a new geographic market with more rigid ingredient requirements for the products we distribute and an English and French dual labeling requirement that reduces the number of products we are likely to sell in comparison to the United States market, our ability to retain customers and suppliers, the adequacy of our implementation plans, our ability to maintain our financial and internal controls and systems as we expand within Canada, the ability of our management to oversee and operate effectively the combined operations and our ability to achieve desired operating efficiencies and sales goals. Failure to achieve these anticipated benefits could result in a reduction in the price of our common stock as well as in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy and could materially and adversely impact our business, financial condition or moreresults of operations.

        A significant portion of our past growth has been achieved through acquisitions of, or mergers with, other distributors of natural, organic and specialty products. We also continually evaluate opportunities to acquire other companies. We believe that there are risks related to acquiring companies, including an inability to successfully identify suitable acquisition candidates or consummate such factorspotential acquisitions. To the extent that our future growth includes acquisitions, we cannot assure you that we will not materiallyoverpay for acquisitions, lose key employees of acquired companies, fail to achieve potential synergies or expansion into new markets as a result of our acquisitions. Therefore, future acquisitions, if any, may have a material adverse effect on our results of operations, particularly in periods immediately following the consummation of those transactions while the operations of the acquired business are being integrated with our operations. Achieving the benefits of acquisitions depends on timely, efficient and successful execution of a number of post-acquisition events, including, among other things:

•

maintaining the customer base;



•

optimizing delivery routes;



•

coordinating administrative, distribution and finance functions; and



•

integrating management information systems and personnel.

        The integration process could divert the attention of management and any difficulties or problems encountered in the transition process could have a material adverse effect on our business, financial condition or results of operations. In particular, the integration process may temporarily redirect resources previously focused on reducing product cost, resulting in lower gross profits in relation to sales. In addition, the process of combining companies could cause the interruption of, or a loss of momentum in, the activities of the respective businesses, which could have an adverse effect on their combined operations.

        In connection with acquisitions of businesses in the future, if any, we may decide to consolidate the operations of any acquired business with our existing operations or make other changes with respect to the acquired business, which could result in special charges or other expenses. Our results of operations also may be adversely affected by expenses we incur in making acquisitions, by amortization of acquisition-related intangible assets with definite lives and by additional depreciation attributable to acquired assets. Any of the businesses we acquire may also have liabilities or adverse operating issues, including some that we fail to discover before the acquisition, and our indemnity for such liabilities may also be limited. Additionally, our ability to make any future acquisitions may depend upon obtaining additional financing. We may not be able to obtain additional financing on acceptable terms or at all. To the extent that we seek to acquire other businesses in exchange for our common stock, fluctuations in our stock price could have a material adverse effect on our ability to complete acquisitions.

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We may have difficulty managing our growth.

        The growth in the size of our business and operations has placed, and is expected to continue to place, a significant strain on our management. Our future growth may be limited by our inability to acquire new distribution facilities or expand our existing distribution facilities, make acquisitions, successfully integrate acquired entities or significant new customers, implement information systems initiatives or adequately manage our personnel. Our future growth is limited in part by the size and location of our distribution centers. As we near maximum utilization of a given facility or maximize our processing capacity, operations may be constrained and inefficiencies have been and may be created, which could adversely affect our results of operations unless the facility is expanded, volume is shifted to another facility or additional processing capacity is added. Conversely, as we add additional facilities or expand existing operations or facilities, excess capacity may be created. Any excess capacity may also create inefficiencies and adversely affect our results of operations. We cannot assure you that we will be able to successfully expand our existing distribution facilities or open new distribution facilities in new or existing markets as needed to accommodate or facilitate growth. Even if we are able to expand our distribution network, our ability to compete effectively and to manage future growth, if any, will depend on our ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage our work force. We cannot assure you that our existing personnel, systems, procedures and controls will be adequate to support the future growth of our operations. Our inability to manage our growth effectively could have a material adverse effect on our business, financial condition or results of operations.

Increased fuel costs may adversely affect our results of operationsoperations.

        Increased fuel costs may have a negative impact on our results of operations. The high cost of diesel fuel can increase the price we pay for products as well as the costs we incur to deliver products to our customers. These factors, in turn, may negatively impact our net sales, margins, operating expenses and operating results. To manage this risk, we have in the past periodically entered, and may in the future periodically enter, into heating oil derivative contracts to hedge a portion of our projected

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diesel fuel requirements. Heating crude oil prices have a highly correlated relationship to fuel prices, making these derivatives effective in offsetting changes in the cost of diesel fuel. We are not party to any commodity swap agreements and, as a result, our exposure to volatility in the price of diesel fuel has increased relative to our exposure to volatility in prior periods in which we had outstanding heating oil derivative contracts. We do not enter into fuel hedge contracts for speculative purposes. We have in the past, and may in the future, periodically enter into forward purchase commitments for a portion of our projected diesel fuel requirements. If fuel prices decrease significantly, these forward purchases may prove ineffective and result in us paying higher than the then market costs for a portion of our diesel fuel. As of July 30, 2011, there were no forward diesel fuel commitments in effect. We also have maintainedmaintain a fuel surcharge program since fiscal 2005 which allows us to pass some of our higher fuel costs through to our customers. We cannot guarantee that we will continue to be able to pass a comparable proportion or any of our higher fuel costs to our customers in the future.future, which may adversely affect our business, financial condition or results of operations.

Disruption of our distribution network could adversely affect our business.

        Damage or disruption to our distribution capabilities due to weather, natural disaster, fire, terrorism, pandemic, strikes, the financial and/or operational instability of key suppliers, 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 manage effectively such events if they occur, there could be an adverse effect on our business financial condition or results of operations.

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The cost of the capital available to us and any limitations on our ability to access additional capital may have a material adverse effect on our business, financial condition or results of operationsoperations.

        We have a $400 million secured revolving credit facility, which matures on November 27, 2012, and under which borrowings accrue interest, at our option, at either (i) the base rate (the applicable prime lending rate of Bank of America Business Capital, as announced from time to time) plus, during the period from June 1, 2008 through the date on which we demonstrate compliance with the fixed charge coverage ratio covenant thereunder (the "Credit Facility Noncompliance Period"), 0.25%, or (ii) the one-month London Interbank Offered Rate ("LIBOR") plus 1.0% during the Credit Facility Noncompliance Period and one-month LIBOR plus 0.75% thereafter.. As of August 2, 2008,July 30, 2011, our borrowing base, based on accounts receivable and inventory levels and described more completely below under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Revenues", was $370.9$400.0 million, with remaining availability of $65.0$262.0 million. We have a term loan agreement in the principal amount of $75 million secured by certain real property. The term loan is repayable over seven years based on a fifteen-year amortization schedule. Interest on the term loan accrues at one-month LIBOR plus 1.25% during the period from June 1, 2008 through the date on which we demonstrate compliance with the fixed charge coverage ratio covenant under the term loan agreement and one-month LIBOR plus 1.0% thereafter.. As of August 2, 2008, $61.2July 30, 2011, $47.1 million was outstanding under the term loan agreement.

        In order to maintain our profit margins, we rely on strategic investment buying initiatives, such as discounted bulk purchases, which require spending significant amounts of working capital.capital up front to purchase products that we will sell over a multi-month time period. In the event that our cost of capital increases, such as during thea period in which we are not in compliance with the fixed charge coverage ratio covenants under our revolving credit facility and our term loan agreement, or our ability to borrow funds or raise equity capital is limited, we could suffer reduced profit margins and be unable to grow our business organically or through acquisitions, which could 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 contain financial covenants and other restrictions that limit our operating flexibility, limit our flexibility in planning for or reacting to changes in our business and make us more vulnerable to economic downturns and competitive pressures. Our indebtedness could have significant negative consequences, including:

•

increasing our vulnerability to general adverse economic and industry conditions;



•

limiting our ability to obtain additional financing;



•

limiting our flexibility in planning for or reacting to changes in our business and the industry in which we compete; and



•

placing us at a competitive disadvantage compared to competitors with less leverage or better access to capital resources.

        In addition, each of our credit facility and term loan requires that we comply with various financial tests and imposes 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 pay dividends. Failure to comply with these covenants could have an adverse effect on our business, financial condition or results of operations.

Our operating results are subject to significant fluctuationsfluctuations.

        Our operating results may vary significantly from period to period due to:

•

demand for naturalour products; including as a result of seasonal fluctuations;



•

changes in our operating expenses, including fuel and insurance expenses;



•

management's ability to execute our business and growth strategies;

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•

changes in customer preferences, including levels of enthusiasm for health, fitness and environmental issues;



•

fluctuation of natural product prices due to competitive pressures;



•

personnel changes;



•

general economic conditions;conditions including inflation;



•

supply shortages, including a lack of an adequate supply of high-quality agricultural products due to poor growing conditions, natural disasters or otherwise;

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•

volatility in prices of high-quality agricultural products resulting from poor growing conditions, natural disasters or otherwise; and



•

future acquisitions, particularly in periods immediately following the consummation of such acquisition transactions while the operations of the acquired businesses are being integrated into our operations.

        Due to the foregoing factors, we believe that period-to-period comparisons of our operating results may not necessarily be meaningful and that such comparisons cannot be relied upon as indicators of future performance.

We are subject to significant governmental regulationregulation.

        Our business is highly regulated at the federal, state and local levels and our products and distribution operations require various licenses, permits and approvals. In particular:

•

ourthe products that we distribute in the United States are subject to inspection by the U.S.United States Food and Drug Administration;



•

our warehouse and distribution facilities are subject to inspection by the U.S. Department of AgricultureUSDA and state health authorities; and



•

the U.S.United States Department of Transportation and the U.S.United States Federal Highway Administration regulate our United States trucking operations.

        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. In addition, as a distributor and manufacturer of natural, organic, and specialty foods, we are subject to increasing 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. If we were to manufacture or distribute foods that are or are perceived to be contaminated, any resulting product recalls, such as the peanut-related recall in January 2009 and egg recall in August 2010, could have an adverse effect on our business, financial condition or results of operations. 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, especially diesel engine emissions, could impose substantial costs on us. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or replacing our vehicles prematurely. 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 impose material costs on us which we may be unable to pass on to our customers.

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Product liability claims could have an adverse effect on our business.

        We face an inherent risk of exposure to product liability claims if the products we manufacture or sell cause injury or illness. 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. 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 from manufacturers, but any such indemnification is limited, as a practical matter, to the creditworthiness of the indemnifying party. If we or any of our acquired companies 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.

We are dependent on a number of key executivesexecutives.

        Management of our business is substantially dependent upon the services of certain key management employees. Loss of the services of any officers or any other key management employee could have a material adverse effect on our business, financial condition or results of operations.

Union-organizing activities could cause labor relations difficultiesdifficulties.

        As of August 2, 2008,July 30, 2011 we had approximately 6,3006,900 full and part-time employees. An aggregateemployees, 390 of approximately 6.6% of our total employees, or approximately 415 of the employees at our Auburn, Washington, East Brunswick, New Jersey, Edison, New Jersey, Iowa City, Iowa and Leicester, Massachusetts facilities,whom (approximately 5.9%) are covered by collective bargaining agreements.agreements at our Edison, New Jersey, Auburn, Washington, Leicester, Massachusetts, and Iowa City, Iowa facilities. The Edison, New Jersey, Auburn, Washington, East Brunswick, New Jersey, Leicester, Massachusetts and Iowa City, Iowa agreements expire in June 2011,2014, February 2009, June 2009,2012, March 2013 and July 2009,June 2014, respectively. We have in the past been the focus of union-organizing efforts. On June 8, 2010, the National Labor Relations Board issued a certification of representative notice to us with respect to our Dayville, Connecticut drivers, resulting from an election there in May 2010. Subsequently, we entered into negotiations with Teamsters' representatives to reach a collective bargaining agreement. On June 14, 2011, with no collective bargaining agreement having been reached, the Dayville facility drivers petitioned for decertification of union representation. A decertification election took place on July 14 - 15, 2011, and the petition failed to achieve decertification by one vote. We reached agreement on a collective bargaining agreement for these workers on August 1, 2011. In September of 2010, we received a petition for union representation of our Iowa City, Iowa distribution center's drivers and dispatchers by the Teamsters. An election was held in October of 2010, which was favorable to management, the results of which were certified in October 2010. On October 18, 2010, the National Labor Relations Board issued a petition for union representation of the warehouse associates at our Greenwood, Indiana distribution center by the Teamsters. An election was held in November 2010, and the National Labor Relations Board issued its certification of results of election in favor of management on December 1, 2010.

        As we increase our employee base and broaden our distribution operations to new geographic markets, our increased visibility could result in increased or expanded union-organizing efforts. Although we have not experienced a work stoppage to date, if additional employees were to unionize or we are not successful in reaching agreement with these employees, we could be subject to work stoppages and increases in labor costs, either of which could materially adversely affecthave a material adverse effect on our business, financial condition or results of operations.

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The market price for our common stock may be volatile.

        In recent periods, there has been significant volatility in the market price of our common stock. In addition, the market price of our common stock could fluctuate substantially in the future in response to a number of factors, including the following:

•

our quarterly operating results or the operating results of other distributors of organic or natural food and non-food products and of supernatural chains and conventional supermarkets and other of our customers;



•

changes in general conditions in the economy, the financial markets or the organic or natural food and non-food product distribution industries;



•

changes in financial estimates or recommendations by stock market analysts regarding us or our competitors;



•

announcements by us or our competitors of significant acquisitions;



•

increases in labor, energy, fuel costs or the costs of food products;



•

natural disasters, severe weather conditions or other developments affecting us or our competitors;



•

publication of research reports about us or the organic or natural food and non-food product distribution

        industries generally;

•

changes in market valuations of similar companies;



•

additions or departures of key management personnel;



•

actions by institutional stockholders; and



•

speculation in the press or investment community.

        In addition, in recent years the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance. These broad market fluctuations may materially adversely affect our stock price, regardless of our operating results.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        Not applicable.

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ITEM 2.    PROPERTIES

        We maintained twentytwenty-eight distribution centers at fiscal year endJuly 30, 2011 which were utilized by our wholesale division. These facilities, including offsite storage space, consisted of an aggregate of approximately 5.87.6 million square feet of storage space, which we believe represents the largest capacity of any distributor within the United States in the natural, organic and specialty products industry.

        Set forth below for each of our distribution facilities is its location and the date on which our lease will expireexpiration of leases as of July 30, 2011 for those distribution facilities that we do not own. We have granted the lenders under

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our term loan facility a mortgage on those of our facilities identified with an asterisk below, which have a combined appraised value of approximately $84.3 million.

        We lease facilities to operate thirteentwelve retail stores through our EOM division in Florida, Maryland and Massachusetts and one retail store through our UNFI Canada division, each with various lease expiration dates. We also lease a processing and manufacturing facility in Edison, New Jersey with a lease expiration date of March 31, 2010.2013.

        We lease office space in Santa Cruz, California, Danielson, Connecticut, Chesterfield, New Hampshire, and Uniondale, New York.York, Richmond, Virginia, and Providence, Rhode Island, the site of our corporate headquarters. Our leases have been entered into upon terms that we believe to be reasonable and customary. We own office space in Dayville, Connecticut.

        We also lease a warehouse facility in Minneapolis, Minnesota. Our operations were moved to thisMinnesota that we acquired in connection with our acquisition of Roots & Fruits Produce Cooperative in 2005. This facility fromis currently being subleased under an agreement that expires concurrently with our Mounds View, Minnesota facility in October 2005. The lease for the Minneapolis facility will expiretermination in November 2016.

        We lease the Moreno Valley, California warehouse facility that opened in September 2008 and the warehouse facility in York, Pennsylvania that is expected to open in January 2009. These leases expire in July 2023 and May 2020, respectively. We also lease offsite storage space in Aurora, Colorado.

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ITEM 3.    LEGAL PROCEEDINGS

        From time to time, we are involved in routine litigation that arises in the ordinary course of our business. There are no pending material legal proceedings to which we are a party or to which our property is subject.

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ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS(REMOVED AND RESERVED)

        There were no matters submitted to a vote of the security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended August 2, 2008.

Executive Officers of the Registrant

        Our executive officers are elected on an annual basis and serve at the discretion of our Board of Directors. Our executive officers and their ages as of September 25, 2008 are listed below:

Daniel V. Atwood has served as our Executive Vice President, Chief Marketing Officer and President of Blue Marble Brands since December 2005 and as our Secretary since January 1998. Mr. Atwood served as our Senior Vice President of Marketing from October 2002 until December 2005 and National Vice President of Marketing from April 2001 until October 2002. Mr. Atwood served on our Board of Directors from November 1996 until December 1997 and served on the Board of Directors of our predecessor company, Cornucopia Natural Foods, Inc., from August 1988 until October 1996. Mr. Atwood served as President of our subsidiary, NRG, from August 1995 until March 2001.

Michael Beaudry has served as President of the Eastern Region since January 2006. Mr. Beaudry served as our Vice President of Distribution from August 2003 until January 2006, Vice President of Operations, Eastern Region, from December 2002 until August 2003, as our Director of Operations from December 2001 until December 2002 and as the Warehouse/Operations Manager of our Dayville, Connecticut facility from December 1999 until December 2001. Prior to joining us, Mr. Beaudry held various management positions at Target Corporation.

Thomas A. Dziki has served as Vice President of Sustainable Development since March 2007. Mr. Dziki served as our National Vice President of Real Estate and Construction from August 2006 until March 2007, President of Hershey Imports and Select Nutrition from December 2004 until August 2006, Corporate Vice President of Special Projects from December 2003 to November 2004 and as our Manager of Special Projects from May 2002 to December 2003. Prior to joining us, Mr. Dziki served as a private consultant to our company, our subsidiaries, Hershey Imports, NRG, and Albert's Organics, and our predecessor company, Cornucopia Natural Foods, Inc., from 1995 to May 2002.

Carl F. Koch III has served as our Vice President of Human Resources since December 2007. Mr. Koch previously served as Vice President of Risk and Compliance from August 2006 until December 2007, as Director of Risk Management from June 2004 until August 2006 and as the Corporate Risk Manager from June 2001 until May 2004. Prior to joining us, Mr. Koch held various management positions at Liberty Mutual Group.

Randle Lindberg has served as our President of the Western Region since January 2006. From 1972 through January 2006, Mr. Lindberg served in various positions of increasing responsibility up to and including President and Chief Executive Officer of Nature's Best, Inc.

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Mark E. Shamber has served as Vice President, Chief Financial Officer and Treasurer since October 2006. Mr. Shamber previously served as our Vice President, Chief Accounting Officer and Acting Chief Financial Officer and Treasurer from January 2006 until October 2006, as Vice President and Corporate Controller from August 2005 to October 2006 and as our Corporate Controller from June 2003 until August 2005. From February 1995 until June 2003, Mr. Shamber served in various positions of increasing responsibility up to and including senior manager within the assurance and advisory business systems practice at the international accounting firm of Ernst & Young LLP.

Steven L. Spinner has served as our President and Chief Executive Officer and as a member of our Board of Directors since September 2008. Prior to joining the Company in September 2008, Mr. Spinner served as a director and as Chief Executive Officer of Performance Food Group Company ("PFG") from October 2006 to May 2008, when PFG was acquired by affiliates of The Blackstone Group and Wellspring Capital Management. Mr. Spinner previously had served as PFG's President and Chief Operating Officer beginning in May 2005. Mr. Spinner served as PFG's Senior Vice President and Chief Executive Officer—Broadline Division from February 2002 to May 2005 and as PFG's Broadline Division President from August 2001 to February 2002.

John Stern has served as our Chief Information Officer since January 2008. Prior to joining us, Mr. Stern served in various positions of increasing responsibility up to and including Chief Information Officer at Take Two Interactive Software Inc. from October 2003 to September 2007 and Deloitte & Touche LLP from December 1999 to October 2003.

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PART II.

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Our common stock is traded on the Nasdaq Global Select Market® under the symbol "UNFI." Our common stock began trading on the Nasdaq Stock Market® on November 1, 1996.

        The following table sets forth, for the fiscal periods indicated, the high and low sale prices per share of our common stock on the Nasdaq Global Select Market®:

        On September 25, 2008,July 30, 2011, we had approximately 9092 stockholders of record. The number of record holders may not be representative of the number of beneficial holders of our common stock because depositories, brokers or other nominees hold many shares.

        We have never declared or paid any cash dividends on our capital stock. We anticipate that all of our earnings in the foreseeable future will be retained to finance the continued growth and development of our business and we have no current intention to pay cash dividends. Our future dividend policy will depend on our earnings, capital requirements and financial condition, requirements of the financing agreements to which we are then a party and other factors considered relevant by our Board of Directors. OurAdditionally, the terms of our existing revolving credit facility prohibits the declaration or payment ofrestrict us from making any cash dividends to our stockholders withoutunless certain conditions and financial tests are met.

        The following table provides information on shares repurchased by the written consent of the administrative agent under the facilityCompany during the termfourth quarter ended July 30, 2011. For the periods presented, the shares repurchased were withheld to cover certain employee tax withholding obligations on the vesting of the credit agreement and until all of our obligations under the credit agreement have been met.restricted stock awards.

Comparative Stock Performance

        The graph below compares the cumulative total stockholder return on our common stock for the last five fiscal years with the cumulative total return on (i) an index of Food Service Distributors and Grocery Wholesalers and (ii) The NASDAQ Composite Index. The comparison assumes the investment

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of $100 on July 31, 200329, 2006 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.

        The index of Food Service Distributors and Grocery Wholesalers (referred to below as the "Peer Group") includes Nash Finch Company, SuperValu, Inc. and SYSCO Corporation. Performance Food Group Co.PFG was removed from the peer groupPeer Group in 2008 as it was acquiredfollowing its acquisition by another company.

Table        This performance graph shall not be deemed "soliciting material" or be deemed to be "filed" for purposes of ContentsSection 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of United Natural Foods, Inc. under the Securities Act of 1933, as amended, or the Exchange Act.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among United Natural Foods, Inc., the NASDAQ Composite Index
and Index of Food Distributors and Wholesalers

*

$100 invested on 7/29/06 in 7/3/03 stock & index-includingor on 7/31/06 in index, including reinvestment of dividends. NasdaqIndex calculated on month-end basis.

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ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA

        The selected consolidated financial data presented below are derived from our consolidated financial statements, which have been audited by KPMG LLP, our independent registered public accounting firm. Certain prior year amounts have been reclassified to conform to the current year's presentation. The historical results are not necessarily indicative of results to be expected for any future period. The following selected consolidated financial data should be read in conjunction with and is qualified by reference to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K.

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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 appearing elsewhere in this Annual Report on Form 10-K.

Forward-Looking Statements

        This Annual Report on Form 10-K and the documents incorporated by reference in this Annual Report on Form 10-K contain forward-looking statements 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," "plans," "seek," "should," "will," and "would," or similar words. You should read statements that contain these words carefully because they discuss future expectations, contain projections of future results of operations or of financial positionpositions or state other "forward-looking" information. The

        Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. 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 and economic sensitivity of our business;



•

our sensitivity to general economic conditions, including the current economic environment, changes in disposable income levels and consumer spending trends;



•

our ability to successfully initiate distribution to our recently announced new retail customer;



•

increased fuel costs;



•

our ability to successfully consummate our pending divestiture of our non-foods and general merchandise lines of business within the expected timeframe and cost estimates currently contemplated;



•

our ability to successfully deploy our operational initiatives in the Canadian market;



•

the ability to identify and successfully complete acquisitions of other natural, organic and specialty food and related product distributors;



•

management's allocation of capital and the timing of capital expenditures; and



•

our sensitivity to inflationary pressures.

        This list of risks and uncertainties, however, is only a summary of some of the most important factors listedand is not intended to be exhaustive. You should carefully review the risks described under "Part I. Item 1A. Risk Factors," as well as any other cautionary language in this Annual Report on Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations described in these forward-looking statements. You should be aware thatas the occurrence of theany of these events described under "Risk Factors" and elsewhere in this Annual Report on Form 10-K could have an adverse effect on our business, results of operationsoperation and financial position.

        Any forward-looking statements in this Annual Report on Form 10-K and the documents incorporated by reference in this Annual Report on Form 10-K are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements, possibly materially. We do not undertake to update any information in the foregoing reports until the effective date of our future reports required by applicable laws. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. We may from time to time update these publicly announced projections, but we are not obligated to do so.condition.

Overview

        We believe we are athe leading national distributor based on sales of natural, organic and specialty foods and non-food products in the United States.States and Canada and that our twenty-eight distribution centers, representing approximately 7.6 million square feet of warehouse space, provide us with the

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largest capacity of any North American-based distributor in the natural, organic and specialty products industry. We carry more than 60,000 high-quality natural, organic and specialty foods and non-food products, consisting of national brand,brands, regional brand,brands, private label and master distribution products, in 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. We serve more than 17,000 customers23,000 customer locations primarily located across the United States and Canada, the majority of which can be classified into one of the following categories: independently owned natural products retailers;retailers, which include buying clubs; supernatural chains, which are comprisedconsist solely of large chainsWhole Foods Market; conventional supermarkets, which include mass market chains; and other which includes foodservice and international customers outside of natural foods supermarkets; and conventional supermarkets. Our other distribution channels include food service, international and buying clubs.Canada.

        Our operations are comprised of three principal operating divisions. These operating divisions are:

•

our wholesale division, which includes our broadline natural, organic and organicspecialty distribution business in the United States, UNFI Canada, which is our natural, organic and specialty distribution business in Canada, Albert's, which is a leading distributor of organically grown produce and perishable items, and Select Nutrition, which distributes vitamins, minerals and supplements;



•

our retail division, consisting of NRG,EOM, which operates our 13twelve natural products retail stores;stores within the United States; and

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•

our manufacturing division, which is comprisedconsisting of Hershey Imports,Woodstock Farms Manufacturing, which specializes in the international importation, roasting, packaging and packagingdistribution of nuts, dried fruit, seeds, trail mixes, granola, natural and organic products,snack items, and confections, and our brandedBlue Marble Brands product lines.

        In recent years, our sales to existing and new customers have increased through the continued growth of the naturalorganic and organicnatural products industry in general;general, increased market share throughas a result of our high quality service and a broader product selection, including specialty products, and the acquisition of, or merger with, natural and specialty products distributors;distributors, the expansion of our existing distribution centers; the construction of new distribution centers; and the development of our own line of natural and organic branded products. Through these efforts, we believe that we have been able to broaden our geographic penetration, expand our customer base, enhance and diversify our product selections and increase our market share.

        We have been the primary distributor to Whole Foods Market, our largest customer, for more than 1013 years. In August 2007,Effective June 2, 2010, we amended our distribution agreement with Whole Foods Market and Wild Oats Markets completed their merger,to extend the term of the agreement for an additional seven years. Under the terms of the amended agreement, we will continue to serve as a result of which, Wild Oats Markets became a wholly-owned subsidiary ofthe primary wholesale natural grocery distributor to Whole Foods Market. We had servedMarket in its United States regions where we were serving as the primary distributor at the time of natural and organic foods and non-food products for Wild Oats Markets priorthe amendment. The amendment extended the expiration date of the agreement from September 25, 2013 to the merger, and our relationship withSeptember 25, 2020. On July 28, 2010, we announced that we had entered into an asset purchase agreement under which we agreed to acquire certain assets of Whole Foods Market expandedDistribution, Inc. previously used in their self distribution of non-perishables, and have undertaken to coverbecome the former Wild Oats Markets stores retained byprimary distributor in their Rocky Mountain and Southwest regions. This transaction was completed in late September in the case of the Southwest region and early October 2010 in the case of the Rocky Mountain region. We paid approximately $21.9 million in cash consideration to acquire the purchased assets. Following the closing of this transaction, we now serve as the primary distributor to Whole Foods Market followingin all of its regions in the merger. On a combined basis, and excluding sales to Wild Oats Markets' former Henry's and Sun Harvest store locations (which were sold byUnited States. Whole Foods Market to a subsidiary of Smart & Final Inc. on September 30, 2007), Whole Foods Market and Wild Oats Markets accounted for approximately 31.0%36% and 34.7%35% of our net sales for the years ended August 2, 2008July 30, 2011 and July 28, 2007,31, 2010, respectively.

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        OnIn June 2010, we acquired the SDG assets of SunOpta through our wholly-owned subsidiary, UNFI Canada for cash consideration of $65.8 million. With the acquisition, we became the largest distributor of natural, organic and specialty foods, including kosher foods, in Canada. This was a strategic acquisition as UNFI Canada provides us with an immediate platform for growth in the Canadian market.

        In November 2, 2007, we acquired DHI and Millbrook for total cash consideration of $85.5 million, consisting of the $84.0 million purchase price and $1.5 million of related transaction fees, subject to certain adjustments set forth in the merger agreement. Our UNFI Specialty Distribution division is comprised of DHI and Millbrook. Our specialty distribution division operatestwo distribution centers located in Massachusetts New Jersey, and Arkansas with customers throughout the United States. Through our specialty distribution division's three distribution centers, which provide approximately 1.61.4 million square feet of warehouse space, we distributespace. We have now integrated specialty food items (including ethnic, kosher, gourmet, organicproducts and natural foods), health and beauty careorganic specialty non-food items and other non-food items.

into our broadline distribution centers across the country. We believe that thethis acquisition of DHI and Millbrook accomplishes several of our strategic objectives, including acceleratingaccelerated our expansion into a number of high-growth business segments and establishingestablished immediate market share in the fast-growing specialty foods market. Due to our expansion into specialty foods, we were awarded new business with a number of conventional supermarkets during fiscal 2010 and 2011, including our recently announced relationship with Safeway. We believe that Millbrook's customer basedistribution of these products enhances our conventional supermarket business channel and that the organizations'our complementary product lines continue to present opportunities for cross-selling.

        In orderOn June 9, 2011, we entered into an asset purchase agreement with L&R pursuant to which we have agreed to sell our conventional non-foods and general merchandise lines of business, including certain inventory related to this business. This divestiture will allow us to concentrate on our core business of the distribution of natural, organic, and specialty foods and products.

        To maintain our market leadership 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 selection;



•

offer operational excellence with high service levels and a higher percentage of on-time deliveries;



•

centralize general and administrative functions to reduce expenses;



•

consolidate systems applications among physical locations and regions;



•

increase our investment in people, facilities, equipment and technology;



•

integrate administrative and accounting functions; and



•

reduce the geographic overlap between regions.

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        Our continued growth has created the need for expansion ofallowed us to expand our existing facilities and open new facilities to achieve maximumincreasing operating efficiencies and to assure adequate space for future needs.efficiencies. We have made significant capital expenditures and incurred considerable expenses in connection with the opening and expansion of our facilities, and we expect to continue to do so. In the past six years, we have invested over $175 million in distribution capacity and infrastructure improvements.facilities. We have increased our distribution capacity to approximately 5.87.6 million square feet. In August 2005, we expanded our Midwest operations by opening a 311,000 square foot distribution center in Greenwood, Indiana, which serves as a distribution hub for our customers in Illinois, Indiana, Ohio and other Midwest states. In October 2005, we opened our Rocklin, California distribution center and moved our Auburn, California operations to this facility. The Rocklin distribution center is 487,000 square feet in size and serves as a distribution hub for customers in California and surrounding states. Our new 237,000 square foot distribution center in Ridgefield, Washington commenced operations in December 2007 and serves as a regional distribution hub for customers in Portland, Oregon and other Northwest markets. We opened our Sarasota, Florida warehouse in the first quarter of fiscal 2008 in order to reduce the geographic area served by our Atlanta, Georgia facility, which we believe will contribute to lower transportation costs. Our new, 613,000597,000 square foot distribution center in Moreno Valley, California commenced operations in September 2008 and serves our customers in Southern California, Arizona, Southern Nevada, Southern Utah, and Hawaii. Finally, in April 2008, we announced plans to lease a new 675,000Our newly leased, 654,000 square foot distribution center in York, Pennsylvania, to servecommenced operations in January 2009, and replaced our New Oxford, Pennsylvania facility serving customers in New York, New Jersey, Pennsylvania, Delaware, Maryland, Ohio, Virginia, and West Virginia. Operations are scheduledIn April 2009, we successfully relocated our former DHI specialty distribution facility in East Brunswick, New Jersey into the York, Pennsylvania distribution center, creating our first fully integrated facility offering a full assortment of natural, organic, and specialty foods. In September 2009, we commenced operations of a new facility in Charlotte, North Carolina serving Albert's customers in North Carolina, South Carolina, Georgia, Tennessee and Virginia. In connection with the acquisition of the SDG assets in June 2010, we

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acquired five distribution facilities which provided nationwide presence in Canada with approximately 286,000 square feet of distribution space and the ability to commenceserve all major markets in January 2009.Canada. In September 2010, we commenced operations at a new facility in Lancaster, Texas, shipping to customers throughout the Southwestern United States, including Texas, Oklahoma, New Mexico, Arkansas and Louisiana. Finally, in October 2010 we assumed the operations at the former Whole Foods Market Distribution facility in Aurora, Colorado.

        Our net sales consist primarily of sales of natural, organic and specialty products to retailers, adjusted for customer volume discounts, returns and allowances. Net sales also consist of amounts charged by us to customers for shipping and handling and fuel surcharges. The principal components of our cost of sales include the amounts paid to manufacturers and growers for product sold, plus the cost of transportation necessary to bring the product to our distribution facilities. Cost of sales also includes amounts incurred by us at our manufacturing subsidiary, Hershey Imports,Woodstock Farms Manufacturing, for inbound transportation costs and depreciation for manufacturing equipment, andoffset by consideration received from suppliers in connection with the purchase or promotion of the suppliers' products. Our gross margin may not be comparable to other similar companies within our industry that may include all costs related to their distribution network in their costs of sales rather than as operating expenses. We include purchasing and outbound transportation expenses within our operating expenses rather than in our cost of sales. Total operating expenses include salaries and wages, employee benefits (including payments under our Employee Stock Ownership Plan), warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation, depreciation and amortization expense. Other expenses (income) include interest on our outstanding indebtedness, interest income and miscellaneous income and expenses.

Critical Accounting Policies and 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 related disclosure of contingent assets and liabilities. The Securities and Exchange Commission has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and require our most difficult, complex or subjective judgments or estimates. Based on this definition, we believe our critical accounting policies are: (i) determining our allowance for doubtful accounts, (ii) determining our reserves for the self-insured portions of our workers' compensation and automobile liabilities and (iii) valuing goodwill and intangible assets. For all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies.

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Allowance for doubtful accounts

        We analyze customer creditworthiness, accounts receivable balances, payment history, payment terms and historical bad debt levels when evaluating the adequacy of our allowance for doubtful accounts. 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, orders are released; a failure to pay results in held or cancelled orders. Our accounts receivable balance was $179.1$257.5 million and $160.3$217.1 million, net of the allowance for doubtful accounts of $5.5$4.5 million and $4.4$6.3 million, as of August 2, 2008July 30, 2011 and July 28, 2007,31, 2010, respectively. Our notes receivable balances were $3.8$5.0 million and $4.5$3.3 million, net of the allowance offor doubtful accounts of $1.6$1.3 million and $1.6$1.4 million, as of August 2, 2008July 30, 2011 and July 28, 2007,31, 2010, respectively.

Insurance reserves

        It is our policy to record the self-insured portions of our workers' compensation and automobile liabilities based upon actuarial methods of estimating the future cost of claims and related expenses

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that have been reported but not settled, and that have been incurred but not yet reported. Any projection of losses concerning workers' compensation and automobile liability 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 and automobile liabilities totaled $12.5$17.5 million and $8.5$15.9 million as of August 2, 2008July 30, 2011 and July 28, 2007,31, 2010, respectively.

Valuation of goodwill and intangible assets

        Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," requires that companiesWe are required to test goodwill for impairment at least annually, and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have elected to perform our annual tests for indications of goodwill impairment during the fourth quarter of each fiscal year. Impairment lossesBased on future expected cash flows, we test for goodwill impairment at the reporting unit level. Our reporting units are at or one level below the operating segment level. The goodwill impairment analysis is a two-step test. The first step, used to identify potential impairment, involves comparing each reporting unit's estimated fair value to its carrying value, including goodwill. Each reporting unit regularly prepares discrete operating forecasts and uses these forecasts as the basis for the assumptions used in the discounted cash flow analysis. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment. If required, the second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated potential impairment. The implied fair value of goodwill is determined based uponin a manner similar to the amount of goodwill calculated in a business combination, by measuring the excess of carrying amounts over discounted expected future cash flowsthe estimated fair value of the underlying business. For reporting units that indicate potential impairment, we determineunit, as determined in the first step, over the aggregate estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the implied fair value of thatgoodwill exceeds the carrying value of goodwill assigned to the reporting unit, usingthere is no impairment. If the carrying value of goodwill assigned to a discountedreporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess.

        During the first quarter of the 2011 fiscal year, we performed a test for goodwill impairment as a result of the expected change in future cash flow analysisflows for certain of our branded product lines, and compare such values to the respective reporting units' carrying amounts.determined that no impairment existed. As of August 2, 2008,July 30, 2011, our annual assessment of each of our reporting units indicated that no impairment of goodwill existed.existed as the fair value of each reporting unit exceeded its carrying value. Approximately 91% of our goodwill is within our wholesale reporting unit. For the wholesale reporting unit, the fair value was more than 50% in excess of its carrying value. The fair value of our remaining reporting units, including Blue Marble Brands, Woodstock Farms Manufacturing and EOM were more than 10% in excess of their carrying values, and are not considered at risk of failing the first step of the goodwill impairment test. We feel that these projected results are achievable, though these assumptions are based upon our current business model and may be negatively affected if we attempt to dispose of any of our brands, stores or facilities or substantially change how we market and sell our products. For all of our assessments, the weighted average cost of capital used in calculating the present value of future cash flows was 14.0%. Total goodwill as of August 2, 2008July 30, 2011 and July 28, 200731, 2010 was $170.6$191.9 million and $79.9$186.9 million, respectively.

        Intangible assets with indefinite lives are tested for impairment at least annually and between annual tests if events occur or circumstances change that would indicate that the value of the asset may be impaired. Impairment is measured as the difference between the fair value of the asset and its carrying value. ThereAs of our most recent annual impairment test, the fair value of our indefinite lived

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intangible assets was no impairmentin excess of their carrying value. The fair value of our indefinite-lived intangible assets related to our indefinite livedbranded product lines was more than 100% in excess of its carrying value. The fair value of our indefinite-lived intangible assets during 2008.related to our wholesale distribution business was also more than 100% in excess of its carrying value. The projections used in the impairment assessment for the branded product line asset group assume sales growth of approximately 10% per year, with gross margin and operating expenses which on average approximate current levels as a percentage of sales. The projections used in the impairment assessment for intangibles within the Canadian wholesale distribution business asset group assume sales growth of approximately 12% per year, with gross margin and operating expenses which on average approximate current levels as a percentage of sales. Total indefinite lived intangible assets as of August 2, 2008July 30, 2011 and July 28, 200731, 2010 were $25.9$28.9 million and $8.3$28.8 million, respectively.

        Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over the asset's useful life based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow model. There werehave been no indicatorsevents or changes in circumstances indicating that the carrying value of impairmentour finite-lived intangibles are not recoverable during 2008.2011. Total finite-lived intangible assets as of August 2, 2008July 30, 2011 and July 28, 200731, 2010 were $7.8$29.5 million and $0.3$21.4 million, respectively.

        The assessment of the recoverability of goodwill and intangible assets will be impacted if estimated future cash flows are not achieved.

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Results of Operations

        The following table presents, for the periods indicated, certain income and expense items expressed as a percentage of net sales:

*

        Note: Our 2008 fiscal year included 53 weeksTable of operations while our 2007 and 2006 fiscal years included 52 weeks of operations.Contents

Year ended August 2, 2008 compared toFiscal year ended July 28, 200730, 2011 compared to fiscal year ended July 31, 2010

Net Sales

        Our net sales for the fiscal year ended July 30, 2011 increased approximately 22.2%20.6%, or $611.6$772.9 million, to $3.4 billion for the year ended August 2, 2008, from $2.8a record $4.5 billion for the year ended July 28, 2007.30, 2011 from $3.8 billion for the year ended July 31, 2010. This increase was primarily due to sales from our newly acquired UNFI Specialty Distribution business of $211.4 million as well as organic growth (sales growth excluding the impact of acquisitions) in our wholesale segment of $774.3 million, which includes the growth resulting from our entrance into the Canadian market in June 2010 and the expansion of our primary distribution division of $389.1 million, or 14.4%. Further, approximately 2% of the increaseagreement with Whole Foods Market in net sales was attributable to the extra week included in fiscal 2008.October 2010. Our organic growth is due to the continued growth of the natural products industry in general, increased market share as a result of our focus on service and value added value services, and the openingbreadth of new, and expansionour product selection. In addition, we believe that the integration of existing, distribution centers, which allowour specialty business has allowed us to carryattract customers that we would not have been able to attract without that business as many customers seek a broader selection ofsingle source for their natural, organic and specialty products. Our net sales for the fiscal year ended July 30, 2011 were also favorably impacted by moderate price inflation.

        In addition to net sales growth attributable to UNFI Specialty Distribution and our organic growth, we also benefited from the inclusion of $200.7 million in sales from UNFI Canada, which includes the SDG assets acquired during the fourth quarter of products we acquired from Organic Brands, LLC ("Organic Brands")fiscal 2010, and acquisitions of and other branded product lines during fiscal 2007 and fiscal 2008. However, these acquisitions impacted our cost of sales and gross profit more than they impacted our net sales.

        On a combined basis, and excludingapproximately $131.6 million in incremental sales to Henry's and Sun Harvest store locations, which were divested by Whole Foods Market following its merger with Wild Oats Markets,due to the acquisition of Whole Foods Market's Southwest and Rocky Mountain distribution business in the first quarter of fiscal 2011 and our expanded distribution agreement in October 2010.

        Our net sales by customer type for the years ended July 30, 2011 and July 31, 2010 were as follows (in millions):

        Net sales to our independent retailer channel increased by approximately $187 million, or 12.4% during the year ended July 30, 2011 compared to the year ended July 31, 2010. While net sales in this channel have increased, they have grown at a slower rate than net sales in our supernatural and conventional supermarket channels, and therefore represent a lower percentage of our total net sales compared to the prior year.

        Whole Foods Market is our only supernatural chain customer, and Wild Oats Marketsnet sales to Whole Foods Market for the year ended July 30, 2011 increased by approximately $310 million or 23.6% over the prior year and accounted for approximately 31.0%36% and 34.7%35% of our total net sales for the years ended July 30, 2011 and July 31, 2010, respectively. The increase in sales to Whole Foods Market is primarily due to the increases in same-store sales, as well as the expanded primary distribution agreement noted above.

        Net sales to conventional supermarkets for the year ended July 30, 2011 increased by approximately $220 million, or 28.5% from fiscal 2010 and represented approximately 22% of total net sales in fiscal 2011 compared to 21% in fiscal 2010. The increase in net sales to conventional supermarkets is primarily due to several large new customers won during the year based on our consolidated market strategy of natural, organic and specialty from one supplier, as well as $92.5 million of net sales to conventional supermarkets by UNFI Canada. With the addition of the Safeway business that we anticipate we will begin servicing in the first quarter of fiscal 2012, we expect

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that our sales to conventional supermarkets in fiscal 2012 will be a larger percentage of our total net sales than in fiscal 2011.

        Other net sales, which include sales to foodservice and sales from the United States to countries other than Canada, increased by approximately $56 million or 34.3% during the fiscal year ended August 2, 2008July 30, 2011 over the prior fiscal year and accounted for approximately 5% of total net sales in fiscal 2011 compared to 4% of total net sales for the fiscal year ended July 28, 2007, respectively.31, 2010.

        The Henry's and Sun Harvest locations divested bydecrease in sales percentage to the independent channel is the result of the higher growth rate in our supernatural chain as a result of an increase in Whole Foods Market remainbusiness, and in our customers.conventional supermarkets.

        The following table listsBeginning in the percentagesecond half of fiscal 2010, we began to see steady improvement in our net sales by customer typeand a reduction in the volatility of net sales, as compared to what we experienced throughout our 2009 fiscal year. As we continue to aggressively pursue new customers and as economic conditions continue to stabilize, we expect net sales for fiscal 2012 to further grow over fiscal 2011 in both our organic line and our specialty line. We believe that this projected sales growth will come from both sales to new customers and an increase in the years ended August 2, 2008number of products that we sell to existing customers. We also believe that food price inflation will contribute to our projected net sales growth in fiscal 2012. We expect that most of this sales growth will occur in our lower gross margin supernatural and July 28, 2007:

        Salesconventional supermarket channels. Although sales to Henry's and Sun Harvest store locationsthese customers typically generate lower gross margins than sales to customers within our independent retailer channel, they also typically carry a lower average cost to serve than sales to our independent customers. We believe that the integration of our specialty business into our national platform has allowed us to attract customers that we would not have been reclassified from our supernatural channel into our supermarket channel in both fiscal years 2008 and 2007able to attract without that business and will continue in this classification going forward. This reclassification resulted in an increase in sales in the supermarket channelto allow us to pursue a broader array of 1.7%customers as many customers seek a single source for their natural, organic and a decrease in sales in the supernatural channel of 1.7% for the year ended July 28, 2007. In addition, sales by channel have been adjusted to reflect changes in customer types resulting from a review of our customer lists. As a result of this adjustment, sales to the independents sales channel increased 0.9% for the year ended July 28, 2007 and sales to the supermarket sales channel decreased 0.9% for the year ended July 28, 2007. The overall decrease in sales to the independents and supernatural channels and the increase in sales to the supermarket channel was primarily due to the acquisition of Millbrook in November 2007, as our specialty distribution division primarily distributes to the supermarket channel.products.

Gross Profit

        Our gross profit increased approximately 24.4%18.3%, or $124.3$127.9 million, to $633.9 million for the year ended August 2, 2008, from $509.6$824.8 million for the year ended July 28, 2007.30, 2011, from $696.9 million for the year ended July 31, 2010. Our gross profit as a percentage of net sales was 18.8%18.2% for the year ended August 2, 2008July 30, 2011 and 18.5% for the year ended July 28, 2007. Gross31, 2010. The change in gross profit as a percentage of net sales is primarily due to the change in the mix of net sales by channel that began during the second fiscal quarter of 2010 and start up costs related to inventory issues and incremental freight and service costs incurred during the first half of fiscal 2011 in connection with the initial period of operations of our new Lancaster, Texas distribution facility, partially offset by higher fuel surcharge revenue during the year ended August 2, 2008 was positively impacted byJuly 30, 2011.

        Our gross profits are generally higher on net sales fromto independently owned retailers and lower on net sales in the UNFI Specialty Distribution businessconventional supermarket and sales of our branded product lines. We worked to take advantage of forward buying opportunities duringthe supernatural channels. For the year ended August 2, 2008July 30, 2011 approximately $530 million of our total net sales growth was from increased net sales in orderthe conventional supermarket and supernatural channels, while net sales growth from the independent and other channels was approximately $243 million. As a result, approximately 58% of our total net sales in fiscal 2011 were to improve UNFI Specialty Distribution'sthe conventional supermarket and supernatural channels compared to approximately 56% in fiscal 2010. This change in sales mix from 2010 to 2011 resulted in lower gross margin.profits as a percentage of sales during fiscal 2011. We anticipate net sales growth in the conventional supermarket and supernatural channels will continue to outpace growth in the independent and other channels.

        We expect UNFI Specialty Distribution's full servicethat our expansion with Whole Foods Market, both as a result of organic growth and as a result of becoming their primary distributor in their Rocky Mountain and Southwest regions, and our opportunities in the conventional supermarket model,channel will continue to generate a higherlower gross margin overprofit percentages than our historical rates, particularly during the long-termtime period when we are on-boarding the new business and incurring costs of hiring and training additional associates and increasing inventory levels before the new customer has reached expected purchasing levels. We will seek to fully offset

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these reductions in gross profit percentages by reducing our core distribution business; however, we also expect to incur higher operating expenses in providing those services. Under this model, we provide services typically performed by supermarket employees to our customers, such as stocking shelves, placing sales orders and rotating out damaged and expired products. We continue to focus on increasing our branded product revenues, which we believe will allow us to generate higher gross margins over the long-term, as branded product revenues generally yield higher margins.

        Gross profit as a percentage of net sales during the year ended July 28, 2007 was negatively impacted by missed forward buying opportunities, the full year effect of new customer agreements, $0.5 million of spoilage issues related to certain inventory of Albert's, and $1.9 million of incremental inventory adjustmentsprimarily through improved efficiencies in our broadline distribution business; partially offset by increases in rates within our fuel surcharge program, which passessupply chain and improvements to our customers the increased fuel costs associated with distributing our products to customers.information technology infrastructure.

Operating Expenses

        Our total operating expenses increased approximately 30.1%19.4%, or $125.3$113.1 million, to $541.4 million for the year ended August 2, 2008, from $416.1$695.1 million for the year ended July 28, 2007.30, 2011, from $582.0 million for the year ended July 31, 2010. The increase

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in total operating expenses for the year ended August 2, 2008July 30, 2011 was primarily due to increases in infrastructure, fuelhigher sales volume including sales through our UNFI Canada subsidiary, $4.4 million of labor and other distribution expenses associated with the September 2010 opening of our Lancaster, Texas facility and incremental start up inefficiencies which continued through January 2011, $0.6 million for severance payments for former executives and $6.3 million in restructuring and asset impairment charges associated with our wholesale division to supportongoing divestiture of our sales growthconventional non-foods and general merchandise lines of approximately $31.2business.

        Unallocated corporate expenses have increased $2.0 million and a $60.1 million increase in operating expenses as a result of the Millbrook acquisition. We have been able to partially offset the effect of rising fuel prices by increasing delivery sizes, improving route design and by opening new facilities which reduce the total distance traveled to customers. We also incurred higher operating expenses during the year ended August 2, 2008 relatedJuly 30, 2011 compared to our branded product lines, as we have built our infrastructurethe year ended July 31, 2010, primarily due to support anticipated new business,the continued development of a national platform across many functional areas including warehouse management, inbound logistics and $6.3 million in labor and start-up expenses related to our new distribution facilities in Sarasota, Florida, Ridgefield, Washington, Moreno Valley, California and York, Pennsylvania.category management.

        Total operating expenses for the year ended July 28, 2007 included a loss of $1.5 million related to the sale of one of our Auburn, California facilities, $1.1 million of incremental and redundant costs incurred in connection with the start up of our Sarasota, Florida facility, $1.0 million of costs to transition our expanded relationship with Whole Foods Market in the Southern Pacific region of the United States to our facility located in Fontana, California, an impairment charge of $0.8 million related to the reclassification of the remaining Auburn, California facility to held-for-sale and $0.5 million of increased expense related to our fuel hedging program. The last of our fuel hedges expired in June 2007 and we have not entered into any fuel hedges in fiscal 2008. Total operating expenses for fiscal 2008 includes2011 include share-based compensation expense of $4.7$9.2 million, compared to $4.0$8.1 million in fiscal 2007.2010. Share-based compensation expense for the years ended July 30, 2011 and July 31, 2010 includes approximately $0.7 million and $1.0 million, respectively, in expense related to the vesting of performance share-based awards granted to our Chief Executive Officer related to certain financial goals for those various periods ended July 30, 2011 and July 31, 2010. See Note 3 "Stock Option"Equity Plans" to our Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

        As a percentage of net sales, total operating expenses increaseddecreased to approximately 16.1% for the year ended August 2, 2008, from approximately 15.1%15.3% for the year ended July 28, 2007.30, 2011, from approximately 15.5% for the year ended July 31, 2010. The increasedecrease in total operating expenses as a percentage of net sales was primarily attributable to our acquisition of Millbrook,the growth in the supernatural and conventional supermarket channels which has higherin general have lower operating expenses, due to the additional in store services provided to supermarket customers, $6.3 million in labor and start-up expenses related to our new distribution facilities in Sarasota, Florida, Ridgefield, Washington, Moreno Valley, California and York, Pennsylvania as well as expense control programs across all of our divisions. We were able to manage our fuel costs despite rising prices by locking in the price of a portion of our expected fuel usage, updating and revising existing routes to reduce miles traveled, reducing idle times and other similar measures. Our expansion into Lancaster, Texas, where our new leased facility began servicing customers in late September 2010, has helped to further reduce our fuel costs as a percentage of net sales as we are able to reduce the number of miles traveled to serve our customers in Texas, Oklahoma, New Mexico, Arkansas and Louisiana who were previously primarily served from our facility in Denver, Colorado. These improvements in our operating inefficiencies related toexpenses were offset in part by higher health insurance costs, higher workers' compensation costs and the recent opening of the Sarasota, Florida and Ridgefield, Washington facilities, and our investment in infrastructure for our branded product lines.above described higher incentive compensation costs. We expect that the opening of new facilitieswe will contribute efficiencies and lead to lower operating expenses related to sales over the long-term. As noted above, however, we expectbe able to continue to incurreduce our operating expenses higher thanas we historically have experienced ascontinue the roll out of our supply chain initiatives including a resultnational warehouse management and procurement system which was launched in the new Lancaster, Texas facility and is expected to be rolled out in all of UNFI Specialty Distribution's full service supermarket model.our distribution centers by the end of 2013.

Operating Income

        Operating income decreasedincreased approximately 1.1%12.9%, or $1.0$14.8 million, to $92.5 million for the year ended August 2, 2008, from $93.5$129.7 million for the year ended July 28, 2007.30, 2011, from $114.9 million for the year ended July 31, 2010. As a percentage of net sales, operating income was 2.7% for the year ended August 2, 2008 compared to 3.4%2.9% for the year ended July 28, 2007.30, 2011 compared to 3.1% for the year ended July 31, 2010. The decrease in operating income is primarily attributable to the increase in total

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operating expenses during fiscal 2011, including the $6.3 million recognized for restructuring and asset impairment expenses, compared to fiscal 2010.

Other Expense (Income)

        Other expense (income) increased $4.0$0.3 million to $15.3 million for the year ended August 2, 2008, from $11.3$3.2 million for the year ended July 28, 2007.30, 2011, from $2.9 million for the year ended July 31, 2010. Interest expense for the year ended August 2, 2008 increasedJuly 30, 2011 decreased to $16.1$5.0 million from $12.1$5.8 million in the year ended July 28, 2007.31, 2010. The increasedecrease in interest expense was due primarily to the increase inlower average debt levels required to fund our acquisitions of DHI and Millbrook and three branded product companies. Debt levels also increased forduring the year ended August 2, 2008 compared to the year ended July 28, 2007 as we used a result of UNFI Specialty Distribution's working capital needs and increased inventory levels in preparation for the openingportion of the Sarasota,

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Florida and Ridgefield, Washington facilities$138.3 million in proceeds from our secondary public offering completed in October 2010 to pay down our debt balances which had increased significantly in the first and second quartersfourth quarter of fiscal 2008, respectively, and capital expenditures related2010 as we financed our purchase of the SDG assets from SunOpta with borrowings under our revolving credit facility. In connection with the expected purchase of the SDG assets, we entered into a forward contract to swap United States dollars for Canadian dollars. During the future openingfourth quarter of our Moreno Valley, California and York, Pennsylvania facilities.fiscal 2010, we recognized a gain of $2.8 million, which was recorded in other income, upon settlement of the contract. Interest income for the year ended August 2, 2008 decreasedJuly 30, 2011 increased to $0.8$1.2 million from $1.0$0.2 million in the year ended July 28, 2007.31, 2010, primarily as a result of higher average cash balances during the year.

Provision for Income Taxes

        Our effective income tax rate was 37.2%39.4% and 39.0% for the years ended August 2, 2008July 30, 2011 and July 28, 2007,31, 2010, respectively. The decreaseincrease in the effective income tax rate for the year ended August 2, 2008 wasJuly 30, 2011 is primarily due to anticipatedincreases in effective state tax credits associated with the solar panel installation projects at our Rocklin, California and Dayville, Connecticut distribution facilities. This decrease was offset by an increase in ourrates. Our effective income tax rate due to the acquisition of DHI and Millbrook. Our effective income tax ratein both fiscal years was also affected by share-based compensation for incentive stock options and the timing of disqualifying dispositions of certain share-based compensation awards. Certain incentive stock option expenses are not deductible for tax purposes untilunless a disqualifying disposition occurs. A disqualifying disposition occurs when the option holder sells shares within one year of exercising an incentive stock option.option and within two years of original grant. We receive a tax benefit in the period that the disqualifying disposition occurs. Our effective income tax rate will continue to be effected by the tax impact related to incentive stock options and the timing of tax benefits related to disqualifying dispositions. In fiscal 20092012, we expect our effective tax rate to be in the range of 39.5%39.0% to 40.0%.

Net Income

        NetReflecting the factors described in more detail above, net income decreased $1.7increased $8.4 million to $48.5$76.7 million, or $1.13 per diluted share, for the year ended August 2, 2008, compared to $50.2 million, or $1.17$1.60 per diluted share, for the year ended July 28, 2007.

Year ended July 28, 200730, 2011, compared to $68.3 million, or $1.57 per diluted share on a lower share base, for the year ended July 29, 200631, 2010.

Fiscal year ended July 31, 2010 compared to fiscal year ended August 1, 2009

Net Sales

        Our net sales for the fiscal year ended July 31, 2010 increased approximately 13.2%8.7%, or $320.7$302.2 million, to $2.75$3.8 billion for the year ended July 28, 2007,31, 2010 from $2.43$3.5 billion for the year ended July 29, 2006.August 1, 2009. This increase was primarily due to organic growth (growth(sales growth excluding the impact of acquisitions) in our wholesale distribution division of $317.5 million or 13.3%.$283.3 million. Our organic growth is due to the continued growth of the natural products industry in general, increased market share as a result of our focus on service and value added value services, and the opening of new, and expansion of existing, distribution centers, which allow us to carry a broader selection of products, and approximately 2.0%products. In addition to net sales growth as a result of our expanded relationship with Whole Foods Market in the Southern Pacific region of the United States. In additionattributable to our organic growth, we also benefited from the inclusion of $22.1 million in sales related tofrom our acquisition of certain assetsUNFI Canada during the fourth quarter of Organic Brandsfiscal 2010. Our improvement in April 2007 and our acquisitions of other branded product lines; however, these acquisitions impacted our cost of sales and gross profit more than they impacted our net sales.

        In the years ended July 28, 2007 and July 29, 2006, sales to Whole Foods Market and Wild Oats Markets were approximately 34.7% and 34.1% of net sales respectively.also reflected year over year improvement in sales of our specialty products, which had been negatively affected by the difficult economic environment present throughout our 2009 fiscal year.