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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 2021
or 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-15723
UNFI-20211030_G1.JPG
UNITED NATURAL FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
 
05-0376157
(I.R.S. Employer Identification No.)
313 Iron Horse Way, Providence, RI 02908
(Address of principal executive offices) (Zip Code)

 Registrant’s telephone number, including area code: (401) 528-8634
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.01 UNFI New York Stock Exchange

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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.     
Large accelerated filer ☒   Accelerated filer ☐
Non-accelerated filer ☐   Smaller reporting company ☐
  Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of December 3, 2021 there were 58,085,036 shares of the registrant’s common stock, $0.01 par value per share, outstanding.


Table of Contents

TABLE OF CONTENTS
 
Part I.
Financial Information
 
 
3
 
4
 
5
 
6
 
7
 
8
25
38
39
39
39
39
40
 
41

2
Table of Contents

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions, except for par amounts)
October 30,
2021 		July 31,
2021
ASSETS    
Cash and cash equivalents $ 46  $ 41 
Accounts receivable, net 1,249  1,103 
Inventories, net 2,537  2,247 
Prepaid expenses and other current assets 187  157 
Current assets of discontinued operations —  2 
Total current assets 4,019  3,550 
Property and equipment, net 1,769  1,784 
Operating lease assets 1,095  1,064 
Goodwill 20  20 
Intangible assets, net 873  891 
Deferred income taxes 49  57 
Other long-term assets 174  157 
Long-term assets of discontinued operations —  2 
Total assets $ 7,999  $ 7,525 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Accounts payable $ 1,896  $ 1,644 
Accrued expenses and other current liabilities 326  341 
Accrued compensation and benefits 206  243 
Current portion of operating lease liabilities 142  135 
Current portion of long-term debt and finance lease liabilities 121  120 
Current liabilities of discontinued operations —  4 
Total current liabilities 2,691  2,487 
Long-term debt 2,376  2,175 
Long-term operating lease liabilities 988  962 
Long-term finance lease liabilities 32  35 
Pension and other postretirement benefit obligations 51  53 
Other long-term liabilities 274  299 
Total liabilities 6,412  6,011 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding
—  — 
Common stock, $0.01 par value, authorized 100.0 shares; 58.7 shares issued and 58.1 shares outstanding at October 30, 2021; 57.0 shares issued and 56.4 shares outstanding at July 31, 2021
1  1 
Additional paid-in capital 582  599 
Treasury stock at cost (24) (24)
Accumulated other comprehensive loss (24) (39)
Retained earnings 1,054  978 
Total United Natural Foods, Inc. stockholders’ equity 1,589  1,515 
Noncontrolling interests (2) (1)
Total stockholders’ equity 1,587  1,514 
Total liabilities and stockholders’ equity $ 7,999  $ 7,525 

See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except for per share data) 
  13-Week Period Ended
 
October 30,
2021 		October 31,
2020
Net sales $ 6,997  $ 6,684 
Cost of sales 5,955  5,714 
Gross profit 1,042  970 
Operating expenses 932  904 
Restructuring, acquisition and integration related expenses 3  16 
Operating income 107  50 
Net periodic benefit income, excluding service cost (10) (17)
Interest expense, net 40  69 
Other, net 1  (1)
Income (loss) from continuing operations before income taxes 76  (1)
Benefit for income taxes (1) (1)
Net income from continuing operations 77  — 
Income from discontinued operations, net of tax —  — 
Net income including noncontrolling interests 77  — 
Less net income attributable to noncontrolling interests (1) (1)
Net income (loss) attributable to United Natural Foods, Inc. $ 76  $ (1)
   
Basic earnings (loss) per share:
Continuing operations $ 1.34  $ (0.03)
Discontinued operations $ —  $ 0.01 
Basic earnings (loss) per share $ 1.34  $ (0.02)
Diluted earnings (loss) per share:
Continuing operations $ 1.25  $ (0.03)
Discontinued operations $ —  $ 0.01 
Diluted earnings (loss) per share $ 1.25  $ (0.02)
Weighted average shares outstanding:
Basic 57.0  55.2 
Diluted 61.1  55.2 

See accompanying Notes to Condensed Consolidated Financial Statements.
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UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in millions)
13-Week Period Ended
October 30,
2021 		October 31,
2020
Net income including noncontrolling interests $ 77  $ — 
Other comprehensive income:    
Recognition of pension and other postretirement benefit obligations, net of tax 1  — 
Recognition of interest rate swap cash flow hedges, net of tax(1)
13  12 
Foreign currency translation adjustments —  — 
Recognition of other cash flow derivatives, net of tax 1  — 
Total other comprehensive income 15  12 
Less comprehensive income attributable to noncontrolling interests (1) (1)
Total comprehensive income attributable to United Natural Foods, Inc. $ 91  $ 11 

(1)Amounts are net of tax expense of $4 million for the first quarters of fiscal 2022 and fiscal 2021.


See accompanying Notes to Condensed Consolidated Financial Statements.

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UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
For the 13-week periods ended October 30, 2021 and October 31, 2020
(in millions)
  Common Stock Treasury Stock Additional
Paid-in Capital 		Accumulated
Other
Comprehensive Loss 		Retained Earnings Total United Natural Foods, Inc.
Stockholders’ Equity 		Noncontrolling Interests Total Stockholders’ Equity
Shares Amount Shares Amount
Balances at July 31, 2021 57.0  $ 1  0.6  $ (24) $ 599  $ (39) $ 978  $ 1,515  $ (1) $ 1,514 
Restricted stock vestings 1.7  —  —  —  (33) —  —  (33) —  (33)
Share-based compensation —  —  —  —  11  —  —  11  —  11 
Other comprehensive income —  —  —  —  —  15  —  15  —  15 
Distributions to noncontrolling interests —  —  —  —  —  —  —  —  (2) (2)
Proceeds from issuance of common stock, net —  —  —  —  5  —  —  5  —  5 
Net income —  —  —  —  —  —  76  76  1  77 
Balances at October 30, 2021 58.7  $ 1  0.6  $ (24) $ 582  $ (24) $ 1,054  $ 1,589  $ (2) $ 1,587 
Balances at August 1, 2020 55.3  $ 1  0.6  $ (24) $ 569  $ (239) $ 838  $ 1,145  $ (3) $ 1,142 
Cumulative effect of change in accounting principle —  —  —  —  —  —  (9) (9) —  (9)
Restricted stock vestings 1.4  —  —  —  (9) —  —  (9) —  (9)
Share-based compensation —  —  —  —  12  —  —  12  —  12 
Other comprehensive income —  —  —  —  —  12  —  12  —  12 
Net (loss) income —  —  —  —  —  —  (1) (1) 1  — 
Balances at October 31, 2020 56.7  $ 1  0.6  $ (24) $ 572  $ (227) $ 828  $ 1,150  $ (2) $ 1,148 

See accompanying Notes to Condensed Consolidated Financial Statements.

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UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
  13-Week Period Ended
(in millions) October 30,
2021 		October 31,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income including noncontrolling interests $ 77  $ — 
Income from discontinued operations, net of tax —  — 
Net income from continuing operations 77  — 
Adjustments to reconcile net income to net cash used in operating activities:
   
Depreciation and amortization 69  77 
Share-based compensation 11  12 
Closed property and other restructuring charges 1  — 
Net pension and other postretirement benefit income (10) (17)
Deferred income tax benefit —  2 
LIFO charge 11  7 
Provision for losses on receivables 1  — 
Non-cash interest expense and other adjustments 5  28 
Changes in operating assets and liabilities (246) (164)
Net cash used in operating activities of continuing operations
(81) (55)
Net cash used in operating activities of discontinued operations
—  (3)
Net cash used in operating activities
(81) (58)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Payments for capital expenditures (56) (41)
Proceeds from dispositions of assets 1  4 
Payments for investments (26) — 
Net cash used in investing activities of continuing operations
(81) (37)
Net cash provided by investing activities of discontinued operations
—  2 
Net cash used in investing activities
(81) (35)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from borrowings of long-term debt —  500 
Proceeds from borrowings under revolving credit line 1,238  1,569 
Repayments of borrowings under revolving credit line (1,028) (1,339)
Repayments of long-term debt and finance leases (13) (614)
Proceeds from the issuance of common stock and exercise of stock options 5  — 
Payment of employee restricted stock tax withholdings (33) (9)
Payments for debt issuance costs —  (11)
Distributions to noncontrolling interests (2) — 
Repayments of other loans —  (1)
Net cash provided by financing activities
167  95 
EFFECT OF EXCHANGE RATE ON CASH —  — 
NET INCREASE IN CASH AND CASH EQUIVALENTS 5  2 
Cash and cash equivalents, at beginning of period 41  47 
Cash and cash equivalents, at end of period $ 46  $ 49 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 46  $ 44 
Cash (refunds) payments for federal, state, and foreign income taxes, net $ (1) $ 6 
Leased assets obtained in exchange for new operating lease liabilities $ 71  $ 71 
Additions of property and equipment included in Accounts payable $ 17  $ 21 
 See accompanying Notes to Condensed Consolidated Financial Statements.
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UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


NOTE 1—SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business

United Natural Foods, Inc. and its subsidiaries (the “Company”, “we”, “us”, “UNFI”, or “our”) is a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services to retailers. The Company sells its products primarily throughout the United States and Canada.

Fiscal Year

The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks. References to the first quarters of fiscal 2022 and 2021 relate to the 13-week fiscal quarters ended October 30, 2021 and October 31, 2020, respectively.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Unless otherwise indicated in these Condensed Consolidated Financial Statements, references to the Condensed Consolidated Statements of Operations, the Condensed Consolidated Balance Sheets and the Notes to the Condensed Consolidated Financial Statements exclude all amounts related to discontinued operations.

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 (“GAAP”) 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. However, the results of operations for interim periods 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 July 31, 2021 (the “Annual Report”). There were no material changes in significant accounting policies from those described in the Annual Report.

Discontinued Operations

In the fourth quarter of fiscal 2021, the Company determined it no longer met the held for sale criterion for a probable sale to be completed within 12 months for two of the four stores that were previously included within discontinued operations. As a result, the Company revised its Condensed Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations. The prior period presented in the Condensed Consolidated Financial Statements have been conformed to the current period presentation. The remaining two stores included in discontinued operations were sold subsequent to the end of the first quarter of fiscal 2022.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment. The Company funds all intraday bank balance overdrafts during the same business day. Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows. As of October 30, 2021 and July 31, 2021, the Company had net book overdrafts of $280 million and $268 million, respectively.

Reclassifications

Within the Condensed Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current year presentation. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

Inventories, Net

Substantially all of the Company’s inventories consist of finished goods. To value discrete inventory items at lower of cost or market before application of any last-in, first-out (“LIFO”) reserve, the Company utilizes the weighted average cost method, perpetual cost method, the retail inventory method and the replacement cost method. Allowances for vendor funds received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales upon the sale of the related products. Inventory quantities are evaluated throughout each fiscal year based on actual physical counts in our distribution facilities and stores. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the end of each fiscal year. If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $78 million and $67 million at October 30, 2021 and July 31, 2021, respectively.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions to Topic 740’s general principles. The amendments also improve consistency in and simplify its application. The Company adopted this standard in the first quarter of fiscal 2022. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The temporary guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. ASU 2020-04 is effective from March 12, 2020 and may be applied prospectively through December 31, 2022. In fiscal 2020, the Company elected the initial expedient to assert probability of its hedged interest rate transactions and is currently evaluating the impact the remaining elements of the standard will have on the future cessation of LIBOR rates applicable to the Company.
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NOTE 3—REVENUE RECOGNITION

Disaggregation of Revenues

The Company records revenue to five customer channels within Net sales, which are described below:

•Chains, which consists of customer accounts that typically have more than 10 operating stores and excludes stores included within the Supernatural and Other channels defined below;
•Independent retailers, which includes smaller size accounts, including single store and multiple store locations, and group purchasing entities that are not classified within Chains above or Other discussed below;
•Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market;
•Retail, which reflects our Retail segment, including the Cub Foods business and the remaining Shoppers locations, excluding Shoppers locations that are held for sale within discontinued operations; and
•Other, which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.

The following tables detail the Company’s net sales for the periods presented by customer channel for each of its segments. The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly.
  Net Sales for the 13-Week Period Ended
(in millions) October 30, 2021
Customer Channel Wholesale Retail Other
Eliminations(1)
Consolidated
Chains $ 3,082  $ —  $ —  $ —  $ 3,082 
Independent retailers 1,750  —  —  —  1,750 
Supernatural 1,378  —  —  —  1,378 
Retail —  602  —  —  602 
Other 524  —  56  —  580 
Eliminations —  —  —  (395) (395)
Total $ 6,734  $ 602  $ 56  $ (395) $ 6,997 
Net Sales for the 13-Week Period Ended
(in millions)
October 31, 2020
Customer Channel Wholesale Retail Other
Eliminations(1)
Consolidated
Chains $ 3,027  $ —  $ —  $ —  $ 3,027 
Independent retailers 1,672  —  —  —  1,672 
Supernatural 1,214  —  —  —  1,214 
Retail —  606  —  —  606 
Other 525  —  56  —  581 
Eliminations —  —  —  (416) (416)
Total $ 6,438  $ 606  $ 56  $ (416) $ 6,684 
(1)Eliminations primarily includes the net sales elimination of Wholesale’s sales to the Retail segment and the elimination of sales from segments included within Other to Wholesale.

The Company serves customers in the United States and Canada, as well as customers located in other countries. However, all of the Company’s revenue is earned in the United States and Canada, and international distribution occurs through freight-forwarders. The Company does not have any performance obligations on international shipments subsequent to delivery to the domestic port.

10

Accounts and Notes Receivable Balances

Accounts and notes receivable are as follows:
(in millions) October 30, 2021 July 31, 2021
Customer accounts receivable $ 1,264  $ 1,115 
Allowance for uncollectible receivables (30) (28)
Other receivables, net 15  16 
Accounts receivable, net $ 1,249  $ 1,103 
Notes receivable, net, included within Prepaid expenses and other current assets $ 6  $ 7 
Long-term notes receivable, net, included within Other long-term assets
$ 15  $ 15 

NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES

Restructuring, acquisition and integration related expenses were as follows:
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020
Restructuring and integration costs $ 3  $ 15 
Closed property charges and costs —  1 
Total $ 3  $ 16 


NOTE 5—GOODWILL AND INTANGIBLE ASSETS, NET

Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
(in millions) Wholesale Other Total
Goodwill as of July 31, 2021 $ 10 
(1)
$ 10 
(2)
$ 20 
Change in foreign exchange rates —  —  — 
Goodwill as of October 30, 2021 $ 10 
(1)
$ 10 
(2)
$ 20 
(1)Wholesale amounts are net of accumulated goodwill impairment charges of $717 million as of July 31, 2021 and October 30, 2021.
(2)Other amounts are net of accumulated goodwill impairment charges of $10 million as of July 31, 2021 and October 30, 2021.

Identifiable intangible assets, net consisted of the following:
October 30, 2021 July 31, 2021
(in millions) Gross Carrying
Amount 		Accumulated
Amortization 		Net Gross Carrying
Amount 		Accumulated
Amortization 		Net
Amortizing intangible assets:
Customer relationships $ 1,007  $ 249  $ 758  $ 1,007  $ 234  $ 773 
Pharmacy prescription files 33  14  19  33  13  20 
Operating lease intangibles 7  5  2  7  4  3 
Trademarks and tradenames 84  46  38  84  45  39 
Total amortizing intangible assets 1,131  314  817  1,131  296  835 
Indefinite lived intangible assets:            
Trademarks and tradenames 56  —  56  56  —  56 
Intangibles assets, net $ 1,187  $ 314  $ 873  $ 1,187  $ 296  $ 891 
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Amortization expense was $18 million and $23 million for the first quarters of fiscal 2022 and 2021, respectively. The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of October 30, 2021 is as follows:
Fiscal Year: (in millions)
Remaining fiscal 2022 $ 54 
2023 72 
2024 72 
2025 70 
2026 66 
Thereafter 483 
$ 817 

NOTE 6—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Recurring Fair Value Measurements

The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
Condensed Consolidated Balance Sheets Location Fair Value at October 30, 2021
(in millions) Level 1 Level 2 Level 3
Assets:
Fuel derivatives designated as hedging instruments Prepaid expenses and other current assets $ —  $ 1  $ — 
Mutual funds Other long-term assets $ 1  $ —  $ — 
Liabilities:
Foreign currency derivatives designated as hedging instruments Accrued expenses and other current liabilities $ —  $ 1  $ — 
Interest rate swaps designated as hedging instruments Accrued expenses and other current liabilities $ —  $ 28  $ — 
Interest rate swaps designated as hedging instruments Other long-term liabilities $ —  $ 28  $ — 

Condensed Consolidated Balance Sheets Location Fair Value at July 31, 2021
(in millions) Level 1 Level 2 Level 3
Assets:
Fuel derivatives designated as hedging instruments Prepaid expenses and other current assets $ —  $ 1  $ — 
Mutual funds Other long-term assets $ 2  $ —  $ — 
Liabilities:
Foreign currency derivatives designated as hedging instruments Accrued expenses and other current liabilities $ —  $ 1  $ — 
Interest rate swaps designated as hedging instruments Accrued expenses and other current liabilities $ —  $ 33  $ — 
Interest rate swaps designated as hedging instruments Other long-term liabilities $ —  $ 42  $ — 

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Interest Rate Swap Contracts

The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, LIBOR swap rates and credit default swap rates. As of October 30, 2021, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $27 million; a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $28 million. Refer to Note 7—Derivatives for further information on interest rate swap contracts.

Fair Value Estimates

For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities. The fair value of notes receivable is estimated by using a discounted cash flow approach prior to consideration for uncollectible amounts and is calculated by applying a market rate for similar instruments using Level 3 inputs. The fair value of debt is estimated based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs. In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs.
  October 30, 2021 July 31, 2021
(in millions) Carrying Value Fair Value Carrying Value Fair Value
Notes receivable, including current portion $ 27  $ 24  $ 29  $ 26 
Long-term debt, including current portion $ 2,390  $ 2,480  $ 2,188  $ 2,278 

NOTE 7—DERIVATIVES

Management of Interest Rate Risk

The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap contracts are designated as cash flow hedges as of October 30, 2021. Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets. Refer to Note 6—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

13
Details of active swap contracts as of October 30, 2021, which are all pay fixed and receive floating, are as follows:
Effective Date Swap Maturity Notional Value (in millions) Pay Fixed Rate
Receive Floating Rate(2)
Floating Rate Reset Terms
August 3, 2015(1)
August 15, 2022 $ 32  1.7950  % One-Month LIBOR Monthly
October 26, 2018 October 31, 2022 100  2.8915  % One-Month LIBOR Monthly
January 11, 2019 October 31, 2022 50  2.4678  % One-Month LIBOR Monthly
January 23, 2019 October 31, 2022 50  2.5255  % One-Month LIBOR Monthly
November 16, 2018 March 31, 2023 150  2.8950  % One-Month LIBOR Monthly
January 23, 2019 March 31, 2023 50  2.5292  % One-Month LIBOR Monthly
November 30, 2018 September 30, 2023 50  2.8315  % One-Month LIBOR Monthly
October 26, 2018 October 31, 2023 100  2.9210  % One-Month LIBOR Monthly
January 11, 2019 March 28, 2024 100  2.4770  % One-Month LIBOR Monthly
January 23, 2019 March 28, 2024 100  2.5420  % One-Month LIBOR Monthly
November 30, 2018 October 31, 2024 100  2.8480  % One-Month LIBOR Monthly
January 11, 2019 October 31, 2024 100  2.5010  % One-Month LIBOR Monthly
January 24, 2019 October 31, 2024 50  2.5210  % One-Month LIBOR Monthly
October 26, 2018 October 22, 2025 50  2.9550  % One-Month LIBOR Monthly
November 16, 2018 October 22, 2025 50  2.9590  % One-Month LIBOR Monthly
November 16, 2018 October 22, 2025 50  2.9580  % One-Month LIBOR Monthly
January 24, 2019 October 22, 2025 50  2.5558  % One-Month LIBOR Monthly
$ 1,232 
(1)The swap contract has an amortizing notional principal amount which is reduced by $1 million on a quarterly basis.
(2)For these swap contracts that are indexed to LIBOR, the Company is monitoring and evaluating risks related to the expected future cessation of LIBOR.

In the first quarter of fiscal 2021, in conjunction with the $500 million fixed rate senior unsecured notes offering described below in Note 8—Long-Term Debt, the Company paid $11 million to terminate or novate certain outstanding interest rate swaps with a notional amount of $504 million and certain forward starting interest rate swaps with a notional amount of $450 million. The payments equaled the fair value of the interest rate swaps at the time of their termination or novation. No gain or loss was recorded as a result of the swap terminations and novations. Since the hedged interest payments remain probable of occurring, the unrecognized gains and losses that existed as of the early termination or novation of these interest rate swap agreements will be amortized out of Accumulated other comprehensive loss and into Interest expense, net over the remaining period of the original terminated or novated interest rate swap agreements. If any of the hedged interest payments were not probable of occurring, then a charge representing an accelerated amortization of the unrecognized gains and losses would be recorded. Cash payments resulting from the termination or novation of interest rate swaps are classified as operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair value of the derivative is initially reported in Other comprehensive income (outside of earnings) in the Condensed Consolidated Statements of Comprehensive Income and subsequently reclassified to earnings in Interest expense, net in the Condensed Consolidated Statements of Operations when the hedged transactions affect earnings.

14
The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pretax basis, are as follows:
13-Week Period Ended
October 30, 2021 October 31, 2020
(in millions) Interest expense, net
Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
$ 40  $ 69 
Loss on cash flow hedging relationships:
Loss reclassified from comprehensive income into earnings $ (11) $ (12)

NOTE 8—LONG-TERM DEBT

The Company’s long-term debt consisted of the following:
(in millions)
Average Interest Rate at
October 30, 2021
Fiscal Maturity Year October 30,
2021 		July 31,
2021
Term Loan Facility 3.59% 2026 $ 994  $ 1,002 
ABL Credit Facility 1.46% 2024 910  701 
Senior Notes 6.75% 2029 500  500 
Other secured loans 5.15% 2024-2025 34  37 
Debt issuance costs, net (32) (35)
Original issue discount on debt (16) (17)
Long-term debt, including current portion 2,390  2,188 
Less: current portion of long-term debt (14) (13)
Long-term debt $ 2,376  $ 2,175 

Senior Notes

On October 22, 2020, the Company issued $500 million of unsecured 6.750% Senior Notes due October 15, 2028 (the “Senior Notes”). The Senior Notes are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility (defined below) or the Term Loan Facility (defined below).

ABL Credit Facility

The ABL Loan Agreement by and among the Company and United Natural Foods West, Inc. (together with the Company, the “U.S. Borrowers”) and UNFI Canada, Inc. (the “Canadian Borrower” and, together with the U.S. Borrowers, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Bank of America, N.A. as administrative agent for the ABL Lenders, Bank of America, N.A. (acting through its Canada branch), as Canadian agent for the ABL Lenders, and the other parties thereto, provides for a secured asset-based revolving credit facility (the “ABL Credit Facility” and the loans thereunder, the “ABL Loans”), of which up to (i) $2,050 million is available to the U.S. Borrowers and (ii) $50 million is available to the Canadian Borrower. The ABL Loan Agreement also provides for (i) a $300 million sublimit of availability for letters of credit of which there is a further $25 million sublimit for the Canadian Borrower. Under the ABL Loan Agreement, the Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $600 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding. There is no assurance that additional funding would be available.

The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s wholly-owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations. The Borrowers’ obligations under the ABL Credit Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Borrowers’ and Guarantors’ accounts receivable, inventory and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.
15

Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90% of eligible accounts receivable, plus 90% of eligible credit card receivables, plus 90% of the net orderly liquidation value of eligible inventory, plus 90% of eligible pharmacy receivables, plus certain pharmacy prescription files availability of the Borrowers, after adjusting for customary reserves, but at no time shall exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $2,100 million) or the Borrowing Base.

The assets included in the Condensed Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:
Assets securing the ABL Credit Facility (in millions)(1):
October 30,
2021 		July 31,
2021
Certain inventory assets included in Inventories, net and Current assets of discontinued operations $ 2,538  $ 2,297 
Certain receivables included in Accounts receivable, net and Current assets of discontinued operations $ 1,151  $ 1,041 
(1)The ABL Credit Facility is also secured by all of the Company’s pharmacy prescription files, which are included in Intangibles, net in the Condensed Consolidated Balance Sheets. Refer to Note 5—Goodwill and Intangible Assets, Net for additional information.

As of October 30, 2021, the U.S. Borrowers’ Borrowing Base, net of $193 million of reserves, was $2,311 million, which is above the $2,050 million limit of availability to the U.S. Borrowers under the ABL Credit Facility. As of October 30, 2021, the Canadian Borrower’s Borrowing Base, net of $6 million of reserves, was $44 million, which is below the $50 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $2,094 million for ABL Loans and letters of credit under the ABL Credit Facility. As of October 30, 2021, the U.S. Borrowers had $910 million of ABL Loans and the Canadian Borrower had no ABL Loans outstanding under the ABL Credit Facility, which are presented net of debt issuance costs of $7 million and are included in Long-term debt on the Condensed Consolidated Balance Sheets. As of October 30, 2021, the U.S. Borrowers had $118 million in letters of credit and the Canadian Borrower had no letters of credit outstanding under the ABL Credit Facility. The Company’s resulting remaining availability under the ABL Credit Facility was $1,066 million as of October 30, 2021.
ABL availability (in millions): October 30, 2021
Total availability for ABL Loans and letters of credit $ 2,094 
ABL Loans $ 910 
Letters of credit $ 118 
Unused credit $ 1,066 

The applicable interest rates, letter of credit fees and unutilized commitment fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Agreement), and were as follows:
Interest rates and fees under the ABL Credit Facility: Range of Facility Rates and Fees (per annum) October 30, 2021
U.S. and Canadian Borrowers’ applicable margin for base rate loans
—% - 0.50%
0.25  %
U.S. and Canadian Borrowers’ applicable margin for LIBOR and BA loans(1)
1.00% - 1.50%
1.25  %
Unutilized commitment fees
0.25% - 0.375%
0.25  %
Letter of credit fees
1.125% - 1.625%
1.375  %
(1) The U.S. Borrowers utilize LIBOR-based loans and the Canadian Borrower utilizes bankers’ acceptance rate-based loans.

The ABL Loan Agreement contains provisions for the transition to an alternative rate of interest in the event that LIBOR is no longer available.

Term Loan Facility

The Term Loan Agreement, by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as lenders, Credit Suisse, as administrative agent for the Lenders, and the other parties thereto, provides for senior secured first lien term loans in an aggregate principal amount of $1,800 million in a seven-year tranche (the “Term Loan Facility”). The loans under the Term Loan Facility will be payable in full on October 22, 2025.

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Under the Term Loan Agreement, the Company may, at its option, increase the amount of the Term Loan Facility, add one or more additional tranches of term loans or add one or more additional tranches of revolving credit commitments, without the consent of any Term Lenders not participating in such additional borrowings, up to an aggregate amount of $656 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding. There can be no assurance that additional funding would be available.

The obligations under the Term Loan Facility are guaranteed by the Guarantors, subject to customary exceptions and limitations. The Term Borrowers’ obligations under the Term Loan Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property with net book values of less than $10 million. As of October 30, 2021 and July 31, 2021, there was $672 million and $676 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year. Based on the Company’s Consolidated First Lien Net Leverage Ratio at the end of fiscal 2021, no prepayment from Excess Cash Flow in fiscal 2021 is required to be made in fiscal 2022. The potential amount of prepayment from Excess Cash Flow in fiscal 2022 that may be required in fiscal 2023 is not reasonably estimable as of October 30, 2021.

As of October 30, 2021, the Company had borrowings of $994 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $17 million and an original issue discount on debt of $16 million. As of October 30, 2021, no amount of the Term Loan Facility was classified as current.

As of October 30, 2021, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either: (i) a base rate plus a margin of 2.50% or (ii) a LIBOR rate plus a margin of 3.50%; provided that the LIBOR rate shall never be less than 0.0%. The Term Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available.

Subsequent to the end of the first quarter of fiscal 2022, on November 10, 2021, the Company entered into an amendment (the “Second Term Loan Amendment”) amending the Term Loan Agreement. The amendment provides for (i) the reduction of the applicable margin for LIBOR loans from 3.50% to 3.25% and the applicable margin for base rate loans from 2.50% to 2.25%, and (ii) other administrative changes. The amendment did not change the aggregate amount or maturity date of the Term Loan Facility. In conjunction with the Second Term Loan Amendment, the Company made a voluntary prepayment of $150 million on the Term Loan Facility funded with incremental borrowings under the ABL Credit Facility that reduces its interest costs. This prepayment will count towards any requirement to prepay the Term Loan Facility from Excess Cash Flow (as defined in the Term Loan Agreement) generated during fiscal 2022, which would be due in fiscal 2023. In connection with this prepayment, the Company incurred a loss on debt extinguishment of $5 million related to unamortized debt issuance costs and a loss on unamortized original issue discount, which will be recorded within Interest expense, net in the second quarter of fiscal 2022.

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NOTE 9—COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2022 are as follows:
(in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total
Accumulated other comprehensive income (loss) at July 31, 2021 $ —  $ 37  $ (16) $ (60) $ (39)
Other comprehensive income before reclassifications 1  —  —  5  6 
Amortization of amounts included in net periodic benefit income —  1  —  —  1 
Amortization of cash flow hedges —  —  —  8  8 
Net current period Other comprehensive income 1  1  —  13  15 
Accumulated other comprehensive income (loss) at October 30, 2021 $ 1  $ 38  $ (16) $ (47) $ (24)

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2021 are as follows:
(in millions) Benefit Plans Foreign Currency Translation Swap Agreements Total
Accumulated other comprehensive loss at August 1, 2020 $ (116) $ (21) $ (102) $ (239)
Other comprehensive income before reclassifications —  —  3  3 
Amortization of cash flow hedges —  —  9  9 
Net current period Other comprehensive income —  —  12  12 
Accumulated other comprehensive loss at October 31, 2020 $ (116) $ (21) $ (90) $ (227)

Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations:
13-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations
(in millions) October 30,
2021 		October 31,
2020
Pension and postretirement benefit plan net assets:
Amortization of amounts included in net periodic benefit income(1)
$ 1  $ —  Net periodic benefit income, excluding service cost
Income tax benefit —  —  Benefit for income taxes
Total reclassifications, net of tax $ 1  $ — 
Swap agreements:
Reclassification of cash flow hedges $ 11  $ 12  Interest expense, net
Income tax benefit (3) (3) Benefit for income taxes
Total reclassifications, net of tax $ 8  $ 9 
(1)Reclassification of amounts included in net periodic benefit income include reclassification of prior service cost and reclassification of net actuarial loss as reflected in Note 11—Benefit Plans.

As of October 30, 2021, the Company expects to reclassify $35 million related to unrealized derivative losses out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 10—SHARE-BASED AWARDS

In the first quarter of fiscal 2022, the Company granted restricted stock units and performance share units to its directors, executive officers and certain employees representing a right to receive an aggregate of 1.1 million shares. As of October 30, 2021, there were 2.8 million shares available for issuance under the Amended and Restated 2020 Equity Incentive Plan.

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NOTE 11—BENEFIT PLANS

Net periodic benefit income and contributions to defined benefit pension and other post-retirement benefit plans consisted of the following:
13-Week Period Ended
Pension Benefits Other Postretirement Benefits
(in millions) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020
Net Periodic Benefit (Income) Cost
Interest cost $ 10  $ 9  $ —  $ — 
Expected return on plan assets (21) (26) —  — 
Amortization of prior service credit —  —  1  — 
Net periodic benefit (income) cost $ (11) $ (17) $ 1  $ — 
Contributions to benefit plans $ —  $ —  $ (1) $ (1)
Pension Contributions

No minimum pension contributions are required to be made under either the SUPERVALU INC. Retirement Plan or the Unified Grocers, Inc. Cash Balance Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2022. The Company expects to contribute approximately $2 million and $3 million, respectively, to its other non-qualified pension plans and postretirement benefit plans in fiscal 2022.

Multiemployer Pension Plans

The Company contributed $11 million and $12 million in the first quarters of fiscal 2022 and 2021, respectively, to continuing and discontinued operations multiemployer pension plans.

NOTE 12—INCOME TAXES

The effective tax rate for the first quarter of fiscal 2022 was a benefit of 1.3% on pre-tax income, primarily driven by discrete tax benefits from employee stock award vestings and the release of uncertain tax positions that occurred in the quarter.

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NOTE 13—EARNINGS (LOSS) PER SHARE
 
The following is a reconciliation of the basic and diluted number of shares used in computing earnings (loss) per share:
  13-Week Period Ended
(in millions, except per share data) October 30,
2021 		October 31,
2020
Basic weighted average shares outstanding 57.0  55.2 
Net effect of dilutive stock awards based upon the treasury stock method
4.1  — 
Diluted weighted average shares outstanding 61.1  55.2 
Basic earnings (loss) per share:
Continuing operations $ 1.34  $ (0.03)
Discontinued operations $ —  $ 0.01 
Basic earnings (loss) per share $ 1.34  $ (0.02)
Diluted earnings (loss) per share:
Continuing operations $ 1.25  $ (0.03)
Discontinued operations(1)
$ —  $ 0.01 
Diluted earnings (loss) per share $ 1.25  $ (0.02)
Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share
0.9  5.2 
(1)The computation of diluted earnings per share from discontinued operations is calculated using diluted weighted average shares outstanding, which includes the net effect of dilutive stock awards based on the treasury stock method of approximately 3.9 million shares for the first quarter of fiscal 2021.

NOTE 14—BUSINESS SEGMENTS

The Company has two reportable segments: Wholesale and Retail. These reportable segments are two distinct businesses, each with a different customer base, marketing strategy and management structure. The Wholesale reportable segment is the aggregation of two operating segments: U.S. Wholesale and Canada Wholesale. The U.S. Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics. Reportable segments are reviewed on an annual basis, or more frequently if events or circumstances indicate a change in reportable segments has occurred.

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The following table provides continuing operations Net sales and Adjusted EBITDA by reportable segment and reconciles that information to Income (loss) from continuing operations before income taxes:
13-Week Period Ended
 (in millions) October 30, 2021 October 31, 2020
Net sales:
Wholesale(1)
$ 6,734  $ 6,438 
Retail 602  606 
Other 56  56 
Eliminations (395) (416)
Total Net sales $ 6,997  $ 6,684 
Continuing Operations Adjusted EBITDA:
Wholesale $ 164  $ 123 
Retail 22  25 
Other 4  4 
Eliminations (1) 6 
Adjustments:
Net income attributable to noncontrolling interests 1  1 
Net periodic benefit income, excluding service cost 10  17 
Interest expense, net (40) (69)
Other, net (1) 1 
Depreciation and amortization (69) (77)
Share-based compensation (11) (14)
Restructuring, acquisition and integration related expenses (3) (16)
Other retail expense —  (2)
Income (loss) from continuing operations before income taxes $ 76  $ (1)
Depreciation and amortization:
Wholesale $ 61  $ 68 
Retail 7  7 
Other 1  2 
Total depreciation and amortization $ 69  $ 77 
Payments for capital expenditures:
Wholesale $ 52  $ 38 
Retail 4  3 
Other —  — 
Total capital expenditures $ 56  $ 41 
(1)As presented in Note 3—Revenue Recognition, for the first quarters of fiscal 2022 and 2021, the Company recorded $339 million and $365 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation. Refer to Note 3—Revenue Recognition for additional information regarding Wholesale sales to discontinued operations.

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Total assets of continuing operations by reportable segment were as follows:
(in millions) October 30,
2021 		July 31,
2021
Assets:
Wholesale $ 7,006  $ 6,536 
Retail 589  566 
Other 451  462 
Eliminations (47) (43)
Total assets of continuing operations $ 7,999  $ 7,521 

NOTE 15—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

Guarantees and Contingent Liabilities

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of October 30, 2021. These guarantees were generally made to support the business growth of wholesale customers. The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to nine years, with a weighted average remaining term of approximately five years. For each guarantee issued, if the wholesale customer or other third-party defaults on a payment, the Company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees. The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance. As of October 30, 2021, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $27 million ($23 million on a discounted basis). Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of October 30, 2021, a total estimated loss of $1 million is recorded in the Condensed Consolidated Balance Sheets.

The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise. These agreements primarily relate to the Company’s commercial contracts, service agreements, contracts entered into for the purchase and sale of stock or assets, operating leases and other real estate contracts, financial agreements, agreements to provide services to the Company and agreements to indemnify officers, directors and employees in the performance of their work. While the Company’s aggregate indemnification obligations could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. No amount has been recorded in the Condensed Consolidated Balance Sheets for these contingent obligations as the fair value has been determined to be de minimis.

In connection with Supervalu’s sale of New Albertson’s, Inc. (“NAI”) on March 21, 2013, the Company remains contingently liable with respect to certain self-insurance commitments and other guarantees as a result of parental guarantees issued by Supervalu with respect to the obligations of NAI that were incurred while NAI was Supervalu’s subsidiary. Based on the expected settlement of the self-insurance claims that underlie the Company’s commitments, the Company believes that such contingent liabilities will continue to decline. Subsequent to the sale of NAI, NAI collateralized most of these obligations with letters of credit and surety bonds to numerous state governmental authorities. Because NAI remains a primary obligor on these self-insurance and other obligations and has collateralized most of the self-insurance obligations for which the Company remains contingently liable, the Company believes that the likelihood that it will be required to assume a material amount of these obligations is remote. Accordingly, no amount has been recorded in the Condensed Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis.
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Agreements with Save-A-Lot and Onex

The Agreement and Plan of Merger pursuant to which Supervalu sold the Save-A-Lot business in 2016 (the “SAL Merger Agreement”) contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties and covenants, and certain other specified matters, on the terms and subject to the limitations set forth in the SAL Merger Agreement. Similarly, Supervalu entered into a Separation Agreement (the “Separation Agreement”) with Moran Foods, LLC d/b/a Save-A-Lot (“Moran Foods”), which contains indemnification obligations and covenants related to the separation of the assets and liabilities of the Save-A-Lot business from the Company. The Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company is providing Save-A-Lot with various technical, human resources, finance and other operational services for a term of five years, subject to termination provisions that can be exercised by each party. The initial annual base charge under the Services Agreement is $30 million, subject to adjustments. The Company expects that services provided under the Services Agreement will wind down in 2022. The Services Agreement generally requires each party to indemnify the other party against third-party claims arising out of the performance of or the provision or receipt of services under the Services Agreement. While the Company’s aggregate indemnification obligations to Save-A-Lot and Onex, the purchaser of Save-A-Lot, could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. The Company has recorded the fair value of the guarantee in the Condensed Consolidated Balance Sheets within Other long-term liabilities.

Other Contractual Commitments

In the ordinary course of business, the Company enters into supply contracts to purchase products for resale, and service contracts for fixed asset and information technology systems. These contracts typically include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations. As of October 30, 2021, the Company had approximately $243 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

Legal Proceedings

The Company is one of dozens of companies that have been named in various lawsuits alleging that drug manufacturers, retailers and distributors contributed to the national opioid epidemic. Currently, UNFI, primarily through its subsidiary, Advantage Logistics, is named in approximately 43 suits pending in the United States District Court for the Northern District of Ohio where over 1,800 cases have been consolidated as Multi-District Litigation (“MDL”). In accordance with the Stock Purchase Agreement dated January 10, 2013, between New Albertson’s Inc. (“New Albertson’s”) and the Company (the “Stock Purchase Agreement”), New Albertson’s is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies. In one of the MDL cases, MDL No. 2804 filed by The Blackfeet Tribe of the Blackfeet Indian Reservation, all defendants were ordered to Answer the Complaint, which UNFI did on July 26, 2019. To date, no discovery has been conducted against UNFI in any of the actions. UNFI is vigorously defending these matters, which it believes are without merit.

On January 21, 2021, various health plans filed a complaint in Minnesota state court against the Company, Albertson’s Companies, LLC (“Albertson’s”) and Safeway, Inc. alleging the defendants committed fraud by improperly reporting inflated prices for prescription drugs for members of health plans. The Plaintiffs assert six causes of action against the defendants: common law fraud, fraudulent nondisclosure, negligent misrepresentation, unjust enrichment, violation of the Minnesota Uniform Deceptive Trade Practices Act and violation of the Minnesota Prevention of Consumer Fraud Act. The plaintiffs allege that between 2006 and 2016, Supervalu overcharged the health plans by not providing the health plans, as part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that Supervalu match competitor prices. Plaintiffs seek an unspecified amount of damages. Similar to the above case, for the majority of the relevant period Supervalu and Albertson’s operated as a combined company. In March 2013, Supervalu divested Albertson’s and pursuant to the Stock Purchase Agreement, Albertson’s is responsible for any claims regarding its pharmacies. On February 19, 2021, Albertson’s and Safeway removed the case to Minnesota Federal District Court and on March 22, 2021 plaintiffs’ filed a motion to remand to state court. On February 26, 2021, defendants filed a motion to dismiss. The hearing on the remand motion and motions to dismiss occurred on May 20, 2021. On September 21, 2021, the Federal District Court remanded the case to Minnesota state court and did not rule on the motion to dismiss which will be refiled in state court. The Company believes these claims are without merit and intends to vigorously defend this matter.

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UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”). In United States ex rel. Schutte and Yarberry v. Supervalu, New Albertson’s, Inc., et al, which is pending in the U.S. District Court for the Central District of Illinois, the relators allege that defendants overcharged government healthcare programs by not providing the government, as a part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that defendants match competitor prices. The complaint was originally filed under seal and amended on November 30, 2015. The government previously investigated the relators’ allegations and declined to intervene. Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim. Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s in excess of $100 million, not including trebling and statutory penalties. For the majority of the relevant period Supervalu and New Albertson’s operated as a combined company. In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant to the Stock Purchase Agreement. Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a potential award (at the currently claimed value by relators) would be approximately $24 million, not including trebling and statutory penalties. Both sides moved for summary judgment. On August 5, 2019, the Court granted one of the relators’ summary judgment motions finding that the defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices. On July 2, 2020 the Court granted the defendants’ summary judgment motion and denied the relators’ motion, dismissing the case. On July 9, 2020 the relators filed a notice of appeal with the 7th Circuit Court of Appeals, and on September 30, 2020 filed an appellate brief. On November 30, 2020, the Company filed its response. The hearing before the 7th Circuit Court of Appeals occurred on January 19, 2021. On August 12, 2021, the 7th Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor. On September 23, 2021, the Relators filed a petition for rehearing and defendants filed a response on November 9, 2021. On December 3, 2021, the 7th Circuit denied the petition for rehearing.

From time to time, the Company receives notice of claims or potential claims or becomes involved in litigation, alternative dispute resolution, such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business, including investigations and claims regarding employment law, including wage and hour (including class actions); pension plans; labor union disputes, including unfair labor practices, such as claims for back-pay in the context of labor contract negotiations and other matters; supplier, customer and service provider contract terms and claims, including matters related to supplier or customer insolvency or general inability to pay obligations as they become due; product liability claims, including those where the supplier may be insolvent and customers or consumers are seeking recovery against the Company; real estate and environmental matters, including claims in connection with its ownership and lease of a substantial amount of real property, both retail and warehouse properties; and antitrust. Other than as described above, there are no pending material legal proceedings to which the Company is a party or to which its property is subject.

Predicting the outcomes of claims and litigation and estimating related costs and exposures involves substantial uncertainties that could cause actual outcomes, costs and exposures to vary materially from current expectations. Management regularly monitors the Company’s exposure to the loss contingencies associated with these matters and may from time to time change its predictions with respect to outcomes and estimates with respect to related costs and exposures. As of October 30, 2021, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

Although management believes it has made appropriate assessments of potential and contingent loss in each of these cases based on current facts and circumstances, and application of prevailing legal principles, there can be no assurance that material differences in actual outcomes from management’s current assessments, costs and exposures relative to current predictions and estimates, or material changes in such predictions or estimates will not occur. The occurrence of any of the foregoing, could have a material adverse effect on our financial condition, results of operations or cash flows.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, that involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will,” and “would,” or similar words. Statements that contain these words and other statements that are forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial positions or state other “forward-looking” information.

Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. These statements are based on our management’s beliefs and assumptions, which are based on currently available information. These assumptions could prove inaccurate. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:

•the impact and duration of the COVID-19 pandemic;
•labor and other workforce shortages and challenges;
•our dependence on principal customers;
•the addition or loss of significant customers or material changes to our relationships with these customers;
•our sensitivity to general economic conditions including changes in disposable income levels and consumer spending trends;
•the relatively low margins of our business, which are sensitive to inflationary and deflationary pressures;
•our ability to realize anticipated benefits of our acquisitions and strategic initiatives, including, our acquisition of Supervalu;
•our ability to timely and successfully deploy our warehouse management system throughout our distribution centers and our transportation management system across the Company and to achieve efficiencies and cost savings from these efforts;
•our ability to continue to grow sales, including of our higher margin natural and organic foods and non-food products, and to manage that growth;
•increased competition in our industry as a result of increased distribution of natural, organic and specialty products, and direct distribution of those products by large retailers and online distributors;
•increased competition in our industry, including as a result of continuing consolidation of retailers and the growth of chains;
•union-organizing activities that could cause labor relations difficulties and increased costs;
•our ability to operate, and rely on third-parties to operate, reliable and secure technology systems;
•moderated supplier promotional activity, including decreased forward buying opportunities;
•the potential for disruptions in our supply chain or our distribution capabilities by circumstances beyond our control, including a health epidemic;
•the potential for additional asset impairment charges;
•the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise;
•our ability to maintain food quality and safety;
•volatility in fuel costs;
•volatility in foreign exchange rates; and
•our ability to identify and successfully complete asset or business acquisitions.

You should carefully review the risks described under “Part I. Item 1A Risk Factors” of our Annual Report on Form 10-K for the year ended July 31, 2021 (the “Annual Report”) as well as any other cautionary language in this Quarterly Report, as the occurrence of any of these events could have an adverse effect, which may be material, on our business, results of operations, financial condition or cash flows.

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Table of Contents

EXECUTIVE OVERVIEW

This Management’s Discussion and Analysis of financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto contained in this Quarterly Report on Form 10-Q, the information contained under the caption “Forward-Looking Statements,” and the information in the Annual Report.

Business Overview

As a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services to retailers in the United States and Canada, we believe we are uniquely positioned to provide the broadest array of products and services to customers throughout North America. We offer nearly 300,000 products consisting of national, regional and private label brands grouped into six product categories: grocery and general merchandise; produce; perishables and frozen foods; nutritional supplements and sports nutrition; bulk and food service products; and personal care items. We believe we are North America’s premier wholesaler with 56 distribution centers and warehouses representing approximately 30 million square feet of warehouse space. We are a coast-to-coast distributor with customers in all fifty states as well as all ten provinces in Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product assortment and service offerings are unmatched by our wholesale competitors. We plan to aggressively pursue new business opportunities with independent retailers who operate diverse formats, regional and national chains, as well as international customers with wide-ranging needs. Our business is classified into two reportable segments: Wholesale and Retail; and also includes a manufacturing division and a branded product line division.

We introduced our Fuel the Future strategy with the mission of making our customers stronger, our supply chain better and our food solutions more inspired. Fuel the Future is composed of six strategic pillars, which are detailed in “Part I. Item 1. Business” of our Annual Report. Collectively, the actions and plans behind each pillar are meant to capitalize on our unique position in the food distribution industry, including the number and location of distribution centers we operate, the array of services and the data driven insights that we are able to customize for each of our customers, our innovation platforms and the growth potential we see in each, our commitment to our people and the planet, the positioning of our retail operations, and our focus on delivering returns for our shareholders.

We also introduced our ValuePath initiative early in fiscal 2021, pursuant to which we plan to improve operating performance through various initiatives to be implemented through the end of fiscal 2023. We intend to re-invest a portion of these operating savings in the business to drive market share gains, accelerate innovation, invest in automation and maintain competitive wage scales for our frontline workers.

We will continue to use free cash flow to reduce outstanding debt and are committed to improving our financial leverage.

Growth Drivers

We believe our Fuel the Future strategy will further accelerate our growth through increasing sales of products and services, providing tailored, data-driven solutions to help our existing customers run their business more efficiently and contributing to new customer acquisitions. We believe the key drivers for growth through new customers will come from the benefits of our significant scale, product and service offerings, and nationwide footprint, which we believe were demonstrated by the following recent developments in our relationships with certain large customers.

We have recently begun delivering product to Key Food Stores co-operative, Inc. (“Key Food”), a Co-Operative of over 300 grocery stores, after being selected as Key Food’s primary wholesaler. Our supply agreement with Key Food has a term of 10 years with expected sales over that period of approximately $10 billion.

We have been the primary distributor to Whole Foods Market for more than 20 years. We continue to serve as the primary distributor to Whole Foods Market in all of its regions in the United States pursuant to a distribution agreement that expires on September 27, 2027.

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Trends and Other Factors Affecting our Business

Our results are impacted by macroeconomic and demographic trends, and changes in the food distribution market structure and changes in trends in consumer behavior. We expect that food-at-home expenditures as a percentage of total food expenditures will remain elevated in the near term compared to levels prior to the COVID-19 pandemic, which we refer to as the pandemic. We believe that changes in work being done outside of the traditional office setting will continue to contribute to more food being consumed at home. The pandemic also drove significant growth in eCommerce utilization by grocery consumers, and we expect that trend to continue. We expect to benefit from this trend through the growth of our traditional eCommerce customers, our Community Marketplace, an online marketplace connecting suppliers and retailers, and EasyOptions, which directly services non-traditional customers, such as bakeries or yoga studios, and through customers adopting our turnkey eCommerce platform.

Recently-enacted federal orders require certain employers, including us, to implement a vaccine mandate for employees or require periodic testing for employees who are not vaccinated. On November 4, 2021, the Occupational Safety and Health Administration issued its related regulations for covered employers, including us, which set a January 4, 2022 deadline for compliance, which has subsequently been challenged in the courts and is currently stayed. Such vaccine mandates could result in disruptions to our current and potential future workforce and our vendors’ ability to deliver product and/or maintain pricing, and could impact our ability to supply products to our customers. We are currently evaluating methods of compliance with the mandates, and those efforts could result in increased costs and/or turnover in our workforce.

The future impact of the pandemic on our results from changes in the pandemic is uncertain and dependent upon future developments, including any resurgence of infection rates and new variants with higher transmissibility, any economic downturn, actions taken by governmental authorities and other third parties in response to the pandemic such as social distancing orders, vaccine mandates or companies’ remote work policies, the impact on capital and financial markets, food-at-home purchasing levels and other consumer trends, each of which is uncertain. Any of these disruptions could adversely impact our business and results of operations. Considerable uncertainty remains regarding the future impact of the pandemic on our business.

We are experiencing a tighter operating labor market for our warehouse and driver associates, which has caused additional reliance on and higher costs from third-party resources, and incremental hiring and wage costs. We believe this operating environment has been impacted by labor force availability and the pandemic. We are working to implement actions to fill open roles and maintain existing and future employment levels.

We are also impacted by changes in food distribution trends affecting our Wholesale customers, such as direct store deliveries and other methods of distribution. Our Wholesale customers manage their businesses independently and operate in a competitive environment. We seek to obtain security interests and other credit support in connection with the financial accommodations we extend these customers; however, we may incur additional credit or inventory charges related to our customers, as we expect the competitive environment to continue to lead to financial stress on some customers. The magnitude of these risks increases as the size of our Wholesale customers increases.

Distribution Center Network

Network Optimization and Construction

To support our continued growth within southern California, we began operating a newly leased facility in Riverside, CA with approximately 1.2 million square feet upon completion of its construction in the fourth quarter of fiscal 2020. This facility provides significant capacity to service our customers in this market. On February 24, 2020, we executed a purchase option with a delayed purchase provision to acquire the real property of this distribution center for approximately $152 million. We entered into an agreement to monetize the real property of this location through a sale-leaseback transaction, which is contingent upon the acquisition of the facility that we expect will occur in the first half of calendar 2022.

In the first quarter of fiscal 2022, we started shipping from our Allentown, PA distribution center with a capacity of 1.3 million square feet that is being utilized to service customers in that geographical area. We incurred and expect to continue to incur initial start-up costs and operating losses in fiscal 2022 as the volume in this facility ramps up to match its expected full operating capacity.

We continue to evaluate our distribution center network to optimize its performance and expect to incur incremental expenses related to any future network realignment and are working to both minimize these costs and obtain new business to further improve the efficiency of our transforming distribution network.
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Retail Operations

We currently operate 74 continuing operations Retail grocery stores, including 53 Cub Foods corporate stores and 21 Shoppers Food Warehouse stores. In addition, we supply another 27 Cub Foods stores operated by our Wholesale customers through franchise and equity ownership arrangements. We operate 81 pharmacies primarily within the stores we operate and the stores of our franchisees. In addition, we operate 23 “Cub Wine and Spirit” and “Cub Liquor” stores.

In the fourth quarter of fiscal 2021, we determined that the Company no longer met the held for sale criterion for a probable sale to be completed within 12 months for two of the four stores that were previously included within discontinued operations. As a result, we revised the Condensed Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations. The prior period presented in the Condensed Consolidated Financial Statements have been conformed to the current period presentation. The remaining two stores in discontinued operations were sold subsequent to the end of the first quarter of fiscal 2022.

Impact of Inflation

We experienced a mix of inflation across product categories during the first quarter of fiscal 2022. In the aggregate across our businesses, including the mix of products, management estimates our business experienced cost inflation of approximately four percent in the first quarter of fiscal 2022. Cost inflation estimates are based on individual like items sold during the periods being compared. Changes in merchandising, customer buying habits and competitive pressures create inherent difficulties in measuring the impact of inflation on Net sales and Gross profit. Absent any changes in units sold or the mix of units sold, inflation generally has the effect of increasing sales. Under the last-in, first out (“LIFO”) method of inventory accounting, product cost increases are recognized within Cost of sales based on expected year-end inventory quantities and costs, which has the effect of decreasing Gross profit and the carrying value of inventory during periods of inflation.

Composition of Condensed Consolidated Statements of Operations and Business Performance Assessment

Net sales

Our net sales consist primarily of product sales of natural, organic, specialty, produce and conventional grocery and non-food products, and support services revenue from retailers, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue. Net sales also include amounts charged by us to customers for shipping and handling and fuel surcharges.

Cost of sales and Gross profit

The principal components of our cost of sales include the amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, our distribution centers and retail stores, partially offset by consideration received from suppliers in connection with the purchase or promotion of the suppliers’ products. 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.

Operating expenses

Operating expenses include salaries and wages, employee benefits, warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation, depreciation, and amortization expense. These expenses include warehousing, delivery, purchasing, receiving, selecting and outbound transportation expenses.

Restructuring, acquisition and integration expenses

Restructuring, acquisition and integration expenses reflect expenses resulting from restructuring activities, including severance costs, change-in-control related charges, facility closure asset impairment charges and costs, stock-based compensation acceleration charges and acquisition and integration expenses. Integration expenses include certain professional consulting expenses related to business transformation and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.

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Interest expense, net

Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest income.

Net periodic benefit income, excluding service cost

Net periodic benefit income, excluding service cost reflects the recognition of expected returns on benefit plan assets and interest costs on plan liabilities.

Adjusted EBITDA

Our Condensed Consolidated Financial Statements are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition to the GAAP results, we consider certain non-GAAP financial measures to assess the performance of our business and understand underlying operating performance and core business trends, which we use to facilitate operating performance comparisons of our business on a consistent basis over time. Adjusted EBITDA is provided as a supplement to our results of operations and related analysis, and should not be considered superior to, a substitute for or an alternative to, any financial measure of performance prepared and presented in accordance with GAAP. Adjusted EBITDA excludes certain items because they are non-cash items or are items that do not reflect management’s assessment of ongoing business performance.

We believe Adjusted EBITDA is useful to investors and financial institutions because it provides additional information regarding factors and trends affecting our business, which are used in the business planning process to understand expected operating performance, to evaluate results against those expectations, and because of its importance as a measure of underlying operating performance, as the primary compensation performance measure under certain compensation programs and plans. We believe Adjusted EBITDA is reflective of factors that affect our underlying operating performance and facilitate operating performance comparisons of our business on a consistent basis over time. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures reflected below exclude items that may be considered recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements and items may be different from non-GAAP financial measures used by other companies. Adjusted EBITDA should be reviewed in conjunction with our results reported in accordance with GAAP in this Quarterly Report.

There are significant limitations to using Adjusted EBITDA as a financial measure including, but not limited to, it not reflecting the cost of cash expenditures for capital assets or certain other contractual commitments, finance lease obligation and debt service expenses, income taxes, and any impacts from changes in working capital.

We define Adjusted EBITDA as a consolidated measure inclusive of continuing and discontinued operations results, which we reconcile by adding Net income (loss) from continuing operations, less net income attributable to noncontrolling interests, plus non-operating income and expenses, including Net periodic benefit income, excluding service cost, Interest expense, net and Other, net, plus Provision (benefit) for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus adjustments for Share-based compensation, Restructuring, acquisition and integration related expenses, Goodwill impairment charges, (Gain) loss on sale of assets, certain legal charges and gains, certain other non-cash charges or other items, as determined by management, plus Adjusted EBITDA of discontinued operations calculated in a manner consistent with the results of continuing operations, outlined above. The changes to the definition of Adjusted EBITDA from prior periods reflect changes to line item references in our Condensed Consolidated Financial Statements, which do not impact the calculation of Adjusted EBITDA.

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Assessment of Our Business Results

The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated. We have revised the following table for the prior-period presentation of two discontinued operations stores moved to continuing operations as discussed in Note 1—Significant Accounting Policies within Part II, Item 8 of the Annual Report.
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020 Change
Net sales $ 6,997  $ 6,684  $ 313 
Cost of sales 5,955  5,714  241 
Gross profit 1,042  970  72 
Operating expenses 932  904  28 
Restructuring, acquisition and integration related expenses 3  16  (13)
Operating income 107  50  57 
Net periodic benefit income, excluding service cost (10) (17) 7 
Interest expense, net 40  69  (29)
Other, net 1  (1) 2 
Income (loss) from continuing operations before income taxes 76  (1) 77 
Benefit for income taxes (1) (1) — 
Net income from continuing operations 77  —  77 
Income from discontinued operations, net of tax —  —  — 
Net income including noncontrolling interests 77  —  77 
Less net income attributable to noncontrolling interests (1) (1) — 
Net income (loss) attributable to United Natural Foods, Inc. $ 76  $ (1) $ 77 
 
Adjusted EBITDA
$ 189  $ 159  $ 30 

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The following table reconciles Adjusted EBITDA to Net income from continuing operations and to Income from discontinued operations, net of tax.
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020
Net income from continuing operations $ 77  $ — 
Adjustments to continuing operations net income:
Less net income attributable to noncontrolling interests (1) (1)
Net periodic benefit income, excluding service cost
(10) (17)
Interest expense, net 40  69 
Other, net 1  (1)
Benefit for income taxes (1) (1)
Depreciation and amortization 69  77 
Share-based compensation 11  14 
Restructuring, acquisition and integration related expenses(1)
3  16 
Other retail expense(2)
—  2 
Adjusted EBITDA of continuing operations 189  158 
Adjusted EBITDA of discontinued operations(3)
—  1 
Adjusted EBITDA $ 189  $ 159 
 
Income from discontinued operations, net of tax $ —  $ — 
Adjustments to discontinued operations net income:
Provision for income taxes —  1 
Adjusted EBITDA of discontinued operations
$ —  $ 1 
(1)Fiscal 2021 primarily reflects costs associated with advisory and transformational activities as we position our business for further value-creation following the Supervalu acquisition. Refer to Note 4—Restructuring, Acquisition and Integration Related Expenses in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
(2)Reflects expenses associated with event-specific damages to certain retail stores.
(3)The last two remaining retail stores of discontinued operations were sold subsequent to the end of the first quarter of fiscal 2022.

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RESULTS OF OPERATIONS

Net Sales

Our net sales by customer channel were as follows (in millions except percentages):
 
13-Week Period Ended
Increase (Decrease)
Customer Channel(1)
October 30,
2021 		October 31,
2020 		$ %
Chains $ 3,082  $ 3,027  $ 55  1.8  %
Independent retailers 1,750  1,672  78  4.7  %
Supernatural 1,378  1,214  164  13.5  %
Retail 602  606  (4) (0.7) %
Other 580  581  (1) (0.2) %
Eliminations (395) (416) 21  (5.0) %
Total net sales $ 6,997  $ 6,684  $ 313  4.7  %
(1)Refer to Note 3—Revenue Recognition in Part 1, Item 1 of this Quarterly Report on Form 10-Q for our channel definitions and additional information.

Our net sales for the first quarter of fiscal 2022 increased approximately 4.7% from the first quarter of fiscal 2021. The increase in net sales was primarily driven by inflation and new business from both existing and new customers, including the benefit of cross selling, partially offset by supply chain challenges and expected modest market contraction.

Chains net sales increased primarily due to growth in sales to existing customers, including an increase from higher product costs.

Independent retailers net sales increased primarily due to the beginning of a new supply agreement with a new customer for East Coast locations in the first quarter of fiscal 2022 and growth in sales to existing customers.

Supernatural net sales increased primarily due to growth in existing store sales, including the supply of new product categories previously impacted by the pandemic, such as bulk and ingredients used for prepared foods, and increased sales to new stores. Net sales within our Supernatural channel do not include net sales to Amazon.com, Inc. in either the current period or the prior period, as these net sales are reported in our other channel.

Retail net sales decreased primarily due to a 1.0% decrease in identical store sales from lower transaction counts as a result of cycling strong sales in the first quarter of 2021. Retail identical store sales are defined as net product sales from stores operating since the beginning of the prior-year period, including store expansions and excluding fuel costs and announced planned store dispositions. Identical store sales is a common metric used to understand the sales performance of retail stores as it removes the impact of new and closed stores.

Cost of Sales and Gross Profit

Our gross profit increased $72 million, or 7.4%, to $1,042 million for the first quarter of fiscal 2022, from $970 million for the first quarter of fiscal 2021. Our gross profit as a percentage of net sales increased to 14.89% for the first quarter of fiscal 2022 compared to 14.51% for the first quarter of fiscal 2021. The increase in gross profit rate was primarily driven by improvements in the Wholesale segment margin rate, including the impact of inflation and the Company’s ValuePath initiative. Retail gross margin rate declined modestly compared to last year.

Operating Expenses

Operating expenses increased $28 million, or 3.1%, to $932 million, or 13.32% of net sales, for the first quarter of fiscal 2022 compared to $904 million, or 13.52% of net sales, for the first quarter of fiscal 2021. The decrease in operating expenses as a percent of net sales was due to leveraging fixed operating and administrative expenses and lower year-over-year distribution center start-up and consolidation costs, partially offset by higher transportation expenses, the temporary, voluntary closure of a distribution center and the investment in distribution center labor to better support our customers.

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Restructuring, Acquisition and Integration Related Expenses

Restructuring, acquisition and integration related expenses were $3 million for the first quarter of fiscal 2022. Expenses for the first quarter of fiscal 2021 were $16 million, which included $15 million of restructuring and integration costs primarily reflecting costs associated with advisory and transformational activities as we position our business for further value-creation post-acquisition and $1 million of closed property charges and costs.

Operating Income

Reflecting the factors described above, operating income increased $57 million to $107 million for the first quarter of fiscal 2022, compared to $50 million for the first quarter of fiscal 2021. The operating income increase was primarily driven by an increase in gross profit in excess of an increase in operating expenses as described above.

Net Periodic Benefit Income, Excluding Service Cost

Net periodic benefit income, excluding service cost decreased $7 million to $10 million for the first quarter of fiscal 2022, from $17 million for the first quarter of fiscal 2021. The decrease in Net periodic benefit income, excluding service cost was primarily driven by lower expected rates of return on plan assets.

Interest Expense, Net
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020
Interest expense on long-term debt, net of capitalized interest $ 33  $ 37 
Interest expense on finance lease obligations 4  5 
Amortization of financing costs and discounts 3  4 
Loss on debt extinguishment —  24 
Interest income —  (1)
Interest expense, net $ 40  $ 69 
 
The decrease in interest expense on long-term debt, net of capitalized interest, in the first quarter of fiscal 2022 compared to fiscal 2021 was primarily driven by lower outstanding debt balances.

The decrease in loss on debt extinguishment costs primarily reflects the acceleration of unamortized debt issuance costs and original issue discounts related to mandatory and voluntary prepayments on the Term Loan Facility made and expensed financing costs related to the First Term Loan Amendment in the first quarter of fiscal 2021. Refer to Note 8—Long-Term Debt for further information.

Benefit for Income Taxes

The effective tax rate for the first quarter of fiscal 2022 was a benefit of 1.3% on pre-tax income, primarily driven by discrete tax benefits from employee stock award vestings and the release of uncertain tax positions that occurred in the quarter.

Net Income (Loss) Attributable to United Natural Foods, Inc.

Reflecting the factors described in more detail above, Net income attributable to United Natural Foods, Inc. was $76 million, or $1.25 per diluted common share, for the first quarter of fiscal 2022, compared to a net loss of $1 million, or $0.02 per diluted common share, for the first quarter of fiscal 2021.

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Segment Results of Operations

In evaluating financial performance in each business segment, management primarily uses Net sales and Adjusted EBITDA of its business segments as discussed and reconciled within Note 14—Business Segments within Part I, Item 1 of this Quarterly Report on Form 10-Q and the above table within the Executive Overview section. The following tables set forth Net sales and Adjusted EBITDA by segment for the periods indicated.
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020 Change
Net sales:
Wholesale $ 6,734  $ 6,438  $ 296 
Retail 602  606  (4)
Other 56  56  — 
Eliminations (395) (416) 21 
Total Net sales $ 6,997  $ 6,684  $ 313 
Continuing operations Adjusted EBITDA:
Wholesale $ 164  $ 123  $ 41 
Retail 22  25  (3)
Other 4  4  — 
Eliminations (1) 6  (7)
Total continuing operations Adjusted EBITDA $ 189  $ 158  $ 31 

Net Sales

Wholesale’s net sales increased primarily due to growth in the Supernatural, Independent retailers and Chains channels. Refer to the Net Sales discussion above for additional information.

Retail’s net sales decreased primarily due to a 1.0% decrease in identical store sales from lower transaction counts as a result of cycling strong sales in the first quarter of 2021.

Adjusted EBITDA

Wholesale’s Adjusted EBITDA increased 33.3% for the first quarter of fiscal 2022 as compared to the first quarter of fiscal 2021. The increase was driven by gross margin rate expansion, partially offset by a slight increase in operating expenses. Wholesale’s gross profit dollar growth for the first quarter of fiscal 2022 was $82 million with a gross profit rate increase of approximately 68 basis points primarily driven by margin rate expansion from the benefits of inflation and the Company’s ValuePath initiative. Wholesale’s operating expense increased $41 million, which excludes depreciation and amortization, stock-based compensation and other adjustments as outlined in Note 14—Business Segments. Wholesale’s operating expense rate increased 17 basis points driven by higher transportation expenses and the temporary, voluntary closure of a distribution center and the investment in distribution center labor to better support our customers, partially offset by lower year-over-year distribution center start-up and consolidation costs in fiscal 2021. Wholesale’s depreciation expense decreased $7 million compared to last year.

Retail’s Adjusted EBITDA decreased 12.0% for the first quarter of fiscal 2022 from the first quarter of fiscal 2021. The decrease was driven by a lower gross margin rate. Retail operating expenses, which excludes depreciation and amortization, stock-based compensation and other adjustments as outlined in Note 14—Business Segments, was approximately flat. Retail’s depreciation and amortization expense was approximately flat compared to last year.


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LIQUIDITY AND CAPITAL RESOURCES

Highlights

•Total liquidity as of October 30, 2021 was $1,112 million and consisted of the following:
◦Unused credit under our revolving line of credit was $1,066 million, which decreased $214 million from $1,280 million as of July 31, 2021, primarily due to increased cash utilized to fund seasonal working capital increases.
◦Cash and cash equivalents was $46 million, which increased $5 million from $41 million as of July 31, 2021.
•Our total debt increased $202 million to $2,390 million as of October 30, 2021 from $2,188 million as of July 31, 2021, primarily related to additional borrowings under the ABL Credit Facility to fund seasonal working capital increases.
•In the remainder of fiscal 2022, scheduled debt maturities are expected to be $11 million. We are also obligated to make payments to reduce finance lease obligations, including a payment to acquire the Riverside, CA distribution center in fiscal 2022, which we expect to fund with the proceeds of a concurrent sale-leaseback transaction in fiscal 2022. Based on our Consolidated First Lien Net Leverage Ratio (as defined in the Term Loan Agreement) at the end of fiscal 2021, no prepayment from Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2021 is required to be made in fiscal 2022.
•Subsequent to the end of the first quarter of fiscal 2022, we made a voluntary prepayment of $150 million on the Term Loan Facility funded with incremental borrowings under the ABL Credit Facility that will reduce our interest costs. This prepayment will count towards satisfying any requirement to make a mandatory prepayment with Excess Cash Flow generated during fiscal 2022, if any, which would be due in fiscal 2023. In the second quarter of fiscal 2022, we expect to record an accelerated charge related to deferred financing fees and original issue discounts based on the proportionate amount of this prepayment to the Term Loan Facility balance. Also subsequent to the end of the first quarter of fiscal 2022, we amended our Term Loan Agreement to, reduce the applicable margin for LIBOR and base rate loans under the Term Loan Facility by 25 basis points.
•Working capital increased $265 million to $1,328 million as of October 30, 2021 from $1,063 million as of July 31, 2021, primarily due to seasonal increases in inventory and accounts receivable levels, partially offset by an increase in accounts payable related to inventories.

Sources and Uses of Cash

We expect to continue to replenish operating assets and pay down debt obligations with internally generated funds and proceeds from the sale of surplus and/or non-core assets. A significant reduction in operating earnings or the incurrence of operating losses could have a negative impact on our operating cash flow, which may limit our ability to pay down our outstanding indebtedness as planned. Our credit facilities are secured by a substantial portion of our total assets. We expect to be able to fund debt maturities and finance lease liabilities through fiscal 2022 with internally generated funds, proceeds from asset sales or borrowings under the ABL Credit Facility.

Our primary sources of liquidity are from internally generated funds and from borrowing capacity under the ABL Credit Facility. We believe our short-term and long-term financing abilities are adequate as a supplement to internally generated cash flows to satisfy debt obligations and fund capital expenditures as opportunities arise. Our continued access to short-term and long-term financing through credit markets depends on numerous factors, including the condition of the credit markets and our results of operations, cash flows, financial position and credit ratings.

Primary uses of cash include debt service, capital expenditures, working capital maintenance and income tax payments. We typically finance working capital needs with cash provided from operating activities and short-term borrowings. Inventories are managed primarily through demand forecasting and replenishing depleted inventories.

We currently do not pay a dividend on our common stock, and have no plans to do so. In addition, we are limited in the aggregate amount of dividends that we may pay under the terms of our Term Loan Facility, ABL Credit Facility, and Senior Notes. Subject to certain limitations contained in our debt agreements and as market conditions warrant, we may from time to time refinance indebtedness that we have incurred, including through the incurrence or repayment of loans under existing or new credit facilities or the issuance or repayment of debt securities. Proceeds from the sale of any properties mortgaged and encumbered under our Term Loan Facility are required to be used to make additional Term Loan Facility payments or to be reinvested in the business.

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Long-Term Debt

During the first quarter of fiscal 2022, we borrowed a net $209 million under the ABL Credit Facility and repaid $8 million on the Term Loan Facility related to voluntary prepayments. Subsequent to the end of the first quarter of fiscal 2022, we repaid an additional $150 million under the Term Loan Facility with borrowings under the ABL Credit Facility. We also entered into a second amendment to the Term Loan Facility to, among other things, reduce the applicable margin by 0.25%. Refer to Note 8—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information, including a detailed discussion of the provisions of our credit facilities and certain long-term debt agreements.

Our Term Loan Agreement and Senior Notes do not include any financial maintenance covenants. Our ABL Loan Agreement subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $235 million and (ii) 10% of the aggregate borrowing base. We have not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report. The Term Loan Agreement, ABL Loan Agreement and Senior Notes contain certain operational and informational covenants customary for debt securities of these types that limit our restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to our stockholders, transfer or sell assets, create liens on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of our and our subsidiaries’ assets on a consolidated basis. We were in compliance with all such covenants for all periods presented. If we fail to comply with any of these covenants, we may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable.

Derivatives and Hedging Activity

We enter into interest rate swap contracts from time to time to mitigate our exposure to changes in market interest rates as part of our strategy to manage our debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.

As of October 30, 2021, we had an aggregate of $1,232 million of floating rate notional debt subject to active interest rate swap contracts, which effectively hedge the LIBOR component of our interest rate payments through pay fixed and receive floating interest rate swap agreements. These fixed rates range from 1.795% to 2.959%, with maturities between August 2022 and October 2025. The fair value of these interest rate derivatives represents a total net liability of $56 million and are subject to volatility based on changes in market interest rates. In the first quarter of fiscal 2021, we paid $11 million to terminate or novate $954 million of interest rate swap contracts over our floating rate notional debt. The termination payments reflect the amount of accumulated other comprehensive loss that will continue to be amortized into interest expense over the original interest rate swap contract terms as long as the hedged interest rate transactions are still probable of occurring. See Note 7—Derivatives in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

From time to time, we enter into fixed price fuel supply agreements and foreign currency hedges. As of October 30, 2021, we had fixed price fuel contracts outstanding and foreign currency forward agreements outstanding. Gains and losses and the outstanding assets and liabilities from these arrangements are insignificant.

Payments for Capital Expenditures

Our capital expenditures for the first quarter of fiscal 2022 were $56 million, compared to $41 million for the first quarter of fiscal 2021, an increase of $15 million primarily due to the new Allentown, PA distribution center investment in the first quarter of fiscal 2022. Fiscal 2022 capital spending is expected to be approximately $300 million and include projects that optimize and expand our distribution network, technology platform investments and the remaining investments in the Allentown, PA distribution center. In addition to this fiscal 2022 capital spending, we expect to spend an incremental $152 million to acquire the real property of the Riverside, CA distribution center, which we expect to fund with the proceeds of a concurrent sale-leaseback transaction. We expect to finance fiscal 2022 capital expenditures requirements with cash generated from operations and borrowings under our ABL Credit Facility. Longer term, capital spending is expected to be at or below 1.0% of net sales. Future investments may be financed through long-term debt or borrowings under our ABL Credit Facility.

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Cash Flow Information

The following summarizes our Condensed Consolidated Statements of Cash Flows:
13-Week Period Ended
(in millions) October 30, 2021 October 31, 2020 Change
Net cash used in operating activities of continuing operations
$ (81) $ (55) $ (26)
Net cash used in investing activities of continuing operations
(81) (37) (44)
Net cash provided by financing activities of continuing operations
167  95  72 
Net cash used in discontinued operations
—  (1) 1 
Effect of exchange rate on cash —  —  — 
Net increase in cash and cash equivalents 5  2  3 
Cash and cash equivalents, at beginning of period 41  47  (6)
Cash and cash equivalents, at end of period $ 46  $ 49  $ (3)

The increase in net cash used in operating activities of continuing operations in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 was primarily due to higher levels of cash utilized to build inventories and credit extended through accounts receivable from seasonal working capital changes and continued sales growth, partially offset by an increase in accounts payable related to inventory increases.

The increase in net cash used in investing activities of continuing operations in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 was primarily due to increased payments for investments and capital expenditures.

The increase in net cash provided by financing activities of continuing operations in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 was due to a larger increase in net borrowings under the ABL Credit Facility resulting from increases in net cash used in operating activities and investing activities, as described above.

Other Obligations and Commitments

Except as otherwise disclosed in Note 8—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes in the Company’s contractual obligations since the end of fiscal 2021. Refer to Item 7 of the Annual Report for additional information regarding the Company’s contractual obligations.

Pension and Other Postretirement Benefit Obligations

In fiscal 2022, no minimum pension contributions are required to be made under the Unified Grocers, Inc. Cash Balance Plan or the SUPERVALU INC. Retirement Plan under Employee Retirement Income Security Act of 1974, as amended (“ERISA”). An insignificant amount of contributions are expected to be made to defined benefit pension plans and postretirement benefit plans in fiscal 2022. We fund our defined benefit pension plans based on the minimum contribution amount required under ERISA, the Pension Protection Act of 2006 and other applicable laws, as determined by us, including our external actuarial consultant, and additional contributions made at our discretion. We may accelerate contributions or undertake contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing needs or other factors as may be applicable. We assess the relative attractiveness of the use of cash to accelerate contributions considering such factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required Pension Benefit Guaranty Corporation variable rate premiums, or in order to achieve exemption from participant notices of underfunding.

Off-Balance Sheet Multiemployer Pension Arrangements

We contribute to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees typically are responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration. Trustees are appointed in equal number by employers and unions that are parties to the collective bargaining agreement. Based on the assessment of the most recent information available from the multiemployer plans, we believe that most of the plans to which we contribute are underfunded. We are only one of a number of employers contributing to these plans and the underfunding is not a direct obligation or liability to us.
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Our contributions can fluctuate from year to year due to store closures, employer participation within the respective plans and reductions in headcount. Our contributions to these plans could increase in the near term. However, the amount of any increase or decrease in contributions will depend on a variety of factors, including the results of our collective bargaining efforts, investment returns on the assets held in the plans, actions taken by the trustees who manage the plans and requirements under the Pension Protection Act of 2006, the Multiemployer Pension Reform Act and Section 412(e) of the Internal Revenue Code. Furthermore, if we were to significantly reduce contributions, exit certain markets or otherwise cease making contributions to these plans, we could trigger a partial or complete withdrawal that could require us to record a withdrawal liability obligation and make withdrawal liability payments to the fund. Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP. We made contributions to these plans, and recognized continuing and discontinued operations expense of $48 million in fiscal 2021. In fiscal 2022, we expect to contribute approximately $46 million to multiemployer plans related to continuing operations, subject to the outcome of collective bargaining and capital market conditions. We expect required cash payments to fund multiemployer pension plans from which we have withdrawn to be immaterial in any one fiscal year, which would exclude any payments that may be agreed to on a lump sum basis to satisfy existing withdrawal liabilities. Any future withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Any triggered withdrawal obligation could result in a material charge and payment obligations that would be required to be made over an extended period of time.

We also make contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining agreements. A small minority of collective bargaining agreements contain reserve requirements that may trigger unanticipated contributions resulting in increased healthcare expenses. If these healthcare provisions cannot be renegotiated in a manner that reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.

Refer to Note 13—Benefit Plans in Part II, Item 8 of the Annual Report for additional information regarding the plans in which we participate.

Share Repurchases

On October 6, 2017, we announced that our Board of Directors authorized a share repurchase program for up to $200 million of our outstanding common stock. The repurchase program is scheduled to expire upon our repurchase of shares of our common stock having an aggregate purchase price of $200 million. We did not repurchase any shares of our common stock in the first quarters of fiscal 2022 and fiscal 2021 pursuant to the share repurchase program. As of October 30, 2021, we have $176 million remaining authorized under the share repurchase program. We do not expect to purchase shares under the share repurchase program during fiscal 2022. Additionally, our ABL Credit Facility, Term Loan Facility, and Senior Notes contain terms that limit our ability to repurchase common stock above certain levels unless certain conditions and financial tests are met.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies during the period covered by this Quarterly Report on Form 10-Q. Refer to the description of critical accounting policies included in Item 7 of our Annual Report.

Seasonality
 
Generally, we do not experience 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, demand for our products, supply shortages and general economic conditions. Our working capital needs are generally greater during the months leading up to high sales periods, such as the build up in inventory during the time period leading to the calendar year-end holidays. Our inventory, accounts payable and accounts receivable levels may be impacted by macroeconomic impacts and changes in food-at-home purchasing rates. These effects can result in normal operating fluctuations in working capital balances, which in turn can result in changes to cash flow from operations that are not necessarily indicative of long-term operating trends.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
Our exposure to market risk results primarily from fluctuations in interest rates on our borrowings and our interest rate swap agreements, and price increases in diesel fuel. Except as described in Note 7—Derivatives and Note 8—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q, which are incorporated herein, there have been no other material changes to our exposure to market risks from those disclosed in our Annual Report on Form 10-K.
 
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Item 4. Controls and Procedures

(a)     Evaluation of disclosure controls and procedures. We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.
 
(b)    Changes in internal controls. There has been no change in our internal control over financial reporting that occurred during the first quarter of fiscal 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in routine litigation or other legal proceedings that arise in the ordinary course of our business, including investigations and claims regarding employment law including wage and hour, pension plans, unfair labor practices, labor union disputes, supplier, customer and service provider contract terms, products liability, real estate and antitrust. Other than as set forth in Note 15—Commitments, Contingencies and Off-Balance Sheet Arrangements in Part I, Item I of this Quarterly Report on Form 10-Q, which is incorporated herein, there are no pending material legal proceedings to which we are a party or to which our property is subject.

Item 1A. Risk Factors

There have been no material changes to our risk factors contained in Part I, Item 1A. Risk Factors, of our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On October 6, 2017, we announced that our Board of Directors authorized a share repurchase program for up to $200 million of our outstanding common stock. The repurchase program is scheduled to expire upon our repurchase of shares of our common stock having an aggregate purchase price of $200 million. Any repurchases will be made in accordance with applicable securities laws from time to time in the open market, through privately negotiated transactions, or otherwise. We do not expect to purchase shares under the share repurchase program during fiscal 2022. We may also implement all or part of the repurchase program pursuant to a plan or plans meeting the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
(in millions, except shares and per share amounts)
Total Number of Shares Purchased(2)
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(3)
Period(1):
August 1, 2021 to September 4, 2021 3,647 $ 35.52  —  $ — 
September 5, 2021 to October 2, 2021 77,793 37.17  —  — 
October 3, 2021 to October 30, 2021 640,380 47.16  —  176 
Total
721,820 $ 46.03  —  $ — 

(1)The reported periods conform to our fiscal calendar.
(2)These amounts represent the deemed surrender by participants in our compensatory stock plans of 721,820 shares of our common stock to cover taxes from the vesting of restricted stock awards and restricted stock units granted under such plans.
(3)As of October 30, 2021, there was approximately $176 million that may yet be purchased under the share repurchase program. There were no share repurchases under the share repurchase program in the first quarter of fiscal 2022.

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Item 6.  Exhibits

Exhibit No. Description
2.1
2.2
3.1
3.2
10.1* **
10.2* **
10.3* **
10.4* **
10.5*
31.1*
31.2*
32.1*
32.2*
101*
The following materials from the United Natural Foods, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended October 30, 2021, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104
The cover page from our Quarterly Report on Form 10-Q for the first quarter of fiscal 2022, filed with the SEC on December 8, 2021, formatted in Inline XBRL (included as Exhibit 101).
______________________________________________
*     Filed herewith.
**     Denotes a management contract or compensatory plan or arrangement.

*                 *                 *
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  UNITED NATURAL FOODS, INC.
   
  /s/ JOHN W. HOWARD
  John W. Howard
  Chief Financial Officer
  (Principal Financial Officer and duly authorized officer)
 
Dated:  December 8, 2021


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    Exhibit 10.1
UNITED NATURAL FOODS, INC.

2020 EQUITY INCENTIVE PLAN
    RESTRICTED SHARE UNIT AWARD AGREEMENT    

[time vesting for Chief Executive Officer]


This Restricted Share Unit Award Agreement (this “Agreement”) effective as of [ ] __, 20__ (the “Grant Date”), between United Natural Foods, Inc. (the “Company”) and __________________ (the “Participant”), evidences an Award denominated in Restricted Share Units to the Participant under the United Natural Foods, Inc. Amended and Restated 2020 Equity Incentive Plan (as amended from time to time, the “Plan”). Except in the preceding sentence and where the context otherwise requires, the term “Company” shall include the Company and all present and future Subsidiaries. All capitalized terms that are used in this Agreement without definition shall have the meanings set forth in the Plan.

1.Definitions.

(a)    “Participant,” solely for the purpose of this Agreement, means the employee designated above.
(b)    “Restricted Share Unit” means a right to receive a payment in the form of any one Share of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth in this Agreement and in the Plan.

(c)    “Vesting Period” means the period beginning on [ ] and ending on [ ].

2.    Grant of Restricted Share Units.  In consideration of services to be rendered by the Participant to the Company, the Company hereby grants to the Participant [______] Restricted Share Units, on the terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. The grant of Restricted Share Units shall be subject to adjustment as provided in Section 4.3 of the Plan. This grant is conditional upon the Participant signing a counterpart of this Agreement and delivering such signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic means if provided by the Company pursuant to Section 18 hereof. Capitalized terms that are used but not defined herein have the meaning ascribed to them in the Plan.

3.    Vesting & Effect of Termination.

(a)    Generally: Except as otherwise provided herein or in the Plan, if the Participant remains continuously employed by the Company through the applicable vesting date, the Restricted Share Units will vest in accordance with the following schedule:

Vesting Date                Restricted Share Units

[Vesting date]        [Number or % of shares that vest on the vesting date]

[Vesting date]        [Number or % of shares that vest on the vesting date]

[Vesting date]        [Number or % of shares that vest on the vesting date]




(b)    Retirement: In the event the Participant terminates employment on account of Retirement (as defined below) in the 365-day period beginning on the Grant Date (the “Grant Year”), the Pro-Rated Number of Restricted Share Units will continue to vest through the Vesting Period. The “Pro-Rated Number” shall be the product of (i) the total number of Restricted Share Units granted under this Agreement and (ii) the quotient of (A) the number of days beginning with the Grant Date and ending on the date the Participant’s employment is terminated as a result of Retirement and (B) 365, the number of days in the Grant Year. In the event that the Participant terminates employment on account of Retirement before the end of the Vesting Period but after the Grant Year, all of the then-unvested Restricted Share Units granted under this Agreement will continue to vest through the Vesting Period. The rights of the Participant in the event of Retirement with respect to any then-unvested Restricted Share Units shall become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock Units would have been issued pursuant to Section 4 hereof had the Participant continued to be employed through the end of the Vesting Period. For purposes of this Agreement and notwithstanding the provisions of the Plan, “Retirement” means the Participant’s retirement from active employment with the Company or any of its Subsidiaries or Affiliates on or after the date on which both of the following have occurred: (1) the Participant’s 59th birthday and (2) the sixth anniversary of the Participant’s employment with the Company or any of its Subsidiaries or Affiliates. For the avoidance of doubt, “Retirement” does not include a termination of the Participant’s employment for Cause.

(c)    Death and Disability: In the event that the Participant dies or terminates employment on account of Disability at any time after the Grant Date, all of the then-unvested Restricted Share Units shall fully vest.

(d)    Change in Control: In the event the Participant’s employment with the Company or any successor to the Company is terminated without Cause, or the Participant terminates his or her employment for Good Reason, within twenty-four (24) months after a Change in Control (and before the Restricted Share Units otherwise have become vested under Section 3(a), (b) or (c)), the Participant shall vest in all of the Restricted Share Units granted under Section 2 of this Agreement and the Participant’s rights to such Restricted Share Units shall become non-forfeitable as of the date on which the Participant’s employment with the Company or its successor is terminated. In the event that this Award is not assumed by the Acquiror in connection with a Change in Control, all of the Restricted Share Units shall vest immediately prior to the Change in Control and shall settle immediately following the Change in Control (notwithstanding the longer period of time for settlement provided in Section 4 below). In the event that settlement of the Restricted Share Units at the time described above would result in the imposition of tax on the Participant (if the Participant has then satisfied the conditions for Retirement) pursuant to the operation of Code Section 409A (as defined below), such settlement shall take place on the earliest date upon which settlement may be made without resulting in the imposition of such tax.

(e)    Separation from Service without Cause: If the Participant’s employment with the Company is terminated as a result of a Separation from Service without Cause (as defined in the Plan), then:

(i) any unvested Restricted Share Units that were scheduled to vest within 365 days from the date of separation and were granted more than 365 days preceding the date of separation, shall vest effective as of the date of termination;

(ii) the Separation Pro-Rated Number of Restricted Share Units that were scheduled to vest within 365 days from the date of separation, and were granted less than 365 days prior to the date of separation, shall vest effective as of the date of separation; and



2

(iii) any remaining Restricted Share Units not vesting as provided above shall be forfeited effective as of the date of separation.

    Notwithstanding the foregoing, the vesting and payout of any Restricted Share Units pursuant to this Section 3(e) shall be subject to the satisfaction of any conditions required for payout of the Restricted Share Units pursuant to this Agreement and the Plan.

The “Separation Pro-Rated Number” shall be the product of (A) the total number of Restricted Share Units granted under this Agreement less than 365 days prior to the date of termination and (B) the quotient of (1) the number of days from the Grant Date to the termination date and (2) 365.

(f)    Other Termination: Except as provided in Section 3(b),(c), (d) or (e) above or as otherwise provided in any written agreement by and between the Company and the Participant, if the Participant’s employment with the Company terminates for any reason prior to the expiration of the Vesting Period, all then-unvested Restricted Share Units shall be canceled immediately and shall not be payable to the Participant.

(g)    Effect of Separate Written Agreement, Including Severance Agreement and/or Change in Control Agreement: In case of any conflict between the terms of this Section 3 and any written agreement, including any severance agreement and/or change in control agreement, between the Company and the Participant, the terms of such written agreement shall control to the extent applicable.

4.    Payment. The Company shall issue to the Participant one Share for each Restricted Share Unit which has become vested with respect to the vesting schedule pursuant to Section 3 of this Agreement. The payment of the Shares shall be made to the Participant (or the Participant’s assignee or beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and award policy no later than March 15th of the calendar year next following the calendar year in which the applicable vesting date set forth in Section 3 occurs and may be made as a book-entry confirmation or through the issuance of a certificate evidencing such Shares; provided, however, that if the Participant has satisfied the conditions for Retirement at any point during the Vesting Period, payment of the Shares shall be made as soon as practicable following the applicable vesting date set forth in Section 3, but in no event later than December 31 of the calendar year in which such vesting date occurs.

5.    Rights as a Stockholder. The Participant shall have no rights as a stockholder with respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including, without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect to such Shares) unless and until the Shares have been issued to Participant. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares are issued.

6.    Withholding. The Company’s obligation to make payment of vested Restricted Share Units shall be subject to the Participant’s satisfaction of any applicable federal, state, local and foreign withholding obligations or withholding taxes, including any employer minimum statutory withholding (“Withholding Taxes”), and the Participant shall pay the amount of any such Withholding Taxes to the Company as set forth in this Section 6. The Participant may satisfy his or her obligation to pay the Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Participant pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the Company shares of Common Stock already owned by the Participant; provided that the amount of such Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding

3

Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from compensation or other amounts owing to the Participant an amount not to exceed the Withholding Taxes.

7.    Covenants. As a condition to the receipt of the Award (which shall be forfeited in the event of noncompliance with this Section 7), the Participant hereby agrees to adhere to the covenants set forth in Section 14.8 of the Plan, which include confidentiality, non-competition and non-solicitation covenants and acknowledges that the Award is subject to recoupment as provided in the Plan.

8.    No Guarantee of Employment.  Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue in the employ of the Company, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without Cause.

9.    Amendment. Subject to the restrictions contained in the Plan, the Committee may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with Section 409A of the Code with regard to awards subject thereto); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Participant or any holder or beneficiary of the Restricted Share Units shall not to that extent be effective without the consent of the Participant, holder or beneficiary; and provided further that no consent of the Participant or any holder or beneficiary shall be required for any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent necessary to conform this Agreement to mandatory provisions of applicable federal or state laws, regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary to avoid tax penalties to the Participant. The Committee is authorized to make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted Share Units as set forth in the Plan.

10.    Determinations by the Committee. Except as otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons.

11.    Provisions of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan. This Agreement is governed by the terms of the Plan, and in the case of any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together with the Plan, represents the entire understanding and agreement between the Company and the Participant, and shall supersede any prior agreement and understanding between the parties with respect to the matters contained herein. This Agreement, and any payment of Shares in settlement of the Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.

12.    Nontransferability of Restricted Share Units.  Except as otherwise provided in the Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the Restricted Share Units for value is not permitted under the Plan or this Agreement.



4

13.    Notices. Any notice required or permitted to be given to the Participant under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States mail with postage and fees prepaid. Any notice or communication required or permitted to be given to the Company under this Agreement shall be in writing and shall be deemed effective only upon receipt by the Secretary of the Company at the Company’s principal office.

14.    Waiver. The waiver by the Company of any provision of this Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Agreement at any subsequent time or for any other purpose.

15.    Section 409A.

(a)    For the avoidance of doubt, the Restricted Share Units granted under this Agreement are intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Participant by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)    Notwithstanding any other payment schedule provided herein to the contrary, if the Participant is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then any payment due under this Agreement that is considered “deferred compensation” under Section 409A of the Code payable on account of a Participant’s “separation from service” shall not be made until the date which is the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” of the Participant, and (B) the date of Participant’s death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 15(b) shall be paid to the Participant in a lump sum in accordance with the Agreement.

(c)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Code Section 409A) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Code Section 409A (and, more specifically, Treasury Regulation 1.409A-1(h)) and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(d)    For the avoidance of doubt, any payment due under this Agreement within a period following the Participant’s termination of employment, death, Disability, Retirement or other event, shall be made on a date during such period as determined by the Company in its sole discretion.

16.    Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

17.    Successors. This Agreement shall inure to the benefit of and be binding upon any successor to the Company and shall inure to the benefit of the Participant's legal representative. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be binding upon the Participant's heirs, executors, administrator and successors.



5

18.    Electronic Communication. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

[signature page follows]


IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer of the Company, and the Participant has accepted and signed this Agreement, all on the day and year first mentioned above.

UNITED NATURAL FOODS, INC.
By: __________________________
PARTICIPANT
______________________________


                    

6
Exhibit 10.2

UNITED NATURAL FOODS, INC.

2020 EQUITY INCENTIVE PLAN
PERFORMANCE-BASED VESTING
RESTRICTED SHARE UNIT AWARD AGREEMENT

[cliff-vesting for Chief Executive Officer]


This Performance-Based Vesting Restricted Share Unit Award Agreement (this “Agreement”) effective as of [ ] __, 20__, (the “Grant Date”) between United Natural Foods, Inc. (the “Company”) and __________________ (the “Participant”), evidences a Performance Award denominated in Restricted Share Units to the Participant under the United Natural Foods, Inc. Amended and Restated 2020 Equity Incentive Plan (as amended from time to time, the “Plan”). Except in the preceding sentence and where the context otherwise requires, the term “Company” shall include the Company and all present and future Subsidiaries. All capitalized terms that are used in this Agreement without definition shall have the meanings set forth in the Plan.

1.Definitions.

(a)    “Participant,” solely for the purpose of this Agreement, means the employee designated above.

(b)    “Performance Criteria” means the performance targets related to one or more performance goals set forth on Exhibit A hereto.

(c)    “Performance Period” means the period beginning on [ ] and ending on [ ].

(d)    “Restricted Share Unit” means a right to receive a payment in the form of any one Share of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth in this Agreement and in the Plan, following the successful attainment of the Performance Criteria to the satisfaction of the Committee.

2.    Grant of Restricted Share Units.  In consideration of services to be rendered by the Participant to the Company, the Company hereby grants to the Participant, subject to the terms and conditions set forth in this Agreement and in the Plan, [______] Restricted Share Units (the “Target Amount”). The Target Amount shall be subject to adjustment as provided in Section 4.3 of the Plan. This grant is conditional upon the Participant signing a counterpart of this Agreement and delivering such signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic means if provided by the Company pursuant to Section 18 hereof.

3.    Vesting & Effect of Termination.

(a)    Performance Criteria: Exhibit A hereto identifies the Performance Criteria and the levels of performance that must be achieved in order to receive payment of Shares at the percentage of the Target Amount specified in Exhibit A, based on achievement of the Performance Criteria, as determined in accordance with this Agreement and the Plan. The percentage of the Target Amount based on actual achievement of the Performance Criteria as of the last day of the Performance Period is referred to herein


as the “Earned Amount.” Except as otherwise provided herein or in the Plan, if the Participant remains continuously employed by the Company throughout the Performance Period, the Participant will vest in the Earned Amount, and any amount in excess of the Earned Amount will be forfeited. Prior to the issuance of any Shares in settlement of any Restricted Share Units, the Committee shall determine and certify in writing (which may be set forth in the minutes of a meeting of the Committee) the extent to which the Performance Criteria and all other material terms of this Agreement have been met. In making such determination, the Committee shall have the right to adjust the number of Shares payable at a given level of performance to take into account additional factors that the Committee may deem relevant in its sole discretion to the assessment of individual or corporate performance.

(b)    Retirement, Death, or Disability: In the event the Participant terminates employment on account of Retirement (as defined below) in the 365-day period beginning on the Grant Date (the “Grant Year”), the Pro-Rated Number of Restricted Share Units will vest at the end of the Performance Period. The “Pro-Rated Number” shall be the product of (i) the Earned Amount that the Participant would have earned had he or she not terminated employment on account of Retirement and (ii) the quotient of (A) the number of days beginning with the first day of the Performance Period and ending on the date the Participant’s employment is terminated as a result of Retirement and (B) 365, the number of days in the Grant Year (and, for the avoidance of doubt, no additional Restricted Share Units in which the Participant may have been entitled to vest in accordance with the Performance Criteria shall vest). In the event that the Participant terminates employment on account of Retirement before the end of the Performance Period but after the Grant Year, or in the event that the Participant dies or terminates employment on account of Disability at any time after the Grant Date then, at the conclusion of the Performance Period, the Participant (or the Participant’s estate or beneficiaries in the event of Participant’s death) will vest in the Earned Amount that the Participant would have earned had had his or her employment continued through the end of the Performance Period. The rights of the Participant (or the Participant’s estate or beneficiaries in the event of Participant’s death) in any event described in this Section 3(b) shall become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock Units would have been issued pursuant to Section 4 hereof had the Participant continued to be employed through the end of the Performance Period. For purposes of this Agreement and notwithstanding the provisions of the Plan, “Retirement” means the Participant’s retirement from active employment with the Company or any of its Subsidiaries or Affiliates on or after the date on which both of the following have occurred: (1) the Participant’s 59th birthday and (2) the sixth anniversary of the Participant’s employment with the Company or any of its Subsidiaries or Affiliates. For the avoidance of doubt, “Retirement” does not include a termination of the Participant’s employment for Cause.

(c)    Change in Control: In the event this Award is assumed in connection with a Change in Control, the Committee shall make such adjustments to the Performance Criteria as are necessary to equitably account for the Change in Control. In the event the Participant’s employment with the Company or any successor to the Company is terminated without Cause, or the Participant terminates his or her employment for Good Reason, within twenty-four (24) months after a Change in Control (and before the Restricted Share Units otherwise have become vested under Section 3(a) or (b)), the Participant shall vest in the Restricted Share Units at the Target Amount granted under Section 2 of this Agreement and the Participant’s rights to such vested amount of Restricted Share Units shall become non-forfeitable as of the date on which the Participant’s employment with the Company or its successor is terminated. In the event that this Award is not assumed by the Acquiror in connection with a Change in Control, the Participant shall vest in the Restricted Share Units at the Target Amount immediately prior to the Change in Control and shall settle immediately following the Change in Control (notwithstanding the longer period of time for settlement provided in Section 4 below). In the event that settlement of the Restricted Share Units at the time described above would result in the imposition of tax on the Participant (if the Participant has then satisfied the conditions for Retirement) pursuant to the operation of Code Section 409A (as defined below),

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such settlement shall take place on the earliest date upon which settlement may be made without resulting in the imposition of such tax.

(d)    Separation from Service without Cause: If the Participant’s employment with the Company is terminated as a result of a Separation from Service without Cause (as defined in the Plan), then:

(i) the PSU Separation Pro-Rated Number of performance-based Restricted Share Units shall continue to vest, on the same terms that such performance-based Restricted Share Units would have vested had the Participant remained an employee, but without the requirement of continued employment; and
(ii) any remaining performance-based Restricted Share Units not vesting as provided above shall be forfeited effective as of the date of separation.
    Notwithstanding the foregoing, the vesting and payout of any performance-based Restricted Share Units pursuant to this Section 3(d) shall be subject to the satisfaction of any conditions required for payout of the performance-based Restricted Share Units pursuant to this Agreement and the Plan.

The “PSU Separation Pro-Rated Number” for performance-based Restricted Share Units shall be the product of (A) the total number of performance-based Restricted Share Units and (B) the quotient of (1) the number of days beginning on the first day of the Performance Period and ending on the date of separation, and (2) the total number of days in the Performance Period (for example 1,095 days for a three-year performance period).

(e)    Other Termination: Except as provided in Section 3(b), (c), or (d) above or as otherwise provided in any written agreement by and between the Company and the Participant, if the Participant’s employment with the Company terminates for any reason prior to the expiration of the Performance Period, all then-unvested Restricted Share Units shall be canceled immediately and shall not be payable to the Participant.

(f)    Effect of Separate Written Agreement, Including Severance Agreement and/or Change in Control Agreement: In case of any conflict between the terms of this Section 3 and any written agreement, including any severance agreement and/or change in control agreement, between the Company and the Participant, the terms of such written agreement shall control to the extent applicable.

4.    Payment. The Company shall issue to the Participant one Share for each Restricted Share Unit which has become vested with respect to the Performance Period pursuant to Section 3 of this Agreement. The payment of the Shares shall be made to the Participant (or the Participant’s assignee or beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and award policy no later than March 15th of the calendar year next following the calendar year in which the Performance Period ends and may be made as a book-entry confirmation or through the issuance of a certificate evidencing such Shares.

5.    Rights as a Stockholder. The Participant shall have no rights as a stockholder with respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including, without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect to such Shares) unless and until the Shares have been issued to Participant. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares are issued.



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6.    Withholding. The Company’s obligation to make payment of vested Restricted Share Units shall be subject to the Participant’s satisfaction of any applicable federal, state, local and foreign withholding obligations or withholding taxes, including any employer minimum statutory withholding (“Withholding Taxes”), and the Participant shall pay the amount of any such Withholding Taxes to the Company as set forth in this Section 6. The Participant may satisfy his or her obligation to pay the Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Participant pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the Company shares of Common Stock already owned by the Participant; provided that the amount of such Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding Taxes. The Participant acknowledges and agrees that the Company has the right to deduct from compensation or other amounts owing to the Participant an amount not to exceed the Withholding Taxes.

7.    Covenants. As a condition to the receipt of the Award (which shall be forfeited in the event of noncompliance with this Section 7 ), the Participant hereby agrees to adhere to the covenants set forth in Section 14.8 of the Plan, which include confidentiality, non-competition and non-solicitation covenants and acknowledges that the Award is subject to recoupment as provided in the Plan.

8.    No Guarantee of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue in the employ of the Company, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge the Participant at any time for any reason whatsoever, with or without Cause.

9.    Amendment. Subject to the restrictions contained in the Plan, the Committee may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with Section 409A of the Code with regard to awards subject thereto); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Participant or any holder or beneficiary of the Restricted Share Units shall not to that extent be effective without the consent of the Participant, holder or beneficiary; and provided further that no consent of the Participant or any holder or beneficiary shall be required for any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent necessary to conform this Agreement to mandatory provisions of applicable federal or state laws, regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary to avoid tax penalties to the Participant. The Committee is authorized to make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted Share Units as set forth in the Plan.

10.    Determinations by the Committee. Except as otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons.

11.    Provisions of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan. This Agreement is governed by the terms of the Plan, and in the case of any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together with the Plan, represents the entire understanding and agreement between the Company and the Participant, and shall supersede any prior agreement and understanding between the parties with respect to the matters contained herein. This

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Agreement, and any payment of Shares in settlement of the Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.

12.    Nontransferability of Restricted Share Units.  Except as otherwise provided in the Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the Restricted Share Units for value is not permitted under the Plan or this Agreement.

13.    Notices. Any notice required or permitted to be given to the Participant under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States mail with postage and fees prepaid. Any notice or communication required or permitted to be given to the Company under this Agreement shall be in writing and shall be deemed effective only upon receipt by the Secretary of the Company at the Company’s principal office.

14.    Waiver. The waiver by the Company of any provision of this Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Agreement at any subsequent time or for any other purpose.

15.    Section 409A.

(a)    For the avoidance of doubt, the Restricted Share Units granted under this Agreement are intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Participant by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)    Notwithstanding any other payment schedule provided herein to the contrary, if the Participant is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then any payment due under this Agreement that is considered “deferred compensation” under Section 409A of the Code payable on account of a Participant’s “separation from service” shall not be made until the date which is the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” of the Participant, and (B) the date of Participant’s death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 15(b) shall be paid to the Participant in a lump sum in accordance with the Agreement.

(c)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Code Section 409A) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Code Section 409A (and, more specifically, Treasury Regulation 1.409A-1(h)) and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”



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(d)    For the avoidance of doubt, any payment due under this Agreement within a period following the Participant’s termination of employment, death, Disability, Retirement or other event, shall be made on a date during such period as determined by the Company in its sole discretion.

16.    Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

17.    Successors. This Agreement shall inure to the benefit of and be binding upon any successor to the Company and shall inure to the benefit of the Participant's legal representative. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be binding upon the Participant's heirs, executors, administrator and successors.

18.    Electronic Communication. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

[signature page follows]





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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer of the Company, and the Participant has accepted and signed this Agreement, all on the day and year first mentioned above.

UNITED NATURAL FOODS, INC.
By: __________________________
PARTICIPANT
 ______________________________


                    

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EXHIBIT A
Performance criteria and levels required to be achieved for payout;
payout percentage of Target Amount


[TO BE DETERMINED ON OR PRIOR TO GRANT]




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Exhibit 10.3

UNITED NATURAL FOODS, INC.

INDUCEMENT AWARD
RESTRICTED SHARE UNIT AWARD AGREEMENT

[time vesting for Chief Executive Officer]

This Restricted Share Unit Award Agreement (this “Agreement”) effective as of _______, 20__ (the “Grant Date”), between United Natural Foods, Inc. (the “Company”) and _______ (the “Grantee”), evidences an Award denominated in Restricted Share Units to the Grantee. The Award is being made as an inducement grant in reliance on Rule 303A.08 of the New York Stock Exchange and is not issued under the United Natural Foods, Inc. Amended and Restated 2020 Equity Incentive Plan (as amended from time to time, the “Plan”). Notwithstanding the foregoing, the Award shall be governed by the terms of the Plan and interpreted as if the Award were subject to the Plan. Capitalized terms used but not defined herein will have the meaning ascribed to them in the Plan. Except where the context otherwise requires, the term “Company” shall include the Company and all present and future Subsidiaries.

1.Definitions.

(a)    “Grantee,” solely for the purpose of this Agreement, means the employee designated above.
(b)    “Restricted Share Unit” means a right to receive a payment in the form of any one Share of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth in this Agreement and in the Plan.

(c)    “Vesting Period” means the period beginning on _____________, 20__ and ending on __________, 20__.

2.    Grant of Restricted Share Units.  In consideration of services to be rendered by the Grantee to the Company, the Company hereby grants to the Grantee [______] Restricted Share Units, on the terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. The grant of Restricted Share Units shall be subject to adjustment as provided in Section 4.3 of the Plan. This grant is conditional upon the Grantee signing a counterpart of this Agreement and delivering such signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic means if provided by the Company pursuant to Section 19 hereof.

3.    Vesting & Effect of Termination.

(a)    Generally: Except as otherwise provided herein or in the Plan, if the Grantee remains continuously employed by the Company through the applicable vesting date, the Restricted Share Units will vest in accordance with the following schedule:




Vesting Date                Restricted Share Units

__________, 2022            33.3%

__________, 2023            33.3%

__________, 2024            33.4%


(b)    Retirement: In the event the Grantee terminates employment on account of Retirement (as defined below) in the 365-day period beginning on the Grant Date (the “Grant Year”), the Pro-Rated Number of Restricted Share Units will continue to vest through the Vesting Period. The “Pro-Rated Number” shall be the product of (i) the total number of Restricted Share Units granted under this Agreement and (ii) the quotient of (A) the number of days beginning with the Grant Date and ending on the date the Grantee’s employment is terminated as a result of Retirement and (B) 365, the number of days in the Grant Year. In the event that the Grantee terminates employment on account of Retirement before the end of the Vesting Period but after the Grant Year, all of the then-unvested Restricted Share Units granted under this Agreement will continue to vest through the Vesting Period. The rights of the Grantee in the event of Retirement with respect to any then-unvested Restricted Share Units shall become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock Units would have been issued pursuant to Section 4 hereof had the Grantee continued to be employed through the end of the Vesting Period. For purposes of this Agreement and notwithstanding the provisions of the Plan, “Retirement” means the Grantee’s retirement from active employment with the Company or any of its Subsidiaries or Affiliates on or after the date on which both of the following have occurred: (1) the Grantee’s 59th birthday and (2) the sixth anniversary of the Grantee’s employment with the Company or any of its Subsidiaries or Affiliates. For the avoidance of doubt, “Retirement” does not include a termination of the Grantee’s employment for Cause.

(c)    Death and Disability: In the event that the Grantee dies or terminates employment on account of Disability at any time after the Grant Date, all of the then unvested Restricted Share Units shall fully vest.

(d)    Change in Control: In the event the Grantee’s employment with the Company or any successor to the Company is terminated without Cause, or the Grantee terminates his or her employment for Good Reason, within twenty-four (24) months after a Change in Control (and before the Restricted Share Units otherwise have become vested under Section 3(a), (b) or (c)), the Grantee shall vest in all of the Restricted Share Units granted under Section 2 of this Agreement and the Grantee’s rights to such Restricted Share Units shall become non-forfeitable as of the date on which the Grantee’s employment with the Company or its successor is terminated. In the event that this Award is not assumed by the Acquiror in connection with a Change in Control, all of the Restricted Share Units shall vest immediately prior to the Change in Control and shall settle immediately following the Change in Control (notwithstanding the longer period of time for settlement provided in Section 4 below). In the event that settlement of the Restricted Share Units at the time described above would result in the imposition of tax on the Grantee (if the Grantee has then satisfied the conditions for Retirement) pursuant to the operation of Code Section 409A (as defined below), such settlement shall take place on the earliest date upon which settlement may be made without resulting in the imposition of such tax.

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(e)    Separation from Service without Cause: If the Grantee’s employment with the Company is terminated as a result of a Separation from Service without Cause (as defined in the Plan), then:

(i) any unvested Restricted Share Units that were scheduled to vest within 365 days from the date of separation and were granted more than 365 days preceding the date of separation, shall vest effective as of the date of termination;

(ii) the Separation Pro-Rated Number of Restricted Share Units that were scheduled to vest within 365 days from the date of separation, and were granted less than 365 days prior to the date of separation, shall vest effective as of the date of separation; and

(iii) any remaining Restricted Share Units not vesting as provided above shall be forfeited effective as of the date of separation.

    Notwithstanding the foregoing, the vesting and payout of any Restricted Share Units pursuant to this Section 3(e) shall be subject to the satisfaction of any conditions required for payout of the Restricted Share Units pursuant to this Agreement and the Plan (as if the Restricted Share Units were granted under the Plan).

The “Separation Pro-Rated Number” shall be the product of (A) the total number of Restricted Share Units granted under this Agreement less than 365 days prior to the date of termination and (B) the quotient of (1) the number of days from the Grant Date to the termination date and (2) 365.

(f)    Other Termination: Except as provided in Section 3(b), (c), (d) or (e) above or as otherwise provided in any written agreement by and between the Company and the Grantee, if the Grantee’s employment with the Company terminates for any reason prior to the expiration of the Vesting Period, all then-unvested Restricted Share Units shall be canceled immediately and shall not be payable to the Grantee.

(g)    Effect of Separate Written Agreement, Including Severance Agreement and/or Change in Control Agreement: In case of any conflict between the terms of this Section 3 and any written agreement, including any severance agreement and/or change in control agreement, between the Company and the Grantee, the terms of such written agreement shall control to the extent applicable

4.    Payment. The Company shall issue to the Grantee one Share for each Restricted Share Unit which has become vested with respect to the vesting schedule pursuant to Section 3 of this Agreement. The payment of the Shares shall be made to the Grantee (or the Grantee’s assignee or beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and award policy no later than March 15th of the calendar year next following the calendar year in which the applicable vesting date set forth in Section 3 occurs and may be made as a book-entry confirmation or through the issuance of a certificate evidencing such Shares; provided, however, that if the Grantee has satisfied the conditions for Retirement at any point during the Vesting Period, payment of the Shares shall be made as soon as practicable following the applicable vesting date set forth in Section 3, but in no event later than December 31 of the calendar year in which such vesting date occurs.

5.    Rights as a Stockholder. The Grantee shall have no rights as a stockholder with respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including, without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect to such Shares) unless and until the Shares have been issued to Grantee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares are issued.



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6.    Withholding. The Company’s obligation to make payment of vested Restricted Share Units shall be subject to the Grantee’s satisfaction of any applicable federal, state, local and foreign withholding obligations or withholding taxes, including any employer minimum statutory withholding (“Withholding Taxes”), and the Grantee shall pay the amount of any such Withholding Taxes to the Company as set forth in this Section 6. The Grantee may satisfy his or her obligation to pay the Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Grantee pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the Company shares of Common Stock already owned by the Grantee; provided that the amount of such Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding Taxes. The Grantee acknowledges and agrees that the Company has the right to deduct from compensation or other amounts owing to the Grantee an amount not to exceed the Withholding Taxes.

7.    Covenants. As a condition to the receipt of the Award (which shall be forfeited in the event of noncompliance with this Section 7), the Grantee hereby agrees to adhere to the covenants set forth in Section 14.8 of the Plan, which include confidentiality, non-competition and non-solicitation covenants and acknowledges that the Award is subject to recoupment as provided in the Plan (as if the Award was made under the Plan).

8.    No Guarantee of Employment.  Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in the employ of the Company, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge the Grantee at any time for any reason whatsoever, with or without Cause.

9.    Private Placement. The Restricted Share Units and any Shares issued upon payment thereof have not been registered under the Securities Act of 1933, as amended (the “Act”), in reliance on exemptions provided under Section 4(a)(2) of the Act and other applicable exemptions. Accordingly, they may not be transferred except in reliance on an exemption from registration under the Act and any applicable state securities laws. It is anticipated that the Shares will be transferable in compliance with Rule 144 under the Act. Prior to, and as a condition of, any transfer, the Grantee shall be required to deliver to the Company an opinion of counsel, satisfactory to the Company, to the effect such transfer may be made in accordance with the Act. Certificates representing any Shares issued hereunder shall bear a legend reflecting such restrictions on transfer and any electronic stock transfer records shall also reflect a notation of such restrictions on transfer.

10.    Amendment. Subject to the restrictions contained in the Plan, the Committee may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with Section 409A of the Code with regard to awards subject thereto); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Grantee or any holder or beneficiary of the Restricted Share Units shall not to that extent be effective without the consent of the Grantee, holder or beneficiary; and provided further that no consent of the Grantee or any holder or beneficiary shall be required for any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent necessary to conform this Agreement to mandatory provisions of applicable federal or state laws, regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary to avoid tax penalties to the Grantee. The Committee is authorized to make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted Share Units as set forth in the Plan.



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11.    Determinations by the Committee. Except as otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons.

12.    Provisions of the Plan. The Grantee hereby acknowledges receipt of a copy of the Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan as if this Award had been made under the Plan. This Agreement is governed by the terms of the Plan as if this Award had been made under the Plan and in the case of any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together with the Plan, represents the entire understanding and agreement between the Company and the Grantee, and shall supersede any prior agreement and understanding between the parties with respect to the matters contained herein. This Agreement, and any payment of Shares in settlement of the Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.

13.    Nontransferability of Restricted Share Units.  Except as otherwise provided in the Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the Restricted Share Units for value is not permitted under the Plan or this Agreement.

14.    Notices. Any notice required or permitted to be given to the Grantee under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States mail with postage and fees prepaid. Any notice or communication required or permitted to be given to the Company under this Agreement shall be in writing and shall be deemed effective only upon receipt by the Secretary of the Company at the Company’s principal office.

15.    Waiver. The waiver by the Company of any provision of this Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Agreement at any subsequent time or for any other purpose.

16.    Section 409A.

(a)    For the avoidance of doubt, the Restricted Share Units granted under this Agreement are intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Grantee by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)    Notwithstanding any other payment schedule provided herein to the contrary, if the Grantee is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then any payment due under this Agreement that is considered “deferred compensation” under Section 409A of the Code payable on account of a Grantee’s “separation from service” shall not be made until the date which is the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” of the Grantee, and (B) the date of Grantee’s death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration

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of the Delay Period, all payments delayed pursuant to this Section 15(b) shall be paid to the Grantee in a lump sum in accordance with the Agreement.

(c)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Code Section 409A) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Code Section 409A (and, more specifically, Treasury Regulation 1.409A-1(h)) and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(d)    For the avoidance of doubt, any payment due under this Agreement within a period following Grantee’s termination of employment, death, Disability, Retirement or other event, shall be made on a date during such period as determined by the Company in its sole discretion.

17.    Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

18.    Successors. This Agreement shall inure to the benefit of and be binding upon any successor to the Company and shall inure to the benefit of the Grantee's legal representative. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs, executors, administrator and successors.

19.    Electronic Communication. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

[signature page follows]





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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer of the Company, and the Grantee has accepted and signed this Agreement, all on the day and year first mentioned above.


UNITED NATURAL FOODS, INC.
By: __________________________
GRANTEE
______________________________






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Exhibit 10.4

UNITED NATURAL FOODS, INC.

INDUCEMENT AWARD

2020 EQUITY INCENTIVE PLAN
PERFORMANCE-BASED VESTING
RESTRICTED SHARE UNIT AWARD AGREEMENT

[cliff-vesting for Chief Executive Officer]


This Performance-Based Vesting Restricted Share Unit Award Agreement (this “Agreement”) effective as of [ ] __, 20__, (the “Grant Date”) between United Natural Foods, Inc. (the “Company”) and __________________ (the “Grantee”), evidences a Performance Award denominated in Restricted Share Units to the Grantee. The Award is being made as an inducement grant in reliance on Rule 303A.08 of the New York Stock Exchange and is not issued under the United Natural Foods, Inc. Amended and Restated 2020 Equity Incentive Plan (as amended from time to time, the “Plan”). Notwithstanding the foregoing, the Award shall be governed by the terms of the Plan and interpreted as if the Award were subject to the Plan. Capitalized terms used but not defined herein will have the meaning ascribed to them in the Plan. Except where the context otherwise requires, the term “Company” shall include the Company and all present and future Subsidiaries.

1.Definitions.

(a)    “Grantee,” solely for the purpose of this Agreement, means the employee designated above.

(b)    “Performance Criteria” means the performance targets related to one or more performance goals set forth on Exhibit A hereto.

(c)    “Performance Period” means the period beginning on [ ] and ending on [ ].

(d)    “Restricted Share Unit” means a right to receive a payment in the form of any one Share of the Company’s common stock, par value $0.01 per share, subject to the terms and conditions set forth in this Agreement and in the Plan, following the successful attainment of the Performance Criteria to the satisfaction of the Committee.

2.    Grant of Restricted Share Units.  In consideration of services to be rendered by the Grantee to the Company, the Company hereby grants to the Grantee, subject to the terms and conditions set forth in this Agreement and in the Plan, [______] Restricted Share Units (the “Target Amount”). The Target Amount shall be subject to adjustment as provided in Section 4.3 of the Plan. This grant is conditional upon the Grantee signing a counterpart of this Agreement and delivering such signed counterpart to the Company within sixty (60) days of this Agreement, including by electronic means if provided by the Company pursuant to Section 19 hereof.




3.    Vesting & Effect of Termination.

(a)    Performance Criteria: Exhibit A hereto identifies the Performance Criteria and the levels of performance that must be achieved in order to receive payment of Shares at the percentage of the Target Amount specified in Exhibit A, based on achievement of the Performance Criteria, as determined in accordance with this Agreement and the Plan. The percentage of the Target Amount based on actual achievement of the Performance Criteria as of the last day of the Performance Period is referred to herein as the “Earned Amount.” Except as otherwise provided herein or in the Plan, if the Grantee remains continuously employed by the Company throughout the Performance Period, the Grantee will vest in the Earned Amount, and any amount in excess of the Earned Amount will be forfeited. Prior to the issuance of any Shares in settlement of any Restricted Share Units, the Committee shall determine and certify in writing (which may be set forth in the minutes of a meeting of the Committee) the extent to which the Performance Criteria and all other material terms of this Agreement have been met. In making such determination, the Committee shall have the right to adjust the number of Shares payable at a given level of performance to take into account additional factors that the Committee may deem relevant in its sole discretion to the assessment of individual or corporate performance.

(b)    Retirement, Death, or Disability: In the event the Grantee terminates employment on account of Retirement (as defined below) in the 365-day period beginning on the Grant Date (the “Grant Year”), the Pro-Rated Number of Restricted Share Units will vest at the end of the Performance Period. The “Pro-Rated Number” shall be the product of (i) the Earned Amount that the Grantee would have earned had he or she not terminated employment on account of Retirement and (ii) the quotient of (A) the number of days beginning with the first day of the Performance Period and ending on the date the Grantee’s employment is terminated as a result of Retirement and (B) 365, the number of days in the Grant Year (and, for the avoidance of doubt, no additional Restricted Share Units in which the Grantee may have been entitled to vest in accordance with the Performance Criteria shall vest). In the event that the Grantee terminates employment on account of Retirement before the end of the Performance Period but after the Grant Year, or in the event that the Grantee dies or terminates employment on account of Disability at any time after the Grant Date then, at the conclusion of the Performance Period, the Grantee (or the Grantee’s estate or beneficiaries in the event of Grantee’s death) will vest in the Earned Amount that the Grantee would have earned had had his or her employment continued through the end of the Performance Period. The rights of the Grantee (or the Grantee’s estate or beneficiaries in the event of Grantee’s death) in any event described in this Section 3(b) shall become non-forfeitable only at such time as the Shares issuable in settlement of such Restricted Stock Units would have been issued pursuant to Section 4 hereof had the Grantee continued to be employed through the end of the Performance Period. For purposes of this Agreement and notwithstanding the provisions of the Plan, “Retirement” means the Grantee’s retirement from active employment with the Company or any of its Subsidiaries or Affiliates on or after the date on which both of the following have occurred: (1) the Grantee’ 59th birthday and (2) the sixth anniversary of the Grantee’s employment with the Company or any of its Subsidiaries or Affiliates. For the avoidance of doubt, “Retirement” does not include a termination of the Grantee’s employment for Cause

(c)    Change in Control: In the event this Award is assumed in connection with a Change in Control, the Committee shall make such adjustments to the Performance Criteria as are necessary to equitably account for the Change in Control. In the event the Grantee’s employment with the Company or any successor to the Company is terminated without Cause, or the Grantee terminates his or her employment for Good Reason, within twenty-four (24) months after a Change in Control (and before the Restricted Share Units otherwise have become vested under Section 3(a) or (b)), the Grantee shall vest in the Restricted Share Units at the Target Amount granted under Section 2 of this Agreement and the Grantee’s rights to such vested amount of Restricted Share Units shall become non-forfeitable as of the date on which the Grantee’s employment with the Company or its successor is terminated. In the event that this Award is not

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assumed by the Acquiror in connection with a Change in Control, the Grantee shall vest in the Restricted Share Units at the Target Amount immediately prior to the Change in Control and shall settle immediately following the Change in Control (notwithstanding the longer period of time for settlement provided in Section 4 below). In the event that settlement of the Restricted Share Units at the time described above would result in the imposition of tax on the Grantee (if the Grantee has then satisfied the conditions for Retirement) pursuant to the operation of Code Section 409A (as defined below), such settlement shall take place on the earliest date upon which settlement may be made without resulting in the imposition of such tax.

(d)    Separation from Service without Cause: If the Grantee’s employment with the Company is terminated as a result of a Separation from Service without Cause (as defined in the Plan), then:

(i) the PSU Separation Pro-Rated Number of performance-based Restricted Share Units shall continue to vest, on the same terms that such performance-based Restricted Share Units would have vested had the Grantee remained an employee, but without the requirement of continued employment; and
(ii) any remaining performance-based Restricted Share Units not vesting as provided above shall be forfeited effective as of the date of separation.
    Notwithstanding the foregoing, the vesting and payout of any performance-based Restricted Share Units pursuant to this Section 3(d) shall be subject to the satisfaction of any conditions required for payout of the performance-based Restricted Share Units pursuant to this Agreement and the Plan (as if the performance-based Restricted Share Units were granted under the Plan).

The “PSU Separation Pro-Rated Number” for performance-based Restricted Share Units shall be the product of (A) the total number of performance-based Restricted Share Units and (B) the quotient of (1) the number of days beginning on the first day of the Performance Period and ending on the date of separation, and (2) the total number of days in the Performance Period (for example 1,095 days for a three-year performance period).

(e)    Other Termination: Except as provided in Section 3(b), (c), or (d) above or as otherwise provided in any written agreement by and between the Company and the Grantee, if the Grantee’s employment with the Company terminates for any reason prior to the expiration of the Performance Period, all then-unvested Restricted Share Units shall be canceled immediately and shall not be payable to the Grantee.

(f)    Effect of Separate Written Agreement, Including Severance Agreement and/or Change in Control Agreement: In case of any conflict between the terms of this Section 3 and any written agreement, including any severance agreement and/or change in control agreement, between the Company and the Grantee, the terms of such written agreement shall control to the extent applicable.

4.    Payment. The Company shall issue to the Grantee one Share for each Restricted Share Unit which has become vested with respect to the Performance Period pursuant to Section 3 of this Agreement. The payment of the Shares shall be made to the Grantee (or the Grantee’s assignee or beneficiary if permitted by the Plan or the Committee) in accordance with the Company’s grant and award policy no later than March 15th of the calendar year next following the calendar year in which the Performance Period ends and may be made as a book-entry confirmation or through the issuance of a certificate evidencing such Shares.



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5.    Rights as a Stockholder. The Grantee shall have no rights as a stockholder with respect to any Shares which may be issued upon the vesting of the Restricted Share Units (including, without limitation, voting rights and any rights to receive dividends or non-cash distributions with respect to such Shares) unless and until the Shares have been issued to Grantee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such Shares are issued.

6.    Withholding. The Company’s obligation to make payment of vested Restricted Share Units shall be subject to the Grantee’s satisfaction of any applicable federal, state, local and foreign withholding obligations or withholding taxes, including any employer minimum statutory withholding (“Withholding Taxes”), and the Grantee shall pay the amount of any such Withholding Taxes to the Company as set forth in this Section 6. The Grantee may satisfy his or her obligation to pay the Withholding Taxes by (i) having the Company withhold Shares otherwise deliverable to the Grantee pursuant to settlement of vested Restricted Share Units; or (ii) delivering, actually or by attestation, to the Company shares of Common Stock already owned by the Grantee; provided that the amount of such Shares withheld or shares of Common Stock delivered (with the value of such Shares being based on the Fair Market Value of a Share of the Company’s Common Stock as of the payment date as determined by the Committee) shall not exceed the amount necessary to satisfy the minimum amount of Withholding Taxes. The Grantee acknowledges and agrees that the Company has the right to deduct from compensation or other amounts owing to the Grantee an amount not to exceed the Withholding Taxes.

7.    Covenants. As a condition to the receipt of the Award (which shall be forfeited in the event of noncompliance with this Section 7 ), the Grantee hereby agrees to adhere to the covenants set forth in Section 14.8 of the Plan, which include confidentiality, non-competition and non-solicitation covenants (as if the Award was made under the Plan).

8.    No Guarantee of Employment. Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in the employ of the Company, or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge the Grantee at any time for any reason whatsoever, with or without Cause.

9.    Private Placement. The Restricted Share Units and any Shares issued upon payment thereof have not been registered under the Securities Act of 1933, as amended (the “Act”), in reliance on exemptions provided under Section 4(a)(2) of the Act and other applicable exemptions. Accordingly, they may not be transferred except in reliance on an exemption from registration under the Act and any applicable state securities laws. It is anticipated that the Shares will be transferable in compliance with Rule 144 under the Act. Prior to, and as a condition of, any transfer, the Grantee shall be required to deliver to the Company an opinion of counsel, satisfactory to the Company, to the effect such transfer may be made in accordance with the Act. Certificates representing any Shares issued hereunder shall bear a legend reflecting such restrictions on transfer and any electronic stock transfer records shall also reflect a notation of such restrictions on transfer.

10.    Amendment. Subject to the restrictions contained in the Plan, the Committee may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, this Agreement and the Restricted Share Units, prospectively or retroactively in time (and in accordance with Section 409A of the Code with regard to awards subject thereto); provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Grantee or any holder or beneficiary of the Restricted Share Units shall not to that extent be effective without the consent of the Grantee, holder or beneficiary; and provided further that no consent of the Grantee or any holder or beneficiary shall be required for any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination to the extent necessary to

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conform this Agreement to mandatory provisions of applicable federal or state laws, regulations or rulings, including but not limited to the provisions of Section 409A of the Code necessary to avoid tax penalties to the Grantee. The Committee is authorized to make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, this Agreement and the Restricted Share Units as set forth in the Plan.

11.    Determinations by the Committee. Except as otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or this Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons.

12.    Provisions of the Plan. The Grantee hereby acknowledges receipt of a copy of the Plan with this Agreement and agrees to be bound by all the terms and provisions of the Plan as if this Award had been made under the Plan. This Agreement is governed by the terms of the Plan as if the Award had been made under the Plan, , and in the case of any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern. This Agreement, read together with the Plan, represents the entire understanding and agreement between the Company and the Grantee, and shall supersede any prior agreement and understanding between the parties with respect to the matters contained herein. This Agreement, and any payment of Shares in settlement of the Restricted Share Units, shall be subject to any policy of the Company regarding the recoupment or clawback of compensation as in effect at the date of this Agreement or hereafter adopted by the Board.

13.    Nontransferability of Restricted Share Units.  Except as otherwise provided in the Plan, the Restricted Share Units and this Agreement shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Share Units otherwise than as permitted by the Plan and this Agreement shall, at the election of the Company, be null and void. Transfer of the Restricted Share Units for value is not permitted under the Plan or this Agreement.

14.    Notices. Any notice required or permitted to be given to the Grantee under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States mail with postage and fees prepaid. Any notice or communication required or permitted to be given to the Company under this Agreement shall be in writing and shall be deemed effective only upon receipt by the Secretary of the Company at the Company’s principal office.

15.    Waiver. The waiver by the Company of any provision of this Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Agreement at any subsequent time or for any other purpose.

16.    Section 409A.

(a)    For the avoidance of doubt, the Restricted Share Units granted under this Agreement are intended to be exempt from or otherwise comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be either exempt from or in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Grantee by Code Section 409A or damages for failing to comply with Code Section 409A.

(b)    Notwithstanding any other payment schedule provided herein to the contrary, if the Grantee is deemed on the date of termination to be a “specified employee” within the meaning of that term under

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Section 409A(a)(2)(B) of the Code, then any payment due under this Agreement that is considered “deferred compensation” under Section 409A of the Code payable on account of a Grantee’s “separation from service” shall not be made until the date which is the earlier of (A) the expiration of the six (6) month period measured from the date of such “separation from service” of the Grantee, and (B) the date of Grantee’s death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 15(b) shall be paid to the Grantee in a lump sum in accordance with the Agreement.

(c)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of “deferred compensation” (as such term is defined in Code Section 409A) upon or following a termination of employment unless such termination is also a “separation from service” from the Company within the meaning of Code Section 409A (and, more specifically, Treasury Regulation 1.409A-1(h)) and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(d)    For the avoidance of doubt, any payment due under this Agreement within a period following the Grantee’s termination of employment, death, Disability, Retirement or other event, shall be made on a date during such period as determined by the Company in its sole discretion.

17.    Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

18.    Successors. This Agreement shall inure to the benefit of and be binding upon any successor to the Company and shall inure to the benefit of the Grantee's legal representative. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee's heirs, executors, administrator and successors.

19.    Electronic Communication. The Company may, in its sole discretion, decide to deliver any document related to current or future participation in the Plan by electronic means. The Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third-party designated by the Company.

[signature page follows]





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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer of the Company, and the Grantee has accepted and signed this Agreement, all on the day and year first mentioned above.


UNITED NATURAL FOODS, INC.
By: __________________________
GRANTEE
 ______________________________




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EXHIBIT A
Performance criteria and levels required to be achieved for payout;
payout percentage of Target Amount


[TO BE DETERMINED ON OR PRIOR TO GRANT]




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Exhibit 10.5
Execution Version


AMENDMENT NO. 2
TO TERM LOAN AGREEMENT

This AMENDMENT NO. 2 to Term Loan Agreement, dated as of November 10, 2021 (this “Amendment”), is entered into among UNITED NATURAL FOODS, INC., a Delaware corporation (the “Lead Borrower”), SUPERVALU INC., a Delaware corporation (the “Co-Borrower”; and, together with the Lead Borrower, the “Borrowers”), the Guarantors party hereto (the “Guarantors”; and, together with the Borrowers, the “Loan Parties”), CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as the initial New Lender (as defined below), and CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as administrative agent and collateral agent (in such capacity and including any successors in such capacity, the “Agent”), and amends the Term Loan Agreement, dated as of October 22, 2018 (as amended by Amendment No. 1, dated as of February 11, 2021, and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time through the date hereof, the “Credit Agreement”) entered into among the Lead Borrower, the Co-Borrower, the institutions from time to time party thereto as Lenders (the “Lenders”) and the Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Lead Borrower has requested that the Lenders amend the Credit
Agreement to effect the changes described in this Amendment;

WHEREAS, the Lead Borrower has requested that Credit Suisse Loan Funding LLC (“CSLF”) act as Lead Arranger (in such capacity, the “Initial Lead Arranger” and, together with each Additional Lead Arranger (as defined below), the “Lead Arrangers”) in connection with the Amendment;

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows:

Section 1. Amendments to the Credit Agreement

The Credit Agreement is, effective as of the Amendment No. 2 Effective Date, hereby amended:

(a) to delete the references to “3.50%” and “2.50%” in clause (1) of the definition of “Applicable Rate” set forth in Section 1.01 of the Credit Agreement and replace such references with “3.25%” and “2.25%”, respectively;

(b) to delete the reference to “prior to the six (6) month anniversary of the Amendment No. 1 Effective Date” in Section 2.05(a)(iv) of the Credit Agreement and replace such reference with “prior to the six (6) month anniversary of the Amendment No. 2 Effective Date”; and


(c)    to effect the additional amendments to the Credit Agreement set forth on
Exhibit B hereto.

Section 2. New Lenders and Non-Consenting Lenders

If any Lender under the Credit Agreement (each a “Non-Consenting Lender”) declines to consent or fails to consent to this Amendment by failing to return an executed consent
(“Consent”) in the form of Exhibit A to this Amendment to the Agent prior to 5:00 p.m., New York City time on November 4, 2021 (the “Consent Deadline”), then pursuant to and in compliance with the terms of Section 3.06 of the Credit Agreement, such Lender may be replaced and its Term Loans, commitments and/or obligations purchased and assumed by either a new lender (a “New Lender”) or an existing Lender that is willing to increase its Term Loans. For the avoidance of doubt, each Non-Consenting Lender will be deemed to have executed an Assignment and Assumption for all of its then outstanding Term Loans.

Section 3. Additional Lead Arrangers and Co-Managers

The Lead Borrower hereby appoints and designates each of (i) Barclays Bank PLC, JPMorgan Chase Bank, N.A., RBC Capital Markets, LLC, Wells Fargo Securities, LLC and BofA Securities, Inc. as “joint lead arrangers” and “joint bookrunners” in respect of the Amendment (each of the foregoing, in such capacity, an “Additional Lead Arranger”) and (ii) Capital One, National Association, Citizens Bank, N.A., Coöperatieve Rabobank U.A., New York Branch, PNC Capital Markets LLC, TD Securities (USA) LLC, Truist Securities, Inc. and U.S. Bank National Association, as “co-managers” in respect of the Amendment (each of the foregoing, in such capacity, a “Co-Manager”), and each such Additional Lead Arranger and Co- Manager shall be entitled to all of the rights, benefits and obligations of an “Engagement Party” under that certain Engagement Letter, dated as of November 1, 2021, entered into among the Lead Borrower and the Initial Lead Arranger, as if each Additional Lead Arranger and Co- Manager had been an initial party to the Engagement Letter as an Engagement Party; provided that, CSLF shall have “left side” designation and shall appear on the top left in any marketing materials and presentations in respect of the Amendment, and shall hold the leading role and responsibility customarily associated with such “top left” placement.

Section 4. Conditions Precedent to the Effectiveness of this Amendment

This Amendment shall become effective as of the date first written above when, and only when, each of the following conditions precedent shall have been satisfied or waived (the “Amendment No. 2 Effective Date”):

(a) Executed Counterparts. The Agent shall have received this Amendment, duly executed by the Borrowers, the Guarantors, the initial New Lender and the Agent;

(b) Executed Consents. The Agent shall have received a Consent, duly executed by each Lender (including each replacement financial institution that becomes a Lender pursuant to Section 10.07(b) of the Credit Agreement, but excluding any Non- Consenting Lender) by the Consent Deadline;
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(c) Officer’s Certificate. The Lead Borrower shall have provided a certificate signed by a Responsible Officer of the Lead Borrower certifying that (i) immediately prior to and immediately after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing and (ii) the representations and warranties of the Borrowers contained in Article V of the Credit Agreement and in Section 5 of this Amendment shall be true and correct in all material respects (and in all respects if qualified by materiality) on and as of the Amendment No. 2 Effective Date, as if made on and as of such date, except to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be true and correct in all material respects (and in all respects if qualified by materiality) as of such specific date; provided, however, that references therein to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby and after giving effect to the consents and waivers set forth herein;

(d)    [Reserved];

(e) Secretary’s Certificate. The Agent (or its counsel) shall have received such certificates, copies of Organization Documents of the Borrowers, resolutions or other action and incumbency certificates and/or other certificates of Responsible Officers of each Borrower as the Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which such Borrower is a party or is to be a party on the date hereof;

(f) Fees and Expenses Paid. The Lead Borrower shall have paid all reasonable and documented out-of-pocket costs and expenses of the Lead Arrangers and the Agent in connection with the preparation, reproduction, execution and delivery of this Amendment (including, without limitation, the reasonable and documented fees and out- of-pocket expenses of counsel for such parties with respect thereto) and all other fees (including, without limitation, any fees pursuant to any fee letter entered into between the Lead Borrower and the Initial Lead Arranger with respect to this Amendment (which fees shall be in addition to any consent or similar fee, if any, payable to the Lenders)) then due and payable to any Lead Arranger or the Agent in connection with this Amendment, in each case, to the extent invoiced to the Lead Borrower prior to November 9, 2021;

(g) USA PATRIOT Act. The Lead Borrower shall have delivered at least three (3) Business Days prior to the Amendment No. 2 Effective Date (i) all documentation and other information about the Borrowers and the Guarantors as has been reasonably requested in writing at least five (5) Business Days prior to the Amendment No. 2 Effective Date by the Agent and the initial New Lender that they reasonably determine is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the USA PATRIOT Act and (ii) a Beneficial Ownership Certification in respect of the Lead Borrower to the extent the Lead Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation if reasonably requested in writing by the new initial New Lender at least five (5) Business Days prior to the Amendment No. 2 Effective Date.
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Section 5.    Representations and Warranties

Both immediately prior to and immediately after giving effect to this Amendment, each Loan Party hereby represents and warrants to the Agent and each Lender (including the initial New Lender) as follows:

(a) this Amendment has been duly authorized, executed and delivered by such Loan Party and constitutes the legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms and the Credit Agreement, as amended by this Amendment, constitutes the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity;

(b) each of the representations and warranties contained in Article V of the Credit Agreement is true and correct in all material respects (and in all respects if qualified by materiality) on and as of the Amendment No. 2 Effective Date, as if made on and as of such date, except to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be true and correct in all material respects (and in all respects if qualified by materiality) as of such specific date; provided, however, that references therein to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby and after giving effect to the consents and waivers set forth herein; and

(c)    no Default or Event of Default has occurred and is continuing.

Section 6.    Fees and Expenses; Indemnity; No Fiduciary Duty

The Lead Borrower agrees to pay, in accordance with the terms of Section 10.04 of the Credit Agreement, all reasonable out-of-pocket costs and expenses of the Agent and the Lead Arrangers in connection with the preparation, reproduction, execution and delivery of this Amendment (including, without limitation, the reasonable and documented fees and out-of- pocket expenses of external counsel for such parties with respect thereto). Sections 10.04, 10.05 and 10.23 of the Credit Agreement are incorporated by reference herein as if such Sections appeared herein, and shall apply to the activities of the Lead Arrangers in connection with this Amendment, mutatis mutandis.

Section 7.    Reference to the Effect on the Loan Documents

(a) As of the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder,” “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument. Each of the table of contents and lists of Exhibits and Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as of the Amendment No. 2 Effective Date.
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(b) Except as expressly amended hereby or specifically waived above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Loans Parties, the Lead Arrangers or the Agent under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein. The parties hereto acknowledge and agree that the amendment of the Credit Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection herewith shall not constitute a novation of the Credit Agreement and the other Loan Documents as in effect prior to the Amendment No. 2 Effective Date.

(d) Each Loan Party acknowledges and agrees that each of the Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.

(e)    This Amendment is a Loan Document.

(f) It is understood and agreed that, notwithstanding anything to the contrary contained herein or in the Credit Agreement, (x) any voluntary prepayment of Term Loans pursuant to Section 2.05(a) of the Credit Agreement made in connection with this Amendment (i) may be in an aggregate principal amount as the Agent and the Lead Borrower may agree and (ii) shall be deemed to occur prior to giving effect to this Amendment and the occurrence of the Amendment No. 2 Effective Date and (y) any prepayment notice requirement contained in Section 2.05(a) of the Credit Agreement may be waived or ameliorated in the Agent’s sole discretion.

Section 8.    Reaffirmation

Each Loan Party hereby expressly acknowledges the terms of this Amendment and reaffirms, as of the date hereof, (a) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated hereby and (b) its guarantee of the Obligations under the Guarantee and Collateral Agreement, as applicable, and its grant of Liens on the Collateral to secure the Obligations pursuant to the Collateral Documents (including, without limitation, pursuant to the Mortgages, if any to which it is party).

Section 9.    Execution in Counterparts

This Amendment may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. Any signature to this Amendment may be delivered by facsimile, electronic mail (including pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the New York Electronic Signature and Records Act or other
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transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes to the fullest extent permitted by applicable law. For the avoidance of doubt, the foregoing also applies to any amendment, extension or renewal of this Amendment.

Section 10. Governing Law

THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 11. Section Titles

The section titles contained in this Amendment are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section.

Section 12. Notices

All communications and notices hereunder shall be given as provided in the
Credit Agreement.

Section 13. Severability

If any provision of this Amendment is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 14. Successors

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

Section 15. Jurisdiction; Waiver of Jury Trial

The jurisdiction and waiver of right to trial by jury provisions in Sections 10.14 and 10.15 of the Credit Agreement are incorporated herein by reference mutatis mutandis.

[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers and general partners thereunto duly authorized, as of the date first written above.


UNITED NATURAL FOODS, INC., as Lead
Borrower and a Guarantor
By: /s/ John Howard
Name: John W. Howard
Title: Chief Financial Officer
SUPERVALU INC., as Co-Borrower and a
Guarantor
By: /s/ Devon Hart
Name: Devon J. Hart
Title: Vice President
THE GUARANTORS SET FORTH ON
ANNEX I TO THIS SIGNATURE PAGE
By: /s/ Devon Hart
Name: Devon J. Hart
Title: Vice President

























[Signature Page to Amendment No. 2]


ANNEX I

Name of Guarantor

Advantage Logistics - Southeast, Inc.
Albert’s Organics, Inc.
Arden Hills 2003 LLC
Associated Grocers of Florida, Inc. Blue Marble Brands, LLC Cambridge 2006 L.L.C.
Centralia Holdings, LLC Champlin 2005 L.L.C. Cub Stores, LLC
Cub Stores Holdings, LLC DS & DJ Realty, LLC
Eastern Region Management, LLC FF Acquisition, L.L.C.
Foodarama LLC
GROCERS CAPITAL COMPANY Hazelwood Distribution Company, Inc. Hazelwood Distribution Holdings, Inc. Hopkins Distribution Company, LLC Hornbacher’s, Inc.
Inver Grove Heights 2001 L.L.C. Maplewood East 1996 L.L.C. Monticello 1998 L.L.C.
Natural Retail Group, Inc.
NOR – CAL PRODUCE, INC. UNFI Distribution Company, LLC SFW Holding Corp.
Shop ‘N Save East, LLC Shop ‘N Save St. Louis, Inc.
Shop ‘N Save Warehouse Foods, Inc. Shoppers Food Warehouse Corp. SUPERVALU Licensing, LLC SUPERVALU Pharmacies, Inc. SUPERVALU Transportation, Inc. SUPERVALU Wholesale Holdings, Inc. SUPERVALU Wholesale Operations, Inc. SUPERVALU Wholesale, Inc.
Tony’s Fine Foods
Unified Grocers, Inc.
UNITED NATURAL FOODS WEST, INC. United Natural Trading, LLC
UNFI Canada, Inc.
W. Newell & Co., LLC







Agreed and acknowledged:

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as Administrative Agent



By: /s/ William Daly
Name: William O’Daly
Title: Authorized Signatory
By: /s/ Dan Maletta
Name: D. Andrew Maletta
Title: Authorized Signatory























[Signature Page to Master Consent to Assignment]


Exhibit A


CONSENT


This CONSENT (this “Consent”) to Amendment No. 2 to Term Loan Agreement, dated as of the date hereof (the “Amendment”), entered into among United Natural Foods, Inc., as Lead Borrower, SUPERVALU INC., as Co-Borrower, Credit Suisse AG, Cayman Islands Branch, as the Initial New Lender, and Credit Suisse AG, Cayman Islands Branch, as the Agent, which amends the Term Loan Agreement, dated as of October 22, 2018 (as amended by Amendment No. 1, dated as of February 11, 2021, restated, amended and restated, supplemented or otherwise modified from time to time through the date hereof, the “Credit Agreement”), among the Lead Borrower, the Co-Borrower, the Lenders from time to time party thereto and the Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement or the Amendment, as applicable.


Date of Credit Agreement: ☐ October 22, 2018 (as amended by Amendment No. 1, dated as of
February 11, 2021)

Check the first or second box below

Consent:
☐     The undersigned Lender (including any New Lender) hereby irrevocably and unconditionally approves of and consents to the Amendment with respect to all Term Loans held by such Lender.

Decline:
☐     The undersigned Lender declines to participate and agrees that all of the outstanding principal amount of the
Term Loans held by such Lender will be assigned on the Amendment No. 2 Effective Date to a New Lender and is hereby deemed to execute the Assignment and Assumption.



Name of Lender: ___________________________________________________
by
_________________________________
Name:
Title:
For any Institution requiring a second signature line:
by
_________________________________
Name:
Title:



Exhibit B

ADDITIONAL AMENDMENTS

In addition to the other amendments set forth in Section 1 of the Amendment, the
Credit Agreement is, effective as of the Amendment No. 2 Effective Date, hereby amended to: (a)    add the following definitions to Section 1.01 in alphabetical order:
“Amendment No. 2 Effective Date” means November 10, 2021.

“Corresponding Loan Amount” has the meaning assigned to it in Section 9.16(c).

“Erroneous Payment” has the meaning assigned to it in Section 9.16(a).

“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section
9.16(c).

“Payment Recipient” has the meaning assigned to it in Section 9.16(a).



(b)    add the following as a new Section 9.16:

“9.16. Erroneous Payments.

(a) If the Administrative Agent notifies a Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error. If a Payment Recipient receives any payment, prepayment or repayment of principal, interest, fees, distribution or otherwise and does not receive a corresponding payment notice or payment
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advice, such payment, prepayment or repayment shall be presumed to be in error absent written confirmation from the Administrative Agent to the contrary.

(b) Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.

(c) For so long as an Erroneous Payment (or portion thereof) has not been returned by any Payment Recipient who received such Erroneous Payment (or portion thereof) (such unrecovered amount, an “Erroneous Payment Return Deficiency”) to the Administrative Agent after demand therefor in accordance with immediately preceding clause (a), (i) the Administrative Agent may elect, in its sole discretion on written notice to such Lender or Secured Party, that all rights and claims of such Lender or Secured Party with respect to the Loans or other Obligations owed to such Person up to the amount of the corresponding Erroneous Payment Return Deficiency in respect of such Erroneous Payment (the “Corresponding Loan Amount”) shall immediately vest in the Administrative Agent upon such election; after such election, the Administrative Agent (x) may reflect its ownership interest in Loans in a principal amount equal to the Corresponding Loan Amount in the Register, and (y) upon five business days’ written notice to such Lender or Secured Party, may sell such Loan (or portion thereof) in respect of the Corresponding Loan Amount, and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by such Lender or Secured Party shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or Secured Party (and/or against any Payment Recipient that receives funds on its behalf), and (ii) each party hereto agrees that, except to the extent that the Administrative Agent has sold such Loan, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of such Lender or Secured Party with respect to the Erroneous Payment Return Deficiency.

(d) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Lead Borrower, the Co- Borrower or any other Loan Party; provided that this Section 9.16 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Lead Borrower, Co-Borrower or any other Loan Party relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, the immediately preceding clause (c)(ii) and this clause (d) shall not apply to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Lead Borrower, Co-Borrower or any other Loan Party or Affiliate thereof for the purpose of making such Erroneous Payment.

(e) No Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
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(f) Each party’s obligations, agreements and waivers under this Section 9.16 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.




(c)    delete Schedule 5.10 in its entirety and replace it with the following:

SCHEDULE 5.10

COMPLIANCE WITH ERISA


1. One or more Obligors maintained, established, contributed to or been obligated to contribute to the following Multiemployer Plans:

•United Wire, Metal and Machine Pension Fund (the Woodstock Farms location)
•New England Teamsters and Trucking Industry Pension Fund (the Leicester, MA
location)
•Western Conference of Teamsters Pension Trust
•Bakery and Confectionery Union and Industry International Health Benefits Fund
•District 77 IAM&AW Welfare Association
•Indiana Teamsters Safety Training Educational Trust Fund
•IUOE & Pipeline Employers Health & Welfare Fund
•Machinists Health & Welfare Trust
•Minnesota Teamsters Health & Welfare Plan
•Teamsters Joint Council 32 – Employers H&W Fund
•Minnesota Teamsters HRA Plan
•Montana Teamsters/Contractors-Employers Trust
•Montana Teamsters/Contractors-Employers Trust (Retirees)
•Montana Teamsters/Contractors-Employers Trust (HRA)
•Minneapolis Retail Meat Cutters & Food Handlers Health & Welfare Fund
•Automotive, Petroleum & Allied Industries Employees Health & Welfare Trust
•Central Pennsylvania Teamsters Health & Welfare Fund
•Central States Southeast & Southwest Areas Health & Welfare Fund
•Washington Teamsters Welfare Trust
•Washington Bakers Trust
•Northwest IAM Benefit Trust
•Northern Minnesota - Wisconsin Area Retail Food Health and Welfare Fund
•Oregon Teamster Employers Trust
•Sound Health &Wellness Trust
•Southern States Savings Plan
•St. Louis Labor Healthcare Network
•Teamsters & Employers Welfare Trust of Illinois
•Teamsters 206 Employers Trust
•Teamsters Local 610 Prescripticare Trust Fund
•Teamsters and Food Employers Security Trust Fund
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•Twin Cities Bakery Workers Health & Welfare Fund
•UFCW Local 88 & Employers Health & Welfare Fund
•UFCW Local 1189 & St. Paul Food Employers Health and Welfare Plans (formerly
Local 789)
•UFCW Union Local 655 Welfare Fund
•UFCW Unions & Employers Midwest Health Benefits Fund
•UFCW Unions & Participating Employers Health and Welfare Fund
•UFCW Unions & Participating Employers Legal Fund
•Teamsters Medicare Trust for Retired Employees
•District 9 IAM&AW Welfare Trust
•Locals 302 & 612 IUOE Construction Industry Health and Security Fund
•Automotive Machinists Pension Trust
•Bakery and Confectionery Union and Industry International Pension Fund
•Central Pension Fund of the IUOE and Participating Employers
•Central States, SE & SW Areas Pension Fund
•Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
•Employers and Local 534 Grocery Employees Pension Fund
•Employers and Local 534 Meat Employees Pension Fund
•Food Employers Labor Relations Association (FELRA) and UFCW Pension Fund
•International Association of Machinists National Pension Fund
•Minneapolis Food Distributing Industry Pension Plan
•Minneapolis Retail Meat Cutters and Food Handlers Pension Fund
•Minnesota Bakers Union Pension Plan
•Minnesota Teamsters 401(k) Plan
•Northern Minnesota / Wisconsin Area Retail Clerks Pension Fund
•Sound Retirement Trust
•UFCW 1189 & St. Paul Food Employers Defined Contribution Plan
•UFCW Consolidated Pension Plan
•UFCW International Union-Industry Pension Fund
•UFCW Union Local 655 Food Employers Joint Pension Plan and Trust
•UFCW Unions and Employers Midwest Pension Fund
•UFCW Unions and Employers Pension Fund
•UFCW Unions and Participating Employers Pension Fund
•Stationary Engineers Training Local 286 Journeymen Upgrading, Apprenticeship Training, and Training Trust
•Western Alliance Trust Fund
•United Wire, Metal & Machine Health & Welfare Fund
•VEBA Trust
•Master Investment Trust
•UNFI 401(k) Plan
•UNFI Health and Welfare Plan
•United Natural Foods, Inc. Severance Pay Plan for Non-Union Associates

2. One or more Obligors may withdraw from the New England Teamsters and Trucking Industry Pension Fund (the Leicester, MA location) in the next year. The amount of any potential withdrawal liability cannot be determined at this time.
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3. Supervalu has withdrawn from certain Multiemployer Plans which could result in Supervalu incurring withdrawal liability under Title IV of ERISA in the future. Supervalu's estimate of such potential liability is set forth in Supervalu's Annual Report on Form 10-K, as filed with the SEC on April24, 2018.

4. The Unified Grocers, Inc. Cash Balance Pension Plan have Unfunded Pension Liabilities.
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Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Alexander Miller Douglas, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of United Natural Foods, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


December 8, 2021

/s/ J. ALEXANDER MILLER DOUGLAS
J. Alexander Miller Douglas
Chief Executive Officer



Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002

I, John W. Howard, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of United Natural Foods, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


December 8, 2021

/s/ John W. Howard
John W. Howard
Chief Financial Officer


Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, in his capacity as the Chief Executive Officer of United Natural Foods, Inc., a Delaware corporation (the “Company”), hereby certifies that the Quarterly Report of the Company on Form 10-Q for the quarterly period ended October 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects, the financial condition and results of operations of the Company.

/s/ J. ALEXANDER MILLER DOUGLAS
J. Alexander Miller Douglas
Chief Executive Officer
December 8, 2021





Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, in his capacity as the Chief Financial Officer of United Natural Foods, Inc., a Delaware corporation (the “Company”), hereby certifies that the Quarterly Report of the Company on Form 10-Q for the quarterly period ended October 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects, the financial condition and results of operations of the Company.

/s/ John W. Howard
John W. Howard
Chief Financial Officer
December 8, 2021