What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-06-09 compared with 2021-03-10 · 133 added, 144 removed, 852 unchanged (25% of the section changed)

38 unchanged sentences

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

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

56,956 shares issued and 56,341 shares outstanding at May 1, 2021;

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

13 unchanged sentences

13-Week Period Ended 39-Week Period Ended

2021 February 1,

2020 January 30,

2021 February 1,

Net sales $ 6,619,842 $ 7,031,718 $ 20,180,582 $ 19,759,712

4 unchanged sentences

Restructuring, acquisition and integration related expenses 9,867 14,557 44,078 65,751

Loss on sale of assets 399 524 169 434

(Gain) loss on sale of assets ( 25 ) 351 144 785

Operating income (loss) 90,494 124,317 245,130 ( 274,600 )

28 unchanged sentences

13-Week Period Ended 39-Week Period Ended

2021 February 1,

2020 January 30,

2021 February 1,

Net income (loss) including noncontrolling interests $ 49,952 $ 90,369 $ 110,841 $ ( 323,099 )

7 unchanged sentences

( 296 ) — ( 341 ) —

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

Total other comprehensive income (loss) 16,437 ( 43,225 ) 40,854 ( 42,692 )

Less comprehensive income attributable to noncontrolling interests ( 1,394 ) ( 2,238 ) ( 4,366 ) ( 3,407 )

3 unchanged sentences

(2) Amounts are net of tax expense (benefit) of $ 4.8 million, $( 13.4 ) million, $ 12.3 million and $( 15.9 ) million, respectively.

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

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

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

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

For the 13-week periods ended May 1, 2021 and May 2, 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

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

Restricted stock vestings 163 2 — — ( 3,054 ) — — ( 3,052 ) — ( 3,052 )

5 unchanged sentences

Net income — — — — — — 48,558 48,558 1,394 49,952

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

Balances at May 1, 2021 56,956 $ 570 615 $ ( 24,231 ) $ 588,324 $ ( 197,092 ) $ 934,871 $ 1,302,442 $ ( 1,380 ) $ 1,301,062

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

Restricted stock vestings 21 — — — ( 143 ) — — ( 143 ) — ( 143 )

Share-based compensation — — — — 11,137 — — 11,137 — 11,137

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

Other comprehensive loss — — — — — ( 43,225 ) — ( 43,225 ) — ( 43,225 )

Distributions to noncontrolling interests — — — — — — — — ( 1,127 ) ( 1,127 )

Proceeds from issuance of common stock, net 1,096 11 — — 11,844 — — 11,855 — 11,855

Net (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

Net income — — — — — — 88,131 88,131 2,238 90,369

Balances at May 2, 2020 55,292 $ 553 615 $ ( 24,231 ) $ 558,738 $ ( 151,645 ) $ 779,771 $ 1,163,186 $ ( 1,855 ) $ 1,161,331

See accompanying Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

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

For the 39-week periods ended May 1, 2021 and May 2, 2020

Common Stock Treasury Stock Additional

12 unchanged sentences

Net income — — — — — — 106,475 106,475 4,366 110,841

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 May 1, 2021 56,956 $ 570 615 $ ( 24,231 ) $ 588,324 $ ( 197,092 ) $ 934,871 $ 1,302,442 $ ( 1,380 ) $ 1,301,062

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

2 unchanged sentences

Share-based compensation — — — — 15,088 — — 15,088 — 15,088

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

Other comprehensive loss — — — — — ( 42,692 ) — ( 42,692 ) — ( 42,692 )

Distributions to noncontrolling interests — — — — — — — — ( 2,525 ) ( 2,525 )

1 unchanged sentence

Net (loss) income — — — — — — ( 326,506 ) ( 326,506 ) 3,407 ( 323,099 )

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

Balances at May 2, 2020 55,292 $ 553 615 $ ( 24,231 ) $ 558,738 $ ( 151,645 ) $ 779,771 $ 1,163,186 $ ( 1,855 ) $ 1,161,331

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

39-Week Period Ended

(In thousands) January 30,

2021 February 1,

(In thousands) May 1,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Net income (loss) from continuing operations 104,089 ( 306,971 )

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

Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities:

Depreciation and amortization 210,088 214,002

16 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 91,516 ) ( 91,128 )

Payments for capital expenditures ( 165,457 ) ( 126,803 )

Proceeds from dispositions of assets 57,329 29,650

8 unchanged sentences

Proceeds from borrowings under revolving credit line 3,451,529 3,244,573

Proceeds from issuance of other loans — 6,266

Repayments of borrowings under revolving credit line ( 3,368,951 ) ( 3,508,573 )

6 unchanged sentences

Other ( 691 ) —

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 233,657 ) ( 365,485 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH 443 ( 290 )

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

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 7,486 ) 13,474

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

4 unchanged sentences

Cash paid for interest $ 118,441 $ 139,040

Cash payments (refunds) for federal and state income taxes, net 42,990 ( 24,376 )

Cash (refunds) for federal and state income taxes, net ( 21,847 ) ( 24,236 )

Leased assets obtained in exchange for new operating lease liabilities 226,570 154,888

Leased assets obtained in exchange for new finance lease liabilities 468 92,843

Capital expenditures included in accounts payable $ 31,309 $ 20,193

Additions of property and equipment included in accounts payable $ 49,182 $ 20,547

See accompanying Notes to Condensed Consolidated Financial Statements.

7 unchanged sentences

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.

References to the third quarter of fiscal 2021 and 2020 relate to the 13-week fiscal quarters ended May 1, 2021 and May 2, 2020, respectively.

References to fiscal 2021 and 2020 year-to-date relate to the 39-week fiscal periods ended May 1, 2021 and May 2, 2020, respectively.

Basis of Presentation

14 unchanged sentences

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

6 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 January 30, 2021 and August 1, 2020, the Company had net book overdrafts of $ 268.6 million and $ 267.8 million, respectively.

As of May 1, 2021 and August 1, 2020, the Company had net book overdrafts of $ 243.4 million and $ 267.8 million, respectively.

Reclassifications

5 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 $ 56.6 million and $ 43.3 million at January 30, 2021 and August 1, 2020, respectively.

If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 62.0 million and $ 43.3 million at May 1, 2021 and August 1, 2020, respectively.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

26 unchanged sentences

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.

ASU 2018-14 requires entities to disclose the weighted-average interest crediting rates used, reasons for significant gains and losses affecting benefit obligations, and an explanation of any other significant changes in the benefit obligation or plan assets.

The amendment also removed certain required disclosures.

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.

The provisions of the new standard do not have any effect on other disclosures in these Condensed Consolidated Financial Statements but will require disclosure updates in the Company’s annual audited consolidated financial statements.

Recently Issued Accounting Pronouncements

16 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) January 30, 2021

(in millions) (1)

Customer Channel Wholesale Retail Other Eliminations (3)

7 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) February 1, 2020 (1)

(in millions) (1)

May 2, 2020 (2)

Customer Channel Wholesale Retail Other Eliminations (3)

7 unchanged sentences

Net Sales for the 39-Week Period Ended

(in millions) January 30, 2021

(in millions) (1)

Customer Channel Wholesale Retail Other Eliminations (3)

7 unchanged sentences

Net Sales for the 39-Week Period Ended

(in millions) February 1, 2020 (1)

(in millions) (1)

May 2, 2020 (2)

Customer Channel Wholesale Retail Other Eliminations (3)

6 unchanged sentences

Total $ 19,024 $ 1,691 $ 164 $ ( 1,120 ) $ 19,760

(1) As a result of displaying amounts in millions, totals may not sum due to rounding.

(2) 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.

12 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 $ 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.

These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 12.4 million and $ 16.8 million in the third quarters of fiscal 2021 and 2020, respectively, and $ 40.2 million and $ 108.9 million in fiscal 2021 and 2020 year-to-date, respectively.

Accounts and Notes Receivable Balances

Accounts and notes receivable are as follows:

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

(in thousands) May 1, 2021 August 1, 2020

Customer accounts receivable $ 1,143,399 $ 1,156,694

7 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

(in thousands) May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

2019 SUPERVALU INC.

2 unchanged sentences

Restructuring and integration costs 12,047 552 41,489 25,257

Closed property charges and costs 3,101 20,447 4,769 23,988

Closed property (recoveries) charges and costs ( 2,180 ) 12,513 2,589 36,501

Total $ 9,867 $ 14,557 $ 44,078 $ 65,751

7 unchanged sentences

Fiscal 2020 Goodwill Impairment Review

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.

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 INC.

(“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.

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 units, which included a determination of the fair value of all reporting units.

The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit.

The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities.

The calculation of the impairment charge included substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities.

The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 8.5 %, which considered observable data about guideline publicly traded companies, an estimated market participant’s expectations about capital structure and risk premiums, including those reflected in the Company’s market capitalization.

4 unchanged sentences

The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Condensed Consolidated Statements of Operations.

The goodwill impairment charge reflects the impairment of all of the U.S.

The goodwill impairment charge reflected the impairment of all of the U.S.

Wholesale reporting unit’s goodwill.

4 unchanged sentences

Change in foreign exchange rates 888 — 888

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.

Goodwill as of May 1, 2021 $ 10,635 (1)

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

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

Identifiable intangible assets, net consisted of the following:

January 30, 2021 August 1, 2020

May 1, 2021 August 1, 2020

(in thousands) Gross Carrying

13 unchanged sentences

Intangible assets, net $ 1,188,370 $ 278,780 $ 909,590 $ 1,200,624 $ 231,024 $ 969,600

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.

Amortization expense was $ 18.4 million and $ 21.9 million for the third quarters of fiscal 2021 and 2020, respectively, and $ 60.0 million and $ 65.5 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:

for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of May 1, 2021 is shown below:

(In thousands)

4 unchanged sentences

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

Condensed Consolidated Balance Sheets Location Fair Value at May 1, 2021

(in thousands) Level 1 Level 2 Level 3

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

Foreign currency derivatives not designated as hedging instruments Prepaid expenses and other current assets $ — $ 2 $ —

Fuel derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1,101 $ —

Mutual funds Other long-term assets $ 1,550 $ — $ —

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

Fuel derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 1 $ —

Foreign currency derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 1,904 $ —

15 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 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.

As of May 1, 2021, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 34.0 million;

a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $ 35.3 million.

Refer to Note 7—Derivatives for further information on interest rate swap contracts.

13 unchanged sentences

In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs.

January 30, 2021 August 1, 2020

May 1, 2021 August 1, 2020

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

5 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 January 30, 2021.

The Company’s interest rate swap contracts are designated as cash flow hedges at May 1, 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.

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

Details of active swap contracts as of May 1, 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

March 21, 2019 April 15, 2022 $ 100.0 2.3645 % One-Month LIBOR Monthly

April 2, 2019 June 30, 2022 100.0 2.2170 % One-Month LIBOR Monthly

June 28, 2019 June 30, 2022 50.0 2.1840 % One-Month LIBOR Monthly

August 3, 2015 (1)

18 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 third quarter of fiscal 2021, in order to reduce its exposure to pay fixed and receive floating interest rate swap contracts due to lower levels of debt balances with floating interest rates, the Company paid $ 6.3 million to terminate certain outstanding interest rate swaps with a notional amount of $ 250.0 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.

1 unchanged sentence

No gain or loss was recorded as a result of the swap termination and novations.

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.

Since the hedged interest payments remain probable of occurring, the unrecognized gains and losses resulting from the early termination or novation of these interest rate swap agreements will be amortized out of Accumulated other comprehensive income and into 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.

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

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered.

5 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

(In thousands) Interest expense, net Interest expense, net

3 unchanged sentences

Loss reclassified from comprehensive income into earnings $ ( 14,623 ) $ ( 6,191 ) $ ( 35,186 ) $ ( 12,812 )

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

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

Gain (loss) on interest rate swap contracts not designated as hedging instruments:

Gain (loss) recognized in earnings $ 2,969 $ — $ ( 2 ) $ —

NOTE 8—LONG-TERM DEBT

1 unchanged sentence

(in thousands) Average Interest Rate at

January 30, 2021

Fiscal Maturity Year January 30,

Fiscal Maturity Year May 1,

2021 August 1,

9 unchanged sentences

Refinancing Activities

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).

During the third quarter of fiscal 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.

During the third quarter of fiscal 2021, the Company made a voluntary prepayment of $ 9.9 million and a mandatory prepayment of $ 2.8 million under the Term Loan Facility with asset sale proceeds.

During the second quarter of fiscal 2021, the Company made a voluntary prepayment of $ 150.0 million on the Term Lo an 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.

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 Statement 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).

9 unchanged sentences

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.

The Company is in compliance with all such covenants for all periods presented.

The Company was in compliance with all such covenants for all periods presented.

ABL Credit Facility

18 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.

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

As of May 1, 2021, the U.S.

Borrowers’ Borrowing Base, net of $ 173.0 million of reserves, was $ 2,252.5 million, which is above the $ 2,050.0 million limit of availability to the U.S.

Borrowers under the ABL Credit Facility.

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.

As of May 1, 2021, the Canadian Borrower’s Borrowing Base, net of $ 4.6 million of reserves, was $ 49.6 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 $ 2,099.6 million for ABL Loans and letters of credit under the ABL Credit Facility.

As of May 1, 2021, the U.S.

Borrowers had $ 839.3 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 $ 8.8 million and are included in Long-term debt in the Condensed Consolidated Balance Sheets.

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

As of May 1, 2021, the U.S.

Borrowers had $ 117.5 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 $ 1,117.8 million as of January 30, 2021.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,142.8 million as of May 1, 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 January 30, 2021, the applicable margin for base rate loans was 0.25 % and the applicable margin for LIBOR loans was 1.25 %.

As of May 1, 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 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 %.

As of May 1, 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.

Borrowers and Canadian Borrower will be subject to adjustment based upon the aggregate availability under the ABL Credit Facility.

Unutilized commitments under the ABL Credit Facility are subject to a per annum fee of (i) 0.375 % if the average daily total outstandings were less than 25 % of the aggregate commitments during the preceding fiscal quarter or (ii) 0.25 % if such average daily total outstandings were 25 % or more of the aggregate commitments during the preceding fiscal quarter.

As of January 30, 2021, the unutilized commitment fee was 0.25 % per annum.

Unutilized commitments under the ABL Credit

Facility are subject to a per annum fee of (i) 0.375 % if the average daily total outstandings were less than 25 % of the aggregate commitments during the preceding fiscal quarter or (ii) 0.25 % if such average daily total outstandings were 25 % or more of the aggregate commitments during the preceding fiscal quarter.

As of May 1, 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.

6 unchanged sentences

Certain receivables included in Accounts receivable, net and Current assets of discontinued operations $ 1,064,392 $ 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 January 30, 2021 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 May 1, 2021 and August 1, 2020.

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

January 30, 2021

Outstanding letters of credit

11 unchanged sentences

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.

On March 3, 2021, the Company 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 $ 770.7 million as described above.

5 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 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.

As of May 1, 2021, there was $ 570.5 million of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

Subsequent to May 1, 2021, the Company pledged an additional $ 123.7 million of owned real property as collateral, which includes eight additional distribution centers.

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 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:

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 May 1, 2021.

As of May 1, 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 2.50 % or (ii) a LIBOR rate and a margin of 3.50 %;

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 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.

As of May 1, 2021, the Company had borrowings of $ 1,002.3 million outstanding under the Term B Tranche, which are presented net of debt issuance costs of $ 19.2 million and an original issue discount on debt of $ 17.3 million.

As of May 1, 2021, no amount of the Term B Tranche was classified as current.

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

6 unchanged sentences

Net current period Other comprehensive (loss) income ( 341 ) ( 807 ) 6,164 35,838 40,854

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

Accumulated other comprehensive loss at May 1, 2021 $ ( 408 ) $ ( 116,103 ) $ ( 15,255 ) $ ( 65,326 ) $ ( 197,092 )

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2020 year-to-date are as follows:

6 unchanged sentences

Net current period Other comprehensive income (loss) 7,368 ( 3,561 ) ( 46,499 ) ( 42,692 )

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

Accumulated other comprehensive loss at May 2, 2020 $ ( 25,090 ) $ ( 23,643 ) $ ( 102,912 ) $ ( 151,645 )

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

13-Week Period Ended 39-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations

(in thousands) January 30,

2021 February 1,

2020 January 30,

2021 February 1,

(in thousands) May 1,

Pension and postretirement benefit plan obligations:

11 unchanged sentences

Reclassification of cash flow hedge $ ( 612 ) $ — $ ( 448 ) $ — Cost of sales

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

Income tax expense 164 — 120 — Provision (benefit) for income taxes

Total reclassifications, net of tax $ ( 448 ) $ — $ ( 328 ) $ —

(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 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.

As of May 1, 2021, the Company expects to reclassify $ 43.1 million out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 10—SHARE-BASED AWARDS

1 unchanged sentence

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 2.7 million shares.

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

As of May 1, 2021, there were 3.9 million shares available for issuance under the Amended and Restated 2020 Equity Incentive Plan.

NOTE 11—BENEFIT PLANS

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

Net periodic benefit income 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) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020

(in thousands) May 1, 2021 May 2, 2020 May 1, 2021 May 2, 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 $ ( 16,540 ) $ ( 12,160 ) $ ( 576 ) $ ( 584 )

2 unchanged sentences

Pension Benefits Other Postretirement Benefits

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

(in thousands) May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

Net Periodic Benefit (Income) Cost

13 unchanged sentences

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 Company contributed $ 12.2 million and $ 12.3 million in the third quarters of fiscal 2021 and 2020, respectively, and $ 35.9 million and $ 38.4 million in fiscal 2021 and 2020 year-to-date, respectively, to continuing and discontinued operations multiemployer pension plans.

The withdrawal liability is included in Other long-term liabilities and the withdrawal charge was recorded within Restructuring, acquisition and integration related expenses.

2 unchanged sentences

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.

The lump sum payment amounts are equal to the present value of the participant’s pension benefits, and were made to certain (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.

4 unchanged sentences

NOTE 12—INCOME TAXES

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 25.8 % compared to a benefit of 3.1 % on pre-tax income for the third quarters of fiscal 2021 and 2020, respectively.

The change in the rate for the quarter was primarily driven by the impact of a tax benefit from the revaluation of net operating loss deferred tax assets in the third quarter of fiscal 2020 due to passage of the CARES Act.

The effective income tax rate for continuing operations was an expense of 23.6 % on pre-tax income compared to a benefit of 21.2 % 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.

The change in the year-to-date rate was primarily driven by the impact of the goodwill impairment charge recorded in fiscal 2020, partially offset by the impact of a tax benefit from the revaluation of net operating loss deferred tax assets in the third quarter of fiscal 2020 due to passage of the CARES Act.

NOTE 13—EARNINGS (LOSS) PER SHARE

1 unchanged sentence

13-Week Period Ended 39-Week Period Ended

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

2021 February 1,

2020 January 30,

2021 February 1,

(in thousands, except per share data) May 1,

Basic weighted average shares outstanding 56,458 53,718 56,028 53,485

9 unchanged sentences

Discontinued operations (1)

$ 0.03 $ ( 0.08 ) $ 0.11 $ ( 0.30 )

Diluted earnings (loss) per share $ 0.80 $ 1.60 $ 1.78 $ ( 6.10 )

1 unchanged sentence

790 1,771 1,152 1,868

(1) The computation of diluted earnings per share from discontinued operations excludes the net effect of dilutive stock awards based on the treasury stock method of approximately 1.5 million shares for the third quarter of fiscal 2020.

NOTE 14—BUSINESS SEGMENTS

19 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

(in thousands) May 1, 2021 May 2, 2020 May 1, 2021 May 2, 2020

Wholesale (1)

15 unchanged sentences

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

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

Gain (loss) on sale of assets 25 ( 351 ) ( 144 ) ( 785 )

Notes receivable charges — — — ( 12,516 )

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

Legal reserve charge — — — ( 1,196 )

Other retail expense ( 355 ) — ( 3,358 ) —

10 unchanged sentences

Total capital expenditures $ 73,941 $ 35,675 $ 165,457 $ 126,803

(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.

(1) As presented in Note 3—Revenue Recognition, for the third quarters of fiscal 2021 and 2020, the Company recorded $ 323.5 million and $ 352.8 million, respectively, and $ 1,026.4 million and $ 958.6 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.

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

(in thousands) January 30,

(in thousands) May 1,

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 January 30, 2021.

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of May 1, 2021.

These guarantees were generally made to support the business growth of wholesale customers.

3 unchanged sentences

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

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.

As of May 1, 2021, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 28.0 million ($ 24.4 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of May 1, 2021, a total estimated loss of $ 1.0 million is recorded in the Condensed Consolidated Balance Sheets.

The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.

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

As of May 1, 2021, the Company had approximately $ 243 million of non-cancelable future purchase obligations.

Legal Proceedings

15 unchanged sentences

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

On February 19, 2021, Albertson’s and Safeway removed the case to Minnesota Federal District Court and on March 22, 2021 plaintiffs’ filed a motion to remand to state court.

On February 26, 2021, defendants filed a motion to dismiss.

The hearing on the remand motion and motions to dismiss occurred on May 20, 2021.

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

3 unchanged sentences

Supervalu, New Albertson’s, Inc., et al, which is pending in the U.S.

District Court for the Central District of Illinois, the relators allege that defendants overcharged government healthcare programs by not providing the government, as a part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that defendants match competitor prices.

medication who requested that defendants match competitor prices.

The complaint was originally filed under seal and amended on November 30, 2015.

1 unchanged sentence

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.

7 unchanged sentences

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;

pension plans;

1 unchanged sentence

supplier, customer and service provider contract terms and claims, including matters related to supplier or customer insolvency or general inability to pay obligations as they become due;

product liability claims;

real estate and environmental matters, including claims in connection with its ownership and lease of a substantial amount of real property, both retail and warehouse properties;

3 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 January 30, 2021, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

As of May 1, 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 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.

As of May 1, 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.

2 unchanged sentences

13-Week Period Ended 39-Week Period Ended

(In thousands) January 30, 2021 February 1,

2020 January 30, 2021 February 1,

(In thousands) May 1,

Net sales $ 20,009 $ 30,115 $ 67,798 $ 200,786

4 unchanged sentences

Operating income (loss) 2,366 ( 4,165 ) 7,093 ( 19,621 )

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

Other income, net — ( 107 ) — ( 171 )

Income (loss) from discontinued operations before income taxes 2,366 ( 4,058 ) 7,093 ( 19,450 )

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

Provision (benefit) for income taxes 713 20 341 ( 3,322 )

Income (loss) from discontinued operations, net of tax $ 1,653 $ ( 4,078 ) $ 6,752 $ ( 16,128 )

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 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

(In thousands) May 1, 2021 August 1, 2020

Current assets

19 unchanged sentences

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