United Natural Foods (UNFI) 10-Q 10 Dec 15 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Oct. 31, 2015	Dec. 02, 2015
Document and Entity Information
Entity Registrant Name	UNITED NATURAL FOODS INC
Entity Central Index Key	1,020,859
Current Fiscal Year End Date	--07-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Oct. 31, 2015
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		50,320,813

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 31, 2015	Aug. 01, 2015
Current assets:
Cash and cash equivalents	$ 12,293	$ 17,380
Accounts receivable, net of allowance of $10,181 and $7,489, respectively	491,221	474,494
Inventories	1,082,979	982,559
Prepaid expenses and other current assets	40,779	46,976
Deferred income taxes	32,333	32,333
Total current assets	1,659,605	1,553,742
Property & equipment, net	566,522	572,452
Other assets:
Goodwill	266,660	266,640
Intangible assets, net of accumulated amortization of $27,578 and $25,717, respectively	123,990	125,830
Other assets	33,408	31,526
Total assets	2,650,185	2,550,190
Current liabilities:
Accounts payable	495,648	390,134
Accrued expenses and other current liabilities	140,027	129,113
Current portion of long-term debt	11,632	11,613
Total current liabilities	647,307	530,860
Notes Payable	316,060	362,993
Long-term debt, excluding current portion	171,871	174,780
Deferred income taxes	64,983	65,644
Other long-term liabilities	29,497	30,380
Total liabilities	1,229,718	1,164,657
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; 50,315 issued and outstanding shares at October 31, 2015; 50,096 issued and outstanding shares at August 1, 2015	503	501
Additional paid-in capital	426,314	420,584
Accumulated other comprehensive loss	(20,372)	(19,443)
Retained earnings	1,014,022	983,891
Total stockholders’ equity	1,420,467	1,385,533
Total liabilities and stockholders’ equity	$ 2,650,185	$ 2,550,190

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Oct. 31, 2015	Aug. 01, 2015
Statement of Financial Position [Abstract]
Accounts receivable, allowance (in dollars)	$ 10,181	$ 7,489
Intangible assets, accumulated amortization (in dollars)	$ 27,578	$ 25,717
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	50,315	50,096
Common stock, outstanding shares	50,315	50,096

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Income Statement [Abstract]
Net sales	$ 2,076,649	$ 1,992,476
Cost of sales	1,762,712	1,673,480
Gross profit	313,937	318,996
Operating expenses	257,224	260,048
Restructuring and asset impairment expenses	2,809	555
Total operating expenses	260,033	260,603
Operating income	53,904	58,393
Other expense (income):
Interest expense	3,748	3,255
Interest income	(152)	(93)
Other, net	173	616
Total other expense, net	3,769	3,778
Income before income taxes	50,135	54,615
Provision for income taxes	20,004	21,573
Net income	$ 30,131	$ 33,042
Basic per share data:
Net income (usd per share)	$ 0.60	$ 0.66
Weighted average basic shares of common stock outstanding	50,194	49,889
Diluted per share data:
Net income (usd per share)	$ 0.60	$ 0.66
Weighted average diluted shares of common stock outstanding	50,313	50,113

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 30,131	$ 33,042
Other comprehensive income (loss), After-tax Amount:
Fair value of swap agreements, net of tax	(990)	0
Foreign currency translation adjustments	61	(2,562)
Total other comprehensive income (loss), net of tax	(929)	(2,562)
Total comprehensive income	$ 29,202	$ 30,480

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Oct. 31, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid in Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings
Beginning Balance (shares) at Aug. 01, 2015	50,096	50,096
Beginning Balance at Aug. 01, 2015	$ 1,385,533	$ 501	$ 420,584	$ (19,443)	$ 983,891
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock option exercises and restricted stock vestings, net of tax		219
Stock option exercises and restricted stock vestings, net of tax	(655)	$ 2	(657)
Share-based compensation	5,973		5,973
Tax benefit associated with stock plans	414		414
Fair value of swap agreements, net of tax	(990)			(990)
Foreign currency translation adjustments	61			61
Net income	$ 30,131				30,131
Ending Balance (shares) at Oct. 31, 2015	50,315	50,315
Ending Balance at Oct. 31, 2015	$ 1,420,467	$ 503	$ 426,314	$ (20,372)	$ 1,014,022

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 30,131	$ 33,042
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	16,704	14,158
Share-based compensation	5,973	5,962
Loss on disposals of property and equipment	194	32
Excess tax benefits from share-based payment arrangements	(414)	(1,659)
Restructuring and asset impairment	0	555
Deferred income taxes	0	(6,052)
Provision for doubtful accounts	3,207	1,196
Non-cash interest (income) expense	(102)	134
Changes in assets and liabilities, net of acquired businesses:
Accounts receivable	(19,866)	(42,079)
Inventories	(100,387)	(150,761)
Prepaid expenses and other assets	4,455	4,586
Accounts payable	58,395	50,878
Accrued expenses and other liabilities	7,202	(8,735)
Net cash provided by (used in) operating activities	5,492	(98,743)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(7,588)	(27,372)
Purchases of acquired businesses, net of cash acquired	(17)	(7,734)
Payments for (Proceeds from) Other Investing Activities	0	(3,000)
Net cash used in investing activities	(7,605)	(38,106)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(2,890)	(2,902)
Proceeds from issuance of long-term debt	0	150,000
Proceeds from borrowings under revolving credit line	122,650	127,962
Repayments of borrowings under revolving credit line	(169,591)	(176,614)
Increase in bank overdraft	47,084	40,674
Proceeds from exercise of stock options	921	523
Payment of employee restricted stock tax withholdings	(1,576)	(2,089)
Excess tax benefits from share-based payment arrangements	414	1,659
Capitalized debt issuance costs	0	(954)
Net cash (used in) provided by financing activities	(2,988)	138,259
EFFECT OF EXCHANGE RATE CHANGES ON CASH	14	38
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(5,087)	1,448
Cash and cash equivalents at beginning of period	17,380	16,116
Cash and cash equivalents at end of period	12,293	17,564
Supplemental disclosures of cash flow information:
Cash paid for interest	4,354	3,190
Cash paid for federal and state income taxes, net of refunds	$ 1,768	$ 11,032

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Oct. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
SIGNIFICANT ACCOUNTING POLICIES	SIGNIFICANT ACCOUNTING POLICIES (a) Nature of Business United Natural Foods, Inc. and its 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 condensed consolidated 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 condensed consolidated 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 1, 2015 . 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 amounts 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 of 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. 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 $114.5 million and $112.0 million for the three months ended October 31, 2015 and November 1, 2014 , respectively.

RECENTLY ISSUED ACCOUNTING PRON

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Oct. 31, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-17, Balance Sheet Classification of Deferred Taxes , which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The new pronouncement is effective for public companies with annual periods, and interim periods within those periods, beginning after December 15, 2016, which for the Company will be the first quarter of the fiscal year ending July 28, 2018. Early adoption at the beginning of an interim or annual period is permitted. We are in the process of evaluating the impact that this new guidance will have on the Company's consolidated financial statements. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, (Topic 606): Deferral of the Effective Date deferring the adoption of previously issued guidance published in May 2014, ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606) . The core principle of the new guidance is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new pronouncement is effective for public companies with annual periods, and interim periods within those periods, beginning after December 15, 2017, which for the Company will be the first quarter of the fiscal year ending August 3, 2019. We are in the process of evaluating the impact that this new guidance will have on the Company's consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) ("ASU 2015-03"), which simplifies the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the presentation of debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, which for the Company will be the first quarter of the fiscal year ending July 29, 2017, with early adoption permitted and retrospective application required. If the Company had adopted this standard in the first quarter of fiscal 2016 , the result would have been the reclassification of $4.0 million and $4.2 million as of October 31, 2015 and August 1, 2015, respectively, from deferred financing costs to long-term debt in our condensed consolidated balance sheets. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new guidance requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures as appropriate. The new pronouncement is effective for public companies with annual periods ending after December 15, 2016, and interim periods thereafter. We do not expect the adoption of this guidance to have a significant impact on the Company’s consolidated financial statements.

RESTRUCTURING ACTIVITIES AND AS

RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS	3 Months Ended
	Oct. 31, 2015
Restructuring and Related Activities [Abstract]
Restructuring and Related Activities Disclosure	RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS 2016 cost-saving measures During the fourth quarter of fiscal 2015, the Company announced that its contract as a distributor to Albertsons Companies, Inc., which includes the Albertsons, Safeway and Eastern Supermarket chains, terminated on September 20, 2015 rather than upon the original contract end date of July 31, 2016. In the first quarter of fiscal 2016, the Company implemented company-wide cost-saving measures in response to this lost business. The various cost-saving measures implemented in the first quarter of fiscal 2016 resulted in restructuring costs of $2.8 million that were recorded during the three months ended October 31, 2015. These initiatives resulted in a reduction of employees, the majority of which were terminated by October 31, 2015, across the Company. The total work-force reduction charge of $2.3 million during the three months ended October 31, 2015 was primarily related to severance and fringe benefits. The Company also delayed filling vacant positions during the first quarter of fiscal 2016. In connection with these initiatives, we expect to incur additional costs of $1.2 million to $2.2 million related to severance and fringe benefits in the remainder of fiscal 2016. In addition to workforce reduction charges, the Company also recorded $0.5 million for an early lease termination charge and operational transfer costs associated with these initiatives in the first quarter of fiscal 2016. The following is a summary of the restructuring costs the Company recorded in the first quarter of fiscal 2016, as well as the remaining liability as of October 31, 2015 (in thousands): Restructuring Costs Cash Payments Restructuring Cost Liability as of October 31, 2015 Severance $ 2,285 $ (732 ) $ 1,553 Early lease termination 225 — 225 Operational transfer costs 299 (299 ) — Total $ 2,809 $ (1,031 ) $ 1,778 The Company anticipates that the remaining liability related to the workforce reduction will be substantially paid by the end of fiscal 2016. The early lease termination charge was paid in the second quarter of fiscal 2016, prior to the filing of this Quarterly Report. Canadian facility closure During fiscal 2015, the Company ceased operations at its Canadian facility located in Scotstown, Quebec which was acquired in 2010. In connection with this closure, the Company recognized an impairment of $0.6 million during the first quarter of fiscal 2015 representing the remaining unamortized balance of an intangible asset.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Oct. 31, 2015
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 October 31, November 1, Basic weighted average shares outstanding 50,194 49,889 Net effect of dilutive stock awards based upon the treasury stock method 119 224 Diluted weighted average shares outstanding 50,313 50,113 For the three months ended October 31, 2015 and November 1, 2014 , there were 50,453 and 14,047 anti-dilutive share-based awards outstanding, respectively. These anti-dilutive share-based awards were excluded from the calculation of diluted earnings per share.

FAIR VALUE MEASUREMENTS OF FINA

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS	3 Months Ended
	Oct. 31, 2015
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS	FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS Interest Rate Swap Agreement On January 23, 2015 , the Company entered into a forward starting interest rate swap agreement with an effective date of August 3, 2015. The agreement provides for the Company to pay interest for a seven-year period at a fixed rate of 1.795% on an initial amortizing principal amount of $140.0 million while receiving interest for the same period at the one-month London Interbank Offered Rate ("LIBOR") on the same notional amount. The interest rate swap has been entered into as a hedge against LIBOR movements on the current variable rate related to the Company’s real-estate backed Term Loan Agreement entered into on August 14, 2014, explained in more detail in Note 7 "Long-Term Debt," to protect against rising interest rates. We expect that the interest rate swap will effectively fix the Company’s interest rate payments on the $140.0 million of debt. The swap agreement qualifies as an “effective” hedge under FASB Accounting Standards Codification ("ASC") 815, Derivatives and Hedging (“ASC 815”). Interest rate swap agreements are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap agreement is designated as a cash flow hedge at October 31, 2015 and is reflected at fair value in the Condensed Consolidated Balance Sheet. The Company uses the “Hypothetical Derivative Method” described in ASC 815 for quarterly prospective and retrospective assessments of hedge effectiveness, as well as for measurements of hedge ineffectiveness. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings in interest income when the hedged transactions affect earnings. Ineffectiveness resulting from the hedge is recorded as a gain or loss in the condensed consolidated statement of income as part of other income. The Company did not have any hedge ineffectiveness recognized in earnings during the three months ended October 31, 2015 . The Company also monitors the risk of counterparty default on an ongoing basis. Fuel Supply Agreements The Company is party to several fixed price fuel supply agreements. As of the first quarter of fiscal 2016, the Company had entered into an agreement which requires it to purchase a portion of its diesel fuel each month at fixed prices through December 2016 . These fixed price fuel agreements qualify for, and the Company has elected to utilize, the “normal purchase” exception under 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 November 1, 2014 , 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 December 2015 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 also expensed as incurred and included within operating expenses. Financial Instruments The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis as of October 31, 2015 and August 1, 2015: Fair Value at October 31, 2015 Fair Value at August 1, 2015 (In thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Interest Rate Swap — $ (2,378 ) — — $ (726 ) — 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. October 31, 2015 August 1, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Liabilities: Long-term debt, including current portion $ 183,503 $ 189,057 $ 186,393 $ 192,679

BUSINESS SEGMENTS

BUSINESS SEGMENTS	3 Months Ended
	Oct. 31, 2015
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 the 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, packaging, and distributing of nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s branded 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 new national platform, these corporate expense amounts have increased, which is the primary driver behind the increasing 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 October 31, 2015: Net sales $ 2,059,622 $ 57,807 $ (40,780 ) $ — $ 2,076,649 Restructuring and asset impairment expenses 2,809 — — — 2,809 Operating income (loss) 62,065 (6,672 ) (1,489 ) — 53,904 Interest expense — — — 3,748 3,748 Interest income — — — (152 ) (152 ) Other, net — — — 173 173 Income before income taxes 50,135 Depreciation and amortization 16,083 621 — — 16,704 Capital expenditures 7,122 466 — — 7,588 Goodwill 248,929 17,731 — — 266,660 Total assets 2,485,086 189,442 (24,343 ) — 2,650,185 Three months ended November 1, 2014: Net sales $ 1,970,719 $ 59,570 $ (37,813 ) $ — $ 1,992,476 Restructuring and asset impairment expenses 555 — — — $ 555 Operating income (loss) 66,709 (7,599 ) (717 ) — 58,393 Interest expense — — — 3,255 3,255 Interest income — — — (93 ) (93 ) Other, net — — — 616 616 Income before income taxes 54,615 Depreciation and amortization 12,409 1,749 — — 14,158 Capital expenditures 26,937 435 — — 27,372 Goodwill 256,185 17,731 — — 273,916 Total assets 2,351,321 176,624 (17,879 ) — 2,510,066

LONG-TERM DEBT

LONG-TERM DEBT	3 Months Ended
	Oct. 31, 2015
Debt Disclosure [Abstract]
Long-term Debt	LONG-TERM DEBT On August 14, 2014, the Company entered into a real-estate backed Term Loan Agreement (the “Term Loan Agreement”) by and among the Company, its wholly-owned subsidiary Albert’s Organics, Inc. (“Albert's,” and together with the Company, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “Lenders”), Bank of America, N.A. as administrative agent for the Lenders (the “Administrative Agent”) and the other parties thereto. The total initial borrowings under the Term Loan Agreement were $150.0 million . Borrowings under the Term Loan Agreement are guaranteed by most of the Company's wholly-owned subsidiaries who are not also Borrowers. The Borrowers are required to make $2.5 million principal payments quarterly, which began on November 1, 2014. The Term Loan Agreement will terminate on the earlier of (a) August 14, 2022 and (b) the date that is ninety days prior to the termination date of the Company’s amended and restated revolving credit agreement, as amended. Under the Term Loan Agreement, the Borrowers at their option may request the establishment of one or more new term loan commitments in increments of at least $10.0 million , but not to exceed $50.0 million in total, subject to the approval of the Lenders electing to participate in such incremental loans and the satisfaction of the conditions required by the Term Loan Agreement. The Borrowers will be required to make quarterly principal payments on these incremental borrowings in accordance with the terms of the Term Loan Agreement. Borrowings under the Term Loan Agreement bear interest at rates that, at the Company's option, can be either: (1) a base rate generally defined as the sum of (i) the highest of (x) the Administrative Agent's prime rate , (y) the average overnight federal funds effective rate plus 0.50% and (z) one-month LIBOR plus one percent ( 1% ) per annum and (ii) a margin of 1.50% ; or, (2) a LIBOR rate generally defined as the sum of (i) LIBOR (as published by Reuters or other commercially available sources) for one, two, three or six months or, if approved by all affected lenders, nine months (all as selected by the Company), and (ii) a margin of 2.50% . Interest accrued on borrowings under the Term Loan Agreement is payable in arrears. Interest accrued on any LIBOR loan is payable on the last day of the interest period applicable to the loan and, with respect to any LIBOR loan of more than three (3) months, on the last day of every three (3) months of such interest period. Interest accrued on base rate loans is payable on the first day of every month. The Company is also required to pay certain customary fees to the Administrative Agent. The Borrowers' obligations under the Term Loan Agreement are secured by certain parcels of the Borrowers' real property. As of October 31, 2015 , the Company had borrowings of $137.5 million under the Term Loan Agreement which is included in "Long-term debt" on the Condensed Consolidated Balance Sheet. During the second quarter of fiscal 2015, the Company entered into an amendment to an existing lease agreement for the office space utilized as the Company's corporate headquarters in Providence, Rhode Island. The amendment provides for additional office space to be utilized by the Company and extends the lease term for an additional 10 years. The lease qualifies for capital lease treatment pursuant to FASB ASC 840, Leases, and the estimated fair value of the building was initially recorded on the Condensed Consolidated Balance Sheet at lease inception, with the capital lease obligation included in "Long-term debt." A portion of each lease payment reduces the amount of the lease obligation, and a portion is recorded as interest expense at an effective rate of approximately 12.38% . The capital lease obligation as of October 31, 2015 was $13.7 million . The Company recorded $0.4 million of interest expense related to this lease during the three months ended October 31, 2015 . The Company did not have this capital lease obligation during the three months ended November 1, 2014 . 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 October 31, 2015 was $32.3 million . The Company recorded $0.6 million of interest expense related to this lease during each of the three months ended October 31, 2015 and November 1, 2014 , respectively.

SIGNIFICANT ACCOUNTING POLICI15

SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Oct. 31, 2015
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 condensed consolidated 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 condensed consolidated 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 1, 2015 . 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 amounts 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 of 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. 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 $114.5 million and $112.0 million for the three months ended October 31, 2015 and November 1, 2014 , respectively.

RESTRUCTURING ACTIVITIES AND 16

RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS (Tables)	3 Months Ended
	Oct. 31, 2015
Restructuring and Related Activities [Abstract]
Restructuring and Related Costs [Table Text Block]	Restructuring Costs Cash Payments Restructuring Cost Liability as of October 31, 2015 Severance $ 2,285 $ (732 ) $ 1,553 Early lease termination 225 — 225 Operational transfer costs 299 (299 ) — Total $ 2,809 $ (1,031 ) $ 1,778

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Oct. 31, 2015
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 October 31, November 1, Basic weighted average shares outstanding 50,194 49,889 Net effect of dilutive stock awards based upon the treasury stock method 119 224 Diluted weighted average shares outstanding 50,313 50,113

FAIR VALUE MEASUREMENTS OF FI18

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Tables)	3 Months Ended
	Oct. 31, 2015
Fair Value Disclosures [Abstract]
Fair Value, Assets and Liabilities Measured on Recurring Basis	Fair Value at October 31, 2015 Fair Value at August 1, 2015 (In thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Liabilities: Interest Rate Swap — $ (2,378 ) — — $ (726 ) —
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments	October 31, 2015 August 1, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Liabilities: Long-term debt, including current portion $ 183,503 $ 189,057 $ 186,393 $ 192,679

BUSINESS SEGMENTS (Tables)

BUSINESS SEGMENTS (Tables)	3 Months Ended
	Oct. 31, 2015
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 October 31, 2015: Net sales $ 2,059,622 $ 57,807 $ (40,780 ) $ — $ 2,076,649 Restructuring and asset impairment expenses 2,809 — — — 2,809 Operating income (loss) 62,065 (6,672 ) (1,489 ) — 53,904 Interest expense — — — 3,748 3,748 Interest income — — — (152 ) (152 ) Other, net — — — 173 173 Income before income taxes 50,135 Depreciation and amortization 16,083 621 — — 16,704 Capital expenditures 7,122 466 — — 7,588 Goodwill 248,929 17,731 — — 266,660 Total assets 2,485,086 189,442 (24,343 ) — 2,650,185 Three months ended November 1, 2014: Net sales $ 1,970,719 $ 59,570 $ (37,813 ) $ — $ 1,992,476 Restructuring and asset impairment expenses 555 — — — $ 555 Operating income (loss) 66,709 (7,599 ) (717 ) — 58,393 Interest expense — — — 3,255 3,255 Interest income — — — (93 ) (93 ) Other, net — — — 616 616 Income before income taxes 54,615 Depreciation and amortization 12,409 1,749 — — 14,158 Capital expenditures 26,937 435 — — 27,372 Goodwill 256,185 17,731 — — 273,916 Total assets 2,351,321 176,624 (17,879 ) — 2,510,066

SIGNIFICANT ACCOUNTING POLICI20

SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Significant Accounting Policies
Total outbound shipping and handling costs	$ 114.5	$ 112

RECENTLY ISSUED ACCOUNTING PR21

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Millions	Oct. 31, 2015	Aug. 01, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred Finance Costs, Noncurrent, Net	$ 4	$ 4.2

RESTRUCTURING ACTIVITIES AND 22

RESTRUCTURING ACTIVITIES AND ASSET IMPAIRMENTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Restructuring Costs [Abstract]
Severance Costs	$ 2,285
Restructuring and asset impairment expenses	2,809	$ 555
Cash Payments
Severance Costs	2,285
Payments for Restructuring	(1,031)
Restructuring Cost Liability as of October 31, 2015
Restructuring Reserve	1,778
Asset Impairment Charges		$ 555
Employee Severance [Member]
Restructuring Costs [Abstract]
Severance Costs	2,285
Cash Payments
Severance Costs	2,285
Restructuring Cost Liability as of October 31, 2015
Restructuring Reserve	1,553
Contract Termination [Member]
Restructuring Costs [Abstract]
Loss on Contract Termination	225
Cash Payments
Loss on Contract Termination	225
Restructuring Cost Liability as of October 31, 2015
Restructuring Reserve	225
Other Restructuring [Member]
Restructuring Costs [Abstract]
Other Restructuring Costs	299
Cash Payments
Other Restructuring Costs	299
Restructuring Cost Liability as of October 31, 2015
Restructuring Reserve	0
Cash paid for restructuring [Member]
Restructuring Costs [Abstract]
Severance Costs	(732)
Loss on Contract Termination	0
Other Restructuring Costs	(299)
Cash Payments
Severance Costs	(732)
Loss on Contract Termination	0
Other Restructuring Costs	(299)
Minimum
Restructuring Costs
Restructuring and Related Cost, Expected Cost	1,200
Maximum
Restructuring Costs
Restructuring and Related Cost, Expected Cost	$ 2,200

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - shares	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Reconciliation of the basic and diluted number of shares used in computing earnings per share:
Basic weighted average shares outstanding	50,194,000	49,889,000
Net effect of dilutive stock awards based upon the treasury stock method	119,000	224,000
Diluted weighted average shares outstanding	50,313,000	50,113,000
Anti-dilutive share-based payment awards outstanding (in shares)	50,453	14,047

FAIR VALUE MEASUREMENTS OF FI24

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Oct. 31, 2015	Aug. 01, 2015
Fair Value Disclosures [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	$ (2,378)	$ (726)
Long term debt, including current portion, carrying value	183,503	186,393
Long term debt, including current portion, fair value	$ 189,057	$ 192,679
Derivative, Forward Interest Rate	1.795%
Derivative, Notional Amount	$ 140,000

BUSINESS SEGMENTS (Details)

BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Aug. 01, 2015
Business segment information
Net sales	$ 2,076,649	$ 1,992,476
Restructuring and asset impairment expenses	2,809	555
Operating income (loss)	53,904	58,393
Interest expense	3,748	3,255
Interest income	(152)	(93)
Other, net	173	616
Income before income taxes	50,135	54,615
Depreciation and amortization	16,704	14,158
Capital expenditures	7,588	27,372
Goodwill	266,660	273,916	$ 266,640
Total assets	2,650,185	2,510,066	$ 2,550,190
Wholesale
Business segment information
Net sales	2,059,622	1,970,719
Restructuring and asset impairment expenses	2,809	555
Operating income (loss)	62,065	66,709
Interest expense	0	0
Interest income	0	0
Other, net	0	0
Depreciation and amortization	16,083	12,409
Capital expenditures	7,122	26,937
Goodwill	248,929	256,185
Total assets	2,485,086	2,351,321
Other
Business segment information
Net sales	57,807	59,570
Restructuring and asset impairment expenses	0	0
Operating income (loss)	(6,672)	(7,599)
Interest expense	0	0
Interest income	0	0
Other, net	0	0
Depreciation and amortization	621	1,749
Capital expenditures	466	435
Goodwill	17,731	17,731
Total assets	189,442	176,624
Eliminations
Business segment information
Net sales	(40,780)	(37,813)
Restructuring and asset impairment expenses	0	0
Operating income (loss)	(1,489)	(717)
Interest expense	0	0
Interest income	0	0
Other, net	0	0
Depreciation and amortization	0	0
Capital expenditures	0	0
Goodwill	0	0
Total assets	(24,343)	(17,879)
Unallocated
Business segment information
Net sales	0	0
Restructuring and asset impairment expenses	0	0
Operating income (loss)	0	0
Interest expense	3,748	3,255
Interest income	152	93
Other, net	173	(616)
Depreciation and amortization	0	0
Capital expenditures	0	0
Goodwill	0	0
Total assets	$ 0	$ 0

LONG-TERM DEBT (Details)

LONG-TERM DEBT (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Aug. 01, 2015
Long-term debt instrument
Proceeds from issuance of long-term debt	$ 0	$ 150,000
Repayments of Long-term Debt	2,890	2,902
Long term debt, including current portion, carrying value	183,503		$ 186,393
Interest expense	3,748	$ 3,255
Term loan
Long-term debt instrument
Repayments of Long-term Debt	2,500
Long term debt, including current portion, carrying value	137,500
Capital lease obligation
Long-term debt instrument
Interest Expense, Lessee, Assets under Capital Lease	$ 400
Lease Term	10 years
Effective interest rate on debt	12.38%
Capital Lease Obligation	$ 13,700
Sale Leaseback Financing Obligation
Long-term debt instrument
Long term debt, including current portion, carrying value	$ 32,300
Effective interest rate on debt	7.32%
Interest expense	$ 600
Minimum | Term loan
Long-term debt instrument
Long term debt, including current portion, carrying value	10,000
Maximum | Term loan
Long-term debt instrument
Long term debt, including current portion, carrying value	$ 50,000
Base Rate [Member] | Term loan
Long-term debt instrument
Debt Instrument, Description of Variable Rate Basis	Administrative Agent's prime rate
initial applicable margin	1.50%
Federal Funds Effective Swap Rate [Member] | Term loan
Long-term debt instrument
Debt Instrument, Description of Variable Rate Basis	overnight federal funds effective rate
Debt Instrument, Basis Spread on Variable Rate	0.50%
One-month LIBOR | Term loan
Long-term debt instrument
Debt Instrument, Description of Variable Rate Basis	one-month LIBOR
Debt Instrument, Basis Spread on Variable Rate	1.00%
London Interbank Offered Rate (LIBOR) [Member] | Term loan
Long-term debt instrument
Debt Instrument, Description of Variable Rate Basis	one, two, three or six months or, if approved by all affected lenders, nine months
initial applicable margin	2.50%