What changed in this filing

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Item 1. Financial Statements

2021-03-10 compared with 2020-12-09 · 306 added, 225 removed, 690 unchanged (43% of the section changed)

6 unchanged sentences

Accounts receivable, net 1,136,135 1,120,199

Inventories 2,446,604 2,280,767

Inventories, net 2,228,772 2,280,767

Prepaid expenses and other current assets 238,572 251,891

6 unchanged sentences

Deferred income taxes 107,779 107,624

Other assets 94,110 97,285

Other long-term assets 95,551 97,285

Long-term assets of discontinued operations 1,391 3,915

20 unchanged sentences

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

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

56,763 shares issued and 56,148 shares outstanding at January 30, 2021;

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.

1 unchanged sentence

(In thousands, except for per share data)

13-Week Period Ended

2020 November 2,

13-Week Period Ended 26-Week Period Ended

2021 February 1,

2020 January 30,

2021 February 1,

Net sales $ 6,888,133 $ 6,431,382 $ 13,560,740 $ 12,727,994

4 unchanged sentences

Restructuring, acquisition and integration related expenses 17,783 36,522 34,211 51,194

Gain on sale of assets ( 230 ) ( 90 )

Loss on sale of assets 399 524 169 434

Operating income (loss) 105,297 17,547 154,636 ( 398,917 )

4 unchanged sentences

Total other expense, net 32,143 44,339 83,445 82,264

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

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

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

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

Income (loss) from continuing operations before income taxes 73,154 ( 26,792 ) 71,191 ( 481,181 )

Provision (benefit) for income taxes 16,392 ( 12,808 ) 15,401 ( 79,763 )

Net income (loss) from continuing operations 56,762 ( 13,984 ) 55,790 ( 401,418 )

Income (loss) from discontinued operations, net of tax 3,803 ( 16,076 ) 5,099 ( 12,050 )

Net income (loss) including noncontrolling interests 60,565 ( 30,060 ) 60,889 ( 413,468 )

Less net income attributable to noncontrolling interests ( 1,605 ) ( 650 ) ( 2,972 ) ( 1,169 )

Net loss attributable to United Natural Foods, Inc.

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

$ 58,960 $ ( 30,710 ) $ 57,917 $ ( 414,637 )

Basic (loss) earnings per share:

Basic earnings (loss) per share:

Continuing operations $ 0.98 $ ( 0.27 ) $ 0.95 $ ( 7.54 )

Discontinued operations $ 0.07 $ ( 0.30 ) $ 0.09 $ ( 0.23 )

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

Diluted (loss) earnings per share:

Basic earnings (loss) per share $ 1.05 $ ( 0.57 ) $ 1.04 $ ( 7.77 )

Diluted earnings (loss) per share:

Continuing operations $ 0.93 $ ( 0.27 ) $ 0.89 $ ( 7.54 )

Discontinued operations $ 0.06 $ ( 0.30 ) $ 0.09 $ ( 0.23 )

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

Diluted earnings (loss) per share $ 1.00 $ ( 0.57 ) $ 0.98 $ ( 7.77 )

Weighted average shares outstanding:

2 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

1 unchanged sentence

(In thousands)

13-Week Period Ended

2020 November 2,

13-Week Period Ended 26-Week Period Ended

2021 February 1,

2020 January 30,

2021 February 1,

Net income (loss) including noncontrolling interests $ 60,565 $ ( 30,060 ) $ 60,889 $ ( 413,468 )

1 unchanged sentence

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

( 300 ) 7,370 ( 506 ) 7,942

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

2 unchanged sentences

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

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

388 — ( 45 ) —

Total other comprehensive income 12,193 3,271 24,417 533

Less comprehensive income attributable to noncontrolling interests ( 1,605 ) ( 650 ) ( 2,972 ) ( 1,169 )

1 unchanged sentence

$ 71,153 $ ( 27,439 ) $ 82,334 $ ( 414,104 )

(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.

(1) Amounts are net of tax (benefit) expense of $( 0.1 ) million, $ 2.4 million, $( 0.2 ) million and $ 2.6 million, respectively.

(2) Amounts are net of tax expense (benefit) of $ 3.2 million, $( 1.3 ) million, $ 7.4 million and $( 2.5 ) million, respectively.

(3) Amounts are net of tax expense of $ 0.1 million, $— million, $— million and $— 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 13-week periods ended October 31, 2020 and November 2, 2019

For the 13-week periods ended January 30, 2021 and February 1, 2020

(In thousands)

4 unchanged sentences

Shares Amount Shares Amount

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

Restricted stock vestings 5 — — — ( 1,533 ) — — ( 1,533 ) — ( 1,533 )

Share-based compensation — — — — 10,687 — — 10,687 — 10,687

Other comprehensive income — — — — — 12,193 — 12,193 — 12,193

Distributions to noncontrolling interests — — — — — — — — ( 301 ) ( 301 )

Proceeds from issuance of common stock, net 9 — — — 136 — — 136 — 136

Acquisition of noncontrolling interests — — — — ( 364 ) — — ( 364 ) ( 176 ) ( 540 )

Net income — — — — — — 58,960 58,960 1,605 60,565

Balances at January 30, 2021 56,763 $ 568 615 $ ( 24,231 ) $ 581,096 $ ( 213,529 ) $ 886,313 $ 1,230,217 $ ( 1,151 ) $ 1,229,066

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

Restricted stock vestings 19 1 — — ( 54 ) — — ( 53 ) — ( 53 )

Share-based compensation — — — — 2,704 — — 2,704 — 2,704

Other comprehensive income — — — — — 3,271 — 3,271 — 3,271

Distributions to noncontrolling interests — — — — — — — — ( 300 ) ( 300 )

Proceeds from issuance of common stock, net 35 — — — 292 — — 292 — 292

Net (loss) income — — — — — — ( 30,710 ) ( 30,710 ) 650 ( 30,060 )

Balances at February 1, 2020 54,175 $ 542 615 $ ( 24,231 ) $ 535,900 $ ( 108,420 ) $ 691,640 $ 1,095,431 $ ( 2,966 ) $ 1,092,465

See accompanying Notes to Condensed Consolidated Financial Statements

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 26-week periods ended January 30, 2021 and February 1, 2020

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

Cumulative effect of change in accounting principle — — — — — — ( 9,237 ) ( 9,237 ) — ( 9,237 )

Restricted stock vestings and stock option exercises 1,438 15 — — ( 8,879 ) — — ( 8,864 ) — ( 8,864 )

Restricted stock vestings 1,443 15 — — ( 10,412 ) — — ( 10,397 ) — ( 10,397 )

Share-based compensation — — — — 22,929 — — 22,929 — 22,929

2 unchanged sentences

Proceeds from issuance of common stock, net 14 — — — 207 — — 207 — 207

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

Acquisition of noncontrolling interests — — — — ( 364 ) — — ( 364 ) ( 176 ) ( 540 )

Net income — — — — — — 57,917 57,917 2,972 60,889

Balances at January 30, 2021 56,763 $ 568 615 $ ( 24,231 ) $ 581,096 $ ( 213,529 ) $ 886,313 $ 1,230,217 $ ( 1,151 ) $ 1,229,066

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 424 4 — — ( 823 ) — — ( 819 ) — ( 819 )

Restricted stock vestings 443 5 — — ( 877 ) — — ( 872 ) — ( 872 )

Share-based compensation — — — — 3,951 — — 3,951 — 3,951

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

Other comprehensive income — — — — — 533 — 533 — 533

Distributions to noncontrolling interests — — — — — — — — ( 1,398 ) ( 1,398 )

1 unchanged sentence

Net (loss) income — — — — — — ( 414,637 ) ( 414,637 ) 1,169 ( 413,468 )

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

Balances at February 1, 2020 54,175 $ 542 615 $ ( 24,231 ) $ 535,900 $ ( 108,420 ) $ 691,640 $ 1,095,431 $ ( 2,966 ) $ 1,092,465

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of C ontents

UNITED NATURAL FOODS, INC.

1 unchanged sentence

26-Week Period Ended

(In thousands) October 31,

2020 November 2,

(In thousands) January 30,

2021 February 1,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) including noncontrolling interests $ 60,889 $ ( 413,468 )

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

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

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:

Income (loss) from discontinued operations, net of tax 5,099 ( 12,050 )

Net income (loss) from continuing operations 55,790 ( 401,418 )

Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities:

Depreciation and amortization 143,723 144,360

Share-based compensation 22,929 3,951

Gain on sale of assets ( 230 ) ( 90 )

Loss on sale of assets 169 434

Closed property and other restructuring charges 3,496 23,586

3 unchanged sentences

LIFO charge 13,343 13,879

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

(Recoveries) provision for losses on receivables, net ( 3,860 ) 45,503

Loss on debt extinguishment 29,494 73

1 unchanged sentence

Changes in operating assets and liabilities ( 33,994 ) ( 153,543 )

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 )

Net cash provided by operating activities of continuing operations

205,675 34,730

Net cash provided by operating activities of discontinued operations

Net cash provided by operating activities

206,999 39,082

CASH FLOWS FROM INVESTING ACTIVITIES:

3 unchanged sentences

Net cash used in investing activities of continuing operations

( 51,705 ) ( 80,270 )

Net cash provided by investing activities of discontinued operations

Net cash used in investing activities

( 50,238 ) ( 57,685 )

CASH FLOWS FROM FINANCING ACTIVITIES:

8 unchanged sentences

Repayments of other loans ( 163 ) —

Net provided by financing activities 95,265 156,096

Other ( 540 ) —

Net cash (used in) provided by financing activities

( 163,492 ) 15,649

EFFECT OF EXCHANGE RATE CHANGES ON CASH 265 19

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

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 6,466 ) ( 2,935 )

Cash and cash equivalents, at beginning of period 47,117 45,263

9 unchanged sentences

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”, “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 first quarters of fiscal 2021 and 2020 relate to the 13-week fiscal quarters ended October 31, 2020 and November 2, 2019, respectively.

The Company’s fiscal year ends on the Saturday closest to July 31 and contain either 52 or 53 weeks.

References to the second quarter of fiscal 2021 and 2020 relate to the 13-week fiscal quarters ended January 30, 2021 and February 1, 2020, respectively.

References to fiscal 2021 and 2020 year-to-date relate to the 26-week fiscal periods ended January 30, 2021 and February 1, 2020, respectively.

Basis of Presentation

10 unchanged sentences

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”).

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 Shoppers locations that are held for sale within discontinued operations (collectively “Retail”).

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

6 unchanged sentences

Actual results could differ from those estimates.

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

As of January 30, 2021 and August 1, 2020, the Company had net book overdrafts of $ 268.6 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.

3 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 $ 49.9 million and $ 43.3 million at October 31, 2020 and August 1, 2020, respectively.

If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 56.6 million and $ 43.3 million at January 30, 2021 and August 1, 2020, respectively.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

13 unchanged sentences

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 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.

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, which 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.

3 unchanged sentences

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.

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

16 unchanged sentences

Disaggregation of Revenues

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

The Company records revenue to five customer channels within Net sales, 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;

1 unchanged sentence

• Supernatural , which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market;

• 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;

• Retail , which reflects our Retail segment, including the Cub Foods business and the remaining Shoppers locations, excluding Shoppers locations that are held for sale within discontinued operations;

• 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.

Table of C ontents

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

1 unchanged sentence

Net Sales for the 13-Week Period Ended

(in millions) October 31, 2020

Customer Channel Wholesale Retail Other Eliminations Consolidated

(in millions) January 30, 2021

Customer Channel Wholesale Retail Other Eliminations (2)

Chains $ 3,097 $ — $ — $ — $ 3,097

6 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) November 2, 2019 (1)

Customer Channel Wholesale Retail Other Eliminations Consolidated

(in millions) February 1, 2020 (1)

Customer Channel Wholesale Retail Other Eliminations (2)

Chains $ 2,909 $ — $ — $ — $ 2,909

5 unchanged sentences

Total $ 6,206 $ 539 $ 41 $ ( 355 ) $ 6,431

(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.

Net Sales for the 26-Week Period Ended

(in millions) January 30, 2021

Customer Channel Wholesale Retail Other Eliminations (2)

Chains $ 6,117 $ — $ — $ — $ 6,117

Independent retailers 3,373 — — — 3,373

Supernatural 2,512 — — — 2,512

Retail — 1,216 — — 1,216

Other 1,038 — 111 — 1,149

Eliminations — — — ( 806 ) ( 806 )

Total $ 13,040 $ 1,216 $ 111 $ ( 806 ) $ 13,561

Net Sales for the 26-Week Period Ended

(in millions) February 1, 2020 (1)

Customer Channel Wholesale Retail Other Eliminations (2)

Chains $ 5,784 $ — $ — $ — $ 5,784

Independent retailers 3,118 — — — 3,118

Supernatural 2,322 — — — 2,322

Retail — 1,054 — — 1,054

Other 1,050 — 106 — 1,156

Eliminations — — — ( 706 ) ( 706 )

Total $ 12,274 $ 1,054 $ 106 $ ( 706 ) $ 12,728

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

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.

The Company believes this modified basis better reflects its channel presentation, as it further aligns with segment presentation and how sales channel information would appear following the potential 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.

2 unchanged sentences

There was no impact to the Condensed Consolidated Statements of Operations as a result of the reclassification of customer types.

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

The Company believes this modified basis better reflects the nature and economic risks of cash flows from customers.

(2) Eliminations primarily includes the net sales elimination of Wholesale’s sales to the Retail segment and the elimination of sales from segments included within Other to Wholesale.

The Company serves customers in the United States and Canada, as well as customers located in other countries.

3 unchanged sentences

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

These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 13.4 million and $ 36.1 million in the second quarters of fiscal 2021 and 2020, respectively, and $ 27.8 million and $ 92.1 million in fiscal 2021 and 2020 year-to-date, respectively.

Accounts and Notes Receivable Balances

Accounts and notes receivable are as follows:

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

(in thousands) January 30, 2021 August 1, 2020

Customer accounts receivable $ 1,176,126 $ 1,156,694

2 unchanged sentences

Accounts receivable, net $ 1,136,135 $ 1,120,199

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

$ 45,264 $ 49,268

Notes receivable, net, included within Prepaid expenses and other current assets $ 13,023 $ 49,268

Long-term notes receivable, net, included within Other assets $ 19,101 $ 25,800

1 unchanged sentence

Restructuring, acquisition and integration related expenses incurred were as follows:

13-Week Period Ended

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

13-Week Period Ended 26-Week Period Ended

(in thousands) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

2019 SUPERVALU INC.

restructuring expenses

$ — $ 664 $ — $ 2,501

Restructuring and integration costs 14,682 15,411 29,442 24,705

1 unchanged sentence

Total $ 17,783 $ 36,522 $ 34,211 $ 51,194

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

The Company has 5 goodwill reporting units:

NOTE 5—GOODWILL AND INTANGIBLE ASSETS, NET

The Company has five goodwill reporting units:

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

7 unchanged sentences

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.

13 unchanged sentences

Change in foreign exchange rates 477 — 477

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:

October 31, 2020 August 1, 2020

Goodwill as of January 30, 2021 $ 10,224 (1)

(1) Amounts are net of accumulated goodwill impairment charges of $ 716.5 million as of August 1, 2020 and January 30, 2021.

(2) Amounts are net of accumulated goodwill impairment charges of $ 9.6 million as of August 1, 2020 and January 30, 2021.

Identifiable intangible assets, net consisted of the following:

January 30, 2021 August 1, 2020

(in thousands) Gross Carrying

13 unchanged sentences

Intangible assets, net $ 1,189,501 $ 261,448 $ 928,053 $ 1,200,624 $ 231,024 $ 969,600

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

Amortization expense was $ 18.6 million and $ 21.5 million for the second quarters of fiscal 2021 and 2020, respectively, and $ 41.6 million and $ 43.6 million for fiscal 2021 and 2020 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 January 30, 2021 is shown below:

(In thousands)

3 unchanged sentences

Recurring Fair Value Measurements

The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:

Condensed Consolidated Balance Sheets Location Fair Value at October 31, 2020

The following tables provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:

Condensed Consolidated Balance Sheets Location Fair Value at January 30, 2021

(in thousands) Level 1 Level 2 Level 3

Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 63 $ —

Mutual funds Other assets $ 1,635 $ — $ —

Fuel derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 680 $ —

Mutual funds Other long-term assets $ 1,592 $ — $ —

Foreign currency derivatives not designated as hedging instruments Accrued expenses and other current liabilities $ — $ 3 $ —

3 unchanged sentences

Interest rate swaps designated as hedging instruments Other long-term liabilities $ — $ 66,374 $ —

Table of C ontents

Condensed Consolidated Balance Sheets Location Fair Value at August 1, 2020

3 unchanged sentences

Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 94 $ —

Fuel derivatives designated as hedging instruments Other assets $ — $ 23 $ —

Mutual funds Other assets $ 1,678 $ — $ —

Fuel derivatives designated as hedging instruments Other long-term assets $ — $ 23 $ —

Mutual funds Other long-term assets $ 1,678 $ — $ —

Fuel derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 197 $ —

5 unchanged sentences

The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, LIBOR swap rates and credit default swap rates.

As of October 31, 2020, a 100 basis point increase in forward LIBOR interest rates would decrease the fair value of the interest rate swap liabilities by approximately $ 44.3 million;

As of January 30, 2021, a 100 basis point increase in forward LIBOR interest rates would decrease the fair value of the interest rate swap liabilities by approximately $ 40.6 million;

a 100 basis point decrease in forward LIBOR interest rates would increase the fair value of the interest rate swap liabilities by approximately $ 42.2 million.

9 unchanged sentences

The fair values of foreign exchange derivatives are measured using Level 2 inputs.

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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 notes receivable is estimated by using a discounted cash flow approach prior to consideration for uncollectible amounts and is 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.

October 31, 2020 August 1, 2020

January 30, 2021 August 1, 2020

(In thousands) Carrying Value Fair Value Carrying Value Fair Value

Notes receivable, including current portion $ 41,264 $ 40,655 $ 77,598 $ 78,877

$ 74,581 $ 75,627 $ 77,598 $ 78,877

Long-term debt, including current portion $ 2,387,241 $ 2,474,902 $ 2,497,626 $ 2,535,851

$ 2,633,400 $ 2,688,668 $ 2,497,626 $ 2,535,851

NOTE 7—DERIVATIVES

2 unchanged sentences

Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.

The Company’s interest rate swap contracts are designated as cash flow hedges at October 31, 2020.

The Company’s interest rate swap contracts are designated as cash flow hedges at January 30, 2021.

Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets.

Refer to Note 6—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

Table of C ontents

Details of outstanding swap contracts as of October 31, 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 (2)

Details of active swap contracts as of January 30, 2021, which are all pay fixed and receive floating, are as follows:

Effective Date Swap Maturity Notional Value (in millions) Pay Fixed Rate Receive Floating Rate (2)

Floating Rate Reset Terms

22 unchanged sentences

(2) For these swap contracts that are indexed to LIBOR, the Company is monitoring and evaluating risks related to the expected future cessation of LIBOR.

In the first quarter of fiscal 2021, in conjunction with the $ 500.0 million fixed senior unsecured notes offering described below in Note 8—Long-Term Debt, the Company paid $ 11.3 million to terminate or novate certain outstanding interest rate swaps with a notional amount of $ 504.0 million and certain forward starting interest rate swaps with a notional amount of $ 450.0 million.

In the first quarter of fiscal 2021, in conjunction with the $ 500.0 million fixed rate senior unsecured notes offering described below in Note 8—Long-Term Debt, the Company paid $ 11.3 million to terminate or novate certain outstanding interest rate swaps with a notional amount of $ 504.0 million and certain forward starting interest rate swaps with a notional amount of $ 450.0 million.

The payments equaled the fair value of the interest rate swaps at the time of their termination or novation.

1 unchanged sentence

Since the hedged interest payments remain probable of occurring, the unrecognized gains and losses resulting from the early termination and novation of these interest rate swap agreements will be amortized out of Accumulated other comprehensive income and into to Interest expense, net over the remaining period of the original terminated or novated interest rate swap agreements.

If any of the hedged interest payments were not probable of occurring, then a charge representing an accelerated amortization of the unrecognized gains and losses would be recorded.

Cash payments resulting from the termination and novation of interest rate swaps are classified as operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

3 unchanged sentences

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 Income and subsequently reclassified to earnings in Interest expense, net in the Condensed Consolidated Statements of Operations when the hedged transactions affect earnings.

Table of C ontents

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 Income (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

October 31, 2020 November 2, 2019

(In thousands) Interest expense, net

13-Week Period Ended 26-Week Period Ended

January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

(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

1 unchanged sentence

Loss on cash flow hedging relationships:

Loss reclassified from comprehensive income into income $ ( 12,036 ) $ ( 2,370 )

Loss reclassified from comprehensive income into earnings $ ( 9,303 ) $ ( 4,251 ) $ ( 20,563 ) $ ( 6,621 )

Loss on interest rate swap contracts not designated as hedging instruments:

Loss recognized in earnings $ ( 2,195 ) $ — $ ( 2,971 ) $ —

NOTE 8—LONG-TERM DEBT

1 unchanged sentence

(in thousands) Average Interest Rate at

October 31, 2020 Fiscal Maturity Year October 31,

January 30, 2021

Fiscal Maturity Year January 30,

2021 August 1,

9 unchanged sentences

Refinancing Activities

During the first quarter of fiscal 2021, the Company repaid $ 500.0 million of outstanding borrowings under the Term Loan Facility (defined below) funded primarily by the net proceeds from the issuance of new eight-year senior unsecured notes (as described below).

Subsequent to the end of the second quarter of fiscal 2021, on February 11, 2021, the Company entered into an amendment agreement (the “First Term Loan Amendment”) amending the Term Loan Agreement (as defined below).

The amendment provides for, among other things, (i) the reduction of the applicable margin for LIBOR loans from 4.25 % to 3.50 % and the applicable margin for base rate loans from 3.25 % to 2.50 %, (ii) the appointment of a replacement administrative and collateral agent, and (iii) other administrative changes.

The amendment did not change the aggregate amount or maturity date of the Term Loan Facility.

During the second quarter of fiscal 2021, the Company made a voluntary prepayment of $ 150.0 million on the Term Loan Facility (as defined below) funded with incremental borrowings under the ABL Credit Facility (as defined below) that reduces its interest costs.

This prepayment will count towards any requirement from Excess Cash Flow (as defined in the Term Loan Agreement) generated during fiscal 2021, which would be due in fiscal 2022.

In connection with this prepayment, the Company incurred a loss on debt extinguishment of $ 5.7 million related to unamortized debt issuance costs and a loss on unamortized original issue discount, which were recorded within Interest expense, net in the Condensed Consolidated Statements of Operations in the second quarter of fiscal 2021.

During the first quarter of fiscal 2021, the Company repaid $ 500.0 million of outstanding borrowings under the Term Loan Facility funded primarily by the net proceeds from the issuance of new eight-year senior unsecured notes (as described below).

This refinancing transaction extended the maturity of a significant portion of the Company’s outstanding debt by approximately three years .

Also during the quarter, the Company made $ 108.0 million of additional repayments under the Term Loan Facility, including $ 72.0 million related to the material cash flow generation in fiscal 2020, as required under the Term Loan Agreement (as described below) and a voluntary prepayment of $ 36.0 million with incremental borrowings under the ABL Credit Facility (as described below).

The Company also executed a third amendment to the ABL Loan Agreement (as described below) during the first quarter of fiscal 2021, which added certain assets to the Borrowing Base (defined below) and increased the Company’s capacity to issue letters of credit under the facility, in addition to other administrative changes.

Also during the first quarter, the Company made $ 108.0 million of additional repayments under the Term Loan Facility, including $ 72.0 million related to the material cash flow generation in fiscal 2020, as required under the Term Loan Agreement (as described below) and a voluntary prepayment of $ 36.0 million with incremental borrowings under the ABL Credit Facility (as described below).

In connection with the prepayments, the Company incurred a loss on debt extinguishment related to unamortized debt issuance costs and a loss on unamortized original issue discount of $ 12.0 million and $ 11.8 million, respectively, which were recorded within Interest expense, net in the Condensed Consolidated Statements of Operations in the first quarter of fiscal 2021.

The Company also executed a third amendment to the ABL Loan Agreement (as defined below) during the first quarter of fiscal 2021, which added certain assets to the Borrowing Base (as defined below) and increased the Company’s capacity to issue letters of credit under the facility, in addition to other administrative changes.

The amendment did not change the aggregate amount or maturity date of the ABL Credit Facility.

On October 22, 2020, the Company issued $ 500.0 million of unsecured 6.750 % Senior Notes due October 15, 2028 (the “Senior Notes”).

The Senior Notes are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility.

The net proceeds from the offering of the Senior Notes, together with borrowings under the ABL Credit Facility (defined below), were used to repay $ 500.0 million of the amounts outstanding under the Term B Tranche of the Term Loan Facility (defined below) and for the payment of all financing costs related to the offering of the Senior Notes.

Financing costs of approximately $ 9.0 million were paid and capitalized in the first quarter ending October 31, 2020.

Table of C ontents

The net proceeds from the offering of the Senior Notes, together with borrowings under the ABL Credit Facility, were used to repay $ 500.0 million of the amounts outstanding under the Term B Tranche of the Term Loan Facility and for the payment of all financing costs related to the offering of the Senior Notes.

Financing costs of $ 8.9 million were paid and capitalized in fiscal 2021 year-to-date.

The Senior Notes contain covenants customary for debt securities of this type that limit the ability of the Company and its restricted subsidiaries to, among other things, incur debt, declare or pay dividends or make other distributions to stockholders of the Company, transfer or sell assets, create liens on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis.

8 unchanged sentences

(acting through its Canada branch), as Canadian agent for the ABL Lenders, and the other parties thereto.

On August 14, 2020, the Company entered into the Third Amendment to Loan Agreement, which provides for, among other things, (i) the addition of certain perishable inventory to the calculation of the Borrowing Base (as defined in the ABL Loan Agreement), (ii) the addition of income attributable to the business associated with the Cub Foods banner and the Shoppers banner accounted for within discontinued operations (if any) to the definition of Consolidated Net Income (as defined in the ABL Loan Agreement), (iii) an increase of the sublimit of availability for letters of credit to $ 300 million which includes an increased further sublimit for the Canadian Borrower of $ 25 million, and (iv) other administrative changes.

During the first quarter of fiscal 2021, on August 14, 2020, the Company entered into the Third Amendment to Loan Agreement, which provides for, among other things, (i) the addition of certain perishable inventory to the calculation of the Borrowing Base (as defined in the ABL Loan Agreement), (ii) the addition of income attributable to the business associated with the Cub Foods banner and the Shoppers banner accounted for within discontinued operations (if any) to the definition of Consolidated Net Income (as defined in the ABL Loan Agreement), (iii) an increase of the sublimit of availability for letters of credit to $ 300 million which includes an increased further sublimit for the Canadian Borrower of $ 25 million, and (iv) other administrative changes.

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.

9 unchanged sentences

To the extent that the Borrowers’ Borrowing Base declines, the availability under the ABL Credit Facility may decrease below $ 2,100.0 million.

Table of C ontents

As of October 31, 2020, the U.S.

As of January 30, 2021, the U.S.

Borrowers’ Borrowing Base, net of $ 208.0 million of reserves, was $ 2,216.1 million, which is above the $ 2,050.0 million limit of availability to the U.S.

Borrowers under the ABL Credit Facility.

As of October 31, 2020, the Canadian Borrower’s Borrowing Base, net of $ 4.1 million of reserves, was $ 42.2 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 $ 2,092.2 million for ABL Loans and letters of credit under the ABL Credit Facility.

As of October 31, 2020, the U.S.

Borrowers had $ 986.7 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 October 31, 2020, the U.S.

As of January 30, 2021, the Canadian Borrower’s Borrowing Base, net of $ 4.2 million of reserves, was $ 48.6 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 $ 2,098.6 million for ABL Loans and letters of credit under the ABL Credit Facility.

As of January 30, 2021, the U.S.

Borrowers had $ 885.0 million of ABL Loans outstanding and the Canadian Borrower had no ABL Loans outstanding under the ABL Credit Facility, which are presented net of debt issuance costs of $ 9.7 million and are included in Long-term debt in the Condensed Consolidated Balance Sheets.

As of January 30, 2021, the U.S.

Borrowers had $ 95.8 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 $ 1,008.3 million as of October 31, 2020.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,117.8 million as of January 30, 2021.

The ABL Loans of the U.S.

2 unchanged sentences

(i) a base rate and an applicable margin or (ii) a LIBOR rate and an applicable margin.

As of October 31, 2020, the applicable margin for base rate loans was 0.25 % and the applicable margin for LIBOR loans was 1.25 %.

As of January 30, 2021, the applicable margin for base rate loans was 0.25 % and the applicable margin for LIBOR loans was 1.25 %.

The ABL Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available.

1 unchanged sentence

(i) prime rate and an applicable margin or (ii) a Canadian dollar bankers’ acceptance equivalent rate and an applicable margin.

As of October 31, 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 %.

As of January 30, 2021, 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.

1 unchanged sentence

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 October 31, 2020, the unutilized commitment fee was 0.25 % per annum.

As of January 30, 2021, 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.

4 unchanged sentences

2021 August 1,

Certain inventory assets included in Inventories and Current assets of discontinued operations

$ 2,476,391 $ 2,270,892

Certain inventory assets included in Inventories, net and Current assets of discontinued operations $ 2,261,209 $ 2,270,892

Certain receivables included in Accounts receivable, net and Current assets of discontinued operations $ 1,104,388 $ 1,077,682

(1) The ABL Credit Facility is also secured by all of the Company’s pharmacy scripts, which are included in Intangibles, net in the Condensed Consolidated Balance Sheets as of October 31, 2020 and August 1, 2020.

(1) The ABL Credit Facility is also secured by all of the Company’s pharmacy scripts, which are included in Intangibles, net in the Condensed Consolidated Balance Sheets as of January 30, 2021 and August 1, 2020.

Unused credit and fees under the ABL Credit Facility (in thousands, except percentages):

October 31, 2020

January 30, 2021

Outstanding letters of credit

2 unchanged sentences

Unused facility fees

Table of C ontents

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.

6 unchanged sentences

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 the first quarter ending October 31, 2020, the Company made prepayments on the Term B Tranche of $ 608.0 million as described above.

Subsequent to the end of the first quarter of fiscal 2021, the Company made a voluntary prepayment of $ 150.0 million on the Term Loan funded with incremental borrowings under the ABL Credit Facility that reduces its interest costs.

This prepayment will count towards any requirement from Excess Cash Flow (as defined in the Term Loan Agreement) generated during fiscal 2021, which would be due in fiscal 2022.

In the second quarter of fiscal 2021, the Company expects to record an accelerated charge related to deferred financing fees and original issue discounts based on the proportionate payment amount to the Term Loan Facility balance.

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 (the “Whole Foods Supply Agreement”) 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.

On March 3, 2021, we entered into an amendment to the Whole Foods Supply Agreement, which extended the term of the agreement from September 28, 2025 to September 27, 2027, and which satisfies the extension requirement in the Term Loan Agreement.

In fiscal 2021 year-to-date, the Company made prepayments on the Term B Tranche of $ 758.0 million as described above.

The loans under the 364-day Tranche were paid in full on October 21, 2019.

4 unchanged sentences

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 October 31, 2020, there was $ 594.9 million of owned real property pledged as collateral that was included in Property and equipment, net and Prepaid expenses and Other current assets in the Condensed Consolidated Balance Sheets.

Table of C ontents

As of January 30, 2021, there was $ 587.1 million of owned real property pledged as collateral that was included in Property and equipment, net and Prepaid expenses and Other current assets 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.

2 unchanged sentences

Based on the Company’s Excess Cash Flow in fiscal 2020, a $ 72.0 million prepayment was required and paid in the quarter ending October 31, 2020.

The potential amount of prepayment from Excess Cash Flow in fiscal 2021 that may be required in fiscal 2022 is not reasonably estimable as of October 31, 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:

The potential amount of prepayment from Excess Cash Flow in fiscal 2021 that may be required in fiscal 2022 is not reasonably estimable as of January 30, 2021.

As of January 30, 2021, 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 %;

4 unchanged sentences

If an event of default occurs and is continuing, the Term Borrowers may be required to immediately repay all amounts outstanding under the Term Loan Agreement.

As of October 31, 2020, the Company had borrowings of $ 1,165.0 million outstanding under the Term B Tranche, which are presented net of debt issuance costs of $ 22.5 million and an original issue discount on debt of $ 22.1 million.

As of October 31, 2020, no amount of the Term B Tranche was classified as current.

As of January 30, 2021, the Company had borrowings of $ 1,015.0 million outstanding under the Term B Tranche, which are presented net of debt issuance costs of $ 18.8 million and an original issue discount on debt of $ 18.4 million.

As of January 30, 2021, no amount of the Term B Tranche was classified as current.

NOTE 9—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in Accumulated other comprehensive loss by component net of tax for the first quarter of fiscal 2021 are as follows:

(in thousands) Other Cash Flow Derivatives Benefit Plans Foreign Currency Swap Agreements Total

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2021 year-to-date are as follows:

(in thousands) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total

Accumulated other comprehensive loss at August 1, 2020 $ ( 67 ) $ ( 115,296 ) $ ( 21,419 ) $ ( 101,164 ) $ ( 237,946 )

Other comprehensive (loss) gain before reclassifications ( 557 ) — 405 3,652 3,500

Other comprehensive (loss) income before reclassifications ( 165 ) — 3,257 4,494 7,586

Reclassification of amounts included in net periodic benefit income — ( 506 ) — — ( 506 )

1 unchanged sentence

Net current period Other comprehensive (loss) income ( 45 ) ( 506 ) 3,257 21,711 24,417

Accumulated other comprehensive loss at October 31, 2020 $ ( 500 ) $ ( 115,502 ) $ ( 21,014 ) $ ( 88,706 ) $ ( 225,722 )

Table of C ontents

Changes in Accumulated other comprehensive loss by component net of tax for the first quarter of fiscal 2020 are as follows:

(in thousands) Benefit Plans Foreign Currency Swap Agreements Total

Accumulated other comprehensive loss at January 30, 2021 $ ( 112 ) $ ( 115,802 ) $ ( 18,162 ) $ ( 79,453 ) $ ( 213,529 )

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 Translation Swap Agreements Total

Accumulated other comprehensive loss at August 3, 2019 $ ( 32,458 ) $ ( 20,082 ) $ ( 56,413 ) $ ( 108,953 )

1 unchanged sentence

Reclassification of amounts included in net periodic benefit income ( 1,148 ) — — ( 1,148 )

Reclassification of cash flow hedge — — 1,942 1,942

Reclassification of cash flow hedges — — ( 4,845 ) ( 4,845 )

Pension settlement charge 7,610 — — 7,610

Net current period Other comprehensive income (loss) 7,942 24 ( 7,433 ) 533

Accumulated other comprehensive loss at November 2, 2019 $ ( 31,886 ) $ ( 19,711 ) $ ( 60,094 ) $ ( 111,691 )

Accumulated other comprehensive loss at February 1, 2020 $ ( 24,516 ) $ ( 20,058 ) $ ( 63,846 ) $ ( 108,420 )

Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations:

13-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations

(in thousands) October 31,

2020 November 2,

13-Week Period Ended 26-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations

(in thousands) January 30,

2021 February 1,

2020 January 30,

2021 February 1,

Pension and postretirement benefit plan obligations:

1 unchanged sentence

$ ( 404 ) $ ( 777 ) $ ( 713 ) $ ( 1,551 ) Net periodic benefit income, excluding service cost

Income tax expense (benefit) 103 ( 202 ) Benefit for income taxes

Pension settlement charge — 10,303 — 10,303 Net periodic benefit income, excluding service cost

Total reclassifications ( 404 ) 9,526 ( 713 ) 8,752

Income tax expense (benefit) 104 ( 2,492 ) 207 ( 2,290 ) Provision (benefit) for income taxes

Total reclassifications, net of tax $ ( 300 ) $ 7,034 $ ( 506 ) $ 6,462

1 unchanged sentence

Reclassification of cash flow hedge $ 11,498 $ ( 4,251 ) $ 23,534 $ ( 6,621 ) Interest expense, net

Income tax expense (benefit) ( 3,230 ) ( 428 ) Benefit for income taxes

Income tax benefit ( 3,087 ) ( 1,348 ) ( 6,317 ) ( 1,776 ) Provision (benefit) for income taxes

Total reclassifications, net of tax $ 8,411 $ ( 2,903 ) $ 17,217 $ ( 4,845 )

1 unchanged sentence

Reclassification of cash flow hedge $ ( 5 ) $ — $ 164 $ — Cost of sales

Income tax expense (benefit) ( 45 ) — Benefit for income taxes

Income tax expense (benefit) 1 — ( 44 ) — Provision (benefit) for income taxes

Total reclassifications, net of tax $ ( 4 ) $ — $ 120 $ —

(1) Reclassification of amounts included in net periodic benefit income include reclassification of prior service benefit and reclassification of net actuarial loss as reflected in Note 11—Benefit Plans.

As of October 31, 2020, the Company expects to reclassify $ 45.2 million out of Accumulated other comprehensive loss into Interest expense, net during the following twelve-month period.

As of January 30, 2021, the Company expects to reclassify $ 44.1 million out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 10—SHARE-BASED AWARDS

In the first quarter of fiscal 2021, the Company granted restricted stock units and performance share units to its directors, executive officers, and certain employees representing a right to receive an aggregate of 2.6 million.

As of October 31, 2020, there were 113 thousand shares available for issuance under the 2020 Equity Incentive Plan.

Table of C ontents

During the second quarter of fiscal 2021, the Company authorized for issuance and registered an additional 3.6 million shares of common stock under the Amended and Restated 2020 Equity Incentive Plan.

In fiscal 2021 year-to-date, the Company granted restricted stock units and performance share units to its directors, executive officers, and certain employees representing a right to receive an aggregate of 2.6 million shares.

As of January 30, 2021, there were 3.9 million shares available for issuance under the 2020 Equity Incentive Plan.

NOTE 11—BENEFIT PLANS

Net periodic benefit income and contributions to defined benefit pension and other post-retirement benefit plans consisted of the following:

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) October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019

(in thousands) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

Net Periodic Benefit (Income) Cost

4 unchanged sentences

Amortization of net actuarial loss (gain) 261 3 ( 315 ) ( 430 )

Pension settlement charge — 10,303 — —

Net periodic benefit income $ ( 16,539 ) $ ( 2,679 ) $ ( 576 ) $ ( 584 )

Contributions to benefit plans $ ( 375 ) $ ( 1,150 ) $ ( 950 ) $ ( 60 )

26-Week Period Ended

Pension Benefits Other Postretirement Benefits

(in thousands) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

Net Periodic Benefit (Income) Cost

Service cost $ — $ — $ 24 $ 28

Interest cost 18,328 30,292 206 472

Expected return on plan assets ( 51,929 ) ( 54,069 ) ( 52 ) ( 108 )

Amortization of prior service credit — — ( 700 ) ( 700 )

Amortization of net actuarial loss (gain) 617 6 ( 630 ) ( 857 )

Pension settlement charge — 10,303 — —

Net periodic benefit income $ ( 32,984 ) $ ( 13,468 ) $ ( 1,152 ) $ ( 1,165 )

Contributions to benefit plans $ ( 750 ) $ ( 5,250 ) $ ( 1,900 ) $ ( 160 )

Pension Contributions

4 unchanged sentences

Multiemployer Pension Plans

The Company contributed $ 11.9 million and $ 13.5 million in the first quarters of fiscal 2021 and 2020, respectively, to continuing and discontinued operations multiemployer pension plans.

The Company contributed $ 11.8 million and $ 12.6 million in the second quarters of fiscal 2021 and 2020, respectively, and $ 23.7 million and $ 26.1 million in fiscal 2021 and 2020 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.

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 12—INCOME TAXES

The effective income tax rate for continuing operations was a benefit of 50.5 % compared to a benefit of 14.7 % on pre-tax income for the first quarter of fiscal 2021 and 2020, respectively.

The change in the effective income tax rate for the first quarter of fiscal 2021 was primarily driven by a discrete tax benefit in the first quarter of fiscal 2021 related to employee stock awards compared to a discrete tax expense for this item in the first quarter of fiscal 2020.

In addition, the first quarter of fiscal 2020 was impacted by a goodwill impairment charge.

The tax provision included $ 0.5 million and $ 64.2 million of discrete tax benefit for the first quarter of fiscal 2021 and fiscal 2020, respectively.

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NOTE 13—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

(in thousands, except per share data) October 31,

2020 November 2,

The effective income tax rate for continuing operations was an expense of 22.4 % on pre-tax income compared to a benefit of 47.8 % on pre-tax losses for the second quarters of fiscal 2021 and 2020, respectively.

The change in the effective income tax rate for the second quarter of fiscal 2021 was primarily driven by a pre-tax loss of approximately $ 26.8 million in the second quarter of fiscal 2020 compared to pre-tax income of approximately $ 73.2 million in the second quarter of fiscal 2021.

In addition, the change in the rate is partially driven by a discrete tax benefit of approximately $ 2.8 million in the second quarter of fiscal 2021 related to the release of unrecognized tax positions versus a discrete tax benefit of approximately $ 0.5 million for this item in the second quarter of fiscal 2020.

The tax provision had $ 3.1 million and $ 0.1 million of discrete tax benefits, including those mentioned above, for the second quarters of fiscal 2021 and fiscal 2020, respectively.

The effective income tax rate for continuing operations was an expense of 21.6 % on pre-tax income compared to a benefit of 16.6 % on pre-tax losses for fiscal 2021 year-to-date and fiscal 2020 year-to-date, respectively.

The change in the effective income tax rate was primarily driven by a discrete tax benefit in fiscal 2021 year-to-date for employee stock vestings versus a discrete tax expense for this item in fiscal 2020 year-to-date, as well as a discrete tax benefit for the release of unrecognized tax positions in fiscal 2021 year-to-date versus a discrete tax expense for this item in fiscal 2020 year-to-date.

In addition, fiscal 2020 year-to-date was impacted by a goodwill impairment charge that did not repeat in fiscal 2021 year-to-date.

The tax provision had $ 3.5 million and $ 64.4 million of discrete tax benefits for fiscal 2021 and fiscal 2020 year-to-date, respectively.

NOTE 13—EARNINGS (LOSS) PER SHARE

The following is a reconciliation of the basic and diluted number of shares used in computing earnings (loss) per share:

13-Week Period Ended 26-Week Period Ended

(in thousands, except per share data) January 30,

2021 February 1,

2020 January 30,

2021 February 1,

Basic weighted average shares outstanding 56,138 53,523 55,717 53,368

Net effect of dilutive stock awards based upon the treasury stock method

3,067 — 3,402 —

Diluted weighted average shares outstanding 59,205 53,523 59,119 53,368

Basic (loss) earnings per share:

Basic earnings (loss) per share:

Continuing operations $ 0.98 $ ( 0.27 ) $ 0.95 $ ( 7.54 )

Discontinued operations $ 0.07 $ ( 0.30 ) $ 0.09 $ ( 0.23 )

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

Diluted (loss) earnings per share:

Basic earnings (loss) per share $ 1.05 $ ( 0.57 ) $ 1.04 $ ( 7.77 )

Diluted earnings (loss) per share:

Continuing operations $ 0.93 $ ( 0.27 ) $ 0.89 $ ( 7.54 )

Discontinued operations $ 0.06 $ ( 0.30 ) $ 0.09 $ ( 0.23 )

$ 0.02 $ 0.08

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

Diluted earnings (loss) per share $ 1.00 $ ( 0.57 ) $ 0.98 $ ( 7.77 )

Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share

(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, of approximately 3.95 million and 63 thousand for the first quarters of fiscal 2021 and 2020, respectively.

1,140 7,413 1,214 7,834

NOTE 14—BUSINESS SEGMENTS

6 unchanged sentences

Reportable segments are reviewed on an annual basis, or more frequently if events or circumstances indicate a change in reportable segments has occurred.

The Wholesale reportable segment is engaged in the national distribution of natural, organic, specialty, produce and conventional grocery and non-food products, and providing retail services in the United States and Canada.

The Retail reportable segment derives revenues from the sale of groceries and other products at retail locations operated by the Company.

8 unchanged sentences

Prior period amounts have been recast to reflect this change in segment profit measure.

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The following table provides continuing operations net sales and Adjusted EBITDA by reportable segment and reconciles that information to Loss from continuing operations before income taxes:

13-Week Period Ended

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

The following table provides continuing operations net sales and Adjusted EBITDA by reportable segment and reconciles that information to Income (loss) from continuing operations before income taxes:

13-Week Period Ended 26-Week Period Ended

(in thousands) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

Wholesale (1)

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Goodwill and asset impairment charges — — — ( 425,405 )

Gain on sale of assets 230 90

Loss on sale of assets ( 399 ) ( 524 ) ( 169 ) ( 434 )

Notes receivable charges — — — ( 12,516 )

Legal reserve charge — ( 1,850 )

Legal settlement income (reserve charge) — 654 — ( 1,196 )

Other retail expense ( 1,394 ) — ( 3,003 ) —

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

Income (loss) from continuing operations before income taxes $ 73,154 $ ( 26,792 ) $ 71,191 $ ( 481,181 )

Depreciation and amortization:

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Total capital expenditures $ 50,136 $ 46,080 $ 91,516 $ 91,128

(1) As presented in Note 3—Revenue Recognition, for the first quarters of fiscal 2021 and 2020, the Company recorded $ 357.6 million and $ 297.7 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.

(1) As presented in Note 3—Revenue Recognition, for the second quarters of fiscal 2021 and 2020, the Company recorded $ 345.3 million and $ 308.1 million, respectively, and $ 702.9 million and $ 605.8 million in fiscal 2021 and 2020 year-to-date, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.

Refer to Note 3—Revenue Recognition for additional information regarding Wholesale sales to discontinued operations.

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Total assets of continuing operations by reportable segment were as follows:

(in thousands) October 31,

(in thousands) January 30,

2021 August 1,

6 unchanged sentences

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 October 31, 2020.

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of January 30, 2021.

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 .

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 nine years , with a weighted average remaining term of approximately five years .

For each guarantee issued, if the wholesale customer or other third-party defaults on a payment, the Company would be required to make payments under its guarantee.

1 unchanged sentence

The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance.

As of October 31, 2020, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 31.3 million ($ 26.2 million on a discounted basis).

As of January 30, 2021, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 28.7 million ($ 25.0 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, a total estimated loss of $ 1.0 million is recorded in the Condensed Consolidated Balance Sheets.

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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.

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In connection with Supervalu’s sale of New Albertson’s, Inc.

9 unchanged sentences

The initial annual base charge under the Services Agreement is $ 30 million, subject to adjustments.

We expect that services provided under the Services Agreement will wind down at or near the end of the initial term in December 2021.

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.

4 unchanged sentences

These contracts typically include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations.

As of October 31, 2020, the Company had approximately $ 203 million of non-cancelable future purchase obligations.

As of January 30, 2021, the Company had approximately $ 305 million of non-cancelable future purchase obligations.

Legal Proceedings

7 unchanged sentences

UNFI is vigorously defending these matters, which it believes are without merit.

On January 21, 2021, various health plans filed a complaint in Minnesota state court against the Company, Albertson’s Companies, LLC (“Albertson’s”) and Safeway, Inc.

alleging the defendants committed fraud by improperly reporting inflated prices for prescription drugs for members of health plans.

The Plaintiffs assert six causes of action against the defendants:

common law fraud, fraudulent nondisclosure, negligent misrepresentation, unjust enrichment, violation of the Minnesota Uniform Deceptive Trade Practices Act and violation of the Minnesota Prevention of Consumer Fraud Act.

The plaintiffs allege that between 2006 and 2016, Supervalu overcharged the health plans by not providing the health plans, as part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that Supervalu match competitor prices.

Plaintiffs seek an unspecified amount of damages.

Similar to the above case, for the majority of the relevant period Supervalu and Albertson’s operated as a combined company.

In March 2013, Supervalu divested Albertson’s and pursuant to the Stock Purchase Agreement, Albertson’s is responsible for any claims regarding its pharmacies.

The Company believes these claims are without merit and intends to vigorously defend this matter.

UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”).

6 unchanged sentences

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 Albertson’s in excess of $ 100 million, not including trebling and statutory penalties.

Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s 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 to the Stock Purchase Agreement.

Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a

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potential award (at the currently claimed value by relators) would be approximately $ 24 million, not including trebling and statutory penalties.

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.

3 unchanged sentences

On November 30, 2020, the Company filed its response.

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 agreement, which is immaterial in amount, to avoid costs and uncertainty of litigation.

On August 10, 2020, the Court granted final approval of the settlement, and this matter is now closed.

The hearing before the 7th Circuit Court of Appeals occurred on January 19, 2021.

From time to time, the Company receives notice of claims or potential claims or 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;

7 unchanged sentences

Management regularly monitors the Company’s 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 October 31, 2020, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

As of January 30, 2021, 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.

7 unchanged sentences

Louis and Shop ‘n Save East.

As of October 31, 2020, only five Shoppers locations are contained in remaining disposal groups that continue to be classified as operations held for sale as discontinued operations.

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As of January 30, 2021, only four Shoppers locations are contained in remaining disposal groups that continue to be classified as operations held for sale as discontinued operations.

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 $ 23.6 million in pre-tax aggregate costs and charges related to Shoppers stores that remain within discontinued operations, consisting of $ 18.8 million of operating losses, severance costs and transaction costs during the period of wind-down and $ 5.5 million of property and equipment impairment charges related to impairment reviews.

Operating results of discontinued operations are summarized below:

13-Week Period Ended

(In thousands) October 31, 2020 November 2,

13-Week Period Ended 26-Week Period Ended

(In thousands) January 30, 2021 February 1,

2020 January 30, 2021 February 1,

Net sales $ 22,973 $ 75,076 $ 47,789 $ 170,671

3 unchanged sentences

Restructuring expenses and charges 792 24,009 783 24,184

Operating income 1,822 5,258

Operating income (loss) 2,905 ( 20,714 ) 4,727 ( 15,456 )

Other expense (income), net — ( 3 ) — ( 64 )

Income from discontinued operations before income taxes 1,822 5,319

Income tax provision 526 1,293

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

Income (loss) from discontinued operations before income taxes 2,905 ( 20,711 ) 4,727 ( 15,392 )

Benefit for income taxes ( 898 ) ( 4,635 ) ( 372 ) ( 3,342 )

Income (loss) from discontinued operations, net of tax $ 3,803 $ ( 16,076 ) $ 5,099 $ ( 12,050 )

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.

The carrying amounts 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) October 31, 2020 August 1, 2020

The following table summarizes the carrying amounts of major classes of assets and liabilities that were classified as held-for-sale on the Condensed Consolidated Balance Sheets:

(In thousands) January 30, 2021 August 1, 2020

Current assets

Cash and cash equivalents $ 155 $ 119

Receivables, net 532 350

Inventories 4,348 4,233

Accounts receivable, net 578 350

Inventories, net 3,329 4,233

Other current assets 654 365

2 unchanged sentences

Property and equipment 927 3,450

Other assets 442 465

Other long-term assets 464 465

Total long-term assets of discontinued operations 1,391 3,915

9 unchanged sentences

Net liabilities of discontinued operations $ ( 2,221 ) $ ( 4,194 )

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements