Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Nov. 02, 2013 | Dec. 02, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'UNITED NATURAL FOODS INC | ' |
Entity Central Index Key | '0001020859 | ' |
Current Fiscal Year End Date | '--08-02 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 2-Nov-13 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 49,610,295 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Nov. 02, 2013 | Aug. 03, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $9,357 | $11,111 |
Accounts receivable, net of allowance of $9,784 and $9,271, respectively | 398,210 | 339,590 |
Inventories | 838,391 | 702,161 |
Prepaid expenses and other current assets | 36,192 | 38,534 |
Deferred income taxes | 23,822 | 23,822 |
Total current assets | 1,305,972 | 1,115,218 |
Property & equipment, net | 362,298 | 338,594 |
Other assets: | ' | ' |
Goodwill | 220,480 | 201,874 |
Intangible assets, net of accumulated amortization of $15,193 and $14,214, respectively | 48,540 | 49,540 |
Other assets | 24,625 | 24,682 |
Total assets | 1,961,915 | 1,729,908 |
Current liabilities: | ' | ' |
Accounts payable | 394,668 | 283,851 |
Accrued expenses and other current liabilities | 102,537 | 113,397 |
Current portion of long-term debt | 1,226 | 1,019 |
Total current liabilities | 498,431 | 398,267 |
Notes payable | 228,099 | 130,594 |
Long-term debt, excluding current portion | 33,414 | 33,091 |
Deferred income taxes | 41,474 | 41,474 |
Other long-term liabilities | 27,943 | 27,336 |
Total liabilities | 829,361 | 630,762 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity: | ' | ' |
Preferred stock, $0.01 par value, authorized 5,000 shares; none issued or outstanding | 0 | 0 |
Common stock, $0.01 par value, authorized 100,000 shares; 49,609 issued and outstanding shares at November 2, 2013; 49,330 issued and outstanding shares at August 3, 2013 | 496 | 493 |
Additional paid-in capital | 386,045 | 380,109 |
Unallocated shares of Employee Stock Ownership Plan | -43 | -39 |
Accumulated other comprehensive loss | -1,383 | -1,092 |
Retained earnings | 747,439 | 719,675 |
Total stockholders’ equity | 1,132,554 | 1,099,146 |
Total liabilities and stockholders’ equity | $1,961,915 | $1,729,908 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Nov. 02, 2013 | Aug. 03, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Accounts receivable, allowance (in dollars) | $9,784 | $9,271 |
Intangible assets, accumulated amortization (in dollars) | $15,193 | $14,214 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, authorized shares | 100,000 | 100,000 |
Common stock, issued shares | 49,609 | 49,330 |
Common stock, outstanding shares | 49,609 | 49,330 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Nov. 02, 2013 | Oct. 27, 2012 |
Income Statement [Abstract] | ' | ' |
Net sales | $1,602,011 | $1,410,037 |
Cost of sales | 1,330,835 | 1,174,084 |
Gross profit | 271,176 | 235,953 |
Operating expenses | 223,150 | 197,758 |
Restructuring and asset impairment expenses | 0 | 1,629 |
Total operating expenses | 223,150 | 199,387 |
Operating income | 48,026 | 36,566 |
Other expense (income): | ' | ' |
Interest expense | 1,854 | 978 |
Interest income | -120 | -173 |
Other, net | 19 | 4,781 |
Total other expense, net | 1,753 | 5,586 |
Income before income taxes | 46,273 | 30,980 |
Provision for income taxes | 18,509 | 9,444 |
Net income | $27,764 | $21,536 |
Basic per share data: | ' | ' |
Net income (usd per share) | $0.56 | $0.44 |
Weighted average basic shares of common stock outstanding | 49,439 | 49,142 |
Diluted per share data: | ' | ' |
Net income (usd per share) | $0.56 | $0.43 |
Weighted average diluted shares of common stock outstanding | 49,735 | 49,585 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 02, 2013 | Oct. 27, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income | $27,764 | $21,536 |
Other comprehensive income (loss), Pre-tax Amount | ' | ' |
Foreign currency translation adjustments | -291 | 465 |
Total other comprehensive income (loss) | -291 | 465 |
Other comprehensive income (loss), Tax (expense) benefit: | ' | ' |
Foreign currency translation adjustments | 0 | 0 |
Total other comprehensive income (loss): | 0 | 0 |
Other comprehensive income (loss), After-tax Amount: | ' | ' |
Foreign currency translation adjustments | -291 | 465 |
Total other comprehensive income (loss): | -291 | 465 |
Total comprehensive income | $27,473 | $22,001 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid in Capital | Unallocated Shares of ESOP | Accumulated Other Comprehensive Loss | Retained Earnings |
In Thousands, unless otherwise specified | ||||||
Beginning Balance at Aug. 03, 2013 | $1,099,146 | $493 | $380,109 | ($39) | ($1,092) | $719,675 |
Beginning Balance (shares) at Aug. 03, 2013 | 49,330 | 49,330 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' |
Allocation of shares to ESOP | -4 | ' | ' | -4 | ' | ' |
Stock option exercises and restricted stock vestings, net of tax | ' | 279 | ' | ' | ' | ' |
Stock option exercises and restricted stock vestings, net of tax | -1,871 | 3 | -1,874 | ' | ' | ' |
Share-based compensation | 5,478 | ' | 5,478 | ' | ' | ' |
Tax benefit associated with stock plans | 2,332 | ' | 2,332 | ' | ' | ' |
Foreign currency translation adjustments | -291 | ' | ' | ' | -291 | ' |
Net income | 27,764 | ' | ' | ' | ' | 27,764 |
Ending Balance at Nov. 02, 2013 | $1,132,554 | $496 | $386,045 | ($43) | ($1,383) | $747,439 |
Ending Balance (shares) at Nov. 02, 2013 | 49,609 | 49,609 | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Nov. 02, 2013 | Oct. 27, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income | $27,764,000 | $21,536,000 |
Adjustments to reconcile net income to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 11,238,000 | 10,119,000 |
Share-based compensation | 5,478,000 | 4,714,000 |
Gain on disposals of property and equipment | -67,000 | -19,000 |
Excess tax benefits from share-based payment arrangements | -2,332,000 | -30,000 |
Impairment of intangible asset | 0 | 1,629,000 |
Unrealized loss on foreign exchange | 209,000 | 122,000 |
Provision for doubtful accounts | 933,000 | 691,000 |
Non-cash interest expense | 616,000 | 0 |
Changes in assets and liabilities, net of acquired businesses: | ' | ' |
Accounts receivable | -55,678,000 | -30,216,000 |
Inventories | -131,765,000 | -140,067,000 |
Prepaid expenses and other assets | 2,367,000 | -1,463,000 |
Accounts payable | 100,198,000 | 76,165,000 |
Accrued expenses and other liabilities | -8,625,000 | 1,360,000 |
Net cash used in operating activities | -49,664,000 | -55,459,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Capital expenditures | -33,247,000 | -4,573,000 |
Purchases of acquired businesses, net of cash acquired | -22,973,000 | -9,235,000 |
Proceeds from disposals of property and equipment | 99,000 | 20,000 |
Net cash used in investing activities | -56,121,000 | -13,788,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Repayments of long-term debt | -86,000 | -100,000 |
Proceeds from borrowings under revolving credit line | 192,715,000 | 217,477,000 |
Repayments of borrowings under revolving credit line | -95,210,000 | -183,441,000 |
Increase in bank overdraft | 6,347,000 | 30,352,000 |
Proceeds from exercise of stock options | 1,551,000 | 1,165,000 |
Payment of employee restricted stock tax withholdings | -3,422,000 | -3,217,000 |
Excess tax benefits from share-based payment arrangements | 2,332,000 | 30,000 |
Capitalized debt issuance costs | 0 | -7,000 |
Net cash provided by financing activities | 104,227,000 | 62,259,000 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | -196,000 | -195,000 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | -1,754,000 | -7,183,000 |
Cash and cash equivalents at beginning of period | 11,111,000 | 16,122,000 |
Cash and cash equivalents at end of period | 9,357,000 | 8,939,000 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | 1,074,000 | 932,000 |
Cash paid for federal and state income taxes, net of refunds | $5,989,000 | $4,113,000 |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Nov. 02, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
SIGNIFICANT ACCOUNTING POLICIES | ' |
SIGNIFICANT ACCOUNTING POLICIES | |
(a) Nature of Business | |
United Natural Foods, Inc. and subsidiaries (the “Company”) is a leading distributor and retailer of natural, organic and specialty products. The Company sells its products primarily throughout the United States and Canada. | |
(b) Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. | |
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted. In the Company’s opinion, these financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods, however, may not be indicative of the results that may be expected for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2013. | |
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 include amounts charged by the Company to customers for shipping and handling, and fuel surcharges. The principal components of cost of sales include the amount paid to manufacturers and growers for product sold, plus the cost of transportation necessary to bring the product to the Company’s distribution facilities. Cost of sales also includes amounts incurred by the Company’s manufacturing subsidiary, United Natural Trading LLC, which does business as Woodstock Farms Manufacturing, for inbound transportation costs and depreciation for manufacturing equipment offset by consideration received from suppliers in connection with the purchase or promotion of the suppliers’ products. Operating expenses include salaries and wages, employee benefits (including payments under the Company’s Employee Stock Ownership Plan), warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation and amortization expense. Operating expenses also include depreciation expense related to the wholesale and retail divisions. Other expense (income) includes interest on outstanding indebtedness, interest income and miscellaneous income and expenses. During the three months ended October 27, 2012, other expense also includes a pre-tax charge of $4.9 million related to an agreement reached during the first quarter of fiscal 2013 to settle a multi-state unclaimed property audit. The condensed consolidated statement of cash flows for the three months ended October 27, 2012 has been adjusted to properly present proceeds and borrowings related to the Company's revolving credit facility on a gross basis. These amounts were previously presented on a net basis. The revision was not material to the Company's condensed consolidated financial statements as a whole. | |
As noted above, the Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with inbound freight are generally recorded in cost of sales, whereas shipping and handling costs for selecting, quality assurance, and outbound transportation are recorded in operating expenses. Outbound shipping and handling costs, including allocated employee benefit expenses, totaled $90.5 million and $86.3 million for the three months ended November 2, 2013 and October 27, 2012, respectively. |
RECENTLY_ISSUED_ACCOUNTING_PRO
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Nov. 02, 2013 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | ' |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). This update supersedes the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU No. 2011-05, Presentation of Comprehensive Income, and ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2013-02 requires an entity to provide information about amounts reclassified out of accumulated other comprehensive income by component and to present, either on the face of the financial statements or in a single note, any significant amount reclassified out of accumulated other comprehensive income in its entirety in the period, and the income statement line item affected by the reclassification. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for annual reporting periods that begin after December 15, 2012 and was adopted by the Company in the first quarter of the fiscal year ending August 2, 2014. The adoption of ASU 2013-02 did not have an impact on the presentation of the Company's condensed consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Nov. 02, 2013 | |
Business Combinations [Abstract] | ' |
ACQUISITIONS | ' |
ACQUISITIONS | |
On September 26, 2013, the Company acquired all of the equity interests of Trudeau Foods, LLC (“Trudeau Foods”) from Trudeau Holdings, LLC, a portfolio company of Arbor Investments II, LP. Trudeau Foods is the largest Minnesota-based distributor of natural, organic and specialty food products and serves over 600 customer locations, including chain and independent grocers, wholesalers and meat markets in Minnesota, North Dakota, Wisconsin and Michigan’s Upper Peninsula. Trudeau Foods carries a full range of fine-quality and specialty gourmet meats, frozen foods, dairy, bakery, deli, seafood and dry grocery items under a wide breadth of national, regional and private label brands. The total cash consideration related to this acquisition was approximately $23.0 million. The fair market value of assets and liabilities acquired are preliminary and are included in the condensed consolidated balance sheet. Since the date of acquisition, net sales for the acquired business totaled approximately $7.6 million during the three months ended November 2, 2013 and are consolidated within the Company's wholesale segment. | |
During the first quarter of fiscal 2013, the Company, within its wholesale segment, completed three business combinations related to the acquisition of certain assets of three distribution companies. The total cash consideration related to these acquisitions was approximately $9.2 million. In addition, certain of the asset purchase agreements related to these acquisitions provide for future contingent consideration payments of up to $3.7 million through February 2017. Furthermore, in connection with one of the acquisitions, the Company granted restricted stock units which have pro-rata time-based vesting over four years similar to the structure of the majority of the awards of restricted stock units granted to employees, but for which the vesting may be fully accelerated after two years if net sales of the acquired business, as defined in the applicable asset purchase agreement, meets or exceeds a targeted amount in either of the first two years following consummation of our acquisition of the business. | |
The fair value of the identifiable intangible assets acquired in the three acquisitions was determined by using an income approach. The identifiable intangible assets recorded based on the provisional valuations include customer lists of $3.1 million, which are being amortized on a straight-line basis over estimated useful lives of approximately 5 - 10 years. Significant assumptions utilized in the income approach were based on company-specific information and projections, which are not observable in the market and are considered Level 3 measurements as defined by authoritative guidance. There were no material updates to the preliminary allocations. Net sales resulting from these three acquisitions totaled approximately $13.0 million and $11.2 million during the three months ended November 2, 2013 and October 27, 2012, respectively. | |
The three acquisitions during the first quarter of fiscal 2013 and the acquisition of Trudeau Foods during the first quarter of fiscal 2014 were financed through borrowings under the Company’s amended and restated revolving credit facility. Acquisition costs related to these purchases were insignificant, have been expensed as incurred and are included within “Operating Expenses” in the Condensed Consolidated Statements of Income. Each of these businesses were absorbed by the operations of the Company’s broadline distribution business, therefore the Company does not record the expenses for these businesses separately from the rest of the broadline distribution business and it is not possible to provide complete financial results for each acquisition separately or in total. |
RESTRUCTURING_ACTIVITIES_AND_A
RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS | 3 Months Ended |
Nov. 02, 2013 | |
Restructuring and Related Activities [Abstract] | ' |
RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS | ' |
RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS | |
Impairment of an intangible asset | |
During fiscal 2007, the Company made several asset acquisitions under its Blue Marble Brands division, one of which included a licensing agreement under which the Company was permitted to sell products under the seller’s existing trademark in exchange for royalty payments. The fair value of the intangible asset at the time of acquisition was $2.1 million, and was being amortized over a life of 27 years, the maximum life of the licensing agreement including renewal periods. In October 2012, the Company entered into an agreement to terminate its licensing agreement with the former owners. In connection with this termination agreement, during the three months ended October 27, 2012 the Company recognized an impairment of $1.6 million representing the remaining unamortized balance of the intangible asset. There were no impairments recorded during the three months ended November 2, 2013. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | ||||||
Nov. 02, 2013 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
EARNINGS PER SHARE | ' | ||||||
EARNINGS PER SHARE | |||||||
The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share (in thousands): | |||||||
Three months ended | |||||||
November 2, | October 27, | ||||||
2013 | 2012 | ||||||
Basic weighted average shares outstanding | 49,439 | 49,142 | |||||
Net effect of dilutive stock awards based upon the treasury stock method | 296 | 443 | |||||
Diluted weighted average shares outstanding | 49,735 | 49,585 | |||||
There were 96,113 and 9,327 anti-dilutive share-based payment awards outstanding for the three months ended November 2, 2013 and October 27, 2012, respectively. These anti-dilutive share-based payment awards were excluded from the calculation of diluted earnings per share. |
FAIR_VALUE_MEASUREMENTS_OF_FIN
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||||||||||
Nov. 02, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS | |||||||||||||||||
Fuel Supply Agreements | |||||||||||||||||
The Company is party to several fixed price fuel supply agreements. During the first quarter of fiscal 2014, the Company entered into several agreements which require it to purchase a portion of its diesel fuel each month at fixed prices through December 2014. These fixed price fuel agreements qualify for, and the Company has elected to utilize, the “normal purchase” exception under FASB Accounting Standards Codification ("ASC") 815, Derivatives and Hedging (“ASC 815”) as physical deliveries will occur rather than net settlements, and therefore the fuel purchases under these contracts are expensed as incurred and included within operating expenses. During the three months ended October 27, 2012, the Company was a party to several similar agreements which required it to purchase a portion of its diesel fuel each month at fixed prices through July 2013 and which also qualified and were accounted for using the “normal purchase” exception under ASC 815, and therefore the fuel purchases under those contracts were expensed as incurred and included within operating expenses. | |||||||||||||||||
Financial Instruments | |||||||||||||||||
There were no financial assets and liabilities measured on a recurring basis as of November 2, 2013 or August 3, 2013. | |||||||||||||||||
The fair value of the Company’s other financial instruments including cash, cash equivalents, accounts receivable, notes receivable, accounts payable and certain accrued expenses approximate carrying amounts due to the short-term nature of these instruments. The Company believes its credit risk is similar to the overall market and variable rates have not moved significantly since it initiated the underlying borrowings, therefore the fair value of notes payable approximate carrying amounts. | |||||||||||||||||
The following estimated fair value amounts for long-term debt have been determined by the Company using available market information and appropriate valuation methodologies including the discounted cash flow method, taking into account the instruments’ interest rate, terms, maturity date and collateral, if any, in comparison to market rates for similar financial instruments and are, therefore, deemed Level 2 inputs. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. | |||||||||||||||||
2-Nov-13 | 3-Aug-13 | ||||||||||||||||
(In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Liabilities: | |||||||||||||||||
Long-term debt, including current portion | $ | 34,640 | $ | 36,638 | $ | 34,110 | $ | 36,230 | |||||||||
The following table provides the fair value hierarchy for non-financial assets and liabilities measured on a non-recurring basis as of October 27, 2012. There were no non-financial assets and liabilities measured on a non-recurring basis as of November 2, 2013 . | |||||||||||||||||
Fair Value at October 27, 2012 | |||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Losses | |||||||||||||||||
Fair value of intangible assets subject to write-down | $ | — | $ | — | $ | — | $ | 1,629 | |||||||||
In accordance with the provisions of ASC 360-10, Impairment and Disposal of Long-Lived Assets, an impairment charge of $1.6 million was recognized in connection with the termination of a long-term licensing agreement and the write-off of the associated intangible asset during the three months ended October 27, 2012. |
BUSINESS_SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended | ||||||||||||||||||||
Nov. 02, 2013 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
BUSINESS SEGMENTS | ' | ||||||||||||||||||||
BUSINESS SEGMENTS | |||||||||||||||||||||
The Company has several operating divisions aggregated under the wholesale segment, which is the Company’s only reportable segment. These operating divisions have similar products and services, customer channels, distribution methods and historical margins. The wholesale segment is engaged in national distribution of natural, organic and specialty foods, produce and related products in the United States and Canada. The Company has additional operating divisions that do not meet the quantitative thresholds for reportable segments and are therefore aggregated under the caption of “Other.” “Other” includes a retail division, which engages in the sale of natural foods and related products to the general public through retail storefronts on the east coast of the United States, a manufacturing division, which engages in importing, roasting and packaging of nuts, seeds, dried fruit, trail mixes, granola, natural and organic snack items, confections and the Company’s Blue Marble Brands product lines. “Other” also includes certain corporate operating expenses that are not allocated to operating divisions and are necessary to operate the Company’s headquarters located in Providence, Rhode Island, which include depreciation, salaries, retainers, and other related expenses of officers, directors, corporate finance (including professional services), information technology, governance, legal, human resources and internal audit. As the Company continues to expand its business and serve its customers through a national platform, these corporate expense amounts have increased. These unallocated corporate expenses are the primary driver behind the operating losses within the “Other” category below. Non-operating expenses that are not allocated to the operating divisions are under the caption of “Unallocated Expenses.” The Company does not record its revenues for financial reporting purposes by product group, and it is therefore impracticable for the Company to report them accordingly. | |||||||||||||||||||||
The following table reflects business segment information for the periods indicated (in thousands): | |||||||||||||||||||||
Wholesale | Other | Eliminations | Unallocated | Consolidated | |||||||||||||||||
Three months ended November 2, 2013: | |||||||||||||||||||||
Net sales | $ | 1,584,243 | $ | 48,970 | $ | (31,202 | ) | $ | 1,602,011 | ||||||||||||
Operating income (loss) | 57,374 | (7,961 | ) | (1,387 | ) | 48,026 | |||||||||||||||
Interest expense | $ | 1,854 | 1,854 | ||||||||||||||||||
Interest income | (120 | ) | (120 | ) | |||||||||||||||||
Other, net | 19 | 19 | |||||||||||||||||||
Income before income taxes | 46,273 | ||||||||||||||||||||
Depreciation and amortization | 10,571 | 667 | 11,238 | ||||||||||||||||||
Capital expenditures | 33,112 | 135 | 33,247 | ||||||||||||||||||
Goodwill | 202,749 | 17,731 | 220,480 | ||||||||||||||||||
Total assets | 1,835,966 | 139,650 | (13,701 | ) | 1,961,915 | ||||||||||||||||
Three months ended October 27, 2012: | |||||||||||||||||||||
Net sales | $ | 1,394,414 | $ | 45,322 | $ | (29,699 | ) | $ | 1,410,037 | ||||||||||||
Operating income (loss) | 49,988 | (11,598 | ) | (1,824 | ) | 36,566 | |||||||||||||||
Interest expense | $ | 978 | 978 | ||||||||||||||||||
Interest income | (173 | ) | (173 | ) | |||||||||||||||||
Other, net | 4,781 | 4,781 | |||||||||||||||||||
Income before income taxes | 30,980 | ||||||||||||||||||||
Depreciation and amortization | 9,545 | 574 | 10,119 | ||||||||||||||||||
Capital expenditures | 3,807 | 766 | 4,573 | ||||||||||||||||||
Goodwill | 185,905 | 17,531 | 203,436 | ||||||||||||||||||
Total assets | 1,546,924 | 137,913 | (13,113 | ) | 1,671,724 | ||||||||||||||||
LONGTERM_DEBT
LONG-TERM DEBT | 3 Months Ended |
Nov. 02, 2013 | |
Debt Disclosure [Abstract] | ' |
Long-term Debt | ' |
LONG-TERM DEBT | |
During the fiscal year ended July 28, 2012, the Company entered into a lease agreement for a new distribution facility in Aurora, Colorado. At the conclusion of the fiscal year ended August 3, 2013, actual construction costs exceeded the construction allowance as defined by the lease agreement, and therefore, the Company determined it met the criteria for continuing involvement pursuant to FASB ASC 840, Leases, and applied the financing method to account for this transaction during the fourth quarter of fiscal 2013. Under the financing method, the book value of the distribution facility and related accumulated depreciation remains on the balance sheet. The construction allowance is recorded as a financing obligation in long-term debt. A portion of each lease payment reduces the amount of the financing obligation, and a portion is recorded as interest expense at an effective rate of approximately 7.32%. The financing obligation as of the three months ended November 2, 2013 was $34.1 million. The Company recorded $0.6 million of non-cash interest expense during the three months ended November 2, 2013. |
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Nov. 02, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation | ' |
(b) Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. | |
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted. In the Company’s opinion, these financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods, however, may not be indicative of the results that may be expected for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2013. | |
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 include amounts charged by the Company to customers for shipping and handling, and fuel surcharges. The principal components of cost of sales include the amount paid to manufacturers and growers for product sold, plus the cost of transportation necessary to bring the product to the Company’s distribution facilities. Cost of sales also includes amounts incurred by the Company’s manufacturing subsidiary, United Natural Trading LLC, which does business as Woodstock Farms Manufacturing, for inbound transportation costs and depreciation for manufacturing equipment offset by consideration received from suppliers in connection with the purchase or promotion of the suppliers’ products. Operating expenses include salaries and wages, employee benefits (including payments under the Company’s Employee Stock Ownership Plan), warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation and amortization expense. Operating expenses also include depreciation expense related to the wholesale and retail divisions. Other expense (income) includes interest on outstanding indebtedness, interest income and miscellaneous income and expenses. During the three months ended October 27, 2012, other expense also includes a pre-tax charge of $4.9 million related to an agreement reached during the first quarter of fiscal 2013 to settle a multi-state unclaimed property audit. The condensed consolidated statement of cash flows for the three months ended October 27, 2012 has been adjusted to properly present proceeds and borrowings related to the Company's revolving credit facility on a gross basis. These amounts were previously presented on a net basis. The revision was not material to the Company's condensed consolidated financial statements as a whole. | |
As noted above, the Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with inbound freight are generally recorded in cost of sales, whereas shipping and handling costs for selecting, quality assurance, and outbound transportation are recorded in operating expenses. Outbound shipping and handling costs, including allocated employee benefit expenses, totaled $90.5 million and $86.3 million for the three months ended November 2, 2013 and October 27, 2012, respectively. |
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||
Nov. 02, 2013 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
Schedule of reconciliation of the weighted average number of shares outstanding used in the computation of the basic and diluted earnings per share | ' | ||||||
The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share (in thousands): | |||||||
Three months ended | |||||||
November 2, | October 27, | ||||||
2013 | 2012 | ||||||
Basic weighted average shares outstanding | 49,439 | 49,142 | |||||
Net effect of dilutive stock awards based upon the treasury stock method | 296 | 443 | |||||
Diluted weighted average shares outstanding | 49,735 | 49,585 | |||||
FAIR_VALUE_MEASUREMENTS_OF_FIN1
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||
Nov. 02, 2013 | Oct. 27, 2012 | |||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ' | ||||||||||||||||||||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | ' | ' | ||||||||||||||||||||||||||||||||
2-Nov-13 | 3-Aug-13 | |||||||||||||||||||||||||||||||||
(In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||
Long-term debt, including current portion | $ | 34,640 | $ | 36,638 | $ | 34,110 | $ | 36,230 | ||||||||||||||||||||||||||
Fair Value Measurements, Nonrecurring [Table Text Block] | ' | ' | ||||||||||||||||||||||||||||||||
Fair Value at October 27, 2012 | ||||||||||||||||||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
Losses | ||||||||||||||||||||||||||||||||||
Fair value of intangible assets subject to write-down | $ | — | $ | — | $ | — | $ | 1,629 | ||||||||||||||||||||||||||
BUSINESS_SEGMENTS_Tables
BUSINESS SEGMENTS (Tables) | 3 Months Ended | ||||||||||||||||||||
Nov. 02, 2013 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
Schedule of business segment information | ' | ||||||||||||||||||||
The following table reflects business segment information for the periods indicated (in thousands): | |||||||||||||||||||||
Wholesale | Other | Eliminations | Unallocated | Consolidated | |||||||||||||||||
Three months ended November 2, 2013: | |||||||||||||||||||||
Net sales | $ | 1,584,243 | $ | 48,970 | $ | (31,202 | ) | $ | 1,602,011 | ||||||||||||
Operating income (loss) | 57,374 | (7,961 | ) | (1,387 | ) | 48,026 | |||||||||||||||
Interest expense | $ | 1,854 | 1,854 | ||||||||||||||||||
Interest income | (120 | ) | (120 | ) | |||||||||||||||||
Other, net | 19 | 19 | |||||||||||||||||||
Income before income taxes | 46,273 | ||||||||||||||||||||
Depreciation and amortization | 10,571 | 667 | 11,238 | ||||||||||||||||||
Capital expenditures | 33,112 | 135 | 33,247 | ||||||||||||||||||
Goodwill | 202,749 | 17,731 | 220,480 | ||||||||||||||||||
Total assets | 1,835,966 | 139,650 | (13,701 | ) | 1,961,915 | ||||||||||||||||
Three months ended October 27, 2012: | |||||||||||||||||||||
Net sales | $ | 1,394,414 | $ | 45,322 | $ | (29,699 | ) | $ | 1,410,037 | ||||||||||||
Operating income (loss) | 49,988 | (11,598 | ) | (1,824 | ) | 36,566 | |||||||||||||||
Interest expense | $ | 978 | 978 | ||||||||||||||||||
Interest income | (173 | ) | (173 | ) | |||||||||||||||||
Other, net | 4,781 | 4,781 | |||||||||||||||||||
Income before income taxes | 30,980 | ||||||||||||||||||||
Depreciation and amortization | 9,545 | 574 | 10,119 | ||||||||||||||||||
Capital expenditures | 3,807 | 766 | 4,573 | ||||||||||||||||||
Goodwill | 185,905 | 17,531 | 203,436 | ||||||||||||||||||
Total assets | 1,546,924 | 137,913 | (13,113 | ) | 1,671,724 | ||||||||||||||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 02, 2013 | Oct. 27, 2012 |
Shipping and Handling Fees and Costs | ' | ' |
Pre-tax charge related to settle a multi-state unclaimed property audit | ' | $4.90 |
Total outbound shipping and handling costs | $90.50 | $86.30 |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 3 Months Ended | |
Nov. 02, 2013 | Oct. 27, 2012 | |
Acquisitions | ' | ' |
Payments to Acquire Businesses, Net of Cash Acquired | ($22,973,000) | ($9,235,000) |
Net sales | 1,602,011,000 | 1,410,037,000 |
Trudeau Foods, LLC [Member] | ' | ' |
Acquisitions | ' | ' |
Payments to Acquire Businesses, Net of Cash Acquired | -22,973,000 | ' |
Net sales of acquired business since acquisition | 7,600,000 | ' |
Asset purchase agreements | ' | ' |
Acquisitions | ' | ' |
Potential earn-outs | ' | 3,700,000 |
Vesting period of time-based restricted stock units | ' | '4 years |
Share-based Compensation Arrangement by Share-based Payment Award, Acclerated Award Vesting Period | ' | '2 years |
Period of which define net sales target meet or exceed | ' | '2 years |
Identifiable intangible assets | ' | 3,100,000 |
Number of businesses acquired during the period | ' | 3 |
Net sales | 13,000,000 | 11,200,000 |
Asset purchase agreements | Minimum | ' | ' |
Acquisitions | ' | ' |
Customer relationship, estimated useful life (in years) | '5 years | ' |
Asset purchase agreements | Maximum | ' | ' |
Acquisitions | ' | ' |
Customer relationship, estimated useful life (in years) | '10 years | ' |
Operating Segments [Member] | ' | ' |
Acquisitions | ' | ' |
Number of distributors' assets acquired | ' | 3 |
Cash consideration paid | ' | -9,235,000 |
Net sales | $1,584,243,000 | $1,394,414,000 |
RESTRUCTURING_ACTIVITIES_AND_A1
RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Nov. 02, 2013 | Oct. 27, 2012 | Oct. 27, 2012 | Jul. 28, 2007 | |
Blue Marble Brands division | Blue Marble Brands division | |||
Licensing agreement | Licensing agreement | |||
Restructuring Activities and Assets Impairments | ' | ' | ' | ' |
Fair value of intangible assets | ' | ' | ' | $2,100,000 |
Amortization period | ' | ' | ' | '27 years |
Impairment of intangible asset | $0 | $1,629,000 | $1,629,000 | ' |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) | 3 Months Ended | |
Nov. 02, 2013 | Oct. 27, 2012 | |
Reconciliation of the basic and diluted number of shares used in computing earnings per share: | ' | ' |
Basic weighted average shares outstanding | 49,439,000 | 49,142,000 |
Net effect of dilutive stock awards based upon the treasury stock method | 296,000 | 443,000 |
Diluted weighted average shares outstanding | 49,735,000 | 49,585,000 |
Anti-dilutive share-based payment awards outstanding (in shares) | 96,113 | 9,327 |
FAIR_VALUE_MEASUREMENTS_OF_FIN2
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Nov. 02, 2013 | Oct. 27, 2012 | Aug. 03, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Restructuring and asset impairment expenses | $0 | $1,629 | ' |
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | 0 | -1,629 | ' |
Long term debt, including current portion, carrying value | 34,640 | ' | 34,110 |
Long term debt, including current portion, fair value | 36,638 | ' | 36,230 |
Fair Value, Measurements, Nonrecurring [Member] | ' | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ' |
Restructuring and asset impairment expenses | ' | 1,629 | ' |
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | ' | ($1,629) | ' |
BUSINESS_SEGMENTS_Details
BUSINESS SEGMENTS (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Nov. 02, 2013 | Oct. 27, 2012 | Aug. 03, 2013 |
Business segment information | ' | ' | ' |
Net sales | $1,602,011 | $1,410,037 | ' |
Operating income (loss) | 48,026 | 36,566 | ' |
Interest expense | 1,854 | 978 | ' |
Interest income | -120 | -173 | ' |
Other, net | 19 | 4,781 | ' |
Income before income taxes | 46,273 | 30,980 | ' |
Depreciation and amortization | 11,238 | 10,119 | ' |
Capital expenditures | 33,247 | 4,573 | ' |
Goodwill | 220,480 | 203,436 | 201,874 |
Total assets | 1,961,915 | 1,671,724 | 1,729,908 |
Wholesale | ' | ' | ' |
Business segment information | ' | ' | ' |
Net sales | 1,584,243 | 1,394,414 | ' |
Operating income (loss) | 57,374 | 49,988 | ' |
Interest expense | ' | ' | ' |
Interest income | ' | ' | ' |
Other, net | ' | ' | ' |
Depreciation and amortization | 10,571 | 9,545 | ' |
Capital expenditures | 33,112 | 3,807 | ' |
Goodwill | 202,749 | 185,905 | ' |
Total assets | 1,835,966 | 1,546,924 | ' |
Other | ' | ' | ' |
Business segment information | ' | ' | ' |
Net sales | 48,970 | 45,322 | ' |
Operating income (loss) | -7,961 | -11,598 | ' |
Interest expense | ' | ' | ' |
Interest income | ' | ' | ' |
Other, net | ' | ' | ' |
Depreciation and amortization | 667 | 574 | ' |
Capital expenditures | 135 | 766 | ' |
Goodwill | 17,731 | 17,531 | ' |
Total assets | 139,650 | 137,913 | ' |
Eliminations | ' | ' | ' |
Business segment information | ' | ' | ' |
Net sales | -31,202 | -29,699 | ' |
Operating income (loss) | -1,387 | -1,824 | ' |
Interest expense | ' | ' | ' |
Interest income | ' | ' | ' |
Other, net | ' | ' | ' |
Depreciation and amortization | ' | ' | ' |
Capital expenditures | ' | ' | ' |
Goodwill | ' | ' | ' |
Total assets | -13,701 | -13,113 | ' |
Unallocated | ' | ' | ' |
Business segment information | ' | ' | ' |
Net sales | ' | ' | ' |
Operating income (loss) | ' | ' | ' |
Interest expense | 1,854 | 978 | ' |
Interest income | -120 | -173 | ' |
Other, net | 19 | 4,781 | ' |
Depreciation and amortization | ' | ' | ' |
Capital expenditures | ' | ' | ' |
Goodwill | ' | ' | ' |
Total assets | ' | ' | ' |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | 3 Months Ended | |
Nov. 02, 2013 | Oct. 27, 2012 | |
Debt Disclosure [Abstract] | ' | ' |
Debt Instrument, Interest Rate, Effective Percentage | 7.32% | ' |
Financing obligation | $34,100,000 | ' |
Noncash interest expense | $616,000 | $0 |