34 unchanged sentences
Common stock, $0.01 par value, authorized 100,000 shares;
−Removed: 54,175 shares issued and 53,560 shares outstanding at February 1, 2020;
+Added: 55,292 shares issued and 54,677 shares outstanding at May 2, 2020;
53,501 shares issued and 52,886 shares outstanding at August 3, 2019
16 unchanged sentences
Operating expenses
−Removed: Goodwill and asset impairment charges
+Added: Goodwill and asset impairment (adjustment) charges
Restructuring, acquisition and integration related expenses
−Removed: Operating loss
+Added: Operating income (loss)
Other expense (income):
2 unchanged sentences
Total other expense, net
−Removed: Loss from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes
Benefit for income taxes
−Removed: Net loss from continuing operations
+Added: Net income (loss) from continuing operations
Income from discontinued operations, net of tax
−Removed: Net loss including noncontrolling interests
+Added: Net income (loss) including noncontrolling interests
Less net (income) loss attributable to noncontrolling interests
−Removed: Net loss attributable to United Natural Foods, Inc.
−Removed: Basic (loss) earnings per share:
+Added: Net income (loss) attributable to United Natural Foods, Inc.
+Added: Basic earnings (loss) per share:
Continuing operations
Discontinued operations
−Removed: Basic loss per share
−Removed: Diluted (loss) earnings per share:
+Added: Basic earnings (loss) per share
+Added: Diluted earnings (loss) per share:
Continuing operations
Discontinued operations
−Removed: Diluted loss per share
+Added: Diluted earnings (loss) per share
Weighted average shares outstanding:
5 unchanged sentences
39-Week Period Ended
−Removed: Net loss including noncontrolling interests
+Added: Net income (loss) including noncontrolling interests
Other comprehensive (loss) income:
2 unchanged sentences
Foreign currency translation adjustments
−Removed: Total other comprehensive income (loss)
+Added: Total other comprehensive loss
Less comprehensive (income) loss attributable to noncontrolling interests
−Removed: Total comprehensive loss attributable to United Natural Foods, Inc.
+Added: Total comprehensive income (loss) attributable to United Natural Foods, Inc.
Amounts are net of tax (benefit) expense of $( 0.2 ) million , $ 0.0 million , $ 2.4 million and $ 0.0 million , respectively.
3 unchanged sentences
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
−Removed: For the 13-week periods ended February 1, 2020 and January 26, 2019
+Added: For the 13-week periods ended May 2, 2020 and April 27, 2019
(In thousands)
7 unchanged sentences
Total Stockholders’ Equity
−Removed: Balances at November 2, 2019
+Added: Balances at February 1, 2020
Restricted stock vestings and stock option exercises
Share-based compensation
−Removed: Other comprehensive income
+Added: Other comprehensive loss
Distributions to noncontrolling interests
Proceeds from issuance of common stock, net
−Removed: Balances at February 1, 2020
−Removed: Balances at October 27, 2018
+Added: Balances at May 2, 2020
+Added: Balances at January 26, 2019
Restricted stock vestings and stock option exercises
1 unchanged sentence
Other comprehensive loss
−Removed: Distributions to noncontrolling interests
−Removed: Balances at January 26, 2019
+Added: Proceeds from issuance of common stock, net
+Added: Balances at April 27, 2019
See accompanying Notes to Condensed Consolidated Financial Statements
1 unchanged sentence
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
−Removed: For the 26-week periods ended February 1, 2020 and January 26, 2019
+Added: For the 39-week periods ended May 2, 2020 and April 27, 2019
(In thousands)
10 unchanged sentences
Share-based compensation
−Removed: Other comprehensive income
+Added: Other comprehensive loss
Distributions to noncontrolling interests
Proceeds from issuance of common stock, net
−Removed: Balances at February 1, 2020
+Added: Balances at May 2, 2020
Balances at July 28, 2018
4 unchanged sentences
Other comprehensive loss
+Added: Acquisition of noncontrolling interests
Distributions to noncontrolling interests
−Removed: Balances at January 26, 2019
+Added: Proceeds from issuance of common stock, net
+Added: Balances at April 27, 2019
See accompanying Notes to Condensed Consolidated Financial Statements .
15 unchanged sentences
Deferred income tax benefit
−Removed: Provision for doubtful accounts
+Added: Provision for doubtful accounts, net
Loss on debt extinguishment
1 unchanged sentence
Changes in operating assets and liabilities, net of acquired businesses
−Removed: Net cash used in operating activities of continuing operations
+Added: Net cash provided by operating activities of continuing operations
Net cash provided by operating activities of discontinued operations
4 unchanged sentences
Proceeds from dispositions of assets
+Added: Proceeds from disposal of investments
Payments for long-term investment
6 unchanged sentences
Proceeds from borrowings under revolving credit line
+Added: Proceeds from issuance of other loans
Repayments of borrowings under revolving credit line
3 unchanged sentences
Payments for debt issuance costs
−Removed: Net cash provided by financing activities of continuing operations
+Added: Net cash (used in) provided by financing activities of continuing operations
Net cash used in financing activities of discontinued operations
−Removed: Net cash provided by financing activities
+Added: Net cash (used in) provided by financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH
−Removed: NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
+Added: NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents, at beginning of period
14 unchanged sentences
The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks.
−Removed: References to the second quarter of fiscal 2020 and 2019 relate to the 13-week fiscal quarters ended February 1, 2020 and January 26, 2019 , respectively.
−Removed: References to fiscal 2020 and 2019 year-to-date relate to the 26-week fiscal periods ended February 1, 2020 and January 26, 2019 , respectively.
+Added: References to the third quarter of fiscal 2020 and 2019 relate to the 13-week fiscal quarters ended May 2, 2020 and April 27, 2019 , respectively.
+Added: References to fiscal 2020 and 2019 year-to-date relate to the 39-week fiscal periods ended May 2, 2020 and April 27, 2019 , respectively.
Basis of Presentation
17 unchanged sentences
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.
−Removed: As of February 1, 2020 and August 3, 2019 , the Company had net book overdrafts of $ 236.8 million and $ 236.9 million , respectively.
+Added: As of May 2, 2020 and August 3, 2019 , the Company had net book overdrafts of $ 290.3 million and $ 236.9 million , respectively.
Inventories, Net
1 unchanged sentence
Substantially all of the Company’s inventories consist of finished goods and a substantial portion of its inventories have a last-in, first-out (“LIFO”) reserve applied.
−Removed: Interim LIFO calculations are based on the Company’s estimates of expected year-end inventory levels and costs, as the actual valuation of inventory under the LIFO method is computed at the end of each year based on the inventory levels and costs at that time.
−Removed: If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 37.1 million and $ 24.1 million at February 1, 2020 and August 3, 2019 , respectively.
−Removed: At the inception or modification of contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement.
+Added: Interim LIFO calculations are based on the Company’s estimates of expected year-end inventory levels and costs, as the actual valuation of inventory under the LIFO method is computed at the end of each fiscal year based on the inventory levels and costs at that time.
+Added: If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 43.4 million and $ 24.1 million at May 2, 2020 and August 3, 2019 , respectively.
+Added: At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement.
Subsequent to commencement, lease classification is only reassessed upon a change to the expected lease term or contract modification.
18 unchanged sentences
The calculation of lease impairment charges requires significant judgments and estimates, including estimated subtenant rentals, discount rates and future cash flows based on the Company’s experience and knowledge of the market in which the property is located, previous efforts to dispose of similar assets and the assessment of existing market conditions.
−Removed: Impairment reserves are reflected as a reduction to Operating lease assets.
+Added: Impairments are recognized as a reduction of the carrying value of the right of use asset and are reflected as a reduction to Operating lease assets.
Refer to Note 11—Leases for additional information.
11 unchanged sentences
The difference between the amount of right-of-use assets and lease liabilities recognized is primarily related to adjustments to prepaid rent, deferred rent, lease intangible assets/liabilities, and closed property reserves.
−Removed: In addition, the adoption of the standard resulted in the derecognition of existing property and equipment for certain properties that did not previously qualify for sale accounting because the Company was determined to be the accounting owner during the construction phase.
−Removed: In addition, at the transition date the Company was constructing one facility that, when complete, the Company will perform a sale-leaseback assessment.
+Added: In addition, the adoption of the standard resulted in the derecognition of existing property and equipment for certain properties that did not previously qualify for sale accounting because the Company was determined to be the accounting owner during the construction phase and did not qualify for sale-leaseback accounting upon completion of the construction.
+Added: At the transition date, the Company was constructing one facility, which was completed in the fourth quarter of fiscal 2020.
+Added: The Company exercised a purchase option for the facility in the third quarter of fiscal 2020, which resulted in the Company continuing to account for the facility as its accounting owner.
For properties where the Company was deemed the accounting owner during construction for which construction has been completed, the difference between the assets and liabilities derecognized, net of the deferred tax impact, was recorded as an adjustment to retained earnings.
Lessor accounting guidance remained largely unchanged from previous guidance.
−Removed: Adoption of this standard did not have a material impact to the Company’s Condensed Consolidated Statements of Operations or Cash Flows.
+Added: Adoption of this standard did not have a material impact to the Company’s Condensed Consolidated Statements of Operations , Condensed Consolidated Statements of Stockholders’ Equity or Condensed Consolidated Statements of Cash Flows .
The Company has revised its accounting policies, processes and controls, and systems as applicable to comply with the provisions and disclosure requirements of the standard.
37 unchanged sentences
Th e Company adopted the relevant portions of this standard in the first quarter of fiscal 2020 with no impact to Accumulated other comprehensive loss or Retained earnings for fiscal 2020, as the Company did not have separately measured ineffectiveness related to its cash flow hedges.
+Added: In March 2020, the FASB issued ASU 2020-04, Reference rate reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting .
+Added: This ASU provides optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for contracts, hedging relationships, and other transactions affected by reference rate reform.
+Added: The Company adopted this ASU in the third quarter of fiscal 2020, which is effective on a prospective basis.
+Added: The adoption of this ASU did not have a material impact on the consolidated financial statements.
+Added: The Company has elected the expedient to assert probability of its hedged interest rate transactions, which is effective March 12, 2020 until superseded by subsequent documentation or December 31, 2022, whichever occurs first.
Recently Issued Accounting Pronouncements
16 unchanged sentences
For trade and other receivables, guarantees and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace the current “incurred loss” model and generally will result in the earlier recognition of credit losses.
−Removed: The Company is required to adopt this new guidance in the first quarter of fiscal 2021.
+Added: The Company is required to adopt this new guidance in the first quarter of fiscal 2021 on a modified-retrospective basis as required by the standard by means of a cumulative-effect adjustment to the opening balance of retained earnings in the statement of financial position and stockholders’ equity as of the effective date.
The Company is currently reviewing the provisions of the new standard, establishing revised processes and controls to estimate expected losses for trade and other receivables, guarantees and other instruments, and evaluating its impact on the Company’s consolidated financial statements.
8 unchanged sentences
The Company records revenue to four customer channels, which are described below:
−Removed: Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market.
Supermarkets, which include accounts that also carry conventional products, and include chain accounts, supermarket independents, and gourmet and ethnic specialty stores.
+Added: Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market.
Independents, which include single store and chain accounts (excluding supernatural, as defined above), which carry primarily natural products and buying clubs of consumer groups joined to buy products.
4 unchanged sentences
(in millions)
−Removed: February 1, 2020
Customer Channel
1 unchanged sentence
(in millions)
−Removed: January 26, 2019 (1)
+Added: April 27, 2019 (1)
Customer Channel
1 unchanged sentence
(in millions)
−Removed: February 1, 2020 (1)
+Added: May 2, 2020 (1)
Customer Channel
1 unchanged sentence
(in millions)
−Removed: January 26, 2019 (1)
+Added: April 27, 2019 (1)
Customer Channel
−Removed: During the first quarter of fiscal 2020, the presentation of net sales by customer channel was adjusted to reflect reclassification of customer types resulting from management’s determination that a customer serviced by both Supervalu and legacy UNFI should be classified as a Supermarket customer given that customer’s operations.
+Added: During the first quarter of fiscal 2020, the presentation of net sales by customer channel was adjusted to reflect reclassification of customer types resulting from management’s determination that a customer serviced by both legacy Supervalu and UNFI should be classified as a Supermarket customer given that customer’s operations.
During the second quarter of fiscal 2020, the presentation of net sales by customer channel was adjusted to reflect conventional military sales within Other instead of Independents based on management’s determination to better reflect the focus of its ongoing business and the definition of customer channels above.
There was no impact to the Condensed Consolidated Statements of Operations as a result of the reclassification of customer types.
−Removed: As a result of these adjustments, net sales to the Company’s Supermarkets channel for the second quarter of fiscal 2019 and for fiscal 2019 year-to-date increased approximately $ 26 million and $ 51 million , respectively, compared to the previously reported amounts, while net sales to the Other channel for the second quarter of fiscal 2019 and for fiscal 2019 year-to-date increased $ 109 million and $ 117 million , respectively, compared to previously reported amounts.
−Removed: Net sales to the Company’s Independents channel for the second quarter of fiscal 2019 and fiscal 2019 year-to-date decreased $ 135 million and $ 168 million , respectively, compared to the previously reported amounts.
−Removed: In addition, net sales to the Company’s Other channel for the first quarter of fiscal 2020 increased $ 90 million compared to the previously reported amounts, with an offsetting elimination to the Independents channel.
+Added: As a result of these adjustments, net sales to the Company’s Supermarkets channel for the third quarter of fiscal 2019 and for fiscal 2019 year-to-date increased approximately $ 26 million and $ 77 million , respectively, compared to the previously reported amounts, while net sales to the Other channel for the third quarter of fiscal 2019 and for fiscal 2019 year-to-date increased $ 96 million and $ 213 million , respectively, compared to previously reported amounts.
+Added: Net sales to the Company’s Independents channel for the third quarter of fiscal 2019 and fiscal 2019 year-to-date decreased $ 122 million and $ 290 million , respectively, compared to the previously reported amounts.
The Company serves customers in the United States and Canada, as well as customers located in other countries.
2 unchanged sentences
The Company does not have any performance obligations related to international shipments subsequent to delivery to the domestic port.
−Removed: Sales from the Company’s Wholesale segment to its retail discontinued operations are presented within Net Sales when the Company holds the business for sale with a supply agreement that it anticipates the sale of the retail banner to include upon its disposal.
−Removed: The Company recorded $ 251.5 million and $ 265.2 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in the second quarters of fiscal 2020 and 2019 , respectively, and $ 496.1 million and $ 287.0 million for fiscal 2020 and 2019 year-to-date , respectively, which the Company expects will continue subsequent to the sale of certain retail banners.
+Added: Sales from the Company’s Wholesale segment to its retail discontinued operations are presented within Net sales when the Company holds the business for sale as of the end of the reporting period with a supply agreement that it anticipates the sale of the retail banner to include upon the disposal of the business.
+Added: The Company recorded $ 273.2 million and $ 227.1 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in the third quarters of fiscal 2020 and 2019 , respectively, and $ 756.9 million and $ 505.5 million for fiscal 2020 and 2019 year-to-date , respectively, which the Company expects will continue subsequent to the sale of certain retail banners.
These amounts were recorded at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business.
−Removed: No sales were recorded within continuing operations for purchases by retail banners that the Company expects to dispose of without a supply agreement, which were eliminated upon consolidation within continuing operations and amounted to $ 96.6 million and $ 153.6 million in the second quarters of fiscal 2020 and 2019 , respectively, and $ 209.6 million and $ 163.4 million in fiscal 2020 and 2019 year-to-date , respectively.
+Added: No sales were recorded within continuing operations for purchases by retail banners that the Company expects to dispose of without a supply agreement, which were eliminated upon consolidation within continuing operations and amounted to $ 99.3 million and $ 134.9 million in the third quarters of fiscal 2020 and 2019 , respectively, and $ 320.0 million and $ 308.0 million in fiscal 2020 and 2019 year-to-date , respectively.
Contract Balances
1 unchanged sentence
(in thousands)
−Removed: February 1, 2020
August 3, 2019
77 unchanged sentences
(in thousands, except per share data)
−Removed: January 27, 2018 (2)
−Removed: January 26, 2019 (1)
−Removed: January 27, 2018 (2)
−Removed: Net loss from continuing operations
−Removed: Basic net loss continuing operations per share
−Removed: Diluted net loss from continuing operations per share
+Added: April 28, 2018 (1)
+Added: April 27, 2019 (2)
+Added: April 28, 2018 (3)
+Added: Net income (loss) from continuing operations
+Added: Basic net income (loss) from continuing operations per share
+Added: Diluted net income (loss) from continuing operations per share
+Added: Includes 13 weeks of pro forma Supervalu results for the period ended April 28, 2018.
Includes 12 weeks of pro forma Supervalu results for the period ended September 8, 2018.
−Removed: Includes 13 and 26 weeks of pro forma Supervalu results for the period ended December 2, 2017 and 6 and 19 weeks of pro forma Associated Grocers of Florida, Inc.
−Removed: results for the period ended November 4, 2017, which was acquired by Supervalu on December 8, 2017.
+Added: Includes 39 weeks of pro forma Supervalu results for the period ended April 28, 2018 and 19 weeks of pro forma Associated Grocers of Florida, Inc.
+Added: 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.
4 unchanged sentences
(in thousands)
−Removed: February 1, 2020
−Removed: January 26, 2019
−Removed: February 1, 2020
−Removed: January 26, 2019
+Added: April 27, 2019
+Added: April 27, 2019
2019 SUPERVALU INC.
11 unchanged sentences
Cash payments
−Removed: Balances at February 1, 2020
+Added: Balances at May 2, 2020
Cumulative program charges incurred from inception to date
2019 SUPERVALU INC.
−Removed: As part of its acquisition of Supervalu and in order to achieve synergies from this combination, the Company is taking certain actions, which began during the first quarter of fiscal 2019 and is expected to continue through fiscal 2020 to:
+Added: As part of its acquisition of Supervalu and in order to achieve synergies from this combination, the Company is taking certain actions, which began during the first quarter of fiscal 2019 and are expected to continue through fiscal 2020 to:
(i) review its organizational structure and the strategic needs of the business going forward to identify and place talent with the appropriate skills, experience and qualifications to meet these needs;
7 unchanged sentences
Wholesale and Canada Wholesale), two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments, and a single retail reporting unit, which is included within discontinued operations.
−Removed: The Canada operating segment, which is aggregated with Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria.
+Added: The Canada Wholesale operating segment, which is aggregated with Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria.
The composition of goodwill reporting units is evaluated for events or changes in circumstances indicating a goodwill reporting unit has changed.
24 unchanged sentences
The goodwill impairment charge reflects the impairment of all of the U.S.
−Removed: Wholesale’s reporting unit goodwill.
+Added: Wholesale reporting unit’s goodwill.
Goodwill and Intangible Assets Changes
5 unchanged sentences
Change in foreign exchange rates
−Removed: Goodwill as of February 1, 2020
−Removed: Amounts are net of accumulated goodwill impairment charges of $ 292.8 million and $ 716.5 million as of August 3, 2019 and February 1, 2020 , respectively.
−Removed: Amounts are net of accumulated goodwill impairment charges of $ 9.3 million and $ 9.6 million as of August 3, 2019 and February 1, 2020 .
+Added: Goodwill as of May 2, 2020
+Added: Amounts are net of accumulated goodwill impairment charges of $ 292.8 million and $ 716.5 million as of August 3, 2019 and May 2, 2020 , respectively.
+Added: Amounts are net of accumulated goodwill impairment charges of $ 9.3 million and $ 9.6 million as of August 3, 2019 and May 2, 2020 .
Identifiable intangible assets consisted of the following:
−Removed: February 1, 2020
August 3, 2019
11 unchanged sentences
Intangible assets, net
−Removed: Amortization expense was $ 21.5 million and $ 20.9 million for the second quarters of fiscal 2020 and 2019 , respectively, and $ 43.6 million and $ 24.6 million for fiscal 2020 and 2019 year-to-date , respectively.
−Removed: The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of February 1, 2020 is shown below:
+Added: Amortization expense was $ 21.9 million and $ 19.5 million for the third quarters of fiscal 2020 and 2019 , respectively, and $ 65.5 million and $ 44.1 million for fiscal 2020 and 2019 year-to-date , respectively.
+Added: The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of May 2, 2020 is shown below:
(In thousands)
4 unchanged sentences
The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
−Removed: Fair Value at February 1, 2020
+Added: Fair Value at May 2, 2020
(In thousands)
Balance Sheet Location
−Removed: Interest rate swaps designated as hedging instruments
+Added: Foreign exchange derivatives not designated as hedging instruments
Prepaid expenses and other current assets
−Removed: Interest rate swaps designated as hedging instruments
+Added: Fuel derivatives not designated as hedging instruments
+Added: Accrued expenses and other current liabilities
Interest rate swaps designated as hedging instruments
16 unchanged sentences
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.
−Removed: As of February 1, 2020 , a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 60.2 million ;
+Added: As of May 2, 2020 , a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 65.5 million ;
a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $ 63.5 million .
5 unchanged sentences
To reduce diesel price risk, the Company has entered into derivative financial instruments and/or forward purchase commitments for a portion of its projected monthly diesel fuel requirements at fixed prices.
+Added: The fair values of fuel derivative agreements are measured using Level 2 inputs.
As of August 3, 2019 , the Company had no outstanding fuel supply agreements and derivative agreements.
−Removed: As of February 1, 2020 , the fair value of the Company’s fuel supply agreements and derivatives were immaterial.
Foreign Exchange Derivatives
To reduce foreign exchange risk, the Company has entered into derivative financial instruments for a portion of its projected monthly foreign currency requirements at fixed prices.
+Added: The fair values of foreign exchange derivatives are measured using Level 2 inputs.
As of August 3, 2019 , the Company’s outstanding foreign currency forward contracts were immaterial.
−Removed: As of February 1, 2020 , the fair value of the Company’s outstanding foreign currency forward contracts were immaterial.
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.
−Removed: Notes receivable estimated fair value is determined by a discounted cash flow approach applying a market rate for similar instruments that is determined using Level 3 inputs.
−Removed: The estimated fair values are based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs.
+Added: The fair value of notes receivable is estimated by using a discounted cash flow approach calculated by applying a market rate for similar instruments using Level 3 inputs.
+Added: 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.
−Removed: February 1, 2020
August 3, 2019
8 unchanged sentences
Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.
−Removed: The Company’s interest rate swap contracts are designated as cash flow hedges at February 1, 2020 .
+Added: The Company’s interest rate swap contracts are designated as cash flow hedges at May 2, 2020 .
Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets .
Refer to Note 7—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.
−Removed: Details of outstanding swap contracts as of February 1, 2020 , which are all pay fixed and receive floating, are as follows:
+Added: Details of outstanding swap contracts as of May 2, 2020 , which are all pay fixed and receive floating, are as follows:
Effective Date
Swap Maturity
−Removed: Notional Value (in millions)
+Added: Outstanding Notional Value (in millions)
Pay Fixed Rate
47 unchanged sentences
One-Month LIBOR
+Added: October 30, 2020 (3)
+Added: October 31, 2022
+Added: One-Month LIBOR
November 16, 2018
4 unchanged sentences
One-Month LIBOR
+Added: April 29, 2021 (4)
+Added: April 28, 2023
+Added: One-Month LIBOR
+Added: June 30, 2021 (5)
+Added: June 30, 3023
+Added: One-Month LIBOR
November 30, 2018
4 unchanged sentences
One-Month LIBOR
+Added: October 26, 2018
+Added: October 31, 2023
+Added: One-Month LIBOR
January 11, 2019
28 unchanged sentences
The swap contract has an amortizing notional principal amount which is reduced by $ 1.0 million on a quarterly basis.
+Added: This forward starting swap contract has a notional principal amount of $ 100.0 million .
+Added: This forward starting swap contract has a notional principal amount of $ 100.0 million .
+Added: This forward starting swap contract has a notional principal amount of $ 150.0 million .
+Added: This forward starting swap contract has a notional principal amount of $ 100.0 million .
For these swap contracts that are indexed to LIBOR, the Company is monitoring and evaluating risks related to the expected future cessation of LIBOR.
7 unchanged sentences
39-Week Period Ended
−Removed: February 1, 2020
−Removed: January 26, 2019
−Removed: February 1, 2020
−Removed: January 26, 2019
+Added: April 27, 2019
+Added: April 27, 2019
(In thousands)
2 unchanged sentences
Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
−Removed: Gain or (loss) on cash flow hedging relationships:
−Removed: Gain or (loss) reclassified from comprehensive income into income
+Added: (Loss) or gain on cash flow hedging relationships:
+Added: (Loss) or gain reclassified from comprehensive income into income
Gain or (loss) on interest rate swap contracts not designated as hedging instruments:
4 unchanged sentences
Average Interest Rate at
−Removed: February 1, 2020
Calendar Maturity Year
27 unchanged sentences
To the extent that the Borrowers’ Borrowing Base declines, the availability under the ABL Credit Facility may decrease below $ 2,100.0 million .
−Removed: As of February 1, 2020 , the U.S.
−Removed: Borrowers’ Borrowing Base, net of $ 179.1 million of reserves, was $ 2,103.1 million , which is above the $ 2,050.0 million limit of availability to the U.S.
+Added: As of May 2, 2020 , the U.S.
+Added: Borrowers’ Borrowing Base, net of $ 239.0 million of reserves, was $ 2,027.2 million , which is below the $ 2,050.0 million limit of availability to the U.S.
Borrowers under the ABL Credit Facility.
−Removed: As of February 1, 2020 , the Canadian Borrower’s Borrowing Base, net of $ 3.7 million of reserves, was $ 38.1 million , which is below the $ 50.0 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $ 2,088.1 million for ABL Loans and letters of credit under the ABL Credit Facility.
−Removed: As of February 1, 2020 , the U.S.
+Added: As of May 2, 2020 , the Canadian Borrower’s Borrowing Base, net of $ 4.0 million of reserves, was $ 37.8 million , which is below the $ 50.0 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $ 2,065.0 million for ABL Loans and letters of credit under the ABL Credit Facility.
+Added: As of May 2, 2020 , the U.S.
Borrowers had $ 816.0 million of ABL Loans outstanding, which are presented net of debt issuance costs of $ 10.6 million and are included in Long-term debt in the Condensed Consolidated Balance Sheets , and the Canadian Borrower had no ABL Loans outstanding under the ABL Credit Facility.
−Removed: As of February 1, 2020 , the U.S.
+Added: As of May 2, 2020 , the U.S.
Borrowers had $ 95.1 million in letters of credit and the Canadian Borrower had no letters of credit outstanding under the ABL Credit Facility.
−Removed: The Company’s resulting remaining availability under the ABL Credit Facility was $ 824.1 million as of February 1, 2020 .
+Added: The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,153.9 million as of May 2, 2020 .
The ABL Loans of the U.S.
2 unchanged sentences
(i) a base rate and an applicable margin, or (ii) a LIBOR rate and an applicable margin.
−Removed: As of February 1, 2020 , the applicable margin for base rate loans was 0.25 % , and the applicable margin for LIBOR loans was 1.25 % .
+Added: As of May 2, 2020 , the applicable margin for base rate loans was 0.25 % , and the applicable margin for LIBOR loans was 1.25 % .
The ABL Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available.
1 unchanged sentence
(i) prime rate and an applicable margin, or (ii) a Canadian dollar bankers’ acceptance equivalent rate and an applicable margin.
−Removed: As of February 1, 2020 , the applicable margin for prime rate loans was 0.25 % , and the applicable margin for Canadian dollar bankers’ acceptance equivalent rate loans was 1.25 % .
−Removed: Commencing on the first day of the calendar month following the ABL Administrative Agent’s receipt of the Company’s aggregate availability calculation for the fiscal quarter ending on January 26, 2019, and quarterly thereafter, the applicable margins for borrowings by the U.S.
+Added: As of May 2, 2020 , the applicable margin for prime rate loans was 0.25 % , and the applicable margin for Canadian dollar bankers’ acceptance equivalent rate loans was 1.25 % .
+Added: Commencing on the first day of the calendar month following the ABL Administrative Agent’s receipt of the Company’s aggregate availability calculation for the prior fiscal quarter, the applicable margins for borrowings by the U.S.
Borrowers and Canadian Borrower will be subject to adjustment based upon the aggregate availability under the ABL Credit Facility.
Unutilized commitments under the ABL Credit Facility are subject to a per annum fee of (i) 0.375 % if the average daily total outstandings were less than 25% of the aggregate commitments during the preceding fiscal quarter or (ii) 0.25% if such average daily total outstandings were 25% or more of the aggregate commitments during the preceding fiscal quarter.
−Removed: As of February 1, 2020 , the unutilized commitment fee was 0.25 % per annum.
+Added: As of May 2, 2020 , the unutilized commitment fee was 0.25 % per annum.
The Borrowers are also required to pay a letter of credit fronting fee to each letter of credit issuer equal to 0.125 % per annum of the amount available to be drawn under each such letter of credit, as well as a fee to all lenders equal to the applicable margin for LIBOR or Canadian dollar bankers’ acceptance equivalent rate loans, as applicable, times the average daily amount available to be drawn under all outstanding letters of credit.
1 unchanged sentence
The Company has not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report.
−Removed: 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 available credit and fees under the ABL Credit Facility, were as follows:
+Added: 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 thousands) (1) :
−Removed: February 1, 2020
Certain inventory assets included in Inventories and Current assets of discontinued operations
Certain receivables included in Accounts receivables, net and Current assets of discontinued operations
−Removed: The ABL Credit Facility is also secured by all of the Company’s pharmacy scripts, which are included in Long-term assets of discontinued operations in the Condensed Consolidated Balance Sheets as of February 1, 2020 .
−Removed: Unused available credit and fees under the ABL Credit Facility (in thousands, except percentages):
−Removed: February 1, 2020
+Added: The ABL Credit Facility is also secured by all of the Company’s pharmacy scripts, which are included in Long-term assets of discontinued operations in the Condensed Consolidated Balance Sheets as of May 2, 2020 .
+Added: Unused credit and fees under the ABL Credit Facility (in thousands, except percentages):
Outstanding letters of credit
Letter of credit fees
−Removed: Unused available credit
+Added: Unused credit
Unused facility fees
7 unchanged sentences
The loans under the Term B Tranche will be payable in full on October 22, 2025;
−Removed: provided that if on or prior to December 31, 2024 that certain Agreement for Distribution of Products, dated as of October 30, 2015, by and between Whole Foods Market Distribution, Inc., a Delaware corporation, and the Company has not been extended until at least October 23, 2025 on terms not materially less favorable, taken as a whole, to the Company and its subsidiaries than those in effect on the date of the Acquisition, then the loans under the Term B Tranche will be payable in full on December 31, 2024.
+Added: provided that if on or prior to December 31, 2024 that certain Agreement for Distribution of Products, dated as of October 30, 2015, by and between Whole Foods Market Distribution, Inc., a Delaware corporation, and the Company has not been extended until at least October 23, 2025 on terms not materially less favorable, taken as a whole, to the Company and its subsidiaries than those in effect on the Closing Date, then the loans under the Term B Tranche will be payable in full on December 31, 2024.
In fiscal year-to-date 2020, the Company made mandatory prepayments and voluntary prepayments of $ 15.3 million and $ 5.8 million , respectively, on the 364-day Tranche with asset sale proceeds.
5 unchanged sentences
The Term Borrowers’ obligations under the Term Loan Facility are guaranteed by most of the Company’s wholly-owned domestic subsidiaries who are not also Term Borrowers (collectively, the “Term Guarantors”), subject to customary exceptions and limitations, including an exception for immaterial subsidiaries designated by the Company from time to time.
−Removed: The Term Borrowers’ obligations under the Term Loan Facility and the Term Guarantors’ obligations under the related guarantees are secured by (i) a
−Removed: first-priority lien on substantially all of the Term Borrowers’ and the Term Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Term 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 $ 10.0 million .
−Removed: As of February 1, 2020 , there was $ 585.7 million of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets .
+Added: The Term Borrowers’ obligations under the Term Loan Facility and the Term Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Term Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Term 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 $ 10.0 million .
+Added: As of May 2, 2020 , there was $ 649.9 million of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets .
The loans under the Term Loan Facility may be voluntarily prepaid, subject to certain minimum payment thresholds and the payment of breakage or other similar costs.
1 unchanged sentence
Commencing with the fiscal year ending August 1, 2020, the Company must also 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 defined in the Term Loan Agreement) as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement) in excess of $ 10 million for the fiscal year then ended, minus any voluntary prepayments of the loans under the Term Loan Facility, the ABL Credit Facility (to the extent they permanently reduce commitments under the ABL Facility) and certain other indebtedness made during such fiscal year.
−Removed: The potential amount of prepayment from Excess Cash Flow in fiscal 2020 that may be required in fiscal 2021 is not reasonably estimable as of February 1, 2020 .
+Added: The potential amount of prepayment from Excess Cash Flow in fiscal 2020 that may be required in fiscal 2021 is not reasonably estimable as of May 2, 2020 .
The borrowings under the Term B Tranche of the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:
5 unchanged sentences
If an event of default occurs and is continuing, the Term Borrowers may be required immediately to repay all amounts outstanding under the Term Loan Agreement.
−Removed: As of February 1, 2020 , the Company had borrowings of $ 1,782.0 million and no amounts outstanding under the Term B Tranche and 364-day Tranche, respectively, which are presented net of debt issuance costs of $ 38.8 million and an original issue discount on debt of $ 38.0 million .
−Removed: As of February 1, 2020 , $ 18.0 million of the Term B Tranche was classified as current, excluding debt issuance costs and original issue discount on debt.
+Added: As of May 2, 2020 , the Company had borrowings of $ 1,777.5 million and no amounts outstanding under the Term B Tranche and 364-day Tranche, respectively, which are presented net of debt issuance costs of $ 37.4 million and an original issue discount on debt of $ 36.6 million .
+Added: As of May 2, 2020 , $ 18.0 million of the Term B Tranche was classified as current, excluding debt issuance costs and original issue discount on debt.
NOTE 10—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
10 unchanged sentences
Net current period Other comprehensive income (loss)
−Removed: Accumulated other comprehensive loss at February 1, 2020
+Added: Accumulated other comprehensive loss at May 2, 2020
Changes in Accumulated other comprehensive loss by component net of tax for fiscal 2019 year-to-date are as follows:
6 unchanged sentences
Net current period Other comprehensive loss
−Removed: Accumulated other comprehensive loss at January 26, 2019
+Added: Accumulated other comprehensive loss at April 27, 2019
Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations :
9 unchanged sentences
Total reclassifications
−Removed: Income tax benefit
+Added: Income tax (expense) benefit
Benefit for income taxes
1 unchanged sentence
Swap agreements:
−Removed: Reclassification of cash flow hedge
+Added: Amortization of cash flow hedge expense (income)
Interest expense, net
−Removed: Income tax (expense) benefit
+Added: Income tax benefit (expense)
Benefit for income taxes
1 unchanged sentence
Amortization of amounts included in net periodic benefit income include amortization of prior service benefit and amortization of net actuarial loss as reflected in Note 13—Benefit Plans .
+Added: As of May 2, 2020, the Company expects to reclassify $ 45.8 million of pre-tax accumulated other comprehensive loss into Interest expense, net during the succeeding twelve-month period.
NOTE 11—LEASES
4 unchanged sentences
Balance Sheet Location
−Removed: February 1, 2020
Operating lease assets
12 unchanged sentences
Total lease liabilities
−Removed: The Company's lease cost under ASC 842 for the 13-week and 26-week periods ended February 1, 2020 is as follows:
+Added: Lease assets and liabilities presented in the table above include lease contracts related to our discontinued operations, as the Company expects to remain primarily obligated under these leases.
+Added: The Company’s lease cost under ASC 842 is as follows:
(in thousands)
2 unchanged sentences
39-Week Period Ended
−Removed: February 1, 2020
−Removed: February 1, 2020
Operating lease cost
14 unchanged sentences
Total net lease cost
−Removed: Rent expense as presented here includes $ 11.9 million and $ 24.4 million in the second quarter and year-to-date of fiscal 2020 , respectively, of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as the Company expects to remain primarily obligated under these leases.
+Added: Rent expense as presented here includes $ 9.1 million and $ 33.5 million in the third quarter and year-to-date of fiscal 2020 , respectively, of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as the Company expects to remain primarily obligated under these leases.
Rent expense as presented here also includes immaterial amounts of variable lease expense of discontinued operations.
2 unchanged sentences
Future minimum lease payments (“Lease Liabilities”) to be made by the Company or certain third parties in the case of assigned leases for noncancellable operating leases and finance leases have not been reduced for future minimum lease and subtenant rentals (“Lease Receipts”) under certain operating subleases, including lease assignments for stores sold to third parties, which they operate.
−Removed: As of February 1, 2020 , these lease obligations and lease receipts consisted of the following (in thousands):
+Added: As of May 2, 2020 , these Lease Liabilities and Lease Receipts consisted of the following (in thousands):
Maturity of Lease Liabilities and Lease Receipts
16 unchanged sentences
Finance lease payments include $ 0.0 million related to extension options that are reasonably certain of being exercised and exclude $ 0.5 million of legally binding minimum lease payments for leases signed but not yet commenced.
+Added: This table excludes payments related to a facility the Company is deemed the accounting owner, which is recognized as a residual obligation, and is subject to an underlying lease.
Calculated using the interest rate for each lease.
16 unchanged sentences
Lease Term and Discount Rate
−Removed: February 1, 2020
Weighted-average remaining lease term (years)
7 unchanged sentences
(in thousands)
−Removed: February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities
4 unchanged sentences
Leased assets obtained in exchange for new operating lease liabilities
+Added: On February 24, 2020, the Company executed a purchase option to acquire the real property of a distribution center facility.
+Added: Upon execution of the purchase option, the previously constructed facility accounted for as an operating lease has been re-classified as a finance lease.
NOTE 12—SHARE-BASED AWARDS
2 unchanged sentences
In the second quarter of fiscal 2020, the Company granted restricted stock units and performance share units representing a right to receive an aggregate of 5.8 million shares to its directors, executive officers and certain employees.
−Removed: As of February 1, 2020, there were 2.6 million shares available for issuance under the 2020 Equity Incentive Plan.
+Added: As of May 2, 2020 , there were 2.6 million shares available for issuance under the 2020 Equity Incentive Plan.
+Added: During the third quarter of fiscal 2020, the Company issued approximately 1.1 million shares of common stock at an average market price of $ 11.12 per share for $ 12.2 million of cash.
+Added: Proceeds from these issuances were received in the third and fourth quarters of fiscal 2020 and were used to fund settlement of replacement award obligations.
NOTE 13—BENEFIT PLANS
4 unchanged sentences
(in thousands)
−Removed: February 1, 2020
−Removed: January 26, 2019
−Removed: February 1, 2020
−Removed: January 26, 2019
+Added: April 27, 2019
+Added: April 27, 2019
Net Periodic Benefit (Income) Cost
2 unchanged sentences
Amortization of net actuarial loss (gain)
−Removed: Pension settlement charge
Net periodic benefit (income) cost
4 unchanged sentences
(in thousands)
−Removed: February 1, 2020
−Removed: January 26, 2019
−Removed: February 1, 2020
−Removed: January 26, 2019
+Added: April 27, 2019
+Added: April 27, 2019
Net Periodic Benefit (Income) Cost
11 unchanged sentences
Multiemployer Pension Plans
−Removed: The Company contributed $ 12.6 million and $ 7.6 million in the second quarters of fiscal 2020 and 2019 , respectively, and $ 26.1 million and $ 7.7 million in fiscal 2020 and 2019 year-to-date , respectively, to continuing and discontinued operations multiemployer pension plans.
+Added: The Company contributed $ 12.3 million and $ 13.8 million in the third quarters of fiscal 2020 and 2019 , respectively, and $ 38.4 million and $ 27.4 million in fiscal 2020 and 2019 year-to-date , respectively, to continuing and discontinued operations multiemployer pension plans.
In connection with the Company’s consolidation of distribution centers in the Pacific Northwest, during the second quarter of fiscal 2020, the Company recorded a $ 10.6 million multiemployer pension plan withdrawal liability, under which payments will be made over a one-year period beginning in fiscal 2022.
10 unchanged sentences
NOTE 14—INCOME TAXES
−Removed: The effective income tax rate for continuing operations was a benefit of 35.5 % compared to a benefit of 20.2 % on pre-tax losses for the second quarter of fiscal 2020 and 2019 , respectively.
−Removed: The change in the effective income tax rate for the second quarter of fiscal 2020 was primarily driven by a tax benefit on the impairment of goodwill and a tax benefit on the release of unrecognized tax positions that both occurred in the second quarter of fiscal 2019 but did not recur in the second quarter of fiscal 2020.
−Removed: The tax provision included $ 0.2 million and $ 77.0 million of discrete tax benefit for the second quarter of fiscal 2020 and fiscal 2019 , respectively.
−Removed: The discrete tax benefit for the second quarter of fiscal 2019 was primarily due to a tax benefit of approximately $ 68.4 million related to the goodwill impairment charge, as well as a tax benefit related to unrecognized tax positions of approximately $ 8.7 million .
+Added: The effective income tax rate for continuing operations was a benefit of 38.7 % compared to a benefit of 32.4 % on pre-tax income for the third quarter of fiscal 2020 and 2019 , respectively.
+Added: The change in the effective income tax rate for the third quarter of fiscal 2020 was primarily driven by a tax benefit recorded on net operating loss deferred tax assets in the third quarter of fiscal 2020 in connection with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), discussed below.
+Added: The tax provision included $ 26.9 million and $ 3.2 million of discrete tax benefit for the third quarter of fiscal 2020 and fiscal 2019 , respectively.
+Added: The discrete tax benefit for the third quarter of fiscal 2020 was primarily due to a tax benefit of approximately $ 28.4 million driven by a tax benefit recorded on net operating loss deferred tax assets in the third quarter of fiscal 2020 in connection with the CARES Act, discussed below.
The effective income tax rate for continuing operations was a benefit of 21.5 % compared to a benefit of 22.8 % on pre-tax losses for fiscal 2020 year-to-date and fiscal 2019 year-to-date, respectively.
−Removed: The decrease in the effective income tax benefit rate was primarily driven by a tax benefit of approximately $ 8.7 million recorded in fiscal 2019 for the release of unrecognized tax positions that did not recur in fiscal 2020.
+Added: The decrease in the effective income tax benefit rate was primarily driven by a tax benefit of approximately $ 8.3 million recorded in fiscal 2019 for the release of unrecognized tax positions that did not recur in fiscal 2020, as well as a goodwill impairment benefit of approximately $ 72.2 million recorded in fiscal 2019 compared to a goodwill impairment benefit of approximately $ 66.4 million recorded in fiscal 2020.
+Added: In addition, effective income tax rate for fiscal 2020 includes a benefit of approximately $ 28.4 million related to revaluation of net operating loss deferred tax assets in connection with the CARES Act.
+Added: The CARES Act was enacted on March 27, 2020 and contains significant business tax provision changes to the U.S.
+Added: tax code, including temporary expansion of the limitations to the deductibility of net operating losses and interest expense and the ability to treat qualified improvement property as eligible for bonus depreciation.
+Added: In addition, the CARES Act changed the required filing of the Company’s federal income tax return from May 2020 to July 2020, and allows remittances of employer FICA payments previously due March 2020 to December 2020 to be deferred until December 2021 and December 2022.
+Added: Prior to the application of the CARES Act, the Company had a deferred tax asset related to $ 203 million of federal net operating losses that were available for unlimited carryforward (but no carryback) pursuant to provisions of the 2017 Tax Cuts and Jobs Act, which permitted taxpayers to carryforward net operating losses indefinitely.
+Added: The CARES Act provides the Company the ability to carry these losses back at a 35 % federal tax rate during the carry back periods, as opposed to the current 21 % federal tax rate.
+Added: This resulted in a tax benefit of approximately $ 28.4 million , which the Company recorded in the third quarter of fiscal 2020.
+Added: This estimated tax benefit will be finalized in the fourth quarter of fiscal 2020 as the 2019 tax return due July 2020 is finalized.
+Added: The entire tax benefit associated with the net operating loss carry back has been recorded as a current tax receivable in the third quarter of fiscal 2020.
NOTE 15—EARNINGS PER SHARE
6 unchanged sentences
Diluted weighted average shares outstanding
−Removed: Basic per share data:
+Added: Basic earnings (loss) per share:
Continuing operations
Discontinued operations
−Removed: Basic loss per share
−Removed: Diluted per share data:
+Added: Basic earnings (loss) per share
+Added: Diluted earnings (loss) per share:
Continuing operations
Discontinued operations (1)
−Removed: Diluted loss per share
+Added: Diluted earnings (loss) per share
Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share
−Removed: 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, of approximately 244 thousand shares and 107 thousand for the second quarters of fiscal 2020 and 2019 , respectively, and 153 thousand and 353 thousand shares for fiscal 2020 and 2019 year-to-date , respectively.
+Added: 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 and 821 thousand and 275 thousand shares for fiscal 2020 and 2019 year-to-date , respectively.
NOTE 16—BUSINESS SEGMENTS
2 unchanged sentences
In addition, the Company’s Retail operating segment is a separate reportable segment, which consists of discontinued operations disposal groups.
−Removed: The Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics.
+Added: Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics.
The Wholesale reportable segment is engaged in the national distribution of natural, organic, specialty, produce, and conventional grocery and non-food products, and is also a provider of support services in the United States and Canada.
8 unchanged sentences
Unallocated (Income)/Expenses
−Removed: 13-Week Period Ended February 1, 2020:
+Added: 13-Week Period Ended May 2, 2020:
Net sales (1)
Restructuring, acquisition and integration related expenses
−Removed: Operating loss
+Added: Operating income (loss)
Total other expense, net
−Removed: Loss from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes
Depreciation and amortization
1 unchanged sentence
Total assets of continuing operations
−Removed: 13-Week Period Ended January 26, 2019:
+Added: 13-Week Period Ended April 27, 2019:
Net sales (2)
+Added: Goodwill and asset impairment (adjustment) charges
Restructuring, acquisition and integration related expenses
−Removed: Operating loss
+Added: Operating income (loss)
Total other expense, net
−Removed: Loss from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes
Depreciation and amortization
1 unchanged sentence
Total assets of continuing operations
−Removed: For the second quarter of fiscal 2020 , the Company recorded $ 251.5 million within Net sales in its wholesale reportable segment attributable to discontinued operations inter-company product purchases from its Retail operating segment, which it expects will continue subsequent to the sale of certain retail banners.
−Removed: For the second quarter of fiscal 2019 , the Company recorded $ 265.2 million within Net sales in its wholesale reportable segment attributable to discontinued operations inter-company product purchases from its Retail operating segment, which it expects will continue subsequent to the sale of certain retail banners.
+Added: For the third quarter of fiscal 2020 , the Company recorded $ 273.2 million within Net sales in its wholesale reportable segment attributable to discontinued operations inter-company product purchases from its Retail operating segment, which it expects will continue subsequent to the sale of certain retail banners.
+Added: For the third quarter of fiscal 2019 , the Company recorded $ 227.1 million within Net sales in its wholesale reportable segment attributable to discontinued operations inter-company product purchases from its Retail operating segment, which it expects will continue subsequent to the sale of certain retail banners.
(in thousands)
Unallocated (Income)/Expenses
−Removed: 26-Week Period Ended February 1, 2020:
+Added: 39-Week Period Ended May 2, 2020:
Net sales (1)
−Removed: Goodwill and asset impairment charges
+Added: Goodwill and asset impairment (adjustment) charges
Restructuring, acquisition and integration related expenses
−Removed: Operating loss
+Added: Operating income (loss)
Total other expense, net
−Removed: Loss from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes
Depreciation and amortization
Capital expenditures
−Removed: 26-Week Period Ended January 26, 2019:
+Added: 39-Week Period Ended April 27, 2019:
Net sales (2)
−Removed: Goodwill and asset impairment charges
+Added: Goodwill and asset impairment (adjustment) charges
Restructuring, acquisition and integration related expenses
−Removed: Operating loss
+Added: Operating income (loss)
Total other expense, net
−Removed: Loss from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes
Depreciation and amortization
4 unchanged sentences
Guarantees and Contingent Liabilities
−Removed: The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of February 1, 2020 .
+Added: The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of May 2, 2020 .
These guarantees were generally made to support the business growth of wholesale customers.
−Removed: 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 six years .
+Added: 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 ten years , with a weighted average remaining term of approximately six 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.
1 unchanged sentence
The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance.
−Removed: As of February 1, 2020 , the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 34.5 million ( $ 26.0 million on a discounted basis).
+Added: As of May 2, 2020 , the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 32.9 million ( $ 25.8 million on a discounted basis).
Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.
28 unchanged sentences
These contracts typically include either volume commitments or fixed expiration dates, term ination provisions and other standard contractual considerations.
−Removed: As of February 1, 2020, the Company had approximately $ 236.0 million of non-cancelable future purchase obligations.
+Added: As of May 2, 2020, the Company had approximately $ 252.0 million of non-cancelable future purchase obligations.
Legal Proceedings
1 unchanged sentence
(“C&S”) was a conspiracy to restrain trade and allocate markets.
−Removed: In the 2003 transaction, Supervalu purchased certain assets of the Fleming Corporation as part of Fleming Corporation’s bankruptcy proceedings and sold certain of Supervalu’s assets to C&S that were located in New England.
−Removed: Three other retailers filed similar complaints in other jurisdictions and the cases were consolidated in the United States District Court in Minnesota.
−Removed: The complaints alleged that the conspiracy was concealed and continued through the use of non-compete and non-solicitation agreements and the closing down of the distribution facilities that Supervalu and C&S purchased from each other.
−Removed: Plaintiffs were divided into Midwest plaintiffs and a New England plaintiff and are seeking monetary damages, injunctive relief and attorney’s fees.
−Removed: As previously disclosed, the Company settled with the Midwest plaintiffs in November 2017.
−Removed: The New England plaintiff was not a party to the settlement and is pursuing its individual claims and potential class action claims against Supervalu, which at this time are determined as remote.
+Added: As previously disclosed, the Company settled with the certain plaintiffs in November 2017.
+Added: The remaining plaintiff (the “New England plaintiff”) was not a party to the settlement and pursued its individual claims and potential class action claims against Supervalu.
On February 15, 2018, Supervalu filed a summary judgment and Daubert motion and the New England plaintiff filed a motion for class certification and on July 27, 2018, the District Court granted Supervalu’s motions.
−Removed: The New England plaintiff appealed to the 8th Circuit on August 15, 2018.
−Removed: Briefing on the appeal is complete and the hearing occurred on October 15, 2019.
−Removed: On December 20, 2019, the 8th Circuit affirmed the District Court’s decision.
+Added: The New England plaintiff appealed to the 8th Circuit on August 15, 2018, and a hearing was held on October 15, 2019.
+Added: In the second quarter of fiscal 2020, the 8th Circuit Court of Appeals denied the appeal.
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.
15 unchanged sentences
Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim.
−Removed: Relators elected to pursue the case on their own and
−Removed: have alleged FCA damages against Supervalu and New Albertsons in excess of $ 100 million , not including trebling and statutory penalties.
+Added: Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertsons 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.
3 unchanged sentences
Discovery is complete, and trial will be set after the Court rules on the pending motions.
−Removed: On August 5, 2019, the Court granted one of relators’ summary judgment motions finding that defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices.
+Added: On August 5, 2019, the Court
+Added: granted one of relators’ summary judgment motions finding that defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices.
There are additional pending motions for summary judgment filed by defendants and relators that await rulings by the Court, including on key FCA elements of materiality and knowledge.
1 unchanged sentence
UNFI is vigorously defending this matter and believes that it should be successful on the merits, however, in light of the most recent summary judgment decision, the Company now believes the risk of loss is reasonably possible.
−Removed: However, management is unable to estimate a range of reasonably possible loss because there are several disputed factual and legal matters that have not yet been resolved, including fundamentally whether the FCA violations actually occurred (which defendants still strongly believe and continue to argue did not), and the appropriate methodology of determining potential damages, if any.
+Added: However, management is unable to estimate a range of reasonably possible loss because there are several disputed factual and legal matters that have not yet been resolved, including fundamentally whether any FCA violations actually occurred (which defendants still strongly believe and continue to argue did not), and the appropriate methodology of determining potential damages, if any.
In November 2018, a putative nationwide class action was filed in Rhode Island state court, which the Company removed to U.S.
14 unchanged sentences
The Company regularly monitors its 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.
−Removed: As of February 1, 2020 , no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.
+Added: As of May 2, 2020 , 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.
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Louis and Shop ‘n Save East retail operations have been presented as discontinued operations and the related assets and liabilities have been classified as held-for-sale.
+Added: As of May 2, 2020, the Company held the remaining Shoppers stores and the Cub Foods business for sale.
+Added: As discussed in more detail in Note 19—Subsequent Events , subsequent to the end of the third quarter of fiscal 2020, the Company determined it would no longer classify the Cub Foods business and the majority of the remaining Shoppers locations (collectively “Remaining Retail”) as discontinued operations.
+Added: The Company may incur additional costs and charges in the future related to the Remaining Retail business if these locations are subsequently sold, if indicators exist that the business may be impaired while classified as held and used as continuing operations, or if the Company incurs additional wind-down or employee-related costs or charges.
In the second quarter of fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations.
−Removed: During the second quarter of fiscal 2020, within discontinued operations the Company incurred approximately $ 30.5 million in pre-tax aggregate costs and charges, consisting of $ 12.4 million of operating losses and transaction costs during the period of wind-down, $ 8.6 million of property and equipment impairment charges related to impairment reviews on the remaining locations (discussed below), $ 6.2 million of severance costs and $ 3.2 million of losses on sale.
−Removed: The Company expects to incur additional related costs and charges in the third quarter of fiscal 2020.
−Removed: In the second quarter of fiscal 2020, the Company reviewed the recoverability of the remaining assets held for sale and assessed the remaining composition of the Shoppers disposal group based on updated fair values.
−Removed: Based on the announced transactions and an updated impairment assessment, the Company recorded property and equipment impairment charges of $ 8.6 million for the remaining Shoppers assets within discontinued operations, which is included above.
−Removed: The Company continues to hold the remaining Shoppers stores and the Cub Foods business for sale.
−Removed: The Company may incur additional costs and charges in the future related to Cub Foods or Shoppers if there are declines in their estimated fair values or if we incur additional wind-down or employee-related costs or charges.
+Added: During fiscal 2020 year-to-date, within discontinued operations the Company incurred approximately $ 39.1 million in pre-tax aggregate costs and charges related to Shoppers, consisting of $ 14.2 million of operating losses and transaction costs during the period of wind-down, $ 15.1 million of property and equipment impairment charges related to impairment reviews, $ 8.7 million of severance costs and $ 1.1 million of losses on sale.
+Added: The Company expects to incur additional related costs and charges in the fourth quarter of fiscal 2020.
+Added: In the second and third quarters of fiscal 2020, the Company reviewed the recoverability of the remaining assets held for sale and assessed the remaining composition of the Shoppers disposal group based on updated fair values.
In fiscal 2019, the Company completed the sale of seven of its eight Hornbacher's locations, as well as Hornbacher’s newest store in West Fargo, North Dakota, to Coborn's Inc.
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In the fourth quarter of fiscal 2019, the Company completed the sale of the pharmacy prescription files and inventory of the Shoppers disposal group.
−Removed: As of February 1, 2020 , only the Cub Foods and Shoppers disposal groups continue to be classified as operations held for sale as discontinued operations.
+Added: As of May 2, 2020 , only the Cub Foods and Shoppers disposal groups continue to be classified as operations held for sale as discontinued operations.
Operating results of discontinued operations are summarized below:
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(In thousands)
−Removed: February 1, 2020
−Removed: February 1, 2020
−Removed: January, 26, 2019 (1)
+Added: April 27, 2019 (1)
Cost of sales
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Operating income
−Removed: Other income, net
+Added: Other expense (income), net
Income from discontinued operations before income taxes
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Income from discontinued operations, net of tax
−Removed: These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to January 26, 2019 .
−Removed: The Company recorded $ 251.5 million and $ 265.2 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in the second quarters of fiscal 2020 and 2019 , respectively, and $ 496.1 million and $ 287.0 million in fiscal 2020 and 2019 year-to-date , respectively, which the Company expects will continue subsequent to the sale of certain retail banners.
+Added: These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to April 27, 2019 .
+Added: The Company recorded $ 273.2 million and $ 227.1 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in the third quarters of fiscal 2020 and 2019 , respectively, and $ 756.9 million and $ 505.5 million in fiscal 2020 and 2019 year-to-date , respectively, which the Company expects will continue subsequent to the sale of certain retail banners.
These amounts were recorded at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business.
−Removed: No sales were recorded within continuing operations for retail banners that the Company expects to dispose of without a supply agreement, which were eliminated upon consolidation within continuing operations and amounted to $ 96.6 million and $ 153.6 million in the second quarters of fiscal 2020 and 2019 , respectively, and $ 209.6 million and $ 163.4 million in fiscal 2020 and 2019 year-to-date , respectively.
+Added: No sales were recorded within continuing operations for retail banners that the Company expects to dispose of without a supply agreement, which were eliminated upon consolidation within continuing operations and amounted to $ 99.3 million and $ 134.9 million in the third quarters of fiscal 2020 and 2019 , respectively, and $ 320.0 million and $ 308.0 million in fiscal 2020 and 2019 year-to-date , respectively.
The carrying amounts (in thousands) of major classes of assets and liabilities that were classified as held-for-sale on the Condensed Consolidated Balance Sheets follows in the table below.
(In thousands)
−Removed: February 1, 2020
August 3, 2019
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Net assets of discontinued operations
−Removed: As of February 1, 2020 , the fair value of disposal groups were estimated based on each group’s expected consideration less costs to sell.
+Added: As of May 2, 2020 , the fair value of disposal groups were estimated based on each group’s expected consideration less costs to sell.
Estimated fair values include indications of values that are based on the stand-alone fair values of the long-lived assets of the disposal group exclusive of transferring multiemployer pension plan obligations.
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NOTE 19—SUBSEQUENT EVENTS
−Removed: On February 24, 2020, the Company executed a purchase option to acquire a distribution center facility with approximately 1.2 million square feet that is currently under construction.
−Removed: Upon completion of the construction the purchase price of the facility will be determined.
−Removed: The purchase of the distribution center may occur anytime between the fourth quarter of fiscal 2020 and the fourth quarter of fiscal 2022 pursuant to the landlord’s determination.
+Added: Subsequent to the end of the third quarter of fiscal 2020, the Company determined it was no longer probable that a sale of Remaining Retail would occur within one year.
+Added: As a result, the Company determined it no longer met the criteria to classify Remaining Retail as discontinued operations.
+Added: In the fourth quarter of fiscal 2020, the Company expects to present Remaining Retail as held and used as part of continuing operations in its fiscal 2020 Consolidated Financial Statements based on this assessment.
+Added: This expected change in financial statement presentation will require the Company to restate the presentation and classification of Remaining Retail within its Consolidated Financial Statements for fiscal 2019, which will result in Remaining Retail’s results of operations, financial position, cash flows and related disclosures being within continuing operations.
+Added: In the fourth quarter of fiscal 2020, the Company expects to record an adjustment to the carrying value of certain long-lived assets, including property and equipment and intangible assets, to record the assets at the carrying amount at the acquisition date adjusted for any depreciation expense that would have been recognized had the assets been held and used as part of continuing operations since their acquisition date.
+Added: As discussed in Note 3—Revenue Recognition , certain sales from the Wholesale segment to the retail discontinued operations are presented within Net sales.
+Added: In order to present Remaining Retail’s results of operations within continuing operations these Wholesale sales to retail discontinued operations will be eliminated upon consolidation.
+Added: Remaining Retail’s net sales will be included in the Net sales line of the Consolidated Statement of Operations.
+Added: As discussed in Note 3—Revenue Recognition , the Company currently holds Shoppers stores for sale without an expectation of a supply agreement and therefore no Wholesale sales were recorded within continuing operations.
+Added: Within the restatement of the Company’s segment financial information, the Company expects to recognize Wholesale segment sales to the majority of the remainder of the Shoppers locations, which will be eliminated upon consolidation as described above.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.