ACQUISITIONS

3 Months Ended

Oct. 29, 2011

ACQUISITIONS

ACQUISITIONS

3. ACQUISITIONS

During the first quarter of fiscal 2012, the Company finalized its valuation of the customer relationship intangible asset related to the first quarter fiscal 2011 acquisition of the Rocky Mountain and Southwest distribution business of Whole Foods Market Distribution, Inc. (“Whole Foods Distribution”), a wholly owned subsidiary of Whole Foods Market, Inc. (“Whole Foods Market”).  The Company, within its wholesale segment, (i) acquired inventory at Whole Foods Distribution’s Aurora, Colorado and Austin, Texas distribution facilities; (ii) acquired substantially all of Whole Foods Distribution’s assets, other than the inventory, at the Aurora, Colorado distribution facility; (iii) assumed Whole Foods Distribution’s obligations under the existing lease agreement related to the Aurora, Colorado distribution facility; and (iv) hired substantially all of Whole Foods Distribution’s employees working at the Aurora, Colorado distribution facility.  In connection therewith, on October 11, 2010, the Company amended the existing Agreement for the Distribution of Products by and between the Company and Whole Foods Market, as amended on June 2, 2010, pursuant to which the Company became Whole Foods Market’s primary distributor in its Rocky Mountain and Southwest Regions.  It is impracticable for the Company to provide complete financial results for this business since it was absorbed by the operations of the Company’s broadline distribution business and the Company does not record the expenses for this business separately from the rest of the broadline distribution business. The amount of incremental net sales resulting from expanded distribution associated with the transaction totaled approximately $25.4 million for the three months ended October 29, 2011 compared to the three months ended October 30, 2010.  For the three months ended October 30, 2010 compared to the three months ended October 31, 2009, the net sales resulting from the approximately one month of expanded distribution associated with the transaction during the period totaled approximately $14.7 million.

During the three months ended October 29, 2011, the Company recorded an increase of less than $0.1 million to its intangible assets in recognition of ongoing contingent consideration payments in the form of royalties ranging between 2-4% of net sales (as defined in the applicable purchase agreement) related to two of its acquisitions of assets of branded product companies during fiscal 2009.  The acquisition of assets of a third branded product company during fiscal 2009 requires ongoing contingent consideration payments in the form of earn-outs over a period of five years from the acquisition date of November 2008.  These earn-outs are based on tiers of net sales for the trailing twelve months, and no such amounts were earned or paid during the three months ended October 29, 2011.  During the three months ended October 30, 2010, the Company recorded an increase of less than $0.1 million in recognition of ongoing contingent consideration payments for these same agreements.

During the first quarter of fiscal 2011, the Company recorded certain adjustments to the amounts recorded during the fourth quarter of fiscal 2010 related to UNFI Canada’s acquisition of certain Canadian food distribution assets of the SunOpta Distribution Group (“SDG”) business of SunOpta Inc. (the “SDG assets”) during June 2010.  These adjustments included an unfavorable lease liability of $0.7 million recorded within other liabilities based on updated valuation information, and an adjustment of $0.3 million to reduce the amount receivable related to the working capital adjustment, which increased goodwill by a total of $1.0 million. After the fourth quarter of fiscal 2011, no further changes are expected to be made to the original opening amounts recorded in the financial statements related to this acquisition.  Net sales resulting from the acquisition of the SDG assets totaled $44.7 million for the three months ended October 30, 2010.  Total assets of UNFI Canada were approximately $90.6 million as of October 29, 2011.