UNITED NATURAL FOODS INC 10-Q

Item 1. Financial Statements UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except for par values) November 2, 2024 August 3, 2024 ASSETS Cash and cash equivalents $ 37 $ 40 Accounts receivable, net 1,103 953 Inventories, net 2,402 2,179 Prepaid expenses and other current assets 201 230 Total current assets 3,743 3,402 Property and equipment, net 1,800 1,820 Operating lease assets 1,499 1,370 Goodwill 19 19 Intangible assets, net 631 649 Deferred income taxes 86 87 Other long-term assets 188 181 Total assets $ 7,966 $ 7,528 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $ 1,906 $ 1,688 Accrued expenses and other current liabilities 278 288 Accrued compensation and benefits 156 197 Current portion of operating lease liabilities 180 181 Current portion of long-term debt and finance lease liabilities 10 11 Total current liabilities 2,530 2,365 Long-term debt 2,244 2,081 Long-term operating lease liabilities 1,393 1,263 Long-term finance lease liabilities 11 12 Pension and other postretirement benefit obligations 15 15 Other long-term liabilities 148 151 Total liabilities 6,341 5,887 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; 62.4 shares issued and 59.9 shares outstanding at November 2, 2024; 62.0 shares issued and 59.5 shares outstanding at August 3, 2024 1 1 Additional paid-in capital 638 635 Treasury stock at cost ( 86 ) ( 86 ) Accumulated other comprehensive loss ( 45 ) ( 47 ) Retained earnings 1,117 1,138 Total United Natural Foods, Inc. stockholders’ equity 1,625 1,641 Noncontrolling interests — — Total stockholders’ equity 1,625 1,641 Total liabilities and stockholders’ equity $ 7,966 $ 7,528 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 November 2, 2024 October 28, 2023 Net sales $ 7,871 $ 7,552 Cost of sales 6,833 6,522 Gross profit 1,038 1,030 Operating expenses 1,015 1,023 Restructuring, acquisition and integration related expenses 12 4 Loss on sale of assets and other asset charges 6 19 Operating income (loss) 5 ( 16 ) Net periodic benefit income, excluding service cost ( 5 ) ( 3 ) Interest expense, net 36 35 Other income, net ( 2 ) — Loss before income taxes ( 24 ) ( 48 ) Benefit for income taxes ( 4 ) ( 9 ) Net loss including noncontrolling interests ( 20 ) ( 39 ) Less net income attributable to noncontrolling interests ( 1 ) — Net loss attributable to United Natural Foods, Inc. $ ( 21 ) $ ( 39 ) Basic loss per share $ ( 0.35 ) $ ( 0.67 ) Diluted loss per share $ ( 0.35 ) $ ( 0.67 ) Weighted average shares outstanding: Basic 59.6 58.7 Diluted 59.6 58.7 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) (in millions) 13-Week Period Ended November 2, 2024 October 28, 2023 Net loss including noncontrolling interests $ ( 20 ) $ ( 39 ) Other comprehensive income (loss): Recognition of interest rate swap cash flow hedges, net of tax (1) 2 ( 3 ) Foreign currency translation adjustments — ( 3 ) Recognition of other cash flow derivatives, net of tax — 1 Total other comprehensive income (loss) 2 ( 5 ) Less comprehensive income attributable to noncontrolling interests ( 1 ) — Total comprehensive loss attributable to United Natural Foods, Inc. $ ( 19 ) $ ( 44 ) (1) Amounts are net of tax expense (benefit) of $ 1 million and $( 1 ) million for the first quarters of fiscal 2025 and 2024, respectively. See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) For the 13-week periods ended November 2, 2024 and October 28, 2023 (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 August 3, 2024 62.0 $ 1 2.5 $ ( 86 ) $ 635 $ ( 47 ) $ 1,138 $ 1,641 $ — $ 1,641 Restricted stock vestings 0.4 — — — ( 4 ) — — ( 4 ) — ( 4 ) Share-based compensation — — — — 7 — — 7 — 7 Other comprehensive income — — — — — 2 — 2 — 2 Distributions to noncontrolling interests — — — — — — — — ( 1 ) ( 1 ) Net (loss) income — — — — — — ( 21 ) ( 21 ) 1 ( 20 ) Balances at November 2, 2024 62.4 $ 1 2.5 $ ( 86 ) $ 638 $ ( 45 ) $ 1,117 $ 1,625 $ — $ 1,625 Balances at July 29, 2023 61.0 $ 1 2.5 $ ( 86 ) $ 606 $ ( 28 ) $ 1,250 $ 1,743 $ 1 $ 1,744 Restricted stock vestings 0.9 — — — ( 6 ) — — ( 6 ) — ( 6 ) Share-based compensation — — — — 6 — — 6 — 6 Other comprehensive loss — — — — — ( 5 ) — ( 5 ) — ( 5 ) Distributions to noncontrolling interests — — — — — — — — ( 1 ) ( 1 ) Net loss — — — — — — ( 39 ) ( 39 ) — ( 39 ) Balances at October 28, 2023 61.9 $ 1 2.5 $ ( 86 ) $ 606 $ ( 33 ) $ 1,211 $ 1,699 $ — $ 1,699 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents UNITED NATURAL FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 13-Week Period Ended (in millions) November 2, 2024 October 28, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss including noncontrolling interests $ ( 20 ) $ ( 39 ) Adjustments to reconcile loss to net cash used in operating activities: Depreciation and amortization 80 78 Share-based compensation 7 6 Gain on sale of assets ( 1 ) ( 7 ) Long-lived asset impairment charges — 21 Net pension and other postretirement benefit income ( 5 ) ( 3 ) LIFO charge 7 7 Provision for losses on receivables 1 — Non-cash interest expense and other adjustments 1 2 Changes in operating assets and liabilities Accounts and notes receivable ( 149 ) ( 126 ) Inventories ( 230 ) ( 364 ) Prepaid expenses and other assets 79 ( 8 ) Accounts payable 224 168 Accrued expenses and other liabilities ( 104 ) 11 Net cash used in operating activities ( 110 ) ( 254 ) CASH FLOWS FROM INVESTING ACTIVITIES: Payments for capital expenditures ( 49 ) ( 74 ) Proceeds from dispositions of assets 4 9 Payments for investments ( 2 ) ( 7 ) Net cash used in investing activities ( 47 ) ( 72 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under revolving credit line 339 597 Repayments of borrowings under revolving credit line ( 176 ) ( 257 ) Repayments of long-term debt and finance leases ( 4 ) ( 6 ) Payments of employee restricted stock tax withholdings ( 4 ) ( 6 ) Distributions to noncontrolling interests ( 1 ) ( 1 ) Other — ( 1 ) Net cash provided by financing activities 154 326 EFFECT OF EXCHANGE RATE ON CASH — — NET DECREASE IN CASH AND CASH EQUIVALENTS ( 3 ) — Cash and cash equivalents, at beginning of period 40 37 Cash and cash equivalents, at end of period $ 37 $ 37 Supplemental disclosures of cash flow information: Cash paid for interest $ 48 $ 44 Cash refunds for federal, state, and foreign income taxes, net $ ( 2 ) $ ( 12 ) Leased assets obtained in exchange for new operating lease liabilities $ 183 $ 39 Leased assets obtained in exchange for new finance lease liabilities $ 1 $ — Additions of property and equipment included in Accounts payable $ 14 $ 18 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents 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” or “UNFI”) 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 quarter of fiscal 2025 and 2024 relate to the 13-week fiscal quarters ended November 2, 2024 and October 28, 2023, 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. 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 August 3, 2024 (the “Annual Report”). There were no material changes in significant accounting policies from those described in the Annual Report. 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. Reclassifications Within the Condensed Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current period presentation. These reclassifications had no impact on reported net loss, net cash flows, or total assets and liabilities. 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 November 2, 2024 and August 3, 2024, the Company had net book overdrafts of $ 293 million and $ 243 million, respectively. 8 Table of Contents Inventories, Net Substantially all of the Company’s inventories consist of finished goods. To value discrete inventory items at lower of cost or net realizable value 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 and cash discounts 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 physical counts in the Company’s distribution centers and stores. Allowances for inventory shortages are recorded based on the results of these counts. The LIFO reserve was $ 358 million and $ 351 million as of November 2, 2024 and August 3, 2024, respectively, which is recorded within Inventories, net on the Condensed Consolidated Balance Sheets. NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update also require additional disclosures for equity securities subject to contractual sale restrictions. The Company adopted this standard in the first quarter of fiscal 2025. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. The Company is required to adopt the amendments in this update in fiscal 2025, and the interim disclosure requirements will be effective for the Company in the first quarter of fiscal 2026. Early adoption is permitted. The amendments in this update are required to be applied on a retrospective basis. The provisions of the amendments in this update will not have an impact on the Company’s financial position, results of operations or cash flows. The Company continues to evaluate the impact of enhanced disclosure requirements on the notes to the consolidated financial statements and expects to provide expanded segment disclosures under the new guidance. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendments also require disclosure on an annual basis of income taxes paid disaggregated by federal, state and foreign taxes as well as the amount of income taxes paid by individual jurisdiction. In addition, the amendments require disclosures of disaggregated pretax income and income tax expense and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. The Company is required to adopt the amendments in this update in fiscal 2026. Early adoption is permitted. The amendments in this update should be applied on a prospective basis, but can also be applied retrospectively. The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . ASU 2024-03 requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying certain income statement expense line items. The Company is required to adopt the amendments in this update in fiscal 2028, and the interim disclosure requirements will be effective for the Company in the first quarter of fiscal 2029. Early adoption is permitted. The amendments in this update should be applied on a prospective basis, but can also be applied retrospectively. The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements. 9 Table of Contents 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 defined below; • Supernatural , which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of one customer; • Retail , which reflects the Company’s Retail segment, including Cub® Foods and Shoppers® stores; 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) November 2, 2024 Customer Channel Wholesale Retail Other Eliminations (1) Consolidated Chains $ 3,294 $ — $ — $ — $ 3,294 Independent retailers 1,853 — — — 1,853 Supernatural 1,835 — — — 1,835 Retail — 586 — — 586 Other 608 — 58 — 666 Eliminations — — — ( 363 ) ( 363 ) Total $ 7,590 $ 586 $ 58 $ ( 363 ) $ 7,871 Net Sales for the 13-Week Period Ended (in millions) October 28, 2023 Customer Channel Wholesale Retail Other Eliminations (1) Consolidated Chains $ 3,184 $ — $ — $ — $ 3,184 Independent retailers 1,899 — — — 1,899 Supernatural 1,612 1,612 Retail — 606 — — 606 Other 586 — 60 — 646 Eliminations — — — ( 395 ) ( 395 ) Total $ 7,281 $ 606 $ 60 $ ( 395 ) $ 7,552 (1) Eliminations primarily includes the net sales elimination of Wholesale to Retail sales 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 Table of Contents Accounts and Notes Receivable Balances Accounts and notes receivable are as follows: (in millions) November 2, 2024 August 3, 2024 Customer accounts receivable $ 1,091 $ 936 Allowance for uncollectible receivables ( 21 ) ( 21 ) Other receivables, net 33 38 Accounts receivable, net $ 1,103 $ 953 Notes receivable, net, included within Prepaid expenses and other current assets $ 1 $ 3 Long-term notes receivable, net, included within Other long-term assets $ 7 $ 7 In fiscal 2023, the Company entered into an agreement to sell, on a revolving basis, certain customer accounts receivable to a third-party financial institution. Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of November 2, 2024 and August 3, 2024, was approximately $ 277 million and $ 322 million, respectively. Net proceeds received are included within cash from operating activities in the Condensed Consolidated Statements of Cash Flows in the period of sale. The loss on sale of receivables was $ 5 million and $ 5 million for the first quarters of fiscal 2025 and 2024, respectively, and is recorded within Loss on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations. NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES Restructuring, acquisition and integration related expenses were as follows: 13-Week Period Ended (in millions) November 2, 2024 October 28, 2023 Restructuring and integration costs $ 11 $ 4 Closed property charges and costs, net 1 — Total $ 12 $ 4 Restructuring and Integration Costs Restructuring and integration costs for the first quarters of fiscal 2025 and 2024 primarily relate to costs associated with certain employee severance and other employee separation costs. Restructuring liabilities related to severance and other employee separation costs were $ 22 million and $ 16 million as of November 2, 2024 and August 3, 2024, respectively, and are included in Accrued expenses and other current liabilities and Accrued compensation and benefits in the Condensed Consolidated Balance Sheets. Changes in the liability for the first quarter of fiscal 2025 included $ 10 million attributable to restructuring and severance-related charges offset by $ 4 million attributable to cash settlements from the prior period balance. 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 August 3, 2024 $ 9 (1) $ 10 (2) $ 19 Change in foreign exchange rates — — — Goodwill as of November 2, 2024 $ 9 (1) $ 10 (2) $ 19 (1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million as of August 3, 2024 and November 2, 2024. (2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million as of August 3, 2024 and November 2, 2024. 11 Table of Contents Identifiable intangible assets, net consisted of the following: November 2, 2024 August 3, 2024 (in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 1,007 $ 428 $ 579 $ 1,007 $ 413 $ 594 Pharmacy prescription files 33 28 5 33 27 6 Operating lease intangibles 6 5 1 6 5 1 Trademarks and tradenames 88 67 21 88 65 23 Total amortizing intangible assets 1,134 528 606 1,134 510 624 Indefinite lived intangible assets: Trademarks and tradenames 25 — 25 25 — 25 Intangibles assets, net $ 1,159 $ 528 $ 631 $ 1,159 $ 510 $ 649 Amortization expense was $ 18 million for the first quarters of fiscal 2025 and 2024. The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of November 2, 2024 is as shown below: Fiscal Year: (in millions) Remaining fiscal 2025 $ 53 2026 67 2027 64 2028 62 2029 51 Thereafter 309 $ 606 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 November 2, 2024 (in millions) Level 1 Level 2 Level 3 Assets: Interest rate swaps designated as hedging instruments Prepaid expenses and other current assets $ — $ 5 $ — Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1 $ — Liabilities: Fuel derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 2 $ — Interest rate swaps designated as hedging instruments Other long-term liabilities $ — $ 1 $ — 12 Table of Contents Condensed Consolidated Balance Sheets Location Fair Value at August 3, 2024 (in millions) Level 1 Level 2 Level 3 Assets: Interest rate swaps designated as hedging instruments Prepaid expenses and other current assets $ — $ 5 $ — Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1 $ — Liabilities: Fuel derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 2 $ — Interest rate swaps designated as hedging instruments Other long-term liabilities $ — $ 5 $ — 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, Secured Overnight Financing Rate (“SOFR”) swap rates and credit default swap rates. As of November 2, 2024, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $ 14 million; a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately $ 14 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. November 2, 2024 August 3, 2024 (in millions) Carrying Value Fair Value Carrying Value Fair Value Notes receivable, including current portion $ 13 $ 7 $ 14 $ 8 Long-term debt, including current portion $ 2,247 $ 2,259 $ 2,085 $ 2,072 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 November 2, 2024. 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 Table of Contents Details of active swap contracts as of November 2, 2024, 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 Floating Rate Reset Terms October 26, 2018 October 22, 2025 50 2.8725 % One-Month Term SOFR Monthly November 16, 2018 October 22, 2025 50 2.8750 % One-Month Term SOFR Monthly November 16, 2018 October 22, 2025 50 2.8380 % One-Month Term SOFR Monthly January 24, 2019 October 22, 2025 50 2.4750 % One-Month Term SOFR Monthly December 29, 2023 June 3, 2027 100 3.7525 % One-Month Term SOFR Monthly December 29, 2023 June 3, 2027 100 3.7770 % One-Month Term SOFR Monthly June 25, 2024 June 30, 2028 50 4.1175 % One-Month Term SOFR Monthly June 25, 2024 June 30, 2028 50 4.1300 % One-Month Term SOFR Monthly October 31, 2024 October 30, 2026 100 3.5965 % One-Month Term SOFR Monthly October 31, 2024 October 30, 2026 100 3.6000 % One-Month Term SOFR Monthly October 31, 2024 October 30, 2026 50 3.6000 % One-Month Term SOFR Monthly $ 750 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 loss (outside of earnings) in the Condensed Consolidated Statements of Comprehensive Loss and subsequently reclassified to earnings in Interest expense, net in the Condensed Consolidated Statements of Operations when the hedged transactions affect earnings. 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 pre-tax basis, are as follows: 13-Week Period Ended November 2, 2024 October 28, 2023 (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 $ 36 $ 35 Gain on cash flow hedging relationships: Gain reclassified from comprehensive loss into earnings $ 4 $ 5 14 Table of Contents NOTE 8—LONG-TERM DEBT The Company’s long-term debt consisted of the following: (in millions) Average Interest Rate at November 2, 2024 Fiscal Maturity Year November 2, 2024 August 3, 2024 Term Loan Facility (1) 9.44 % 2031 $ 498 $ 499 ABL Credit Facility (2) 6.15 % 2027 1,276 1,113 Senior Notes (3) 6.75 % 2029 500 500 Other secured loans — % 2025 — 1 Debt issuance costs, net ( 18 ) ( 18 ) Original issue discount on debt ( 9 ) ( 10 ) Long-term debt, including current portion 2,247 2,085 Less: current portion of long-term debt ( 3 ) ( 4 ) Long-term debt $ 2,244 $ 2,081 (1) Face value before debt issuance costs of $ 6 million and $ 6 million, respectively, and an original issue discount on debt of $ 9 million and $ 10 million, respectively. (2) Face value before debt issuance costs of $ 7 million and $ 7 million, respectively. (3) Face value before debt issuance costs of $ 5 million and $ 5 million, respectively. Term Loan Facility The term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) provides for a $ 500 million senior secured first lien term loan (the “Term Loan Facility”), which is scheduled to mature on May 1, 2031, with a springing maturity of 91 days prior to the maturity of the Senior Notes (defined below), in the event that at least $ 100 million in principal amount outstanding of such Senior Notes remains outstanding on such date. The obligations under the Term Loan Facility are guaranteed by most of the Company’s wholly owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations. The Term Loan Facility is secured by (i) a first-priority lien on substantially all assets other than the ABL Assets (defined below) and (ii) a second-priority lien on substantially all of the ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property (other than distribution centers) with net book values of less than or equal to $ 10 million. As of November 2, 2024 and August 3, 2024, there was $ 676 million and $ 686 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets. As of November 2, 2024, 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 3.75 % or (ii) a SOFR rate plus a margin of 4.75 %, provided that the SOFR rate shall never be less than 0.0 %. ABL Credit Facility The revolving credit agreement dated as of June 3, 2022, (as amended, the “ABL Loan Agreement”) provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”) with an aggregate principal amount available of up to $ 2,730 million, including Revolver Loans (as defined in the ABL Loan Agreement) of up to $ 2,600 million and a First In, Last Out (“FILO”) tranche of incremental ABL loans of $ 130 million (the “ABL FILO Loan”). The ABL Credit Facility is scheduled to mature on June 3, 2027. 15 Table of Contents Revolver Loans and ABL FILO Loans under the ABL Credit Facility bear interest at rates that, at the Company’s option, can be either at a base rate or Term SOFR plus an applicable margin. The applicable margins and letter of credit 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 Loan Agreement), and were as follows: Range of Facility Rates and Fees (per annum) November 2, 2024 Applicable margin for revolver base rate loans 0.00 % - 0.25 % 0.00 % Applicable margin for revolver SOFR and BA loans (1) 1.00 % - 1.25 % 1.00 % Applicable margin for FILO base rate loans 1.50 % 1.50 % Applicable margin for FILO SOFR loans 2.50 % 2.50 % Unutilized commitment fees 0.20 % 0.20 % Letter of credit fees 1.125 % - 1.375 % 1.125 % (1) The Company utilizes SOFR-based loans and UNFI Canada utilizes bankers’ acceptance rate-based loans. The ABL Credit Facility is guaranteed by the Guarantors, subject to customary exceptions and limitations. The ABL Credit Facility is secured by (i) a first-priority lien on certain accounts receivable, inventory and certain other assets (collectively, the “ABL Assets”) and (ii) a second-priority lien on all other assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations. Availability under the ABL Credit Facility is subject to a borrowing base consisting of specified percentages of the value of eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files, after adjusting for customary reserves, but at no time shall exceed the aggregate commitments plus the outstanding ABL FILO Loans under the ABL Credit Facility (currently $ 2,730 million). As of November 2, 2024, the borrowing base was $ 2,589 million, reflecting the advance rates described above and $ 110 million of reserves, which is below the $ 2,730 million limit of availability. This resulted in total availability of $ 2,589 million for loans and letters of credit under the ABL Credit Facility. The Company’s unused credit under the ABL Credit Facility was as follows: (in millions) November 2, 2024 Total availability for ABL loans and letters of credit $ 2,589 ABL loans outstanding 1,276 Letters of credit outstanding 176 Unused credit $ 1,137 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 or the Term Loan Facility. NOTE 9—COMPREHENSIVE LOSS AND ACCUMULATED OTHER COMPREHENSIVE LOSS Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2025 were as follows: (in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total Accumulated other comprehensive loss at August 3, 2024 $ — $ ( 22 ) $ ( 24 ) $ ( 1 ) $ ( 47 ) Other comprehensive income before reclassifications 1 — — 5 6 Amortization of cash flow hedges ( 1 ) — — ( 3 ) ( 4 ) Net current period Other comprehensive income — — — 2 2 Accumulated other comprehensive (loss) income at November 2, 2024 $ — $ ( 22 ) $ ( 24 ) $ 1 $ ( 45 ) 16 Table of Contents Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2024 were as follows: (in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total Accumulated other comprehensive (loss) income at July 29, 2023 $ — $ ( 21 ) $ ( 21 ) $ 14 $ ( 28 ) Other comprehensive income (loss) before reclassifications 1 — ( 3 ) 1 ( 1 ) Amortization of cash flow hedges — — — ( 4 ) ( 4 ) Net current period Other comprehensive income (loss) 1 — ( 3 ) ( 3 ) ( 5 ) Accumulated other comprehensive income (loss) at October 28, 2023 $ 1 $ ( 21 ) $ ( 24 ) $ 11 $ ( 33 ) 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) November 2, 2024 October 28, 2023 Swap agreements: Reclassification of cash flow hedges $ ( 4 ) $ ( 5 ) Interest expense, net Income tax expense 1 1 Benefit for income taxes Total reclassifications, net of tax $ ( 3 ) $ ( 4 ) Other cash flow hedges: Reclassification of cash flow hedge $ ( 1 ) $ — Cost of sales Income tax expense — — Benefit for income taxes Total reclassifications, net of tax $ ( 1 ) $ — As of November 2, 2024, the Company expects to reclassify $ 5 million related to unrealized derivative gains out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period. NOTE 10—BENEFIT PLANS Net periodic benefit (income) costs for defined benefit pension plans consisted of the following: 13-Week Period Ended (in millions) November 2, 2024 October 28, 2023 Interest cost $ 18 $ 19 Expected return on plan assets ( 23 ) ( 22 ) Net periodic benefit income $ ( 5 ) $ ( 3 ) Other postretirement benefits costs were de minimis for the first quarters of fiscal 2025 and 2024. Contributions No minimum pension contributions are required to be made to the SUPERVALU INC. Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2025. The Company expects to contribute approximately $ 1 million to its other defined benefit pension plans and $ 1 million to its postretirement benefit plans in fiscal 2025. Contributions for the first quarters of fiscal 2025 and 2024 were de minimis. 17 Table of Contents Multiemployer Pension Plans The Company contributed $ 13 million in the first quarters of fiscal 2025 and 2024, to multiemployer pension plans, which contributions are included within Operating expenses. NOTE 11—INCOME TAXES The effective tax rate for the first quarter of fiscal 2025 was a benefit rate of 16.7 % on pre-tax loss compared to a benefit rate of 18.8 % on pre-tax loss for the first quarter of fiscal 2024. The change from the first quarter of fiscal 2024 is primarily driven by an increase in state net operating loss valuation allowances for the first quarter of fiscal 2025. The primary drivers for the variation between the Company’s statutory tax rate and its effective tax rate were state net operating loss valuation allowances for the first quarter of fiscal 2025, and discrete tax detriments resulting from share award vestings for the first quarters of fiscal 2025 and fiscal 2024. NOTE 12—LOSS PER SHARE The following is a reconciliation of the basic and diluted number of shares used in computing loss per share: 13-Week Period Ended (in millions, except per share data) November 2, 2024 October 28, 2023 Basic weighted average shares outstanding 59.6 58.7 Net effect of dilutive stock awards based upon the treasury stock method — — Diluted weighted average shares outstanding 59.6 58.7 Basic loss per share (1) $ ( 0.35 ) $ ( 0.67 ) Diluted loss per share (1) $ ( 0.35 ) $ ( 0.67 ) Anti-dilutive share-based awards excluded from the calculation of diluted loss per share 1.8 2.3 (1) Loss per share amounts are calculated using actual unrounded figures. NOTE 13—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 Company organizes and operates the Wholesale reportable segment through three U.S geographic regions: East, Central and West, and Canada Wholesale, which is operated separately from the U.S. Wholesale business. The U.S. Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics, and therefore have been aggregated into a single reportable segment. Reportable segments are reviewed on an annual basis, or more frequently if events or circumstances indicate a change in reportable segments has occurred. 18 Table of Contents The following table provides information by reportable segment, including Net sales, Adjusted EBITDA, with a reconciliation to Loss before income taxes, depreciation and amortization, and payments for capital expenditures: 13-Week Period Ended (in millions) November 2, 2024 October 28, 2023 Net sales: Wholesale (1) $ 7,590 $ 7,281 Retail 586 606 Other 58 60 Eliminations ( 363 ) ( 395 ) Total Net sales $ 7,871 $ 7,552 Adjusted EBITDA: Wholesale $ 131 $ 117 Retail — ( 1 ) Other 1 3 Eliminations 2 ( 2 ) Adjustments: Net income attributable to noncontrolling interests 1 — Net periodic benefit income, excluding service cost 5 3 Interest expense, net ( 36 ) ( 35 ) Other income, net 2 — Depreciation and amortization ( 80 ) ( 78 ) Share-based compensation ( 7 ) ( 6 ) LIFO charge ( 7 ) ( 7 ) Restructuring, acquisition and integration related expenses ( 12 ) ( 4 ) Loss on sale of assets and other asset charges ( 6 ) ( 19 ) Business transformation costs ( 18 ) ( 15 ) Other adjustments — ( 4 ) Loss before income taxes $ ( 24 ) $ ( 48 ) Depreciation and amortization: Wholesale $ 70 $ 67 Retail 9 8 Other 1 3 Total depreciation and amortization $ 80 $ 78 Payments for capital expenditures: Wholesale $ 47 $ 71 Retail 2 3 Total capital expenditures $ 49 $ 74 (1) As presented in Note 3—Revenue Recognition, the Company recorded $ 301 million and $ 321 million for the first quarters of fiscal 2025 and 2024, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail sales that have been eliminated upon consolidation. 19 Table of Contents Total assets by reportable segment were as follows: (in millions) November 2, 2024 August 3, 2024 Assets: Wholesale $ 7,001 $ 6,563 Retail 591 606 Other 423 401 Eliminations ( 49 ) ( 42 ) Total assets $ 7,966 $ 7,528 NOTE 14—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 November 2, 2024. 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 eleven 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 November 2, 2024, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 11 million ($ 9 million on a discounted basis). Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of November 2, 2024, a total estimated loss of less than $ 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. The Company has recorded the de minimis fair value of these guarantees and contingent obligations, when applicable, in the Condensed Consolidated Balance Sheets. 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 November 2, 2024, the Company had approximately $ 512 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year. As of November 2, 2024, the Company had commitments of $ 49 million for future undiscounted minimum lease payments on leases signed but not yet commenced with terms of up to 21 years from commencement date. A lease agreement for a distribution center in Sarasota, Florida commenced in the first quarter of fiscal 2025 resulting in the recognition of a $ 118 million right-of-use asset and operating lease liability in the Condensed Consolidated Balance Sheets. 20 Table of Contents 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 thousands of 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”), the Company believes that New Albertson’s has an obligation to defend and indemnify UNFI in a majority of the cases. New Albertson’s originally agreed to do so under a reservation of rights, however, New Albertson’s is disputing its obligation to do so. 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. On October 7, 2022, the MDL Court issued an order directing the Company and numerous other non-litigating defendants to submit by November 1, 2022, a list of opioid cases where the Company is named and opioid dispensing and distribution data. The Company produced the data in compliance with the order. On March 8, 2023, the Company received a subpoena from the Consumer Protection Division of the Maryland Attorney General’s Office seeking records related to the distribution and dispensing of opioids. On May 19, 2023, the Company provided an initial production in response to the subpoena and is waiting for further direction from the Maryland Attorney General on additional documents requested. At an April 24, 2024 status conference, the MDL Court directed that the plaintiffs and non-litigating defendants, which includes the Company, determine whether the cases will be dismissed, litigated or mediated. At the status conference on June 10, 2024, the Company indicated it is open to exploring mediation. The Company believes these claims are without merit and intends to vigorously defend this matter. 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 was refiled in state court. On February 1, 2022, the state court denied the motion to dismiss. On November 27, 2023, the court held a scheduling conference and thereafter entered a scheduling order setting various discovery and expert deadlines. The trial date is set for March 9, 2026. The Company believes these claims are without merit and is vigorously defending this matter. 21 Table of Contents 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. The 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 the 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 Seventh Circuit Court of Appeals. On August 12, 2021, the Seventh Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor. On June 1, 2023, the Supreme Court reversed and vacated the lower court’s judgment and remanded the case to the Seventh Circuit for further proceedings. On July 27, 2023, the Seventh Circuit vacated the summary judgment order and remanded the case to the District Court. On August 22, 2023, the District Court set the trial date for April 29, 2024. On October 11, 2023, each of the Company and the relators filed a motion for summary judgment. On February 16, 2024, the defendants filed a motion to reconsider the Court’s August 5, 2019 partial grant of summary judgment to the relators and to continue the trial date. On February 27, 2024, the Court granted the defendants’ motion for a trial date continuance and vacated the April 29, 2024 trial date. On April 26, 2024, the Court denied the defendants’ motion to reconsider the partial grant of summary judgment. On May 20, 2024, the District Court heard oral argument on the pending motions for summary judgment and on September 30, 2024, the Court denied both parties’ motions for summary judgment on scienter and granted relators’ motion for summary judgment on materiality. The trial is now scheduled to begin February 10, 2025. The Company, J. Alexander Miller Douglas, John Howard and Chris Testa are named in a putative securities class action that was originally filed on March 29, 2023. In Dan Sills, et al. v. United Natural Foods, Inc., et al., pending in the U.S. District Court for the Southern District of New York, the plaintiffs allege that defendants violated federal securities laws by making materially false and/or misleading statements and failing to disclose material facts about UNFI’s business, operations and prospects. The defendants filed a Motion to Dismiss on December 21, 2023, and on September 13, 2024, the court issued an opinion granting in part and denying in part the motion. On October 28, 2024, the Company answered the complaint denying the allegations. The Company intends to vigorously defend this matter. 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 November 2, 2024, 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 the Company’s financial condition, results of operations or cash flows. 22 Table of Contents