UNFI filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements 
 
 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) 
 (In thousands, except for per share data) 
 
 May 2, 
2020 
 
 August 3, 
2019 
 
 ASSETS 
 
 Cash and cash equivalents 
 
 $ 
 56,425 
 
 $ 
 42,350 
 
 Accounts receivable, net 
 
 1,232,612 
 
 1,065,699 
 
 Inventories 
 
 2,025,694 
 
 2,089,416 
 
 Prepaid expenses and other current assets 
 
 279,886 
 
 226,727 
 
 Current assets of discontinued operations 
 
 128,855 
 
 143,729 
 
 Total current assets 
 
 3,723,472 
 
 3,567,921 
 
 Property and equipment, net 
 
 1,534,270 
 
 1,639,259 
 
 Operating lease assets 
 
 984,039 
 
 — 
 
 Goodwill 
 
 19,148 
 
 442,256 
 
 Intangible assets, net 
 
 956,717 
 
 1,041,058 
 
 Deferred income taxes 
 
 67,690 
 
 31,087 
 
 Other assets 
 
 94,181 
 
 107,319 
 
 Long-term assets of discontinued operations 
 
 321,256 
 
 352,065 
 
 Total assets 
 
 $ 
 7,700,773 
 
 $ 
 7,180,965 
 
 LIABILITIES AND STOCKHOLDERS’ EQUITY 
 
 Accounts payable 
 
 $ 
 1,716,263 
 
 $ 
 1,476,857 
 
 Accrued expenses and other current liabilities 
 
 271,633 
 
 249,426 
 
 Accrued compensation and benefits 
 
 182,029 
 
 148,296 
 
 Current portion of operating lease liabilities 
 
 138,698 
 
 — 
 
 Current portion of long-term debt and finance lease liabilities 
 
 33,440 
 
 112,103 
 
 Current liabilities of discontinued operations 
 
 135,503 
 
 122,265 
 
 Total current liabilities 
 
 2,477,566 
 
 2,108,947 
 
 Long-term debt 
 
 2,541,657 
 
 2,819,050 
 
 Long-term operating lease liabilities 
 
 877,229 
 
 — 
 
 Long-term finance lease liabilities 
 
 145,672 
 
 108,208 
 
 Pension and other postretirement benefit obligations 
 
 191,105 
 
 237,266 
 
 Deferred income taxes 
 
 979 
 
 1,042 
 
 Other long-term liabilities 
 
 289,706 
 
 393,595 
 
 Long-term liabilities of discontinued operations 
 
 8,899 
 
 1,923 
 
 Total liabilities 
 
 6,532,813 
 
 5,670,031 
 
 Commitments and contingencies 
 
 Stockholders’ equity: 
 
 Preferred stock, $0.01 par value, authorized 5,000 shares; none issued or outstanding 
 
 — 
 
 — 
 
 Common stock, $0.01 par value, authorized 100,000 shares; 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 
 
 553 
 
 535 
 
 Additional paid-in capital 
 
 558,738 
 
 530,801 
 
 Treasury stock at cost 
 
 ( 24,231 
 ) 
 
 ( 24,231 
 ) 
 
 Accumulated other comprehensive loss 
 
 ( 151,645 
 ) 
 
 ( 108,953 
 ) 
 
 Retained earnings 
 
 786,400 
 
 1,115,519 
 
 Total United Natural Foods, Inc. stockholders’ equity 
 
 1,169,815 
 
 1,513,671 
 
 Noncontrolling interests 
 
 ( 1,855 
 ) 
 
 ( 2,737 
 ) 
 
 Total stockholders' equity 
 
 1,167,960 
 
 1,510,934 
 
 Total liabilities and stockholders’ equity 
 
 $ 
 7,700,773 
 
 $ 
 7,180,965 
 
 See accompanying Notes to Condensed Consolidated Financial Statements . 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) 
 (In thousands, except for per share data) 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 Net sales 
 
 $ 
 6,667,681 
 
 $ 
 5,962,620 
 
 $ 
 18,824,870 
 
 $ 
 14,979,982 
 
 Cost of sales 
 
 5,811,151 
 
 5,174,070 
 
 16,421,838 
 
 13,017,318 
 
 Gross profit 
 
 856,530 
 
 788,550 
 
 2,403,032 
 
 1,962,664 
 
 Operating expenses 
 
 774,376 
 
 737,681 
 
 2,300,635 
 
 1,852,768 
 
 Goodwill and asset impairment (adjustment) charges 
 
 — 
 
 ( 38,250 
 ) 
 
 425,405 
 
 332,621 
 
 Restructuring, acquisition and integration related expenses 
 
 10,449 
 
 19,438 
 
 54,385 
 
 134,567 
 
 Operating income (loss) 
 
 71,705 
 
 69,681 
 
 ( 377,393 
 ) 
 
 ( 357,292 
 ) 
 
 Other expense (income): 
 
 Net periodic benefit income, excluding service cost 
 
 ( 12,758 
 ) 
 
 ( 10,941 
 ) 
 
 ( 27,419 
 ) 
 
 ( 22,691 
 ) 
 
 Interest expense, net 
 
 47,108 
 
 54,917 
 
 145,247 
 
 121,149 
 
 Other, net 
 
 ( 973 
 ) 
 
 958 
 
 ( 1,539 
 ) 
 
 231 
 
 Total other expense, net 
 
 33,377 
 
 44,934 
 
 116,289 
 
 98,689 
 
 Income (loss) from continuing operations before income taxes 
 
 38,328 
 
 24,747 
 
 ( 493,682 
 ) 
 
 ( 455,981 
 ) 
 
 Benefit for income taxes 
 
 ( 14,849 
 ) 
 
 ( 8,027 
 ) 
 
 ( 106,330 
 ) 
 
 ( 104,091 
 ) 
 
 Net income (loss) from continuing operations 
 
 53,177 
 
 32,774 
 
 ( 387,352 
 ) 
 
 ( 351,890 
 ) 
 
 Income from discontinued operations, net of tax 
 
 37,192 
 
 24,370 
 
 64,253 
 
 47,847 
 
 Net income (loss) including noncontrolling interests 
 
 90,369 
 
 57,144 
 
 ( 323,099 
 ) 
 
 ( 304,043 
 ) 
 
 Less net (income) loss attributable to noncontrolling interests 
 
 ( 2,238 
 ) 
 
 ( 52 
 ) 
 
 ( 3,407 
 ) 
 
 116 
 
 Net income (loss) attributable to United Natural Foods, Inc. 
 
 $ 
 88,131 
 
 $ 
 57,092 
 
 $ 
 ( 326,506 
 ) 
 
 $ 
 ( 303,927 
 ) 
 
 Basic earnings (loss) per share: 
 
 Continuing operations 
 
 $ 
 0.99 
 
 $ 
 0.64 
 
 $ 
 ( 7.24 
 ) 
 
 $ 
 ( 6.93 
 ) 
 
 Discontinued operations 
 
 $ 
 0.65 
 
 $ 
 0.48 
 
 $ 
 1.14 
 
 $ 
 0.95 
 
 Basic earnings (loss) per share 
 
 $ 
 1.64 
 
 $ 
 1.12 
 
 $ 
 ( 6.10 
 ) 
 
 $ 
 ( 5.99 
 ) 
 
 Diluted earnings (loss) per share: 
 
 Continuing operations 
 
 $ 
 0.96 
 
 $ 
 0.64 
 
 $ 
 ( 7.24 
 ) 
 
 $ 
 ( 6.93 
 ) 
 
 Discontinued operations 
 
 $ 
 0.63 
 
 $ 
 0.48 
 
 $ 
 1.12 
 
 $ 
 0.94 
 
 Diluted earnings (loss) per share 
 
 $ 
 1.60 
 
 $ 
 1.12 
 
 $ 
 ( 6.10 
 ) 
 
 $ 
 ( 5.99 
 ) 
 
 Weighted average shares outstanding: 
 
 Basic 
 
 53,718 
 
 50,846 
 
 53,485 
 
 50,748 
 
 Diluted 
 
 55,217 
 
 50,964 
 
 53,485 
 
 50,748 
 
 See accompanying Notes to Condensed Consolidated Financial Statements . 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) 
 (In thousands) 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 Net income (loss) including noncontrolling interests 
 
 $ 
 90,369 
 
 $ 
 57,144 
 
 $ 
 ( 323,099 
 ) 
 
 $ 
 ( 304,043 
 ) 
 
 Other comprehensive (loss) income: 
 
 Recognition of pension and other postretirement benefit obligations, net of tax (1) 
 
 ( 574 
 ) 
 
 — 
 
 7,368 
 
 — 
 
 Recognition of interest rate swap cash flow hedges, net of tax (2) 
 
 ( 39,066 
 ) 
 
 ( 16,196 
 ) 
 
 ( 46,499 
 ) 
 
 ( 26,898 
 ) 
 
 Foreign currency translation adjustments 
 
 ( 3,585 
 ) 
 
 ( 1,326 
 ) 
 
 ( 3,561 
 ) 
 
 ( 2,308 
 ) 
 
 Total other comprehensive loss 
 
 ( 43,225 
 ) 
 
 ( 17,522 
 ) 
 
 ( 42,692 
 ) 
 
 ( 29,206 
 ) 
 
 Less comprehensive (income) loss attributable to noncontrolling interests 
 
 ( 2,238 
 ) 
 
 ( 52 
 ) 
 
 ( 3,407 
 ) 
 
 116 
 
 Total comprehensive income (loss) attributable to United Natural Foods, Inc. 
 
 $ 
 44,906 
 
 $ 
 39,570 
 
 $ 
 ( 369,198 
 ) 
 
 $ 
 ( 333,133 
 ) 
 
 (1) 
 Amounts are net of tax (benefit) expense of $( 0.2 ) million , $ 0.0 million , $ 2.4 million and $ 0.0 million , respectively. 
 
 (2) 
 Amounts are net of tax (benefit) expense of $( 13.4 ) million , $( 6.0 ) million , $( 15.9 ) million and $( 9.9 ) million , respectively. 
 
 See accompanying Notes to Condensed Consolidated Financial Statements . 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) 
 For the 13-week periods ended May 2, 2020 and April 27, 2019 
 (In thousands) 
 
 Common Stock 
 
 Treasury Stock 
 
 Additional 
 Paid-in Capital 
 
 Accumulated 
 Other 
 Comprehensive Loss 
 
 Retained Earnings 
 
 Total United Natural Foods, Inc. 
 Stockholders’ Equity 
 
 Noncontrolling Interests 
 
 Total Stockholders’ Equity 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Balances at February 1, 2020 
 54,175 
 
 $ 
 542 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 535,900 
 
 $ 
 ( 108,420 
 ) 
 
 $ 
 698,269 
 
 $ 
 1,102,060 
 
 $ 
 ( 2,966 
 ) 
 
 $ 
 1,099,094 
 
 Restricted stock vestings and stock option exercises 
 21 
 
 — 
 
 — 
 
 — 
 
 ( 143 
 ) 
 
 — 
 
 — 
 
 ( 143 
 ) 
 
 — 
 
 ( 143 
 ) 
 
 Share-based compensation 
 — 
 
 — 
 
 — 
 
 — 
 
 11,137 
 
 — 
 
 — 
 
 11,137 
 
 — 
 
 11,137 
 
 Other comprehensive loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 43,225 
 ) 
 
 — 
 
 ( 43,225 
 ) 
 
 — 
 
 ( 43,225 
 ) 
 
 Distributions to noncontrolling interests 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 1,127 
 ) 
 
 ( 1,127 
 ) 
 
 Proceeds from issuance of common stock, net 
 1,096 
 
 11 
 
 — 
 
 — 
 
 11,844 
 
 — 
 
 — 
 
 11,855 
 
 — 
 
 11,855 
 
 Net income 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 88,131 
 
 88,131 
 
 2,238 
 
 90,369 
 
 Balances at May 2, 2020 
 55,292 
 
 $ 
 553 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 558,738 
 
 $ 
 ( 151,645 
 ) 
 
 $ 
 786,400 
 
 $ 
 1,169,815 
 
 $ 
 ( 1,855 
 ) 
 
 $ 
 1,167,960 
 
 Balances at January 26, 2019 
 51,433 
 
 $ 
 514 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 495,514 
 
 $ 
 ( 25,863 
 ) 
 
 $ 
 1,039,490 
 
 $ 
 1,485,424 
 
 $ 
 ( 2,056 
 ) 
 
 $ 
 1,483,368 
 
 Restricted stock vestings and stock option exercises 
 26 
 
 — 
 
 — 
 
 — 
 
 ( 115 
 ) 
 
 — 
 
 — 
 
 ( 115 
 ) 
 
 — 
 
 ( 115 
 ) 
 
 Share-based compensation 
 — 
 
 — 
 
 — 
 
 — 
 
 4,316 
 
 — 
 
 — 
 
 4,316 
 
 — 
 
 4,316 
 
 Other comprehensive loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 17,522 
 ) 
 
 — 
 
 ( 17,522 
 ) 
 
 — 
 
 ( 17,522 
 ) 
 
 Proceeds from issuance of common stock, net 
 260 
 
 3 
 
 — 
 
 — 
 
 3,018 
 
 — 
 
 — 
 
 3,021 
 
 — 
 
 3,021 
 
 Net income 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 57,092 
 
 57,092 
 
 52 
 
 57,144 
 
 Balances at April 27, 2019 
 51,719 
 
 $ 
 517 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 502,733 
 
 $ 
 ( 43,385 
 ) 
 
 $ 
 1,096,582 
 
 $ 
 1,532,216 
 
 $ 
 ( 2,004 
 ) 
 
 $ 
 1,530,212 
 
 See accompanying Notes to Condensed Consolidated Financial Statements 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) 
 For the 39-week periods ended May 2, 2020 and April 27, 2019 
 (In thousands) 
 
 Common Stock 
 
 Treasury Stock 
 
 Additional 
 Paid-in Capital 
 
 Accumulated 
 Other 
 Comprehensive Loss 
 
 Retained Earnings 
 
 Total 
 Stockholders’ Equity 
 
 Noncontrolling Interests 
 
 Total Stockholders’ Equity 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Balances at August 3, 2019 
 53,501 
 
 $ 
 535 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 530,801 
 
 $ 
 ( 108,953 
 ) 
 
 $ 
 1,115,519 
 
 $ 
 1,513,671 
 
 $ 
 ( 2,737 
 ) 
 
 $ 
 1,510,934 
 
 Cumulative effect of change in accounting principle 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 2,613 
 ) 
 
 ( 2,613 
 ) 
 
 — 
 
 ( 2,613 
 ) 
 
 Restricted stock vestings and stock option exercises 
 464 
 
 5 
 
 — 
 
 — 
 
 ( 1,020 
 ) 
 
 — 
 
 — 
 
 ( 1,015 
 ) 
 
 — 
 
 ( 1,015 
 ) 
 
 Share-based compensation 
 — 
 
 — 
 
 — 
 
 — 
 
 15,088 
 
 — 
 
 — 
 
 15,088 
 
 — 
 
 15,088 
 
 Other comprehensive loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 42,692 
 ) 
 
 — 
 
 ( 42,692 
 ) 
 
 — 
 
 ( 42,692 
 ) 
 
 Distributions to noncontrolling interests 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 2,525 
 ) 
 
 ( 2,525 
 ) 
 
 Proceeds from issuance of common stock, net 
 1,327 
 
 13 
 
 — 
 
 — 
 
 13,869 
 
 — 
 
 — 
 
 13,882 
 
 — 
 
 13,882 
 
 Net loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 326,506 
 ) 
 
 ( 326,506 
 ) 
 
 3,407 
 
 ( 323,099 
 ) 
 
 Balances at May 2, 2020 
 55,292 
 
 $ 
 553 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 558,738 
 
 $ 
 ( 151,645 
 ) 
 
 $ 
 786,400 
 
 $ 
 1,169,815 
 
 $ 
 ( 1,855 
 ) 
 
 $ 
 1,167,960 
 
 Balances at July 28, 2018 
 51,025 
 
 510 
 
 615 
 
 ( 24,231 
 ) 
 
 483,623 
 
 ( 14,179 
 ) 
 
 1,400,232 
 
 1,845,955 
 
 — 
 
 1,845,955 
 
 Cumulative effect of change in accounting principle 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 277 
 
 277 
 
 — 
 
 277 
 
 Restricted stock vestings and stock option exercises, net of tax 
 434 
 
 4 
 
 — 
 
 — 
 
 ( 3,138 
 ) 
 
 — 
 
 — 
 
 ( 3,134 
 ) 
 
 — 
 
 ( 3,134 
 ) 
 
 Share-based compensation 
 — 
 
 — 
 
 — 
 
 — 
 
 18,827 
 
 — 
 
 — 
 
 18,827 
 
 — 
 
 18,827 
 
 Other/share-based compensation 
 — 
 
 — 
 
 — 
 
 — 
 
 403 
 
 — 
 
 — 
 
 403 
 
 — 
 
 403 
 
 Other comprehensive loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 29,206 
 ) 
 
 — 
 
 ( 29,206 
 ) 
 
 — 
 
 ( 29,206 
 ) 
 
 Acquisition of noncontrolling interests 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 1,633 
 ) 
 
 ( 1,633 
 ) 
 
 Distributions to noncontrolling interests 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 255 
 ) 
 
 ( 255 
 ) 
 
 Proceeds from issuance of common stock, net 
 260 
 
 3 
 
 — 
 
 — 
 
 3,018 
 
 — 
 
 — 
 
 3,021 
 
 — 
 
 3,021 
 
 Net loss 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 303,927 
 ) 
 
 ( 303,927 
 ) 
 
 ( 116 
 ) 
 
 ( 304,043 
 ) 
 
 Balances at April 27, 2019 
 51,719 
 
 $ 
 517 
 
 615 
 
 $ 
 ( 24,231 
 ) 
 
 $ 
 502,733 
 
 $ 
 ( 43,385 
 ) 
 
 $ 
 1,096,582 
 
 $ 
 1,532,216 
 
 $ 
 ( 2,004 
 ) 
 
 $ 
 1,530,212 
 
 See accompanying Notes to Condensed Consolidated Financial Statements . 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 
 
 39-Week Period Ended 
 
 (In thousands) 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 CASH FLOWS FROM OPERATING ACTIVITIES: 
 
 Net loss including noncontrolling interests 
 
 $ 
 ( 323,099 
 ) 
 
 $ 
 ( 304,043 
 ) 
 
 Income from discontinued operations, net of tax 
 
 64,253 
 
 47,847 
 
 Net loss from continuing operations 
 
 ( 387,352 
 ) 
 
 ( 351,890 
 ) 
 
 Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: 
 
 Depreciation and amortization 
 
 214,002 
 
 169,780 
 
 Share-based compensation 
 
 15,088 
 
 18,827 
 
 Loss (gain) on disposition of assets 
 
 1,784 
 
 ( 1,147 
 ) 
 
 Closed property and other restructuring charges 
 
 24,976 
 
 21,368 
 
 Goodwill and asset impairment charges 
 
 425,405 
 
 332,621 
 
 Net pension and other postretirement benefit income 
 
 ( 27,419 
 ) 
 
 ( 22,691 
 ) 
 
 Deferred income tax benefit 
 
 ( 17,381 
 ) 
 
 ( 65,552 
 ) 
 
 LIFO charge 
 
 19,256 
 
 13,686 
 
 Provision for doubtful accounts, net 
 
 44,238 
 
 12,486 
 
 Loss on debt extinguishment 
 
 73 
 
 2,562 
 
 Non-cash interest expense 
 
 10,993 
 
 6,375 
 
 Changes in operating assets and liabilities, net of acquired businesses 
 
 ( 12,525 
 ) 
 
 ( 130,051 
 ) 
 
 Net cash provided by operating activities of continuing operations 
 
 311,138 
 
 6,374 
 
 Net cash provided by operating activities of discontinued operations 
 
 141,141 
 
 70,816 
 
 Net cash provided by operating activities 
 
 452,279 
 
 77,190 
 
 CASH FLOWS FROM INVESTING ACTIVITIES: 
 
 Capital expenditures 
 
 ( 118,245 
 ) 
 
 ( 136,953 
 ) 
 
 Purchases of acquired businesses, net of cash acquired 
 
 — 
 
 ( 2,282,327 
 ) 
 
 Proceeds from dispositions of assets 
 
 19,592 
 
 169,274 
 
 Proceeds from disposal of investments 
 
 9,434 
 
 — 
 
 Payments for long-term investment 
 
 — 
 
 ( 110 
 ) 
 
 Payments of company owned life insurance premiums 
 
 ( 1,335 
 ) 
 
 — 
 
 Other 
 
 ( 1,045 
 ) 
 
 299 
 
 Net cash used in investing activities of continuing operations 
 
 ( 91,599 
 ) 
 
 ( 2,249,817 
 ) 
 
 Net cash provided by investing activities of discontinued operations 
 
 18,569 
 
 50,065 
 
 Net cash used in investing activities 
 
 ( 73,030 
 ) 
 
 ( 2,199,752 
 ) 
 
 CASH FLOWS FROM FINANCING ACTIVITIES: 
 
 Proceeds from borrowings of long-term debt 
 
 2,050 
 
 1,912,178 
 
 Proceeds from borrowings under revolving credit line 
 
 3,244,573 
 
 3,313,014 
 
 Proceeds from issuance of other loans 
 
 6,266 
 
 22,719 
 
 Repayments of borrowings under revolving credit line 
 
 ( 3,508,573 
 ) 
 
 ( 2,306,104 
 ) 
 
 Repayments of long-term debt and finance leases 
 
 ( 111,923 
 ) 
 
 ( 736,949 
 ) 
 
 Proceeds from the issuance of common stock and exercise of stock options 
 
 5,662 
 
 1,589 
 
 Payment of employee restricted stock tax withholdings 
 
 ( 1,015 
 ) 
 
 ( 3,253 
 ) 
 
 Payments for debt issuance costs 
 
 — 
 
 ( 62,587 
 ) 
 
 Net cash (used in) provided by financing activities of continuing operations 
 
 ( 362,960 
 ) 
 
 2,140,607 
 
 Net cash used in financing activities of discontinued operations 
 
 ( 2,525 
 ) 
 
 ( 254 
 ) 
 
 Net cash (used in) provided by financing activities 
 
 ( 365,485 
 ) 
 
 2,140,353 
 
 EFFECT OF EXCHANGE RATE CHANGES ON CASH 
 
 ( 290 
 ) 
 
 ( 226 
 ) 
 
 NET INCREASE IN CASH AND CASH EQUIVALENTS 
 
 13,474 
 
 17,565 
 
 Cash and cash equivalents, at beginning of period 
 
 45,263 
 
 23,315 
 
 Cash and cash equivalents at end of period 
 
 58,737 
 
 40,880 
 
 Less: cash and cash equivalents of discontinued operations 
 
 ( 2,312 
 ) 
 
 ( 3,019 
 ) 
 
 Cash and cash equivalents 
 
 $ 
 56,425 
 
 $ 
 37,861 
 
 Supplemental disclosures of cash flow information: 
 
 Cash paid for interest 
 
 $ 
 139,040 
 
 $ 
 115,378 
 
 Cash (refunds) payments for federal and state income taxes, net 
 
 $ 
 ( 24,236 
 ) 
 
 $ 
 71,643 
 
 See accompanying Notes to Condensed Consolidated Financial Statements . 
 
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 Table of contents 

 UNITED NATURAL FOODS, INC. 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 
 
 NOTE 1—SIGNIFICANT ACCOUNTING POLICIES 
 
 Nature of Business 
 
 United Natural Foods, Inc. and its subsidiaries (the “Company” or “UNFI”) is a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services. The Company sells its products primarily throughout the United States and Canada. 
 
 Fiscal Year 
 
 The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks. References to the third quarter of fiscal 2020 and 2019 relate to the 13-week fiscal quarters ended May 2, 2020 and April 27, 2019 , respectively. 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 
 
 The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation, with the exception of sales transactions from continuing to discontinued operations for wholesale supply discussed further in Note 3—Revenue Recognition. Unless otherwise indicated, references to the Condensed Consolidated Statements of Operations , the Condensed Consolidated Balance Sheets and the Notes to the Condensed Consolidated Financial Statements exclude all amounts related to discontinued operations. Refer to Note 18—Discontinued Operations for additional information about discontinued operations. 
 
 The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these Condensed Consolidated Financial Statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. However, the results of operations for interim periods may not be indicative of the results that may be expected for a full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2019 (the “Annual Report”). Except as described for lease accounting below, there were no material changes in significant accounting policies from those described in the Company’s Annual Report. 
 
 Use of Estimates 
 
 The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 
 
 Cash and Cash Equivalents 
 
 Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment. The Company funds all intraday bank balance overdrafts during the same business day. Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows. As of May 2, 2020 and August 3, 2019 , the Company had net book overdrafts of $ 290.3 million and $ 236.9 million , respectively. 
 
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 Table of contents 

 Inventories, Net 
 
 Inventories are valued at the lower of cost or market. 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. 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. 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. 
 
 Leases 
 
 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. Finance and operating lease assets represent the Company’s right to use an underlying asset as lessee for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. These assets and obligations are recognized at the lease commencement date based on the present value of lease payments, net of incentives, over the lease term. Incremental borrowing rates are estimated based on the Company’s borrowing rate as of the lease commencement date to determine the present value of lease payments, when lease contracts do not provide a readily determinable implicit rate. Incremental borrowing rates are determined by using the yield curve based on the Company’s credit rating adjusted for the Company’s specific debt profile and secured debt risk. The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms include option extension periods when it is reasonably certain that those options will be exercised. Leases with an initial expected term of 12 months or less are not recorded in the consolidated balance sheets and the related lease expense is recognized on a straight-line basis over the lease term. For all classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed nonlease components. 
 
 The Company recognizes contractual obligations and receipts on a gross basis, such that the related lease obligation to the landlord is presented separately from the sublease created by the lease assignment to the assignee. As a result, the Company continues to recognize on its Condensed Consolidated Balance Sheets the operating lease assets and liabilities, and finance lease assets and obligations, for assigned leases. 
 
 The Company records operating lease expense and income using the straight-line method within Operating expenses, and lease income on a straight-line method for leases with its customers within Net sales. Finance lease expense is recognized as amortization expense within Operating expenses, and interest expense within Interest expense, net. For operating leases with step rent provisions whereby the rental payments increase over the life of the lease, and for leases where the Company receives rent-free periods, the Company recognizes expense and income based on a straight-line basis based on the total minimum lease payments to be made or lease receipts expected to be received over the expected lease term, including rent-free periods. The Company is generally obligated for property tax, insurance and maintenance expenses related to leased properties, which often represent variable lease expenses. For contractual obligations on properties where the Company remains the primary obligor upon assignment of the lease and does not obtain a release from landlords or retain the equity interests in the legal entities with the related rent contracts, the Company continues to recognize rent expense and rent income within Operating expenses. 
 
 Operating and finance lease assets are reviewed for impairment based on an ongoing review of circumstances that indicate the assets may no longer be recoverable, such as closures of retail stores, distribution centers and other properties that are no longer being utilized in current operations, and other factors. The Company calculates operating and finance lease impairments using a discount rate to calculate the present value of estimated subtenant rentals that could be reasonably obtained for the property. Lease impairment charges are recorded as a component of Restructuring, acquisition and integration related expenses in the Condensed Consolidated Statements of Operations. 
 
 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. 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. 
 
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 NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS 
 
 Recently Adopted Accounting Pronouncements 
 
 In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2016-02, Leases (Topic 842), which provides new comprehensive lease accounting guidance that supersedes previous lease guidance. The objective of this ASU is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. Criteria for distinguishing between finance and operating leases are substantially similar to criteria for distinguishing between capital and operating leases in previous lease guidance. Lease agreements that are 12 months or less are permitted to be excluded from the balance sheet. In addition, this ASU expands the disclosure requirements of lease arrangements. The Company adopted this standard in the first quarter of fiscal 2020 on August 4, 2019, the effective and initial application date, using the additional transition method under ASU 2018-11, which allows for a cumulative effect adjustment within retained earnings in the period of adoption. In addition, the Company elected the “package of three” practical expedients which allows companies to not reassess whether arrangements contain leases, the classification of leases, and the capitalization of initial direct costs. The impact of the adoption to the Company’s Condensed Consolidated Balance Sheets includes the recognition of operating lease liabilities of $ 1.1 billion with corresponding right-of-use assets of approximately the same amount based on the present value of the remaining lease payments for existing operating leases. 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. 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. At the transition date, the Company was constructing one facility, which was completed in the fourth quarter of fiscal 2020. 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. 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. 
 
 The effects of the changes, including those discussed above, made to the Company’s Condensed Consolidated Balance Sheets as of August 3, 2019 for the adoption of the new lease guidance were as follows (in thousands): 
 
 Balance at August 3, 2019 
 
 Adjustments due to adoption of the new lease guidance 
 
 Adjusted Balance at August 4, 2019 
 
 Assets 
 
 Prepaid expenses and other current assets 
 
 $ 
 226,727 
 
 $ 
 ( 14,733 
 ) 
 
 $ 
 211,994 
 
 Property and equipment, net 
 
 1,639,259 
 
 ( 142,541 
 ) 
 
 1,496,718 
 
 Operating lease assets 
 
 — 
 
 1,059,473 
 
 1,059,473 
 
 Intangible assets, net 
 
 1,041,058 
 
 ( 17,671 
 ) 
 
 1,023,387 
 
 Deferred income taxes 
 
 $ 
 31,087 
 
 1,052 
 
 $ 
 32,139 
 
 Total increase to assets 
 
 $ 
 885,580 
 
 Liabilities and Stockholders’ Equity 
 
 Accrued expense and other current liabilities 
 
 $ 
 249,426 
 
 $ 
 ( 7,260 
 ) 
 
 $ 
 242,166 
 
 Current portion of operating lease liabilities 
 
 — 
 
 137,741 
 
 137,741 
 
 Current portion of long-term debt and finance lease liabilities 
 
 112,103 
 
 ( 6,936 
 ) 
 
 105,167 
 
 Long-term operating lease liabilities 
 
 — 
 
 936,728 
 
 936,728 
 
 Long-term finance lease obligations 
 
 108,208 
 
 ( 37,565 
 ) 
 
 70,643 
 
 Other long-term liabilities 
 
 393,595 
 
 ( 134,515 
 ) 
 
 259,080 
 
 Total stockholders’ equity 
 
 $ 
 1,510,934 
 
 ( 2,613 
 ) 
 
 $ 
 1,508,321 
 
 Total increase to liabilities and stockholders’ equity 
 
 $ 
 885,580 
 
 In October 2018, the FASB issued authoritative guidance under ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU adds the Overnight Index Swap (OIS) rate based on Secured Overnight Financing Rate (SOFR) as a benchmark interest rate for hedge accounting purposes. This ASU is effective for public companies with interim and fiscal years beginning after December 15, 2018, which for the Company was the first quarter of fiscal year 2020. The Company adopted this standard in the first quarter of fiscal 2020 with no impact to the Company’s consolidated financial statements as LIBOR is still being used as benchmark interest rate. 
 
 In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. This ASU is effective for all entities for annual and interim periods in fiscal years beginning after December 15, 2018. The Company adopted this ASU in the first quarter of fiscal 2020. The adoption of this ASU had no impact to Accumulated other comprehensive loss or Retained earnings. 
 
 In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 . This ASU clarifies the accounting treatment for the measurement of credit losses under ASC 236 and provides further clarification on previously issued updates including ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Since the Company adopted ASU 2017-12 in the fourth quarter of fiscal 2018, the amendments in ASU 2019-04 related to clarifications on Accounting for Hedging Activities have been adopted by the Company in the first quarter of fiscal 2020. The remaining amendments within ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, which for the Company is the first quarter of fiscal 2021. Early adoption is permitted. 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. 
 
 In March 2020, the FASB issued ASU 2020-04, Reference rate reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . 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. The Company adopted this ASU in the third quarter of fiscal 2020, which is effective on a prospective basis. The adoption of this ASU did not have a material impact on the consolidated financial statements. 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 
 
 In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. ASU 2018-05 requires implementation costs incurred by customers in cloud computing arrangements (i.e. hosting arrangements) to be capitalized under the same premises as authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The Company is required to adopt this new guidance in the first quarter of fiscal 2021. The Company has outstanding cloud computing arrangements and continues to incur costs that it believes would be required to be capitalized under ASU 2018-05. The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s consolidated financial statements. 
 
 In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans. The Company is required to adopt this guidance in the first quarter of fiscal 2022. The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s consolidated financial statements. 
 
 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, “Topic 326”). Topic 326 changes the impairment model for most financial assets and certain other instruments. 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. 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. 
 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 eliminates certain exceptions to Topic 740’s general principles. The amendments also improve consistent application and simplifies its application. The Company is required to adopt this guidance in the first quarter of fiscal 2022. The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s consolidated financial statements. 
 
 NOTE 3—REVENUE RECOGNITION 
 
 Disaggregation of Revenues 
 
 The Company records revenue to four customer channels, which are described below: 
 
 • 
 Supermarkets, which include accounts that also carry conventional products, and include chain accounts, supermarket independents, and gourmet and ethnic specialty stores. 
 
 • 
 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. 
 
 • 
 Other, which includes conventional military business, international customers outside of Canada, as well as sales to Amazon.com, Inc., e-commerce, and foodservice. 
 
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 The following tables detail the Company’s revenue recognition for the periods presented by customer channel for each of its segments. The Company does not record its revenues within its wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly. 
 
 Net Sales for the 13-Week Period Ended 
 
 (in millions) 
 
 May 2, 2020 
 
 Customer Channel 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Consolidated 
 
 Supermarkets 
 
 $ 
 4,267 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 4,267 
 
 Supernatural 
 
 1,279 
 
 — 
 
 — 
 
 1,279 
 
 Independents 
 
 684 
 
 — 
 
 — 
 
 684 
 
 Other 
 
 441 
 
 56 
 
 ( 59 
 ) 
 
 438 
 
 Total 
 
 $ 
 6,671 
 
 $ 
 56 
 
 $ 
 ( 59 
 ) 
 
 $ 
 6,668 
 
 Net Sales for the 13-Week Period Ended 
 
 (in millions) 
 
 April 27, 2019 (1) 
 
 Customer Channel 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Consolidated 
 
 Supermarkets 
 
 $ 
 3,701 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 3,701 
 
 Supernatural 
 
 1,102 
 
 — 
 
 — 
 
 1,102 
 
 Independents 
 
 707 
 
 — 
 
 — 
 
 707 
 
 Other 
 
 435 
 
 62 
 
 ( 44 
 ) 
 
 453 
 
 Total 
 
 $ 
 5,945 
 
 $ 
 62 
 
 $ 
 ( 44 
 ) 
 
 $ 
 5,963 
 
 Net Sales for the 39-Week Period Ended 
 
 (in millions) 
 
 May 2, 2020 (1) 
 
 Customer Channel 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Consolidated 
 
 Supermarkets 
 
 $ 
 11,915 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 11,915 
 
 Supernatural 
 
 3,600 
 
 — 
 
 — 
 
 3,600 
 
 Independents 
 
 1,983 
 
 — 
 
 — 
 
 1,983 
 
 Other 
 
 1,324 
 
 158 
 
 ( 155 
 ) 
 
 1,327 
 
 Total 
 
 $ 
 18,822 
 
 $ 
 158 
 
 $ 
 ( 155 
 ) 
 
 $ 
 18,825 
 
 Net Sales for the 39-Week Period Ended 
 
 (in millions) 
 
 April 27, 2019 (1) 
 
 Customer Channel 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Consolidated 
 
 Supermarkets 
 
 $ 
 8,559 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 8,559 
 
 Supernatural 
 
 3,229 
 
 — 
 
 — 
 
 3,229 
 
 Independents 
 
 2,041 
 
 — 
 
 — 
 
 2,041 
 
 Other 
 
 1,104 
 
 167 
 
 ( 120 
 ) 
 
 1,151 
 
 Total 
 
 $ 
 14,933 
 
 $ 
 167 
 
 $ 
 ( 120 
 ) 
 
 $ 
 14,980 
 
 (1) 
 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. 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. 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. 
 
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 The Company serves customers in the United States and Canada, as well as customers located in other countries. However, all of the Company’s revenue is earned in the U.S. and Canada, as international distribution occurs through freight-forwarders. The Company does not have any performance obligations related to international shipments subsequent to delivery to the domestic port. 
 
 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. 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. 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 
 
 Accounts and notes receivable are as follows: 
 
 (in thousands) 
 
 May 2, 2020 
 
 August 3, 2019 
 
 Customer accounts receivable 
 
 $ 
 1,264,869 
 
 $ 
 1,063,167 
 
 Allowance for uncollectible receivables 
 
 ( 52,144 
 ) 
 
 ( 20,725 
 ) 
 
 Other receivables, net 
 
 19,887 
 
 23,257 
 
 Accounts receivable, net 
 
 $ 
 1,232,612 
 
 $ 
 1,065,699 
 
 Customer notes receivable, net, included within Prepaid expenses and other current assets 
 
 $ 
 12,122 
 
 $ 
 11,912 
 
 Long-term notes receivable, net, included within Other assets 
 
 $ 
 25,472 
 
 $ 
 34,408 
 
 NOTE 4—ACQUISITIONS 
 
 Supervalu Acquisition 
 
 On July 25, 2018, the Company entered into an agreement and plan of merger to acquire all of the outstanding equity securities of Supervalu, which was then the largest publicly traded conventional grocery distributor in the United States. The acquisition of Supervalu diversifies the Company’s customer base, further 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 $ 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. Included in the liabilities assumed in the Supervalu acquisition were the Supervalu Senior Notes with a fair value of $ 546.6 million . These Senior Notes were redeemed in the second quarter of fiscal 2019 following the required 30-day notice period, resulting in their satisfaction and discharge. 
 
 The assets and liabilities of Supervalu were recorded in the Company’s Consolidated Financial Statements on a preliminary 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 18—Discontinued Operations for more information on discontinued operations. 
 
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 The following table summarizes the final consideration, fair value of assets acquired and liabilities assumed, and the resulting goodwill. 
 
 (in thousands) 
 
 Final Acquisition Date Fair Values 
 
 Consideration: 
 
 Outstanding shares 
 
 $ 
 1,258,450 
 
 Outstanding debt, excluding acquired senior notes 
 
 1,046,170 
 
 Equity-based awards 
 
 18,411 
 
 Total consideration 
 
 $ 
 2,323,031 
 
 Fair value of assets acquired and liabilities assumed: 
 
 Cash and cash equivalents 
 
 $ 
 25,102 
 
 Accounts receivable 
 
 552,381 
 
 Inventories 
 
 1,156,781 
 
 Prepaid expenses and other current assets 
 
 112,449 
 
 Current assets of discontinued operations 
 
 196,848 
 
 Property, plant and equipment 
 
 1,207,115 
 
 Goodwill 
 
 376,181 
 
 Intangible assets 
 
 918,103 
 
 Other assets 
 
 77,008 
 
 Long-term assets of discontinued operations 
 
 433,839 
 
 Accounts payable 
 
 ( 974,252 
 ) 
 
 Current portion of long-term debt and finance lease obligations 
 
 ( 579,565 
 ) 
 
 Other current liabilities 
 
 ( 331,693 
 ) 
 
 Current liabilities of discontinued operations 
 
 ( 148,763 
 ) 
 
 Long-term debt 
 
 ( 34,355 
 ) 
 
 Long-term finance lease obligations 
 
 ( 103,289 
 ) 
 
 Pension and other postretirement benefit obligations 
 
 ( 234,324 
 ) 
 
 Deferred income taxes 
 
 ( 18,254 
 ) 
 
 Other long-term liabilities 
 
 ( 308,516 
 ) 
 
 Long-term liabilities of discontinued operations 
 
 ( 1,398 
 ) 
 
 Noncontrolling interests 
 
 1,633 
 
 Total consideration 
 
 2,323,031 
 
 Less: Cash and cash equivalents (1) 
 
 ( 30,596 
 ) 
 
 Total consideration, net of cash and cash equivalents acquired 
 
 $ 
 2,292,435 
 
 (1) 
 Includes cash and cash equivalents acquired attributable to continuing operations and discontinued operations. 
 
 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. A substantial portion of goodwill is deductible for income tax purposes. Goodwill from the acquisition was attributed to the Company’s Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit, which in the first quarter of fiscal 2020 was reorganized into a single U.S. Wholesale reporting unit, as discussed further in Note 6—Goodwill and Intangible Assets . No goodwill was attributed to the Company’s Retail reporting unit within discontinued operations. 
 
 During the first quarter of fiscal 2020, the Company finalized its fair value estimates of its net assets, primarily by completing income tax returns and reviews of carrying values of other assets and liabilities. There were no material changes to preliminary amounts previously reported. 
 
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 The following table summarizes the identifiable intangible assets and liabilities recorded based on final valuations. The identifiable intangible assets are expected to be amortized on a straight-line basis over the estimated useful lives indicated. The 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. 
 
 Final Acquisition Date Fair Values 
 
 (in thousands) 
 Estimated Useful Life 
 
 Continuing Operations 
 
 Discontinued Operations 
 
 Customer relationship assets 
 10-17 years 
 
 $ 
 810,000 
 
 $ 
 — 
 
 Favorable operating leases 
 1-19 years 
 
 21,629 
 
 — 
 
 Leases in place 
 1-8 years 
 
 10,474 
 
 — 
 
 Tradenames 
 2-9 years 
 
 66,000 
 
 17,000 
 
 Pharmacy prescription files 
 5-7 years 
 
 — 
 
 45,900 
 
 Non-compete agreement 
 2 years 
 
 10,000 
 
 — 
 
 Unfavorable operating leases 
 1-12 years 
 
 ( 21,754 
 ) 
 
 — 
 
 Total 
 
 $ 
 896,349 
 
 $ 
 62,900 
 
 The Company incurred acquisition-related costs in conjunction with the Supervalu acquisition, which are quantified in Note 5—Restructuring, Acquisition and Integration Related Expenses . 
 
 The accompanying Condensed Consolidated Statements of Operations include the results of operations of Supervalu from October 22, 2018. Supervalu’s net sales from discontinued operations for this time period are reported in Note 18—Discontinued Operations . 
 
 The following table presents unaudited supplemental pro forma consolidated Net sales and Net loss from continuing operations based on the Company’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 (3) 
 
 Net sales 
 $ 
 6,067,869 
 
 $ 
 18,096,796 
 
 $ 
 18,125,148 
 
 Net income (loss) from continuing operations 
 $ 
 73,853 
 
 $ 
 ( 378,422 
 ) 
 
 $ 
 42,855 
 
 Basic net income (loss) from continuing operations per share 
 $ 
 1.46 
 
 $ 
 ( 7.46 
 ) 
 
 $ 
 0.85 
 
 Diluted net income (loss) from continuing operations per share 
 $ 
 1.46 
 
 $ 
 ( 7.46 
 ) 
 
 $ 
 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 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. 
 
 NOTE 5—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES 
 
 Restructuring, acquisition and integration related expenses incurred were as follows: 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 (in thousands) 
 May 2, 2020 
 
 April 27, 2019 
 
 May 2, 2020 
 
 April 27, 2019 
 
 2019 SUPERVALU INC. restructuring expenses 
 $ 
 1,492 
 
 $ 
 12,257 
 
 $ 
 3,993 
 
 $ 
 66,423 
 
 Acquisition and integration costs 
 552 
 
 6,084 
 
 25,257 
 
 47,500 
 
 Closed property charges and costs 
 8,405 
 
 1,097 
 
 25,135 
 
 20,644 
 
 Total 
 $ 
 10,449 
 
 $ 
 19,438 
 
 $ 
 54,385 
 
 $ 
 134,567 
 
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 Restructuring Programs 
 
 The following is a summary of the current period activity within restructuring reserves by program included in the Condensed Consolidated Balance Sheets , primarily within Accrued compensation and benefits for severance and other employee separation costs and related tax payments. 
 
 (in thousands) 
 2019 SUPERVALU INC. 
 
 2018 Earth Origins Market 
 
 2017 Cost Saving and Efficiency Initiatives 
 
 Total 
 
 Balances at August 3, 2019 
 $ 
 11,857 
 
 $ 
 383 
 
 $ 
 701 
 
 $ 
 12,941 
 
 Restructuring program charge 
 3,993 
 
 — 
 
 — 
 
 3,993 
 
 Cash payments 
 ( 13,432 
 ) 
 
 ( 383 
 ) 
 
 ( 701 
 ) 
 
 ( 14,516 
 ) 
 
 Balances at May 2, 2020 
 $ 
 2,418 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 2,418 
 
 Cumulative program charges incurred from inception to date 
 $ 
 78,407 
 
 $ 
 2,219 
 
 $ 
 6,864 
 
 $ 
 87,490 
 
 2019 SUPERVALU INC. 
 
 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; and (ii) dispose of and exit the Supervalu legacy retail operations, as efficiently and economically as possible in order to focus on the Company’s core wholesale distribution business. Actions associated with retail divestitures and adjustments to the Company’s core cost-structure for its wholesale food distribution business are expected to result in headcount reductions and other costs and charges. 
 
 NOTE 6—GOODWILL AND INTANGIBLE ASSETS 
 
 The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the acquisition date at their respective estimated fair values. Goodwill represents the excess acquisition cost over the fair value of net assets acquired in a business combination. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company has five goodwill reporting units, two of which represent separate operating segments and are aggregated within the Wholesale reportable segment (U.S. 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. 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. Relative fair value allocations are performed when components of an aggregated goodwill reporting unit become separate reporting units or move from one reporting unit to another. 
 
 The Company reviews goodwill for impairment at least annually and more frequently if events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is below its carrying amount. The annual review for goodwill impairment is performed as of the first day of the fourth quarter of each fiscal year. The Company tests for goodwill impairment at the reporting unit level, which is at or one level below the operating segment level. 
 
 Supervalu Acquisition Goodwill 
 
 In conjunction with the acquisition of Supervalu, goodwill resulting from the acquisition was assigned to the previous Supervalu Wholesale reporting unit and the previous legacy Company Wholesale reporting unit, as both of these reporting units were expected to benefit from the synergies of the business combination. The assignment was based on the relative synergistic value estimated as of the acquisition date. This systematic approach utilized the relative cash flow contributions and value created from the acquisition to each reporting unit on a stand-alone basis. As of the acquisition date, approximately $ 80.9 million was attributed to the legacy Company Wholesale reporting unit. 
 
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 Table of contents 

 As discussed in Note 7—Goodwill and Intangible Assets in the Consolidated Financial Statements of the Annual Report, the Company impaired all goodwill attributed to the Supervalu Wholesale reporting unit prior to the finalization of its purchase accounting within the opening balance sheet. In the first quarter of fiscal 2020, as discussed further in Note 4—Acquisitions the Company finalized purchase accounting and the opening balance sheet related to the Supervalu acquisition. Adjustments to the opening balance sheet goodwill in the first quarter of fiscal 2020, resulted in an additional goodwill impairment charge of $ 2.5 million . 
 
 Fiscal 2020 Goodwill Impairment Review 
 
 During the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting to combine the Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit into one U.S. Wholesale reporting unit, and experienced a further sustained decline in market capitalization and enterprise value. As a result of the change in reporting units and the sustained decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Wholesale reporting unit, which included a determination of the fair value of all reporting units. 
 
 The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 8.5 % , which considered observable data about guideline publicly traded companies, an estimated market participant’s expectations about capital structure and risk premiums, including those reflected in the Company’s market capitalization. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company determined that the carrying value of its U.S. Wholesale reporting unit exceeded its fair value by an amount that exceeded its assigned goodwill. As a result, the Company recorded a goodwill impairment charge of $ 421.5 million in the first quarter of fiscal 2020. The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Condensed Consolidated Statements of Operations. The goodwill impairment charge reflects the impairment of all of the U.S. Wholesale reporting unit’s goodwill. 
 
 Goodwill and Intangible Assets Changes 
 
 Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following: 
 
 (in thousands) 
 Wholesale 
 
 Other 
 
 Total 
 
 Goodwill as of August 3, 2019 
 $ 
 432,103 
 
 (1) 
 $ 
 10,153 
 
 (2) 
 $ 
 442,256 
 
 Goodwill adjustment for prior fiscal year business combinations 
 1,424 
 
 — 
 
 1,424 
 
 Impairment charges 
 ( 423,712 
 ) 
 
 ( 293 
 ) 
 
 ( 424,005 
 ) 
 
 Change in foreign exchange rates 
 ( 527 
 ) 
 
 — 
 
 ( 527 
 ) 
 
 Goodwill as of May 2, 2020 
 $ 
 9,288 
 
 (1) 
 $ 
 9,860 
 
 (2) 
 $ 
 19,148 
 
 (1) 
 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. 
 
 (2) 
 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 . 
 
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 Table of contents 

 Identifiable intangible assets consisted of the following: 
 
 May 2, 2020 
 
 August 3, 2019 
 
 (in thousands) 
 Gross Carrying 
 Amount 
 
 Accumulated 
 Amortization 
 
 Net 
 
 Gross Carrying 
 Amount 
 
 Accumulated 
 Amortization 
 
 Net 
 
 Amortizing intangible assets: 
 
 Customer relationships 
 $ 
 1,005,776 
 
 $ 
 156,471 
 
 $ 
 849,305 
 
 $ 
 1,007,089 
 
 $ 
 111,940 
 
 $ 
 895,149 
 
 Non-compete agreements 
 12,900 
 
 10,191 
 
 2,709 
 
 12,900 
 
 6,237 
 
 6,663 
 
 Operating lease intangibles 
 10,482 
 
 1,771 
 
 8,711 
 
 32,103 
 
 2,209 
 
 29,894 
 
 Trademarks and tradenames 
 67,700 
 
 27,521 
 
 40,179 
 
 67,700 
 
 14,161 
 
 53,539 
 
 Total amortizing intangible assets 
 1,096,858 
 
 195,954 
 
 900,904 
 
 1,119,792 
 
 134,547 
 
 985,245 
 
 Indefinite lived intangible assets: 
 
 Trademarks and tradenames 
 55,813 
 
 — 
 
 55,813 
 
 55,813 
 
 — 
 
 55,813 
 
 Intangible assets, net 
 $ 
 1,152,671 
 
 $ 
 195,954 
 
 $ 
 956,717 
 
 $ 
 1,175,605 
 
 $ 
 134,547 
 
 $ 
 1,041,058 
 
 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. 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: 
 
 Fiscal Year: 
 (In thousands) 
 
 Remaining fiscal 2020 
 $ 
 21,391 
 
 2021 
 71,431 
 
 2022 
 65,895 
 
 2023 
 65,844 
 
 2024 
 66,251 
 
 2025 and thereafter 
 610,092 
 
 $ 
 900,904 
 
 NOTE 7—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS 
 
 Recurring Fair Value Measurements 
 
 The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis: 
 
 Fair Value at May 2, 2020 
 
 (In thousands) 
 
 Balance Sheet Location 
 
 Level 1 
 
 Level 2 
 
 Level 3 
 
 Assets: 
 
 Foreign exchange derivatives not designated as hedging instruments 
 
 Prepaid expenses and other current assets 
 
 $ 
 — 
 
 $ 
 756 
 
 $ 
 — 
 
 Mutual funds 
 
 Other assets 
 
 $ 
 1,715 
 
 $ 
 — 
 
 $ 
 — 
 
 Liabilities: 
 
 Fuel derivatives not designated as hedging instruments 
 
 Accrued expenses and other current liabilities 
 
 $ 
 — 
 
 $ 
 2,424 
 
 $ 
 — 
 
 Interest rate swaps designated as hedging instruments 
 
 Accrued expenses and other current liabilities 
 
 $ 
 — 
 
 $ 
 45,684 
 
 $ 
 — 
 
 Interest rate swaps designated as hedging instruments 
 
 Other long-term liabilities 
 
 $ 
 — 
 
 $ 
 94,745 
 
 $ 
 — 
 
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 Table of contents 

 Fair Value at August 3, 2019 
 
 (in thousands) 
 
 Balance Sheet Location 
 
 Level 1 
 
 Level 2 
 
 Level 3 
 
 Assets: 
 
 Interest rate swaps designated as hedging instruments 
 
 Prepaid expenses and other current assets 
 
 $ 
 — 
 
 $ 
 389 
 
 $ 
 — 
 
 Mutual funds 
 
 Prepaid expenses and other current assets 
 
 $ 
 7 
 
 $ 
 — 
 
 $ 
 — 
 
 Interest rate swaps designated as hedging instruments 
 
 Other assets 
 
 $ 
 — 
 
 $ 
 145 
 
 $ 
 — 
 
 Mutual funds 
 
 Other assets 
 
 $ 
 1,799 
 
 $ 
 — 
 
 $ 
 — 
 
 Liabilities: 
 
 Interest rate swaps designated as hedging instruments 
 
 Prepaid expenses and other current assets 
 
 $ 
 — 
 
 $ 
 16,360 
 
 $ 
 — 
 
 Interest rate swaps designated as hedging instruments 
 
 Other long-term liabilities 
 
 $ 
 — 
 
 $ 
 60,737 
 
 $ 
 — 
 
 Interest Rate Swap Contracts 
 
 The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, LIBOR swap rates and credit default swap rates. As of 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 . Refer to Note 8—Derivatives for further information on interest rate swap contracts. 
 
 Mutual Funds 
 
 Mutual fund assets consist of balances held in investments to fund certain deferred compensation plans. The fair values of mutual fund assets are based on quoted market prices of the mutual funds held by the plan at each reporting period. Mutual funds traded in active markets are classified within Level 1 of the fair value hierarchy. 
 
 Fuel Supply Agreements and Derivatives 
 
 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. 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. 
 
 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. 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. 
 
 Fair Value Estimates 
 
 For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities. The fair value of notes receivable is estimated by using a discounted cash flow approach calculated by applying a market rate for similar instruments using Level 3 inputs. The fair value of debt is estimated based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs. In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs. 
 
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 Table of contents 

 May 2, 2020 
 
 August 3, 2019 
 
 (In thousands) 
 
 Carrying Value 
 
 Fair Value 
 
 Carrying Value 
 
 Fair Value 
 
 Notes receivable, including current portion 
 
 $ 
 37,594 
 
 $ 
 39,701 
 
 $ 
 46,320 
 
 $ 
 45,232 
 
 Long-term debt, including current portion 
 
 $ 
 2,560,876 
 
 $ 
 2,473,690 
 
 $ 
 2,906,483 
 
 $ 
 2,730,271 
 
 NOTE 8—DERIVATIVES 
 
 Management of Interest Rate Risk 
 
 The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap contracts are designated as cash flow hedges 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. 
 
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 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 
 
 Outstanding Notional Value (in millions) 
 
 Pay Fixed Rate 
 
 Receive Floating Rate (7) 
 
 Floating Rate Reset Terms 
 
 March 21, 2019 
 
 May 15, 2020 
 
 $ 
 100.0 
 
 2.4490 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 26, 2018 
 
 October 31, 2020 
 
 100.0 
 
 2.8240 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 June 9, 2016 
 
 April 29, 2021 
 
 25.0 
 
 1.0650 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 June 24, 2016 
 
 April 29, 2021 
 
 25.0 
 
 0.9260 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 23, 2019 
 
 April 29, 2021 
 
 50.0 
 
 2.5500 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 April 2, 2019 
 
 June 30, 2021 
 
 100.0 
 
 2.2520 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 June 10, 2019 
 
 June 30, 2021 
 
 50.0 
 
 2.2290 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 30, 2018 
 
 October 29, 2021 
 
 100.0 
 
 2.8084 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 March 21, 2019 
 
 April 15, 2022 
 
 100.0 
 
 2.3645 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 April 2, 2019 
 
 June 30, 2022 
 
 100.0 
 
 2.2170 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 June 28, 2019 
 
 June 30, 2022 
 
 50.0 
 
 2.1840 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 August 3, 2015 (1) 
 
 August 15, 2022 
 
 55.5 
 
 1.7950 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 August 3, 2015 (2) 
 
 August 15, 2022 
 
 37.0 
 
 1.7950 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 26, 2018 
 
 October 31, 2022 
 
 100.0 
 
 2.8915 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 11, 2019 
 
 October 31, 2022 
 
 50.0 
 
 2.4678 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 23, 2019 
 
 October 31, 2022 
 
 50.0 
 
 2.5255 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 30, 2020 (3) 
 
 October 31, 2022 
 
 — 
 
 0.4540 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 16, 2018 
 
 March 31, 2023 
 
 150.0 
 
 2.8950 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 23, 2019 
 
 March 31, 2023 
 
 50.0 
 
 2.5292 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 April 29, 2021 (4) 
 
 April 28, 2023 
 
 — 
 
 0.5680 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 June 30, 2021 (5) 
 
 June 30, 3023 
 
 — 
 
 0.6070 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 30, 2018 
 
 September 30, 2023 
 
 50.0 
 
 2.8315 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 29, 2021 (6) 
 
 October 20, 2023 
 
 — 
 
 0.6810 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 26, 2018 
 
 October 31, 2023 
 
 100.0 
 
 2.9210 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 11, 2019 
 
 March 28, 2024 
 
 100.0 
 
 2.4770 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 23, 2019 
 
 March 28, 2024 
 
 100.0 
 
 2.5420 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 30, 2018 
 
 October 31, 2024 
 
 100.0 
 
 2.8480 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 11, 2019 
 
 October 31, 2024 
 
 100.0 
 
 2.5010 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 24, 2019 
 
 October 31, 2024 
 
 50.0 
 
 2.5210 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 October 26, 2018 
 
 October 22, 2025 
 
 50.0 
 
 2.9550 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 16, 2018 
 
 October 22, 2025 
 
 50.0 
 
 2.9590 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 November 16, 2018 
 
 October 22, 2025 
 
 50.0 
 
 2.9580 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 January 24, 2019 
 
 October 22, 2025 
 
 50.0 
 
 2.5558 
 % 
 
 One-Month LIBOR 
 
 Monthly 
 
 $ 
 2,092.5 
 
 (1) 
 On March 31, 2015, the Company amended the original contract to reduce the beginning notional principal amount from $ 140.0 million to $ 84.0 million . The swap contract has an amortizing notional principal amount which is reduced by $ 1.5 million on a quarterly basis. 
 
 (2) 
 The swap contract has an amortizing notional principal amount which is reduced by $ 1.0 million on a quarterly basis. 
 
 (3) 
 This forward starting swap contract has a notional principal amount of $ 100.0 million . 
 
 (4) 
 This forward starting swap contract has a notional principal amount of $ 100.0 million . 
 
 (5) 
 This forward starting swap contract has a notional principal amount of $ 150.0 million . 
 
 (6) 
 This forward starting swap contract has a notional principal amount of $ 100.0 million . 
 
 (7) 
 For these swap contracts that are indexed to LIBOR, the Company is monitoring and evaluating risks related to the expected future cessation of LIBOR. 
 
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 The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair value of the derivative is initially reported in Other comprehensive income (outside of earnings) in the Condensed Consolidated Statements of Comprehensive Loss and subsequently reclassified to earnings in Interest expense, net in the Condensed Consolidated Statements of Operations when the hedged transactions affect earnings. 
 
 The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pretax basis, are as follows: 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 May 2, 2020 
 
 April 27, 2019 
 
 May 2, 2020 
 
 April 27, 2019 
 
 (In thousands) 
 
 Interest Expense, net 
 
 Interest Expense, net 
 
 Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded 
 
 $ 
 47,108 
 
 $ 
 54,917 
 
 $ 
 145,247 
 
 $ 
 121,149 
 
 (Loss) or gain on cash flow hedging relationships: 
 
 (Loss) or gain reclassified from comprehensive income into income 
 
 $ 
 ( 6,191 
 ) 
 
 $ 
 15 
 
 $ 
 ( 12,812 
 ) 
 
 $ 
 458 
 
 Gain or (loss) on interest rate swap contracts not designated as hedging instruments: 
 
 Gain or (loss) recognized as interest expense 
 
 $ 
 — 
 
 $ 
 51 
 
 $ 
 — 
 
 $ 
 ( 15 
 ) 
 
 NOTE 9—LONG-TERM DEBT 
 
 The Company’s long-term debt consisted of the following: 
 
 (in thousands) 
 Average Interest Rate at 
 May 2, 2020 
 
 Calendar Maturity Year 
 
 May 2, 
2020 
 
 August 3, 
2019 
 
 Term Loan Facility 
 4.65 % 
 
 2025 
 
 $ 
 1,777,500 
 
 $ 
 1,864,900 
 
 ABL Credit Facility 
 1.96 % 
 
 2023 
 
 816,000 
 
 1,080,000 
 
 Other secured loans 
 5.20 % 
 
 2023-2024 
 
 52,358 
 
 57,649 
 
 Debt issuance costs, net 
 
 ( 48,030 
 ) 
 
 ( 54,891 
 ) 
 
 Original issue discount on debt 
 
 ( 36,952 
 ) 
 
 ( 41,175 
 ) 
 
 Long-term debt, including current portion 
 
 2,560,876 
 
 2,906,483 
 
 Less: current portion of long-term debt 
 
 ( 19,219 
 ) 
 
 ( 87,433 
 ) 
 
 Long-term debt 
 
 $ 
 2,541,657 
 
 $ 
 2,819,050 
 
 ABL Credit Facility 
 
 On August 30, 2018, the Company entered into a loan agreement (as amended by that certain First Amendment to Loan Agreement, dated as of October 19, 2018, and as further amended by that certain Second Amendment to Loan Agreement, dated January 24, 2019, the “ABL Loan Agreement”), by and among the Company and United Natural Foods West, Inc. (together with the Company, the “U.S. Borrowers”) and UNFI Canada, Inc. (the “Canadian Borrower” and, together with the U.S. Borrowers, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Bank of America, N.A. as administrative agent for the ABL Lenders (the “ABL Administrative Agent”), Bank of America, N.A. (acting through its Canada branch), as Canadian agent for the ABL Lenders, and the other parties thereto. 
 
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 The ABL Loan Agreement provides for a secured asset-based revolving credit facility (the “ABL Credit Facility” and the loans thereunder, the “ABL Loans”), of which up to (i) $ 2,050.0 million is available to the U.S. Borrowers and (ii) $ 50.0 million is available to the Canadian Borrower. The ABL Loan Agreement also provides for (i) a $ 125.0 million sublimit of availability for letters of credit of which there is a further $ 5.0 million sublimit for the Canadian Borrower, and (ii) a $ 100.0 million sublimit for short-term borrowings on a swingline basis of which there is a further $ 3.5 million sublimit for the Canadian Borrower. The ABL Credit Facility replaced the Company’s $ 900.0 million prior asset-based revolving credit facility. In addition, $ 1,475.0 million of proceeds from the ABL Credit Facility were drawn to finance the Supervalu acquisition and related transaction costs on the Supervalu acquisition date (the “Closing Date”). 
 
 Under the ABL Loan Agreement, the Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $ 600.0 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding. There is no assurance that additional funding would be available. 
 
 The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s wholly-owned subsidiaries who are not also Borrowers (collectively, the “ABL Guarantors”), subject to customary exceptions and limitations. The Borrowers’ obligations under the ABL Credit Facility and the ABL Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Borrowers’ and ABL Guarantors’ accounts receivable, inventory and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and ABL Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations. 
 
 Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90 % of eligible accounts receivable, plus 90 % of eligible credit card receivables, plus 90 % of the net orderly liquidation value of eligible inventory, plus 90 % of eligible pharmacy receivables, plus certain pharmacy scripts availability of the Borrowers, after adjusting for customary reserves. The aggregate amount of the ABL Loans made and letters of credit issued under the ABL Credit Facility shall at no time exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $ 2,100.0 million or, if increased at the Borrowers’ option as described above, up to $ 2,700.0 million ) or the Borrowing Base. To the extent that the Borrowers’ Borrowing Base declines, the availability under the ABL Credit Facility may decrease below $ 2,100.0 million . 
 
 As of May 2, 2020 , the U.S. 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. 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. 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. 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. 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. Borrowers under the ABL Credit Facility bear interest at rates that, at the U.S. Borrowers’ option, can be either: (i) a base rate and an applicable margin, or (ii) a LIBOR rate and an applicable margin. 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. The ABL Loans of the Canadian Borrower under the ABL Credit Facility bear interest at rates that, at the Canadian Borrower’s option, can be either: (i) prime rate and an applicable margin, or (ii) a Canadian dollar bankers’ acceptance equivalent rate and an applicable margin. 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 % . 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. 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. 
 
 23 

 Table of contents 

 The ABL Loan Agreement subjects the Company to a fixed charge coverage ratio (as defined in the ABL Loan Agreement) of at least 1.0 to 1.0 calculated at the end of each fiscal quarter on a rolling four quarter basis when the adjusted aggregate availability (as defined in the ABL Loan Agreement) is less than the greater of (i) $ 235.0 million and (ii) 10 % of the aggregate borrowing base. 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. 
 
 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) : 
 May 2, 2020 
 
 Certain inventory assets included in Inventories and Current assets of discontinued operations 
 $ 
 2,099,976 
 
 Certain receivables included in Accounts receivables, net and Current assets of discontinued operations 
 $ 
 1,197,501 
 
 (1) 
 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 . 
 
 Unused credit and fees under the ABL Credit Facility (in thousands, except percentages): 
 May 2, 2020 
 
 Outstanding letters of credit 
 $ 
 95,057 
 
 Letter of credit fees 
 1.375 
 % 
 
 Unused credit 
 $ 
 1,153,861 
 
 Unused facility fees 
 0.25 
 % 
 
 The ABL Loan Agreement contains other customary affirmative and negative covenants and customary representations and warranties that must be accurate in order for the Borrowers to borrow under the ABL Credit Facility. The ABL Loan Agreement also contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the ABL Credit Facility to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the ABL Loan Agreement. 
 
 Term Loan Facility 
 
 On the Closing Date, the Company entered into a new term loan agreement (the “Term Loan Agreement”), by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “Term Lenders”), Goldman Sachs Bank USA, as administrative agent for the Lenders, and the other parties thereto. The Term Loan Agreement provides for senior secured first lien term loans in an aggregate principal amount of $ 1,950.0 million , consisting of a $ 1,800.0 million seven year tranche (the “Term B Tranche”) and a $ 150.0 million 364 -day tranche (the “364-day Tranche” and, together with the Term B Tranche, collectively, the “Term Loan Facility”). The entire amount of the net proceeds from the Term Loan Facility was used to finance the Supervalu acquisition and related transaction costs. 
 
 The loans under the Term B Tranche will be payable in full on October 22, 2025; 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. In connection with the prepayments, the Company incurred a loss on debt extinguishment related to unamortized debt issuance costs of $ 0.1 million , which was recorded within Interest expense, net in the Condensed Consolidated Statements of Operations for the first quarter of fiscal 2020. 
 
 The loans under the 364-day Tranche were then paid in full on October 21, 2019. The Company funded the scheduled maturity of the $ 52.8 million outstanding borrowings under the 364-day Tranche with incremental borrowings under the ABL Credit Facility on October 21, 2019. 
 
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 Table of contents 

 Under the Term Loan Agreement, the Term Borrowers may, at their option, increase the amount of the Term B Tranche, add one or more additional tranches of term loans or add one or more additional tranches of revolving credit commitments, without the consent of any Term Lenders not participating in such additional borrowings, up to an aggregate amount of $ 656.3 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding. There can be no assurance that additional funding would be available. 
 
 The 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. 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 . 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. Under the Term Loan Facility, the Company is required, subject to certain exceptions and customary reinvestment rights, to apply 100 percent of Net Cash Proceeds (as defined in the Term Loan Agreement) from certain types of asset sales to prepay the loans outstanding under the Term Loan Facility. 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. 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: (i) a base rate and a margin of 3.25 % or (ii) a LIBOR rate and a margin of 4.25 % ; provided that the LIBOR rate shall never be less than 0.0 % . The Term Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available. 
 
 The Term Loan Agreement does not include any financial maintenance covenants but contains other customary affirmative and negative covenants and customary representations and warranties. The Term Loan Agreement also contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the Term Loan Facility to be in full force and effect, and a change of control. 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. 
 
 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 . 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. 
 
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 Table of contents 

 NOTE 10—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS 
 
 Changes in Accumulated other comprehensive loss by component net of tax for fiscal 2020 year-to-date are as follows: 
 
 (in thousands) 
 Benefit Plans 
 
 Foreign Currency 
 
 Swap Agreements 
 
 Total 
 
 Accumulated other comprehensive loss at August 3, 2019 
 $ 
 ( 32,458 
 ) 
 
 $ 
 ( 20,082 
 ) 
 
 $ 
 ( 56,413 
 ) 
 
 $ 
 ( 108,953 
 ) 
 
 Other comprehensive gain (loss) before reclassifications 
 1,480 
 
 ( 3,561 
 ) 
 
 ( 55,874 
 ) 
 
 ( 57,955 
 ) 
 
 Amortization of amounts included in net periodic benefit income 
 ( 1,722 
 ) 
 
 — 
 
 — 
 
 ( 1,722 
 ) 
 
 Amortization of cash flow hedge 
 — 
 
 — 
 
 9,375 
 
 9,375 
 
 Pension settlement charge 
 7,610 
 
 — 
 
 — 
 
 7,610 
 
 Net current period Other comprehensive income (loss) 
 7,368 
 
 ( 3,561 
 ) 
 
 ( 46,499 
 ) 
 
 ( 42,692 
 ) 
 
 Accumulated other comprehensive loss at May 2, 2020 
 $ 
 ( 25,090 
 ) 
 
 $ 
 ( 23,643 
 ) 
 
 $ 
 ( 102,912 
 ) 
 
 $ 
 ( 151,645 
 ) 
 
 Changes in Accumulated other comprehensive loss by component net of tax for fiscal 2019 year-to-date are as follows: 
 
 (in thousands) 
 Foreign Currency 
 
 Swap Agreements 
 
 Total 
 
 Accumulated other comprehensive (loss) income at July 28, 2018 
 $ 
 ( 19,053 
 ) 
 
 $ 
 4,874 
 
 $ 
 ( 14,179 
 ) 
 
 Other comprehensive loss before reclassifications 
 ( 2,308 
 ) 
 
 ( 26,545 
 ) 
 
 ( 28,853 
 ) 
 
 Amortization of cash flow hedge 
 — 
 
 ( 353 
 ) 
 
 ( 353 
 ) 
 
 Net current period Other comprehensive loss 
 ( 2,308 
 ) 
 
 ( 26,898 
 ) 
 
 ( 29,206 
 ) 
 
 Accumulated other comprehensive loss at April 27, 2019 
 $ 
 ( 21,361 
 ) 
 
 $ 
 ( 22,024 
 ) 
 
 $ 
 ( 43,385 
 ) 
 
 Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations : 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 Affected Line Item on the Condensed Consolidated Statements of Operations 
 
 (in thousands) 
 May 2, 
2020 
 
 April 27, 
2019 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 Pension and postretirement benefit plan obligations: 
 
 Amortization of amounts included in net periodic benefit income (1) 
 $ 
 ( 777 
 ) 
 
 $ 
 — 
 
 $ 
 ( 2,328 
 ) 
 
 $ 
 — 
 
 Net periodic benefit income, excluding service cost 
 
 Pension settlement charge 
 — 
 
 — 
 
 10,303 
 
 — 
 
 Net periodic benefit income, excluding service cost 
 
 Total reclassifications 
 ( 777 
 ) 
 
 — 
 
 7,975 
 
 — 
 
 Income tax (expense) benefit 
 ( 203 
 ) 
 
 — 
 
 2,087 
 
 — 
 
 Benefit for income taxes 
 
 Total reclassifications, net of tax 
 $ 
 ( 574 
 ) 
 
 $ 
 — 
 
 $ 
 5,888 
 
 $ 
 — 
 
 Swap agreements: 
 
 Amortization of cash flow hedge expense (income) 
 $ 
 6,191 
 
 $ 
 ( 15 
 ) 
 
 $ 
 12,812 
 
 $ 
 ( 458 
 ) 
 
 Interest expense, net 
 
 Income tax benefit (expense) 
 1,661 
 
 5 
 
 3,437 
 
 ( 105 
 ) 
 
 Benefit for income taxes 
 
 Total reclassifications, net of tax 
 $ 
 4,530 
 
 $ 
 ( 20 
 ) 
 
 $ 
 9,375 
 
 $ 
 ( 353 
 ) 
 
 (1) 
 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 . 
 
 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 
 
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 The Company leases certain of its distribution centers, retail stores, office facilities, transportation equipment, and other operating equipment from third parties. Many of these leases include renewal options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 
 
 Lease assets and liabilities are as follows (in thousands): 
 
 Lease Type 
 
 Balance Sheet Location 
 
 May 2, 2020 
 
 Operating lease assets 
 
 Operating lease assets 
 
 $ 
 984,039 
 
 Finance lease assets 
 
 Property and equipment, net 
 
 134,357 
 
 Total lease assets 
 
 $ 
 1,118,396 
 
 Operating liabilities 
 
 Current portion of operating lease liabilities 
 
 $ 
 138,698 
 
 Finance liabilities 
 
 Current portion of long-term debt and finance lease liabilities 
 
 14,221 
 
 Operating liabilities 
 
 Long-term operating lease liabilities 
 
 877,229 
 
 Finance liabilities 
 
 Long-term finance lease liabilities 
 
 145,672 
 
 Total lease liabilities 
 
 $ 
 1,175,820 
 
 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. 
 
 The Company’s lease cost under ASC 842 is as follows: 
 
 (in thousands) 
 
 Statement of Operations Location 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 May 2, 2020 
 
 May 2, 2020 
 
 Operating lease cost 
 
 Operating expenses (2) 
 
 $ 
 62,928 
 
 $ 
 196,332 
 
 Short-term lease cost 
 
 Operating expenses 
 
 8,021 
 
 20,010 
 
 Variable lease cost 
 
 Operating expenses (2) 
 
 35,392 
 
 114,299 
 
 Sublease income 
 
 Operating expenses (2) 
 
 ( 7,836 
 ) 
 
 ( 31,034 
 ) 
 
 Sublease income 
 
 Net sales 
 
 ( 5,991 
 ) 
 
 ( 16,738 
 ) 
 
 Net operating lease cost (1) 
 
 92,514 
 
 282,869 
 
 Amortization of leased assets 
 
 Operating expenses 
 
 3,876 
 
 12,272 
 
 Interest on lease liabilities 
 
 Interest expense, net 
 
 2,894 
 
 6,911 
 
 Finance lease cost 
 
 6,770 
 
 19,183 
 
 Total net lease cost 
 
 $ 
 99,284 
 
 $ 
 302,052 
 
 (1) 
 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) 
 Includes certain lease expense or income that is recorded within Restructuring, acquisition and integration related expenses for surplus, non-operating properties for which the Company is restructuring its obligations and which are not separately material. 
 
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 Table of contents 

 The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases, including assigned leases for which the Company has future minimum lease payment obligations. 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. As of May 2, 2020 , these Lease Liabilities and Lease Receipts consisted of the following (in thousands): 
 
 Maturity of Lease Liabilities and Lease Receipts 
 Lease Liabilities 
 
 Lease Receipts 
 
 Net Lease Obligations 
 
 Fiscal Year 
 Operating Leases (1) 
 
 Finance Leases (2) 
 
 Operating Leases 
 
 Finance Leases 
 
 Operating Leases 
 
 Finance Leases 
 
 Remaining fiscal 2020 
 $ 
 62,422 
 
 $ 
 6,991 
 
 $ 
 ( 14,801 
 ) 
 
 $ 
 — 
 
 $ 
 47,621 
 
 $ 
 6,991 
 
 2021 
 217,690 
 
 22,777 
 
 ( 50,944 
 ) 
 
 — 
 
 166,746 
 
 22,777 
 
 2022 
 206,416 
 
 119,387 
 
 ( 45,784 
 ) 
 
 — 
 
 160,632 
 
 119,387 
 
 2023 
 179,364 
 
 15,292 
 
 ( 35,889 
 ) 
 
 — 
 
 143,475 
 
 15,292 
 
 2024 
 153,729 
 
 14,228 
 
 ( 27,871 
 ) 
 
 — 
 
 125,858 
 
 14,228 
 
 Thereafter 
 990,394 
 
 15,541 
 
 ( 62,184 
 ) 
 
 — 
 
 928,210 
 
 15,541 
 
 Total undiscounted lease liabilities and receipts 
 $ 
 1,810,015 
 
 $ 
 194,216 
 
 $ 
 ( 237,473 
 ) 
 
 $ 
 — 
 
 $ 
 1,572,542 
 
 $ 
 194,216 
 
 Less interest (3) 
 ( 794,088 
 ) 
 
 ( 34,323 
 ) 
 
 Present value of lease liabilities 
 1,015,927 
 
 159,893 
 
 Less current lease liabilities 
 ( 138,698 
 ) 
 
 ( 14,221 
 ) 
 
 Long-term lease liabilities 
 $ 
 877,229 
 
 $ 
 145,672 
 
 (1) 
 Operating lease payments include $ 11.4 million related to extension options that are reasonably certain of being exercised and exclude $ 38.5 million of legally binding minimum lease payments for leases signed but not yet commenced. 
 
 (2) 
 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. 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. 
 
 (3) 
 Calculated using the interest rate for each lease. 
 
 As of August 3, 2019 , future minimum lease payments to be made by the Company or certain third parties in the case of assigned leases for noncancellable operating leases and finance leases, which have not been reduced for future minimum subtenant rentals under certain operating subleases, including assignments, consisted of the following amounts (in thousands): 
 
 Lease Obligations 
 
 Lease Receipts 
 
 Net Lease Obligations 
 
 Fiscal Year 
 
 Operating Leases 
 
 Capital Leases 
 
 Operating Leases 
 
 Capital Leases 
 
 Operating Leases 
 
 Capital Leases 
 
 2020 
 
 $ 
 223,612 
 
 $ 
 41,550 
 
 $ 
 ( 55,922 
 ) 
 
 $ 
 ( 319 
 ) 
 
 $ 
 167,690 
 
 $ 
 41,231 
 
 2021 
 
 190,845 
 
 32,804 
 
 ( 41,425 
 ) 
 
 — 
 
 149,420 
 
 32,804 
 
 2022 
 
 179,326 
 
 29,869 
 
 ( 35,998 
 ) 
 
 — 
 
 143,328 
 
 29,869 
 
 2023 
 
 154,812 
 
 26,699 
 
 ( 25,591 
 ) 
 
 — 
 
 129,221 
 
 26,699 
 
 2024 
 
 135,795 
 
 23,095 
 
 ( 18,183 
 ) 
 
 — 
 
 117,612 
 
 23,095 
 
 Thereafter 
 
 1,063,674 
 
 46,999 
 
 ( 59,186 
 ) 
 
 — 
 
 1,004,488 
 
 46,999 
 
 Total future minimum obligations (receipts) 
 
 $ 
 1,948,064 
 
 $ 
 201,016 
 
 $ 
 ( 236,305 
 ) 
 
 $ 
 ( 319 
 ) 
 
 $ 
 1,711,759 
 
 $ 
 200,697 
 
 Less interest 
 
 ( 68,138 
 ) 
 
 Present value of capital lease obligations 
 
 132,878 
 
 Less current capital lease obligations 
 
 ( 24,670 
 ) 
 
 Long-term capital lease obligations 
 
 $ 
 108,208 
 
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 Table of contents 

 The following tables provide other information required by ASC 842: 
 
 Lease Term and Discount Rate 
 
 May 2, 2020 
 
 Weighted-average remaining lease term (years) 
 
 Operating leases 
 
 10.7 years 
 
 Finance leases 
 
 3.4 years 
 
 Weighted-average discount rate 
 
 Operating leases 
 
 10.7 
 % 
 
 Finance leases 
 
 8.8 
 % 
 
 Other Information 
 
 39-Week Period Ended 
 
 (in thousands) 
 
 May 2, 2020 
 
 Cash paid for amounts included in the measurement of lease liabilities 
 
 Operating cash flows from operating leases 
 
 $ 
 166,441 
 
 Operating cash flows from finance leases 
 
 6,181 
 
 Financing cash flows from finance leases 
 
 17,183 
 
 Leased assets obtained in exchange for new finance lease liabilities 
 
 92,843 
 
 Leased assets obtained in exchange for new operating lease liabilities 
 
 154,888 
 
 On February 24, 2020, the Company executed a purchase option to acquire the real property of a distribution center facility. 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 
 
 During the second quarter of fiscal 2020, the Company authorized for issuance and registered 7.2 million shares of common stock for issuance under the 2020 Equity Incentive Plan. In addition, the remaining shares that were available for issuance under the Company’s Amended and Restated 2012 Equity Incentive Plan may be issued under the 2020 Equity Incentive Plan. 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. As of May 2, 2020 , there were 2.6 million shares available for issuance under the 2020 Equity Incentive Plan. 
 
 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. 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. 
 
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 Table of contents 

 NOTE 13—BENEFIT PLANS 
 
 Net periodic benefit (income) cost and contributions to defined benefit pension and other post-retirement benefit plans consisted of the following: 
 
 13-Week Period Ended 
 
 Pension Benefits 
 
 Other Postretirement Benefits 
 
 (in thousands) 
 May 2, 2020 
 
 April 27, 2019 
 
 May 2, 2020 
 
 April 27, 2019 
 
 Net Periodic Benefit (Income) Cost 
 
 Service cost 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 14 
 
 $ 
 55 
 
 Interest cost 
 13,602 
 
 24,004 
 
 236 
 
 478 
 
 Expected return on plan assets 
 ( 25,765 
 ) 
 
 ( 35,416 
 ) 
 
 ( 54 
 ) 
 
 ( 58 
 ) 
 
 Amortization of net actuarial loss (gain) 
 3 
 
 — 
 
 ( 780 
 ) 
 
 — 
 
 Net periodic benefit (income) cost 
 $ 
 ( 12,160 
 ) 
 
 $ 
 ( 11,412 
 ) 
 
 $ 
 ( 584 
 ) 
 
 $ 
 475 
 
 Contributions to benefit plans 
 $ 
 ( 1,500 
 ) 
 
 $ 
 ( 2,386 
 ) 
 
 $ 
 ( 175 
 ) 
 
 $ 
 ( 92 
 ) 
 
 39-Week Period Ended 
 
 Pension Benefits 
 
 Other Postretirement Benefits 
 
 (in thousands) 
 May 2, 2020 
 
 April 27, 2019 
 
 May 2, 2020 
 
 April 27, 2019 
 
 Net Periodic Benefit (Income) Cost 
 
 Service cost 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 42 
 
 $ 
 114 
 
 Interest cost 
 43,894 
 
 49,855 
 
 708 
 
 993 
 
 Expected return on plan assets 
 ( 79,834 
 ) 
 
 ( 73,555 
 ) 
 
 ( 162 
 ) 
 
 ( 121 
 ) 
 
 Amortization of net actuarial loss (gain) 
 9 
 
 — 
 
 ( 2,337 
 ) 
 
 — 
 
 Pension settlement charge 
 10,303 
 
 — 
 
 — 
 
 — 
 
 Net periodic benefit (income) cost 
 $ 
 ( 25,628 
 ) 
 
 $ 
 ( 23,700 
 ) 
 
 $ 
 ( 1,749 
 ) 
 
 $ 
 986 
 
 Contributions to benefit plans 
 $ 
 ( 6,750 
 ) 
 
 $ 
 ( 2,574 
 ) 
 
 $ 
 ( 335 
 ) 
 
 $ 
 ( 218 
 ) 
 
 Pension Contributions 
 
 No minimum pension contributions are required to be made to the SUPERVALU Retirement Plan in fiscal 2020. Minimum pension contributions of $ 8.25 million are required to be made under the Unified Grocers, Inc. Cash Balance Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2020. The Company expects to contribute approximately $ 0.0 million and $ 6.0 million to its other defined benefit pension plans and postretirement benefit plans, respectively, in fiscal 2020. 
 
 Multiemployer Pension Plans 
 
 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. The withdrawal liability is included in Other long-term liabilities and the withdrawal charge was recorded within Restructuring, acquisition and integration related expenses . 
 
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 Table of contents 

 Lump Sum Pension Settlement 
 
 On August 1, 2019, the Company amended the SUPERVALU Retirement Plan to provide for a lump sum settlement window. On August 2, 2019, the Company sent plan participants lump sum settlement election offerings that committed the plan to pay certain deferred vested pension plan participants and retirees, who make such an election, a lump sum payment in exchange for their rights to receive ongoing payments from the plan. The lump sum payment amounts are equal to the present value of the participant’s pension benefits, and were made to certain former (i) retired associates and beneficiaries who are receiving their monthly pension benefit payment and (ii) terminated associates who are deferred vested in the plan, had not yet begun receiving monthly pension benefit payments and who are not eligible for any prior lump sum offerings under the plan. Benefit obligations associated with the lump sum offering have been incorporated into the funded status utilizing the actuarially determined lump sum payments based on estimated offer acceptances. The plan made aggregate lump sum settlement payments of $ 664.0 million to plan participants during the second quarter of fiscal 2020 . The lump sum settlement payments resulted in a non-cash pension settlement charge of $ 10.3 million in the second quarter of fiscal 2020 from the acceleration of a portion of the accumulated unrecognized actuarial loss, which was based on the fair value of SUPERVALU Retirement Plan assets and remeasured liabilities. As a result of the settlement payments, the SUPERVALU Retirement Plan obligations were remeasured using a discount rate of 3.1 percent and the MP-2019 mortality improvement scale. This remeasurement resulted in a $ 1.5 million decrease to Accumulated other comprehensive loss. 
 
 NOTE 14—INCOME TAXES 
 
 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. 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. 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. 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. 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. 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. 
 
 The CARES Act was enacted on March 27, 2020 and contains significant business tax provision changes to the U.S. 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. 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. 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. 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. This resulted in a tax benefit of approximately $ 28.4 million , which the Company recorded in the third quarter of fiscal 2020. This estimated tax benefit will be finalized in the fourth quarter of fiscal 2020 as the 2019 tax return due July 2020 is finalized. 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. 
 
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 Table of contents 

 NOTE 15—EARNINGS PER SHARE 
 
 The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share: 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 (in thousands, except per share data) 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 May 2, 
2020 
 
 April 27, 
2019 
 
 Basic weighted average shares outstanding 
 
 53,718 
 
 50,846 
 
 53,485 
 
 50,748 
 
 Net effect of dilutive stock awards based upon the treasury stock method 
 
 1,499 
 
 118 
 
 — 
 
 — 
 
 Diluted weighted average shares outstanding 
 
 55,217 
 
 50,964 
 
 53,485 
 
 50,748 
 
 Basic earnings (loss) per share: 
 
 Continuing operations 
 
 $ 
 0.99 
 
 $ 
 0.64 
 
 $ 
 ( 7.24 
 ) 
 
 $ 
 ( 6.93 
 ) 
 
 Discontinued operations 
 
 $ 
 0.65 
 
 $ 
 0.48 
 
 $ 
 1.14 
 
 $ 
 0.95 
 
 Basic earnings (loss) per share 
 
 $ 
 1.64 
 
 $ 
 1.12 
 
 $ 
 ( 6.10 
 ) 
 
 $ 
 ( 5.99 
 ) 
 
 Diluted earnings (loss) per share: 
 
 Continuing operations 
 
 $ 
 0.96 
 
 $ 
 0.64 
 
 $ 
 ( 7.24 
 ) 
 
 $ 
 ( 6.93 
 ) 
 
 Discontinued operations (1) 
 
 $ 
 0.63 
 
 $ 
 0.48 
 
 $ 
 1.12 
 
 $ 
 0.94 
 
 Diluted earnings (loss) per share 
 
 $ 
 1.60 
 
 $ 
 1.12 
 
 $ 
 ( 6.10 
 ) 
 
 $ 
 ( 5.99 
 ) 
 
 Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share 
 
 1,771 
 
 5,176 
 
 1,868 
 
 2,723 
 
 (1) 
 The computation of diluted earnings per share from discontinued operations is calculated using diluted weighted average shares outstanding, which includes the net effect of dilutive stock awards and 821 thousand and 275 thousand shares for fiscal 2020 and 2019 year-to-date , respectively. 
 
 NOTE 16—BUSINESS SEGMENTS 
 
 The Company has two operating segments aggregated under the Wholesale reportable segment: U.S. Wholesale and Canada Wholesale. In addition, the Company’s Retail operating segment is a separate reportable segment, which consists of discontinued operations disposal groups. The U.S. 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. The Company has additional operating segments that do not meet the quantitative thresholds for reportable segments and are therefore aggregated under the caption of Other. Other includes a manufacturing division, which engages in the importing, roasting, packaging, and distributing of nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s branded product lines. Other also includes certain corporate operating expenses that are not allocated to operating segments, which include, among other expenses, restructuring, acquisition, and integration related expenses, share-based compensation, and salaries, retainers, and other related expenses of certain officers and all directors. The Company allocates certain corporate capital expenditures and identifiable assets to its business segments and retains certain depreciation expense related to those assets within Other. In the first quarter of fiscal 2020, the Company changed its measurement of segment profit, which resulted in additional corporate expenses that were previously included in Other now being attributed to the Wholesale business. Prior period amounts have been recast to reflect this new measurement approach. Non-operating expenses that are not allocated to the operating segments are under the caption of Unallocated (Income)/Expenses. 
 
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 (in thousands) 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Unallocated (Income)/Expenses 
 
 Consolidated 
 
 13-Week Period Ended May 2, 2020: 
 
 Net sales (1) 
 
 $ 
 6,670,044 
 
 $ 
 56,361 
 
 $ 
 ( 58,724 
 ) 
 
 $ 
 — 
 
 $ 
 6,667,681 
 
 Restructuring, acquisition and integration related expenses 
 
 4,030 
 
 6,419 
 
 — 
 
 — 
 
 10,449 
 
 Operating income (loss) 
 
 119,809 
 
 ( 47,505 
 ) 
 
 ( 599 
 ) 
 
 — 
 
 71,705 
 
 Total other expense, net 
 
 — 
 
 — 
 
 — 
 
 33,377 
 
 33,377 
 
 Income (loss) from continuing operations before income taxes 
 
 38,328 
 
 Depreciation and amortization 
 
 66,754 
 
 2,888 
 
 — 
 
 — 
 
 69,642 
 
 Capital expenditures 
 
 33,216 
 
 402 
 
 — 
 
 — 
 
 33,618 
 
 Total assets of continuing operations 
 
 6,686,382 
 
 614,356 
 
 ( 50,076 
 ) 
 
 — 
 
 7,250,662 
 
 13-Week Period Ended April 27, 2019: 
 
 Net sales (2) 
 
 $ 
 5,944,521 
 
 $ 
 61,910 
 
 $ 
 ( 43,811 
 ) 
 
 $ 
 — 
 
 $ 
 5,962,620 
 
 Goodwill and asset impairment (adjustment) charges 
 
 ( 38,250 
 ) 
 
 — 
 
 — 
 
 — 
 
 ( 38,250 
 ) 
 
 Restructuring, acquisition and integration related expenses 
 
 — 
 
 19,438 
 
 — 
 
 — 
 
 19,438 
 
 Operating income (loss) 
 
 103,142 
 
 ( 31,278 
 ) 
 
 ( 2,183 
 ) 
 
 — 
 
 69,681 
 
 Total other expense, net 
 
 — 
 
 — 
 
 — 
 
 44,934 
 
 44,934 
 
 Income (loss) from continuing operations before income taxes 
 
 24,747 
 
 Depreciation and amortization 
 
 63,375 
 
 8,412 
 
 — 
 
 — 
 
 71,787 
 
 Capital expenditures 
 
 56,655 
 
 161 
 
 — 
 
 — 
 
 56,816 
 
 Total assets of continuing operations 
 
 6,403,512 
 
 423,663 
 
 ( 40,618 
 ) 
 
 — 
 
 6,786,557 
 
 (1) 
 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. 
 
 (2) 
 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. 
 
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 (in thousands) 
 
 Wholesale 
 
 Other 
 
 Eliminations 
 
 Unallocated (Income)/Expenses 
 
 Consolidated 
 
 39-Week Period Ended May 2, 2020: 
 
 Net sales (1) 
 
 $ 
 18,821,520 
 
 $ 
 158,377 
 
 $ 
 ( 155,027 
 ) 
 
 $ 
 — 
 
 $ 
 18,824,870 
 
 Goodwill and asset impairment (adjustment) charges 
 
 423,703 
 
 1,702 
 
 — 
 
 — 
 
 425,405 
 
 Restructuring, acquisition and integration related expenses 
 
 23,392 
 
 30,993 
 
 — 
 
 — 
 
 54,385 
 
 Operating income (loss) 
 
 ( 277,675 
 ) 
 
 ( 99,632 
 ) 
 
 ( 86 
 ) 
 
 — 
 
 ( 377,393 
 ) 
 
 Total other expense, net 
 
 — 
 
 — 
 
 — 
 
 116,289 
 
 116,289 
 
 Income (loss) from continuing operations before income taxes 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 493,682 
 ) 
 
 Depreciation and amortization 
 
 200,515 
 
 13,487 
 
 — 
 
 — 
 
 214,002 
 
 Capital expenditures 
 
 116,565 
 
 1,680 
 
 — 
 
 — 
 
 118,245 
 
 39-Week Period Ended April 27, 2019: 
 
 Net sales (2) 
 
 $ 
 14,932,905 
 
 $ 
 167,381 
 
 $ 
 ( 120,304 
 ) 
 
 $ 
 — 
 
 14,979,982 
 
 Goodwill and asset impairment (adjustment) charges 
 
 332,621 
 
 — 
 
 — 
 
 — 
 
 332,621 
 
 Restructuring, acquisition and integration related expenses 
 
 4 
 
 134,563 
 
 — 
 
 — 
 
 134,567 
 
 Operating income (loss) 
 
 ( 189,299 
 ) 
 
 ( 164,745 
 ) 
 
 ( 3,248 
 ) 
 
 — 
 
 ( 357,292 
 ) 
 
 Total other expense, net 
 
 — 
 
 — 
 
 — 
 
 98,689 
 
 98,689 
 
 Income (loss) from continuing operations before income taxes 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 455,981 
 ) 
 
 Depreciation and amortization 
 
 156,693 
 
 13,087 
 
 — 
 
 — 
 
 169,780 
 
 Capital expenditures 
 
 136,065 
 
 888 
 
 — 
 
 — 
 
 136,953 
 
 (1) 
 For fiscal 2020 year-to-date , the Company recorded $ 756.9 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. 
 
 (2) 
 For fiscal 2019 year-to-date , the Company recorded $ 505.5 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. 
 
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 NOTE 17—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS 
 
 Guarantees and Contingent Liabilities 
 
 The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of May 2, 2020 . These guarantees were generally made to support the business growth of wholesale customers. The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to 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. Generally, the guarantees are secured by indemnification agreements or personal guarantees of the primary obligor/retailer. 
 
 The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance. 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. Accordingly, no amount has been recorded in the Condensed Consolidated Balance Sheets for these contingent obligations under the Company’s guarantee arrangements as the fair value has been determined to be de minimis. 
 
 The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations. Due to the wide distribution of the Company’s lease assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote. For leases that have been assigned, the Company has recorded the associated right of use operating lease assets and obligations within the Condensed Consolidated Balance Sheets . No associated lessor receivables are reflected on the Condensed Consolidated Balance Sheets ; however, within Note 11—Leases expected cash flows from lease receipts reflecting the assignees payments to the landlord are reflected as Lease Receipts within the future maturity table, along with the Wholesale customers future Lease Receipts. For the Company’s lease guarantee arrangements, no amounts have been recorded within the Condensed Consolidated Balance Sheets as the fair value has been determined to be de minimis. 
 
 The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise. These agreements primarily relate to the Company’s commercial contracts, service agreements, contracts entered into for the purchase and sale of stock or assets, operating leases and other real estate contracts, financial agreements, agreements to provide services to the Company and agreements to indemnify officers, directors and employees in the performance of their work. While the Company’s aggregate indemnification obligations could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. No amount has been recorded in the Condensed Consolidated Balance Sheets for these contingent obligations as the fair value has been determined to be de minimis. 
 
 In connection with Supervalu’s sale of New Albertson’s, Inc. (“NAI”) on March 21, 2013, the Company remains contingently liable with respect to certain self-insurance commitments and other guarantees as a result of parental guarantees issued by Supervalu with respect to the obligations of NAI that were incurred while NAI was Supervalu’s subsidiary. Based on the expected settlement of the self-insurance claims that underlie the Company’s commitments, the Company believes that such contingent liabilities will continue to decline. Subsequent to the sale of NAI, NAI collateralized most of these obligations with letters of credit and surety bonds to numerous state governmental authorities. Because NAI remains a primary obligor on these self-insurance and other obligations and has collateralized most of the self-insurance obligations for which the Company remains contingently liable, the Company believes that the likelihood that it will be required to assume a material amount of these obligations is remote. Accordingly, no amount has been recorded in the Condensed Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis. 
 
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 Agreements with Save-A-Lot and Onex 
 
 The Agreement and Plan of Merger pursuant to which Supervalu sold the Save-A-Lot business in 2016 (the “SAL Merger Agreement”) contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties and covenants, and certain other specified matters, on the terms and subject to the limitations set forth in the SAL Merger Agreement. Similarly, Supervalu entered into a Separation Agreement (the “Separation Agreement”) with Moran Foods, LLC d/b/a Save-A-Lot (“Moran Foods”), which contains indemnification obligations and covenants related to the separation of the assets and liabilities of the Save-A-Lot business from the Company. The Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company is providing Save-A-Lot various technical, human resources, finance and other operational services for a term of five years , subject to termination provisions that can be exercised by each party. The initial annual base charge under the Services Agreement is $ 30 million , subject to adjustments. The Services Agreement generally requires each party to indemnify the other party against third-party claims arising out of the performance of or the provision or receipt of services under the Services Agreement. While the Company’s aggregate indemnification obligations to Save-A-Lot and Onex, the purchaser of Save-A-Lot, could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. The Company has recorded the fair value of the guarantee in the Condensed Consolidated Balance Sheets within Other long-term liabilities. 
 
 Other Contractual Commitments 
 
 In the ordinary course of business, the Company enters into supply contracts to purchase products for resale, and service contracts for fixed asset and information technology systems. These contracts typically include either volume commitments or fixed expiration dates, term ination provisions and other standard contractual considerations. As of May 2, 2020, the Company had approximately $ 252.0 million of non-cancelable future purchase obligations. 
 
 Legal Proceedings 
 
 In December 2008, a class action complaint was filed in the United States District Court for the Western District of Wisconsin against Supervalu alleging that a 2003 transaction between Supervalu and C&S Wholesale Grocers, Inc. (“C&S”) was a conspiracy to restrain trade and allocate markets. As previously disclosed, the Company settled with the certain plaintiffs in November 2017. 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. The New England plaintiff appealed to the 8th Circuit on August 15, 2018, and a hearing was held on October 15, 2019. 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. Currently, UNFI, primarily through its subsidiary, Advantage Logistics, is named in approximately 38 suits pending in the United States District Court for the Northern District of Ohio where over 1,800 cases have been consolidated as Multi-District Litigation (“MDL”). In accordance with the Stock Purchase Agreement dated January 10, 2013, between New Albertson’s Inc. and the Company (the “Stock Purchase Agreement”), New Albertson’s Inc. is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies. In one of the MDL cases, MDL No. 2804 filed by The Blackfeet Tribe of the Blackfeet Indian Reservation, all defendants were ordered to Answer the Complaint, which UNFI did on July 26, 2019. To date, no discovery has been conducted against UNFI in any of the actions. UNFI is vigorously defending these matters, which it believes are without merit. 
 
 UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”). In United States ex rel. Schutte and Yarberry v. Supervalu, New Albertson’s, Inc., et al, which is pending in the U.S. District Court for the Central District of Illinois, the relators allege that defendants overcharged government healthcare programs by not providing the government, as a part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that defendants match competitor prices. The complaint was originally filed under seal and amended on November 30, 2015. The government previously investigated the relators' allegations and declined to intervene. Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim. Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New 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. In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant the Stock Purchase Agreement. Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a potential award (at the currently claimed value by relators) would be approximately $ 24 million , not including trebling and statutory penalties. Both sides moved for summary judgment. Discovery is complete, and trial will be set after the Court rules on the pending motions. On August 5, 2019, the Court 
 
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 Table of contents 

 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. On August 30, 2019, defendants filed a motion with the District Court seeking certification of the summary judgment decision for interlocutory appeal and on November 7, 2019, the District Court denied the motion. 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. 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. District Court for the District of Rhode Island. In North Country Store v. United Natural Foods, Inc., plaintiff asserts that the Company made false representations about the nature of fuel surcharges charged to customers and asserts claims for alleged violations of Connecticut’s Unfair Trade Practices Act, breach of contract, unjust enrichment and breach of the covenant of good faith and fair dealing arising out of the Company’s fuel surcharge practices. On March 5, 2019, the Company answered the complaint denying the allegations. At a court-ordered mediation on October 15, 2019, the Company reached an agreed resolution, which was immaterial in amount, to avoid costs and uncertainty of litigation. The potential settlement must go through the Court approval and notice process, which will take several months. 
 
 From time to time, the Company receives notice of claims or potential claims, becomes involved in litigation, alternative dispute resolution such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business, including investigations and claims regarding employment law; pension plans; labor union disputes, including unfair labor practices, such as claims for back-pay it the context of labor contract negotiations; supplier, customer and service provider contract terms and claims including matters related to supplier or customer insolvency or general inability to pay obligations as they become due; real estate and environmental matters, including claims in connection with the Company’s ownership and lease of a substantial amount of real property, both neutral and warehouse properties; and antitrust. Other than as described above, there are no pending material legal proceedings to which the Company is a party or to which its property is subject. 
 
 Predicting the outcomes of claims and litigation and estimating related costs and exposures involves substantial uncertainties that could cause actual outcomes, costs and exposures to vary materially from current expectations. 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. 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. The occurrence of any of the foregoing, could have a material adverse effect on the Company’s financial condition, results of operations or cash flows. 
 
 NOTE 18—DISCONTINUED OPERATIONS 
 
 In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu (“Retail”). The results of operations, financial position and cash flows of Cub Foods, Hornbacher’s, Shoppers and Shop ‘n Save St. 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. 
 
 As of May 2, 2020, the Company held the remaining Shoppers stores and the Cub Foods business for sale. 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. 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. 
 
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 In the second quarter of fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations. 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. The Company expects to incur additional related costs and charges in the fourth quarter of fiscal 2020. 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. (“Coborn’s”). The Company did not incur a gain or loss on the sale of this disposal group. The Hornbacher’s store in Grand Forks, North Dakota was not included in the sale to Coborn’s and has closed pursuant to the terms of the definitive agreement. As part of the sale, Coborn's entered into a long-term agreement for the Company to serve as the primary supplier of the Hornbacher’s locations and expand its existing supply arrangements for other Coborn’s locations. 
 
 In the fourth quarter of fiscal 2019, the Company completed the sale of the pharmacy prescription files and inventory of the Shoppers disposal group. 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: 
 
 13-Week Period Ended 
 
 39-Week Period Ended 
 
 (In thousands) 
 May 2, 2020 
 
 April 27, 
2019 
 
 May 2, 2020 
 
 April 27, 2019 (1) 
 
 Net sales 
 $ 
 667,003 
 
 $ 
 640,121 
 
 $ 
 1,891,529 
 
 $ 
 1,413,756 
 
 Cost of sales 
 479,175 
 
 463,157 
 
 1,371,253 
 
 1,031,330 
 
 Gross profit 
 187,828 
 
 176,964 
 
 520,276 
 
 382,426 
 
 Operating expenses 
 128,232 
 
 144,547 
 
 394,080 
 
 310,751 
 
 Restructuring expenses and charges 
 8,091 
 
 644 
 
 40,304 
 
 11,026 
 
 Operating income 
 51,505 
 
 31,773 
 
 85,892 
 
 60,649 
 
 Other expense (income), net 
 2,242 
 
 ( 369 
 ) 
 
 1,192 
 
 ( 957 
 ) 
 
 Income from discontinued operations before income taxes 
 49,263 
 
 32,142 
 
 84,700 
 
 61,606 
 
 Income tax provision 
 12,071 
 
 7,772 
 
 20,447 
 
 13,759 
 
 Income from discontinued operations, net of tax 
 $ 
 37,192 
 
 $ 
 24,370 
 
 $ 
 64,253 
 
 $ 
 47,847 
 
 (1) 
 These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to April 27, 2019 . 
 
 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. 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. 
 
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 Table of contents 

 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) 
 
 May 2, 2020 
 
 August 3, 2019 
 
 Current assets 
 
 Cash and cash equivalents 
 
 $ 
 2,312 
 
 $ 
 2,917 
 
 Receivables, net 
 
 11,822 
 
 1,471 
 
 Inventories 
 
 110,449 
 
 129,142 
 
 Other current assets 
 
 4,272 
 
 10,199 
 
 Total current assets of discontinued operations 
 
 128,855 
 
 143,729 
 
 Long-term assets 
 
 Property and equipment 
 
 269,272 
 
 301,395 
 
 Intangible assets 
 
 49,687 
 
 48,788 
 
 Other assets 
 
 2,297 
 
 1,882 
 
 Total long-term assets of discontinued operations 
 
 321,256 
 
 352,065 
 
 Total assets of discontinued operations 
 
 $ 
 450,111 
 
 $ 
 495,794 
 
 Current liabilities 
 
 Accounts payable 
 
 $ 
 73,546 
 
 $ 
 61,634 
 
 Accrued compensation and benefits 
 
 42,679 
 
 45,887 
 
 Other current liabilities 
 
 19,278 
 
 14,744 
 
 Total current liabilities of discontinued operations 
 
 135,503 
 
 122,265 
 
 Long-term liabilities 
 
 Other long-term liabilities 
 
 8,899 
 
 1,923 
 
 Total liabilities of discontinued operations 
 
 144,402 
 
 124,188 
 
 Net assets of discontinued operations 
 
 $ 
 305,709 
 
 $ 
 371,606 
 
 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. The sale of the Company’s retail disposal groups may result in charges that may be materially different than the Company’s prior estimates. Estimates most sensitive to changes that could result in material charges include expected consideration, including the extent to which the Company is able transfer multiemployer pension plan obligations, and the potential sale of the disposal groups at a lower level. 
 
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 Table of contents 

 NOTE 19—SUBSEQUENT EVENTS 
 
 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. As a result, the Company determined it no longer met the criteria to classify Remaining Retail as discontinued operations. 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. 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. 
 
 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. 
 
 As discussed in Note 3—Revenue Recognition , certain sales from the Wholesale segment to the retail discontinued operations are presented within Net sales. 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. Remaining Retail’s net sales will be included in the Net sales line of the Consolidated Statement of Operations. 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. 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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
UNITED NATURAL FOODS INC 10-Q

Item 1. Financial Statements
