What changed in this filing

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Item 1. Financial Statements

2020-12-09 compared with 2020-06-10 · 445 added, 849 removed, 470 unchanged (73% of the section changed)

3 unchanged sentences

(In thousands, except for per share data)

2020 August 1,

Cash and cash equivalents $ 49,046 $ 46,993

Accounts receivable, net 1,165,946 1,120,199

Inventories 2,446,604 2,280,767

Prepaid expenses and other current assets 273,211 251,891

3 unchanged sentences

Operating lease assets 1,010,744 982,808

Goodwill 19,671 19,607

Intangible assets, net 946,581 969,600

Deferred income taxes 106,931 107,624

Other assets 94,110 97,285

Long-term assets of discontinued operations 2,407 3,915

Total assets $ 7,783,597 $ 7,586,972

LIABILITIES AND STOCKHOLDERS’ EQUITY

10 unchanged sentences

Pension and other postretirement benefit obligations 274,698 292,128

Deferred income taxes

Other long-term liabilities 339,541 336,487

6 unchanged sentences

Common stock, $ 0.01 par value, authorized 100,000 shares;

55,292 shares issued and 54,677 shares outstanding at May 2, 2020;

56,749 shares issued and 56,135 shares outstanding at October 31, 2020;

55,306 shares issued and 54,691 shares outstanding at August 1, 2020

9 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

2 unchanged sentences

13-Week Period Ended

39-Week Period Ended

2020 November 2,

Net sales $ 6,672,607 $ 6,296,612

Cost of sales 5,706,108 5,389,401

Gross profit 966,499 907,211

Operating expenses 900,962 883,688

Goodwill and asset impairment (adjustment) charges

Goodwill and asset impairment charges — 425,405

Restructuring, acquisition and integration related expenses 16,428 14,672

Gain on sale of assets ( 230 ) ( 90 )

Operating income (loss) 49,339 ( 416,464 )

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Interest expense, net 69,133 49,709

Other, net ( 798 ) ( 400 )

Total other expense, net 51,302 37,925

Income (loss) from continuing operations before income taxes

Loss from continuing operations before income taxes ( 1,963 ) ( 454,389 )

Benefit for income taxes ( 991 ) ( 66,955 )

Net income (loss) from continuing operations

Net loss from continuing operations ( 972 ) ( 387,434 )

Income from discontinued operations, net of tax 1,296 4,026

Net income (loss) including noncontrolling interests 324 ( 383,408 )

Less net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to United Natural Foods, Inc.

Basic earnings (loss) per share:

Less net income attributable to noncontrolling interests ( 1,367 ) ( 519 )

Net loss attributable to United Natural Foods, Inc.

$ ( 1,043 ) $ ( 383,927 )

Basic (loss) earnings per share:

Continuing operations $ ( 0.04 ) $ ( 7.29 )

Discontinued operations $ 0.02 $ 0.08

Basic earnings (loss) per share

Diluted earnings (loss) per share:

Basic loss per share $ ( 0.02 ) $ ( 7.21 )

Diluted (loss) earnings per share:

Continuing operations $ ( 0.04 ) $ ( 7.29 )

Discontinued operations $ 0.02 $ 0.08

Diluted earnings (loss) per share

Diluted loss per share $ ( 0.02 ) $ ( 7.21 )

Weighted average shares outstanding:

Basic 55,171 53,213

Diluted 55,171 53,213

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(In thousands)

13-Week Period Ended

39-Week Period Ended

2020 November 2,

Net income (loss) including noncontrolling interests $ 324 $ ( 383,408 )

Other comprehensive (loss) income:

Other comprehensive income (loss):

Recognition of pension and other postretirement benefit obligations, net of tax (1)

Recognition of interest rate swap cash flow hedges, net of tax (2)

12,458 ( 3,681 )

Foreign currency translation adjustments 405 371

Total other comprehensive loss

Less comprehensive (income) loss attributable to noncontrolling interests

Recognition of other cash flow derivatives, net of tax (3)

Total other comprehensive income (loss) 12,224 ( 2,738 )

Less comprehensive income attributable to noncontrolling interests ( 1,367 ) ( 519 )

Total comprehensive income (loss) attributable to United Natural Foods, Inc.

Amounts are net of tax (benefit) expense of $( 0.2 ) million , $ 0.0 million , $ 2.4 million and $ 0.0 million , respectively.

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 .

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)

Treasury Stock

Paid-in Capital

Comprehensive Loss

Retained Earnings

Total United Natural Foods, Inc.

Stockholders’ Equity

Noncontrolling Interests

Total Stockholders’ Equity

Balances at February 1, 2020

Restricted stock vestings and stock option exercises

Share-based compensation

Other comprehensive loss

Distributions to noncontrolling interests

Proceeds from issuance of common stock, net

Balances at May 2, 2020

Balances at January 26, 2019

Restricted stock vestings and stock option exercises

Share-based compensation

Other comprehensive loss

Proceeds from issuance of common stock, net

Balances at April 27, 2019

$ 11,181 $ ( 386,665 )

(1) Amounts are net of tax (benefit) expense of $( 0.1 ) million and $ 0.2 million, respectively.

(2) Amounts are net of tax expense (benefit) of $ 4.3 million and $( 1.3 ) million, respectively.

(3) Amounts are net of tax (benefit) expense of $( 0.1 ) million and $ 0.0 million, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 39-week periods ended May 2, 2020 and April 27, 2019

For the 13-week periods ended October 31, 2020 and November 2, 2019

(In thousands)

Treasury Stock

Paid-in Capital

Comprehensive Loss

Retained Earnings

Stockholders’ Equity

Noncontrolling Interests

Total Stockholders’ Equity

Common Stock Treasury Stock Additional

Paid-in Capital Accumulated

Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.

Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity

Shares Amount Shares Amount

Balances at August 1, 2020 55,306 $ 553 615 $ ( 24,231 ) $ 568,736 $ ( 237,946 ) $ 837,633 $ 1,144,745 $ ( 2,487 ) $ 1,142,258

2 unchanged sentences

Share-based compensation — — — — 12,242 — — 12,242 — 12,242

Other comprehensive loss

Other comprehensive income — — — — — 12,224 — 12,224 — 12,224

Distributions to noncontrolling interests — — — — — — — — ( 1,159 ) ( 1,159 )

Proceeds from issuance of common stock, net 5 — — — 71 — — 71 — 71

Balances at May 2, 2020

Balances at July 28, 2018

Net (loss) income — — — — — — ( 1,043 ) ( 1,043 ) 1,367 324

Balances at October 31, 2020 56,749 $ 568 615 $ ( 24,231 ) $ 572,170 $ ( 225,722 ) $ 827,353 $ 1,150,138 $ ( 2,279 ) $ 1,147,859

Balances at August 3, 2019 53,501 $ 535 615 $ ( 24,231 ) $ 530,801 $ ( 108,953 ) $ 1,108,890 $ 1,507,042 $ ( 2,737 ) $ 1,504,305

Cumulative effect of change in accounting principle — — — — — — ( 2,613 ) ( 2,613 ) — ( 2,613 )

Restricted stock vestings and stock option exercises, net of tax

Restricted stock vestings and stock option exercises 424 4 — — ( 823 ) — — ( 819 ) — ( 819 )

Share-based compensation — — — — 1,247 — — 1,247 — 1,247

Other/share-based compensation

Other comprehensive loss — — — — — ( 2,738 ) — ( 2,738 ) — ( 2,738 )

Acquisition of noncontrolling interests

Distributions to noncontrolling interests — — — — — — — — ( 1,098 ) ( 1,098 )

Proceeds from issuance of common stock, net 196 2 — — 1,733 — — 1,735 — 1,735

Balances at April 27, 2019

Net (loss) income — — — — — — ( 383,927 ) ( 383,927 ) 519 ( 383,408 )

Balances at November 2, 2019 54,121 $ 541 615 $ ( 24,231 ) $ 532,958 $ ( 111,691 ) $ 722,350 $ 1,119,927 $ ( 3,316 ) $ 1,116,611

See accompanying Notes to Condensed Consolidated Financial Statements

Table of C ontents

UNITED NATURAL FOODS, INC.

1 unchanged sentence

13-Week Period Ended

(In thousands)

(In thousands) October 31,

2020 November 2,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss including noncontrolling interests

Net income (loss) including noncontrolling interests $ 324 $ ( 383,408 )

Income from discontinued operations, net of tax 1,296 4,026

3 unchanged sentences

Share-based compensation 12,242 1,247

Loss (gain) on disposition of assets

Gain on sale of assets ( 230 ) ( 90 )

Closed property and other restructuring charges 497 3,108

2 unchanged sentences

Deferred income tax benefit 2,254 ( 61,762 )

Provision for doubtful accounts, net

LIFO charge 6,670 6,873

Provision for losses on receivables, net ( 278 ) 13,098

Loss on debt extinguishment 23,750 73

Non-cash interest expense

Changes in operating assets and liabilities, net of acquired businesses

Net cash provided by operating activities of continuing operations

Net cash provided by operating activities of discontinued operations

Net cash provided by operating activities

Non-cash interest expense and other adjustments 3,750 3,833

Changes in operating assets and liabilities ( 163,033 ) ( 202,503 )

Net cash used in operating activities of continuing operations ( 55,182 ) ( 134,381 )

Net cash used in operating activities of discontinued operations ( 2,484 ) ( 488 )

Net cash used in operating activities ( 57,666 ) ( 134,869 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 41,380 ) ( 45,048 )

Purchases of acquired businesses, net of cash acquired

Proceeds from dispositions of assets 4,446 1,669

Proceeds from disposal of investments

Payments for long-term investment

Payments of company owned life insurance premiums

Other ( 58 ) ( 1,366 )

Net cash used in investing activities of continuing operations ( 36,992 ) ( 44,745 )

4 unchanged sentences

Proceeds from borrowings under revolving credit line 1,569,088 1,338,446

Proceeds from issuance of other loans

Repayments of borrowings under revolving credit line ( 1,339,100 ) ( 1,100,746 )

3 unchanged sentences

Payments for debt issuance costs ( 10,582 ) —

Net cash (used in) provided by financing activities of continuing operations

Net cash used in financing activities of discontinued operations

Net cash (used in) provided by financing activities

Distributions to noncontrolling interests ( 1,159 ) ( 1,060 )

Repayments of other loans ( 164 ) —

Net provided by financing activities 95,265 156,096

EFFECT OF EXCHANGE RATE CHANGES ON CASH 56 ( 10 )

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,149 ( 2,664 )

Cash and cash equivalents, at beginning of period 47,070 45,267

4 unchanged sentences

Cash paid for interest $ 44,120 $ 49,296

Cash (refunds) payments for federal and state income taxes, net

Cash payments (refunds) for federal and state income taxes, net 5,728 ( 28,874 )

Leased assets obtained in exchange for new operating lease liabilities 70,833 37,020

Leased assets obtained in exchange for new finance lease liabilities 346 —

Capital expenditures included in accounts payable $ 21,399 $ 33,605

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

3 unchanged sentences

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.

and its subsidiaries (the “Company”, “we”, ”us”, “UNFI”, or “our”) 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.

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.

References to the first quarters of fiscal 2021 and 2020 relate to the 13-week fiscal quarters ended October 31, 2020 and November 2, 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.

All significant intercompany transactions and balances have been eliminated in consolidation.

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.

Refer to Note 16—Discontinued Operations for additional information about the Company’s 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.

3 unchanged sentences

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 1, 2020 (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.

There were no material changes in significant accounting policies from those described in the Company’s Annual Report.

Discontinued Operations

In the fourth quarter of fiscal 2020, the Company determined it no longer met the held for sale criterion for a probable sale to be completed within 12 months for the Cub Foods business and the majority of the remaining Shoppers locations excluding five Shoppers locations that are held for sale (collectively “Retail”).

As a result, the Company revised its Condensed Consolidated Financial Statements to reclassify Retail from discontinued operations to continuing operations.

This change in financial statement presentation resulted in the inclusion of Retail’s results of operations, financial position, cash flows and related disclosures within continuing operations.

Prior periods presented in these Condensed Consolidated Financial Statements have been conformed to the current period presentation, resulting in Retail being presented in continuing operations for all periods.

Retail was acquired as part of the SUPERVALU INC.

(“Supervalu”) acquisition in the first quarter of fiscal 2019 on October 22, 2018.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Table of C ontents

Cash and Cash Equivalents

3 unchanged sentences

Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows.

As of May 2, 2020 and August 3, 2019 , the Company had net book overdrafts of $ 290.3 million and $ 236.9 million , respectively.

As of October 31, 2020 and August 1, 2020, the Company had net book overdrafts of $ 275.8 million and $ 267.8 million, respectively.

Reclassifications

Within the Condensed Consolidated Statements of Cash Flows certain immaterial amounts have been reclassified to conform with current year presentation:

prior year amounts for Proceeds from disposal of investments have been combined into a line titled Proceeds from dispositions of assets;

and prior year amounts for Payments for long-term investment and Payment of company owned life insurance premiums have been combined into a line titled Other.

These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

Inventories, Net

2 unchanged sentences

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.

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.

If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 49.9 million and $ 43.3 million at October 31, 2020 and August 1, 2020, respectively.

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

Prepaid expenses and other current assets

Property and equipment, net

Operating lease assets

Intangible assets, net

Deferred income taxes

Total increase to assets

Liabilities and Stockholders’ Equity

Accrued expense and other current liabilities

Current portion of operating lease liabilities

Current portion of long-term debt and finance lease liabilities

Long-term operating lease liabilities

Long-term finance lease obligations

Other long-term liabilities

Total stockholders’ equity

Total increase to liabilities and stockholders’ equity

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 June 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“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 changed the impairment model for most financial assets and certain other instruments.

For trade and other receivables, guarantees and other instruments, entities are required to use a new forward‐looking expected loss model that replaces the previous incurred loss model and generally results in earlier recognition of credit losses.

The Company adopted this standard in the first quarter of fiscal 2021 on August 2, 2020, the effective and initial application date, using 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 Company’s Condensed Consolidated Statement of Stockholders’ Equity.

The difference between reserves and allowances recorded under the former incurred loss model and the amount determined under the current expected loss model, net of the deferred tax impact, was recorded as an adjustment to Retained earnings.

Adoption of this standard did not have a material impact to the Company’s Condensed Consolidated Financial Statements.

In April 2019, the FASB issued ASU No.

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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

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 were adopted by the Company 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.

The remaining amendments within ASU 2019-04 were adopted in the first quarter of fiscal 2021 with the adoption of Topic 326.

Adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software:

2 unchanged sentences

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:

The Company adopted this standard on a prospective basis in the first quarter of fiscal 2021.

The Company expects to incur immaterial implementation costs in fiscal 2021.

Under this standard, the Company is required to defer these costs and recognize these costs as a service expense over future periods.

Adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20):

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.

The Company adopted this guidance in the first quarter of fiscal 2021.

The provisions of the new standard do not have any effect on the Company’s interim financial statements but will require additional disclosures in its annual consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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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.

The Company records revenue to six customer channels, which are described below:

• Chains , which consists of customer accounts that typically have more than 10 operating stores and exclude stores included within the Supernatural and Other channels defined below;

• Independent retailers, which include smaller size accounts and include single store and multiple store locations, but are not classified within Chains above or Other discussed below;

• 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.

The following tables detail the Company’s revenue recognition for the periods presented by customer channel for each of its segments.

• Retail , which includes our Retail segment, including the Cub Foods business and the majority of the remaining Shoppers locations, excluding five Shoppers locations that are held for sale;

• Other , which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.

• Eliminations , which primarily includes the elimination of Wholesale sales to the Retail segment and the elimination of sales from segments included within Other to Wholesale.

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The following tables detail the Company’s net sales for the periods presented by customer channel for each of its segments.

The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly.

Net Sales for the 13-Week Period Ended

(in millions)

Customer Channel

Net Sales for the 13-Week Period Ended

(in millions)

April 27, 2019 (1)

Customer Channel

Net Sales for the 39-Week Period Ended

(in millions)

May 2, 2020 (1)

Customer Channel

(in millions) October 31, 2020

Customer Channel Wholesale Retail Other Eliminations Consolidated

Chains $ 3,020 $ — $ — $ — $ 3,020

Independent retailers 1,672 — — — 1,672

Supernatural 1,214 — — — 1,214

Retail — 595 — — 595

Other 525 — 56 — 581

Eliminations — — — ( 409 ) ( 409 )

Total $ 6,431 $ 595 $ 56 $ ( 409 ) $ 6,673

Net Sales for the 13-Week Period Ended

(in millions)

April 27, 2019 (1)

Customer Channel

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.

(in millions) November 2, 2019 (1)

Customer Channel Wholesale Retail Other Eliminations Consolidated

Chains $ 2,875 $ — $ — $ — $ 2,875

Independent retailers 1,557 — — — 1,557

Supernatural 1,111 — — — 1,111

Retail — 515 — — 515

Other 525 — 65 — 590

Eliminations — — — ( 351 ) ( 351 )

Total $ 6,068 $ 515 $ 65 $ ( 351 ) $ 6,297

(1) In first quarter of fiscal 2021, the presentation of net sales by customer channel has been recast to present the Chains and Other channel exclusive of the intercompany eliminations and present total eliminations as a separate sales channel.

There was no impact to the Condensed Consolidated Statements of Operations.

UNFI believes this new basis better reflects its channel presentation, as it further aligns with segment presentation and how sales channel information would appear following disposition of Retail, assuming all banners retain a supply agreement.

In addition, during the fourth quarter of fiscal 2020, the presentation of net sales by customer channel was recast to be presented on a basis consistent with customer size.

International customers other than Canada, and alternative format sales continue to be classified within Other.

The main effect of the change was to re-categorize the former Supermarkets and Independents channels, previously classified by the majority of product carried by those customers between conventional and natural products, respectively, to classify those stores by the number of customer locations we supply.

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.

We believe this new basis better reflects the nature and economic risks of cash flows from customers.

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.

and Canada, and international distribution occurs through freight-forwarders.

The Company does not have any performance obligations on international shipments subsequent to delivery to the domestic port.

No net sales were recorded within continuing operations for retail stores within discontinued operations that the Company disposed of and expects to dispose of without a supply agreement.

These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 14.4 million and $ 56.0 million in the first quarters of fiscal 2021 and 2020, respectively.

Table of C ontents

Contract Balances

Accounts and notes receivable are as follows:

(in thousands)

August 3, 2019

(in thousands) October 31, 2020 August 1, 2020

Customer accounts receivable $ 1,207,609 $ 1,156,694

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Customer notes receivable, net, included within Prepaid expenses and other current assets

$ 45,264 $ 49,268

Long-term notes receivable, net, included within Other assets $ 19,497 $ 25,800

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.

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

Outstanding debt, excluding acquired senior notes

Equity-based awards

Total consideration

Fair value of assets acquired and liabilities assumed:

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

Current assets of discontinued operations

Property, plant and equipment

Intangible assets

Long-term assets of discontinued operations

Accounts payable

Current portion of long-term debt and finance lease obligations

Other current liabilities

Current liabilities of discontinued operations

Long-term debt

Long-term finance lease obligations

Pension and other postretirement benefit obligations

Deferred income taxes

Other long-term liabilities

Long-term liabilities of discontinued operations

Noncontrolling interests

Total consideration

Cash and cash equivalents (1)

Total consideration, net of cash and cash equivalents acquired

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.

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

Favorable operating leases

Leases in place

Pharmacy prescription files

Non-compete agreement

Unfavorable operating leases

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 income (loss) from continuing operations

Basic net income (loss) from continuing operations per share

Diluted net income (loss) from continuing operations per share

Includes 13 weeks of pro forma Supervalu results for the period ended April 28, 2018.

Includes 12 weeks of pro forma Supervalu results for the period ended September 8, 2018.

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 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES

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13-Week Period Ended

39-Week Period Ended

(in thousands)

April 27, 2019

(in thousands) October 31, 2020 November 2, 2019

2019 SUPERVALU INC.

restructuring expenses

Acquisition and integration costs

Restructuring and integration costs 14,760 9,294

Closed property charges and costs 1,668 3,541

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

Balances at August 3, 2019

Restructuring program charge

Cash payments

Balances at May 2, 2020

Cumulative program charges incurred from inception to date

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.

Total $ 16,428 $ 14,672

NOTE 5—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.

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 .

The Company has 5 goodwill reporting units:

two of which represent separate operating segments and are aggregated within the Wholesale reportable segment (U.S.

Wholesale and Canada Wholesale);

one separate Retail operating and reportable segment and 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.

The Canada Wholesale operating segment, which is aggregated with U.S.

Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria.

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.

During the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting, which resulted in the requirement 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.

Table of C ontents

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.

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Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:

(in thousands)

(in thousands) Wholesale Other Total

Goodwill as of August 1, 2020 $ 9,747 (1)

Goodwill adjustment for prior fiscal year business combinations

Impairment charges

Change in foreign exchange rates 64 — 64

Goodwill as of May 2, 2020

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.

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 .

Goodwill as of October 31, 2020 $ 9,811 (1)

(1) Amounts are net of accumulated goodwill impairment charges of $ 716.5 million as of August 1, 2020 and October 31, 2020.

(2) Amounts are net of accumulated goodwill impairment charges of $ 9.6 million as of August 1, 2020 and October 31, 2020.

Identifiable intangible assets consisted of the following:

August 3, 2019

(in thousands)

Gross Carrying

October 31, 2020 August 1, 2020

(in thousands) Gross Carrying

Amount Accumulated

Amortization Net Gross Carrying

Amount Accumulated

Amortization Net

Amortizing intangible assets:

Customer relationships $ 1,007,195 $ 188,006 $ 819,189 $ 1,007,118 $ 172,832 $ 834,286

Pharmacy prescription files 32,900 9,422 23,478 32,900 7,964 24,936

Non-compete agreements 12,900 12,786 114 12,900 11,500 1,400

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Intangible assets, net $ 1,200,701 $ 254,120 $ 946,581 $ 1,200,624 $ 231,024 $ 969,600

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:

Amortization expense was $ 23.0 million and $ 22.1 million for the first quarters of fiscal 2021 and 2020, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of October 31, 2020 is shown below:

Table of C ontents

(In thousands)

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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

Foreign exchange derivatives not designated as hedging instruments

Prepaid expenses and other current assets

Fuel derivatives not designated as hedging instruments

Accrued expenses and other current liabilities