XML 24 R12.htm IDEA: XBRL DOCUMENT
v3.19.1

ACQUISITIONS ACQUISITIONS | 9 Months Ended
--- | ---
Apr. 27, 2019
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Supervalu Acquisition On July 25, 2018, the Company entered into an agreement and plan of merger (the “Merger Agreement”) to acquire all of the outstanding equity securities of Supervalu, which was then the largest publicly traded food wholesaler in the United States. The acquisition of Supervalu diversifies the Company’s customer base, enables cross-selling opportunities, expands market reach and scale, enhances technology, capacity and systems, and is expected to deliver significant synergies and accelerate potential growth. The merger was completed on October 22, 2018 (the “Closing Date”). At the effective time of the acquisition, each share of Supervalu common stock, par value $0.01 per share, issued and outstanding, was canceled and converted into the right to receive a cash payment equal to $32.50 per share, without interest. Total consideration related to this acquisition was approximately $2.3 billion, $1.3 billion of which was paid in cash to Supervalu shareholders and $1.0 billion of which was used to satisfy Supervalu’s outstanding debt obligations. The assets and liabilities of Supervalu were recorded in the Company’s consolidated financial statements on a provisional basis at their estimated fair values as of the acquisition date. In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu. Refer to Note 19. “Discontinued Operations” for more information. The following table summarizes the consideration paid, preliminary fair values of the Supervalu assets acquired and liabilities assumed, and the resulting preliminary goodwill. Due to the recent closing of the transaction, management’s ongoing assessment of the fair values of acquired assets and assumed liabilities, and its further review of certain disposal components being classified as held for sale, as of April 27, 2019, the purchase price allocation was preliminary and will be finalized when valuations and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such final assessments will not result in material changes from the preliminary purchase price allocations, and such changes may result in increases or decreases to the goodwill impairment charge recorded in fiscal 2019 year-to-date due to changes in the opening balance sheet value of goodwill. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible assets acquired, and liabilities assumed.
| As of October 22, 2018
(in thousands) | Preliminary as of October 27, 2018 |  | Preliminary as of April 27, 2019
Cash and cash equivalents | $ | 25,102 |  |  | $ | 25,102 |
Accounts receivable | 557,680 |  |  | 543,570 |
Inventories | 1,162,360 |  |  | 1,162,175 |
Prepaid expenses and other current assets | 66,440 |  |  | 69,850 |
Current assets of discontinued operations(1) | 196,615 |  |  | 204,917 |
Property, plant and equipment | 1,148,001 |  |  | 1,209,486 |
Goodwill | 347,485 |  |  | 444,572 |
Intangible assets(2) | 1,077,541 |  |  | 923,099 |
Other assets(2) | 109,445 |  |  | 77,266 |
Long-term assets of discontinued operations(1) | 404,301 |  |  | 439,235 |
Accounts payable | (967,429 | ) |  | (973,394 | )
Other current liabilities | (282,692 | ) |  | (327,619 | )
Current portion of long term debt and capital lease obligations | (579,677 | ) |  | (579,566 | )
Current liabilities of discontinued operations(1) | (150,611 | ) |  | (150,690 | )
Long-term debt and capital lease obligations(3) | (179,262 | ) |  | (137,644 | )
Pension and other postretirement benefit obligations | (234,324 | ) |  | (234,324 | )
Deferred income taxes | (177,231 | ) |  | (74,254 | )
Other long-term liabilities(3) | (200,913 | ) |  | (299,598 | )
Long-term liabilities of discontinued operations(1) | (1,401 | ) |  | (753 | )
Total fair value of net assets acquired | 2,321,430 |  |  | 2,321,430 |
Plus: noncontrolling interests | 1,633 |  |  | 1,633 |
Less: cash and cash equivalents(4) | (30,596 | ) |  | (30,596 | )
Less: assumed equity award liabilities | (18,638 | ) |  | (18,638 | )
Plus: cash paid for equity awards | — |  |  | 8,498 |
Total consideration paid in cash | 2,273,829 |  |  | 2,282,327 |
Plus: unpaid assumed equity award liabilities(5) | 18,638 |  |  | 9,914 |
Total consideration | $ | 2,292,467 |  |  | $ | 2,292,241 |
(1) | Refer to Note 19. “Discontinued Operations” for additional information regarding the carrying value of discontinued operations within the Condensed Consolidated Balance Sheets.
(2) | During the second quarter of fiscal 2019, the Company reclassified favorable operating lease intangible assets of $23.7 million from Other assets to Intangible assets within this table.
(3) | During the second quarter of fiscal 2019, the Company reclassified residual financing obligations associated with build-to-suit properties for which the Company is not obligated to fund unless it is obligated under a future extension of a lease agreement. This reclassification resulted in a reduction of Long-term debt and capital lease obligations of $23.8 million, with an offsetting increase in Other long-term liabilities assumed within this table. If the terms of the respective leases are extended and a cash obligation for a portion of this residual value balance exists, the Company will present these contractual obligations within Long-term capital lease obligations within the Condensed Consolidated Balance Sheets.
(4) | Includes cash and cash equivalents acquired attributable to continuing operations and discontinued operations.
(5) | Includes equity consideration for share-based awards that have not yet been paid, which reflects non-cash consideration for the third quarter of fiscal 2019 that will become cash consideration in subsequent periods.
Preliminary goodwill represents the future economic benefits arising largely from the synergies expected from combining the operations of the Company and Supervalu that could not be individually identified and separately recognized. The Company is currently evaluating the tax deductibility of the provisional goodwill amount, however it currently expects a substantial portion of its goodwill to be deductible for income tax purposes. Based on the preliminary valuation, goodwill resulting from the acquisition was primarily attributed to the Company’s wholesale segment, which is presented in Goodwill in the table above. No goodwill was attributed to the retail reporting unit within discontinued operations. Refer to Note 7. “Goodwill and Intangible Assets” for additional information regarding the assignment of goodwill to the Company’s reporting units. During the second and third quarters of fiscal 2019, the Company updated its preliminary fair value estimates of its net assets primarily due to a review of the cash flows used to measure fair value of intangible assets, updated estimates of expected fair value, less costs to sell, of its retail disposal groups based on indications of value, and updates to estimated carrying values of other assets and liabilities based on an ongoing review of their fair values. The following table summarizes the identifiable intangible assets and liabilities recorded based on provisional valuations. The identifiable intangible assets are expected to be amortized on a straight-line basis over the estimated useful lives indicated. The preliminary fair value of identifiable intangible assets acquired was determined using income approaches. Significant assumptions utilized in the income approach were based on Company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.
|  |  | As of October 22, 2018
(in thousands) | Estimated Useful Life |  | Continuing Operations |  | Discontinued Operations
Customer relationship assets | 11–19 years |  | $ | 815,000 |  |  | $ | — |
Favorable operating leases | 3–25 years |  | 33,099 |  |  | — |
Tradenames | 2-9 years |  | 66,000 |  |  | 17,000 |
Pharmacy prescription files | 5–7 years |  | — |  |  | 41,100 |
Non-compete agreement | 2 years |  | 9,000 |  |  | — |
Unfavorable operating leases | 2 years |  | (11,199 | ) |  | — |
Total |  |  | $ | 911,900 |  |  | $ | 58,100 |
In addition to the acquisition of assets and assumption of liabilities above, the Company also began a restructuring plan which resulted in additional expenses recorded in its Condensed Consolidated Statements of Income for the 13-week period and 39-week period ended April 27, 2019. Refer to Note 5. “Restructuring, Acquisition, and Integration Related Expenses” and Note 14. “Share-Based Awards” for further information. The accompanying Condensed Consolidated Statements of Income include the results of operations of Supervalu since the October 22, 2018 acquisition date through April 27, 2019, which consisted of net sales from continuing operations of $6.94 billion, of which $3.24 billion was recorded in the 13-week period ended April 27, 2019. Supervalu’s net sales from discontinued operations for this time period are reported in Note 19. “Discontinued Operations”. The following table presents unaudited supplemental pro forma consolidated Net sales and Net income (loss) from continuing operations based on UNFI’s historical reporting periods as if the acquisition of Supervalu had occurred as of July 30, 2017:
| 13-Week Period Ended |  | 39-Week Period Ended
(in thousands, except per share data) | April 28, 2018(1) |  | April 27, 2019(2) |  | April 28, 2018(2)
Net sales | $ | 6,067,869 |  |  | $ | 18,096,796 |  |  | $ | 18,125,148 |
Net income (loss) from continuing operations | $ | 73,853 |  |  | $ | (303,364 | ) |  | $ | 42,855 |
Basic net income (loss) from continuing operations per share | $ | 1.46 |  |  | $ | (5.98 | ) |  | $ | 0.85 |
Diluted net income (loss) from continuing operations per share | $ | 1.46 |  |  | $ | (5.98 | ) |  | $ | 0.84 |
(1) | Includes 13 weeks of pro forma Supervalu results for the period ended April 28, 2018.
(2) | Includes 12 weeks of pro forma Supervalu results for the period ended September 8, 2018.
(3) | Includes 39 weeks of pro forma Supervalu results for the period ended April 28, 2018 and an additional 19 weeks of pro forma Associated Grocers of Florida, Inc. results, which was acquired by Supervalu on December 8, 2017.
These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined companies would have been had the acquisitions occurred at the beginning of the periods being presented, nor are they indicative of future results of operations.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration