1 unchanged sentence
INDEX TO FINANCIAL STATEMENTS
−Removed: Consolidated Financial Statements
+Added: Consolidated Financial Statements Page
Report of Independent Registered Public Accounting Firm
11 unchanged sentences
We have audited the accompanying consolidated balance sheets of United Natural Foods, Inc.
−Removed: and subsidiaries (the Company) as of August 1, 2020 and August 3, 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended August 1, 2020, and the related notes (collectively, the consolidated financial statements).
−Removed: We also have audited the Company’s internal control over financial reporting as of August 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 1, 2020 and August 3, 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended August 1, 2020, in conformity with U.S.
+Added: and subsidiaries (the Company) as of July 31, 2021 and August 1, 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended July 31, 2021, and the related notes (collectively, the consolidated financial statements).
+Added: We also have audited the Company’s internal control over financial reporting as of July 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 31, 2021 and August 1, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended July 31, 2021, in conformity with U.S.
generally accepted accounting principles.
−Removed: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
16 unchanged sentences
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
+Added: expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
1 unchanged sentence
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Assessment of the Company’s goodwill impairment
−Removed: As discussed in Note 7 to the consolidated financial statements, during the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting to combine the Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit into one U.S.
−Removed: Wholesale reporting unit.
−Removed: In addition, as a result of a further sustained decline in market capitalization and enterprise value, the Company determined that it was more likely than not that the fair value of its U.S.
−Removed: Wholesale reporting unit was below its carrying amount.
−Removed: Accordingly, the Company performed a quantitative impairment test of goodwill for its U.S.
−Removed: Wholesale reporting unit utilizing the income and market approaches.
−Removed: Based on the results of this test, the Company determined that the carrying value of its U.S.
−Removed: Wholesale reporting unit exceeded its fair value by an amount that was greater than its assigned goodwill.
−Removed: As a result, the Company recorded a goodwill impairment charge of $421.5 million, which represented all of the U.S.
−Removed: Wholesale reporting unit’s goodwill.
−Removed: We identified the assessment of the Company’s goodwill impairment as a critical audit matter because of the auditor judgment required to evaluate the assumptions used in the income approach to estimate the fair value of the Company’s U.S.
−Removed: Wholesale reporting unit.
−Removed: Specifically, assessing certain internally-developed assumptions, including cash flow forecasts, long-term revenue growth rates, and the discount rate required a high degree of auditor judgment as there was limited observable market information, and the determined reporting unit fair value was sensitive to changes to such assumptions.
−Removed: Additionally, the audit effort associated with the evaluation of the discount rate required specialized skills and knowledge.
−Removed: The following are the primary procedures we performed to address this critical audit matter.
−Removed: We evaluated the design and tested the operating effectiveness of certain internal controls over the goodwill impairment process, including controls related to the development of the assumptions listed above.
−Removed: We compared the Company’s previous forecasts to historical actual results to assess the Company’s ability to accurately forecast cash flows.
−Removed: In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:
−Removed: Evaluating the Company’s estimated long-term revenue growth rates by comparing those revenue growth rates to historical revenue growth rates of the Company’s peers and industry reports;
−Removed: Performing a sensitivity analysis to assess the impact of possible changes to the discount rate;
−Removed: Evaluating the discount rate used by the Company by comparing it to discount rate ranges that were developed using publicly available market data;
−Removed: Developing an estimated range of indicated values for the U.S.
−Removed: Wholesale reporting unit, using the Company’s cash flow forecasts and the range of discount rates developed using publicly available market data, and comparing the results to the Company’s fair value estimate.
−Removed: Evaluation of the Incremental Borrowing Rates Used to Calculate Operating Lease Assets and Liabilities upon the Adoption of ASC Topic 842, Leases
−Removed: As discussed in Note 2 to the consolidated financial statements, the Company recognized $1.1 billion of operating lease assets and $1.1 billion of operating lease liabilities upon adoption of ASC Topic 842, Leases on August 4, 2019.
−Removed: To calculate the present value of the lease payments used to record the operating lease assets and liabilities upon transition, the Company estimated incremental borrowing rates based on the remaining lease terms as of the adoption date.
−Removed: The Company’s estimated incremental borrowing rates reflect considerations such as the Company’s credit rating, market rates for the Company’s outstanding collateralized debt, interpolations of rates for leases with terms that differ from the Company’s outstanding debt, and market rates for debt of companies with similar credit ratings.
−Removed: We identified the evaluation of the incremental borrowing rates used to calculate operating lease assets and liabilities recorded upon the adoption of ASC Topic 842 as a critical audit matter.
−Removed: There was a high degree of auditor judgment in evaluating the Company’s estimated incremental borrowing rates due to the sensitivity of the present value of the lease payments to possible changes in the estimated incremental borrowing rates.
−Removed: Additionally, the audit effort associated with the evaluation of the incremental borrowing rates required specialized skills and knowledge.
−Removed: The following are the primary procedures we performed to address this critical audit matter.
−Removed: We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s ASC Topic 842 adoption process, including a control related to the Company’s determination of the incremental borrowing rates utilized in the calculation of operating lease assets and liabilities.
−Removed: In addition, we involved valuation professionals with specialized skills and knowledge who assisted in:
−Removed: Evaluating the Company’s methodology used to estimate the incremental borrowing rates;
−Removed: Assessing the Company’s use of its credit rating and market rates for its outstanding collateralized debt as of the adoption date as inputs to estimate the incremental borrowing rates;
−Removed: Developing estimates of the incremental borrowing rates using a combination of a benchmark yield curve and market rates for the Company’s outstanding collateralized debt and compared these estimates to the Company’s estimated incremental borrowing rates.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the value of the defined benefit pension obligation
As discussed in Note 13 to the consolidated financial statements, the Company sponsors defined benefit pension plans, covering primarily former Supervalu employees who meet certain eligibility requirements.
−Removed: The fair value of the defined benefit pension obligation at year-end was $2.4 billion, partially offset by plan assets totaling $2.0 billion.
+Added: The fair value of the defined benefit pension obligation at year end was $2.1 billion, offset by plan assets totaling $2.1 billion.
The determination of the Company’s defined benefit pension obligation with respect to these plans is dependent, in part, on the selection of certain actuarial assumptions, including the discount rates used.
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CONSOLIDATED BALANCE SHEETS
−Removed: (In thousands, except for per share data)
+Added: (In millions, except for per share data)
+Added: 2021 August 1,
Cash and cash equivalents $ 41 $ 47
Accounts receivable, net 1,103 1,120
+Added: Inventories, net 2,247 2,282
Prepaid expenses and other current assets 157 253
3 unchanged sentences
Operating lease assets 1,064 983
+Added: Goodwill 20 20
Intangible assets, net 891 970
Deferred income taxes 57 108
+Added: Other long-term assets 157 96
Long-term assets of discontinued operations 2 4
+Added: Total assets $ 7,525 $ 7,587
LIABILITIES AND STOCKHOLDERS' EQUITY
10 unchanged sentences
Pension and other postretirement benefit obligations 53 292
−Removed: Deferred income taxes
Other long-term liabilities 299 337
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Common stock, $ 0.01 par value, authorized 100.0 shares;
−Removed: 55,306 shares issued and 54,691 shares outstanding at August 1, 2020;
+Added: 57.0 shares issued and 56.4 shares outstanding at July 31, 2021;
55.3 shares issued and 54.7 shares outstanding at August 1, 2020
8 unchanged sentences
Total liabilities and stockholders ’ equity
+Added: $ 7,525 $ 7,587
See accompanying Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF OPERATIONS
−Removed: (In thousands, except for per share data)
+Added: (In millions, except for per share data)
Fiscal Year Ended
+Added: July 31, 2021
August 1, 2020
August 3, 2019
−Removed: July 28, 2018
+Added: Net sales $ 26,950 $ 26,559 $ 22,341
Cost of sales 23,011 22,670 19,121
+Added: Gross profit 3,939 3,889 3,220
Operating expenses 3,593 3,552 2,976
−Removed: Goodwill and asset impairment charges
+Added: Goodwill impairment charges — 425 293
Restructuring, acquisition and integration related expenses 56 87 148
−Removed: Loss (gain) on sale of assets
−Removed: Operating (loss) income
−Removed: Other expense (income):
+Added: (Gain) loss on sale of assets ( 4 ) 18 ( 1 )
+Added: Operating income (loss) 294 ( 193 ) ( 196 )
Net periodic benefit income, excluding service cost ( 85 ) ( 39 ) ( 35 )
Interest expense, net 204 192 181
−Removed: Total other expense, net
−Removed: (Loss) income from continuing operations before income taxes
−Removed: (Benefit) provision for income taxes
−Removed: Net (loss) income from continuing operations
−Removed: (Loss) income from discontinued operations, net of tax
−Removed: Net (loss) income including noncontrolling interests
+Added: Other, net ( 8 ) ( 4 ) ( 1 )
+Added: Income (loss) from continuing operations before income taxes 183 ( 342 ) ( 341 )
+Added: Provision (benefit) for income taxes 34 ( 91 ) ( 59 )
+Added: Net income (loss) from continuing operations 149 ( 251 ) ( 282 )
+Added: Income (loss) from discontinued operations, net of tax 6 ( 18 ) ( 3 )
+Added: Net income (loss) including noncontrolling interests 155 ( 269 ) ( 285 )
Less net income attributable to noncontrolling interests ( 6 ) ( 5 ) —
−Removed: Net (loss) income attributable to United Natural Foods, Inc.
−Removed: Basic (loss) earnings per share:
+Added: Net income (loss) attributable to United Natural Foods, Inc.
+Added: $ 149 $ ( 274 ) $ ( 285 )
+Added: Basic earnings (loss) per share:
Continuing operations $ 2.55 $ ( 4.76 ) $ ( 5.51 )
Discontinued operations $ 0.10 $ ( 0.34 ) $ ( 0.05 )
−Removed: Basic (loss) earnings per share
−Removed: Diluted (loss) earnings per share:
+Added: Basic earnings (loss) per share $ 2.65 $ ( 5.10 ) $ ( 5.56 )
+Added: Diluted earnings (loss) per share:
Continuing operations $ 2.38 $ ( 4.76 ) $ ( 5.51 )
Discontinued operations $ 0.09 $ ( 0.34 ) $ ( 0.05 )
−Removed: Diluted (loss) earnings per share
+Added: Diluted earnings (loss) per share $ 2.48 $ ( 5.10 ) $ ( 5.56 )
Weighted average shares outstanding:
+Added: Basic 56.1 53.8 51.2
+Added: Diluted 60.0 53.8 51.2
See accompanying Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: (In thousands)
+Added: (In millions)
Fiscal Year Ended
+Added: July 31, 2021
August 1, 2020
August 3, 2019
−Removed: July 28, 2018
−Removed: Net (loss) income including noncontrolling interests
−Removed: Other comprehensive (loss) income:
+Added: Net income (loss) including noncontrolling interests $ 155 $ ( 269 ) $ ( 285 )
+Added: Other comprehensive income (loss):
Recognition of pension and other postretirement benefit obligations, net of tax (1)
+Added: 153 ( 83 ) ( 33 )
Recognition of interest rate swap cash flow hedges, net of tax (2)
+Added: 42 ( 46 ) ( 61 )
Foreign currency translation adjustments 5 ( 1 ) ( 1 )
−Removed: Recognition of other cash flow derivatives, net of tax
−Removed: Total other comprehensive (loss) income
+Added: Total other comprehensive income (loss) 200 ( 130 ) ( 95 )
Less comprehensive income attributable to noncontrolling interests ( 6 ) ( 5 ) —
−Removed: Total comprehensive (loss) income attributable to United Natural Foods, Inc.
−Removed: Amounts are net of tax (benefit) expense of $( 29.3 ) million , $( 11.3 ) million and $ 0.0 million for the fiscal years ended August 1, 2020 , August 3, 2019 and July 28, 2018 , respectively.
−Removed: Amounts are net of tax (benefit) expense of $( 16.4 ) million , $( 22.5 ) million and 1.5 million for the fiscal years ended August 1, 2020 , August 3, 2019 and July 28, 2018 , respectively.
+Added: Total comprehensive income (loss) attributable to United Natural Foods, Inc.
+Added: $ 349 $ ( 404 ) $ ( 380 )
+Added: (1) Amounts are net of tax expense (benefit) of $ 52 million, $( 29 ) million and $( 11 ) million, respectively.
+Added: (2) Amounts are net of tax expense (benefit) of $ 13 million, $( 16 ) million and ( 23 ) million, respectively.
See accompanying Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
−Removed: (In thousands)
−Removed: Paid-in Capital
−Removed: Comprehensive Loss
−Removed: Retained Earnings
−Removed: Total United Natural Foods, Inc.
−Removed: Stockholders’ Equity
−Removed: Noncontrolling Interests
−Removed: Total Stockholders’ Equity
−Removed: Treasury Stock
+Added: (In millions)
+Added: Paid-in Capital Accumulated
+Added: Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.
+Added: Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
+Added: Common Stock Treasury Stock
+Added: Shares Amount Shares Amount
Balances at July 28, 2018 51.0 $ 1 0.6 $ ( 24 ) $ 484 $ ( 14 ) $ 1,393 $ 1,840 $ — $ 1,840
−Removed: Cumulative effect of change in accounting principle
−Removed: Restricted stock vestings and stock option exercises, net
+Added: Restricted stock vestings 0.5 — — — ( 3 ) — — ( 3 ) — ( 3 )
Share-based compensation — — — — 26 — — 26 — 26
−Removed: Repurchase of common stock
Other comprehensive loss — — — — — ( 95 ) — ( 95 ) — ( 95 )
−Removed: Balances at July 28, 2018
+Added: Acquisition of noncontrolling interests — — — — — — — — ( 2 ) ( 2 )
+Added: Distributions to noncontrolling interests — — — — — — — — ( 1 ) ( 1 )
+Added: Proceeds from issuance of common stock, net 2.0 — — — 24 — — 24 — 24
+Added: Net loss — — — — — — ( 285 ) ( 285 ) — ( 285 )
+Added: Balances at August 3, 2019 53.5 $ 1 0.6 $ ( 24 ) $ 531 $ ( 109 ) $ 1,108 $ 1,507 $ ( 3 ) $ 1,504
Cumulative effect of change in accounting principle — — — — — — 4 4 — 4
−Removed: Restricted stock vestings and stock option exercises, net
+Added: Restricted stock vestings 0.5 — — — ( 1 ) — — ( 1 ) — ( 1 )
Share-based compensation — — — — 25 — — 25 — 25
Other comprehensive loss — — — — — ( 130 ) — ( 130 ) — ( 130 )
−Removed: Acquisition of noncontrolling interests
Distributions to noncontrolling interests — — — — — — — — ( 5 ) ( 5 )
3 unchanged sentences
Cumulative effect of change in accounting principle — — — — — — ( 9 ) ( 9 ) — ( 9 )
−Removed: Restricted stock vestings and stock option exercises, net
+Added: Restricted stock vestings 1.6 — — — ( 14 ) — — ( 14 ) — ( 14 )
Share-based compensation — — — — 45 — — 45 — 45
−Removed: Other comprehensive loss
+Added: Other comprehensive income — — — — — 200 — 200 — 200
Distributions to noncontrolling interests — — — — — — — — ( 4 ) ( 4 )
Proceeds from the issuance of common stock, net 0.1 — — — 1 — — 1 — 1
−Removed: Net (loss) income
−Removed: Balances at August 1, 2020
+Added: Acquisition of noncontrolling interests — — — — ( 2 ) — — ( 2 ) — ( 2 )
+Added: Net income — — — — — — 149 149 6 155
+Added: Balances at July 31, 2021 57.0 $ 1 0.6 $ ( 24 ) $ 599 $ ( 39 ) $ 978 $ 1,515 $ ( 1 ) $ 1,514
See accompanying Notes to Consolidated Financial Statements.
3 unchanged sentences
Fiscal Year Ended
−Removed: (In thousands)
+Added: (In millions) July 31, 2021
August 1, 2020
August 3, 2019
−Removed: July 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Net (loss) income including noncontrolling interests
−Removed: (Loss) income from discontinued operations, net of tax
−Removed: Net (loss) income from continuing operations
−Removed: Adjustments to reconcile net (loss) income to net cash provided by operating activities:
+Added: Net income (loss) including noncontrolling interests $ 155 $ ( 269 ) $ ( 285 )
+Added: Income (loss) from discontinued operations, net of tax 6 ( 18 ) ( 3 )
+Added: Net income (loss) from continuing operations 149 ( 251 ) ( 282 )
+Added: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 285 282 248
Share-based compensation 45 25 26
−Removed: Loss (gain) on disposal of assets
+Added: (Gain) loss on sale of assets ( 4 ) 18 ( 1 )
Closed property and other restructuring charges 6 46 30
−Removed: Goodwill and asset impairments
+Added: Goodwill impairment charges — 425 293
Net pension and other postretirement benefit income ( 85 ) ( 39 ) ( 35 )
Deferred income tax benefit ( 5 ) ( 71 ) ( 61 )
−Removed: Change in accounting estimate
−Removed: Provision for doubtful accounts, net
+Added: LIFO charge 24 18 25
+Added: Provision for losses on receivables ( 5 ) 46 10
Non-cash interest expense and other adjustments 51 15 16
1 unchanged sentence
Accounts and notes receivable 24 ( 124 ) 53
+Added: Inventories 14 ( 111 ) 183
Prepaid expenses and other assets ( 37 ) 113 ( 48 )
Accounts payable 15 107 ( 25 )
−Removed: Accrued expenses, other liabilities and other
+Added: Accrued expenses and other liabilities 137 ( 42 ) ( 139 )
Net cash provided by operating activities of continuing operations 614 457 293
−Removed: Net cash provided by (used in) operating activities of discontinued operations
+Added: Net cash used in operating activities of discontinued operations — — ( 8 )
Net cash provided by operating activities 614 457 285
CASH FLOWS FROM INVESTING ACTIVITIES:
−Removed: Capital expenditures
+Added: Payments for capital expenditures ( 310 ) ( 173 ) ( 228 )
Purchases of acquired businesses, net of cash acquired — — ( 2,292 )
Proceeds from dispositions of assets 82 147 179
+Added: Other ( 11 ) ( 2 ) —
Net cash used in investing activities of continuing operations ( 239 ) ( 28 ) ( 2,341 )
7 unchanged sentences
Repayments of long-term debt and finance leases ( 792 ) ( 122 ) ( 780 )
−Removed: Repayments of other loans
−Removed: Repurchase of common stock
Proceeds from the issuance of common stock and exercise of stock options 1 14 24
2 unchanged sentences
Distributions to noncontrolling interests ( 4 ) ( 5 ) ( 1 )
+Added: Repayments of other loans ( 6 ) ( 24 ) —
+Added: Other ( 1 ) — —
Net cash (used in) provided by financing activities ( 384 ) ( 453 ) 1,996
EFFECT OF EXCHANGE RATE ON CASH 1 ( 1 ) —
−Removed: NET INCREASE IN CASH AND CASH EQUIVALENTS
+Added: NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 6 ) 2 22
Cash and cash equivalents, at beginning of period 47 45 23
2 unchanged sentences
Cash and cash equivalents $ 41 $ 47 $ 44
−Removed: Fiscal Year Ended
−Removed: (In thousands)
−Removed: August 1, 2020
−Removed: August 3, 2019
−Removed: July 28, 2018
Supplemental disclosures of cash flow information:
Cash paid for interest $ 146 $ 182 $ 183
−Removed: Cash (refunds) payments for federal and state income taxes, net
+Added: Cash (refunds) payments for federal, state and foreign income taxes, net $ ( 16 ) $ ( 22 ) $ 78
+Added: Additions of property and equipment included in Accounts payable $ 35 $ 27 $ 10
See accompanying Notes to Consolidated Financial Statements.
5 unchanged sentences
United Natural Foods, Inc.
−Removed: and its subsidiaries (the “Company”, “we”, “us”, or “our”) is a leading distributor of natural, organic, specialty, produce, and conventional grocery and non-food products, and provider of support services.
+Added: 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 to retailers.
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.
−Removed: References to fiscal 2020 , fiscal 2019 and fiscal 2018 , or 2020 , 2019 and 2018 , as presented in tabular disclosure, relate to the 52 -week, 53 -week and 52 -week fiscal periods ended August 1, 2020 , August 3, 2019 and July 28, 2018 , respectively.
+Added: References to fiscal 2021, fiscal 2020 and fiscal 2019, or 2021, 2020 and 2019, as presented in tabular disclosure, relate to the 52-week, 52-week and 53-week fiscal periods ended July 31, 2021, August 1, 2020 and August 3, 2019, respectively.
Basis of Presentation
2 unchanged sentences
All significant intercompany transactions and balances have been eliminated in consolidation, with the exception of sales transactions from continuing to discontinued operations for wholesale supply to a retail disposal group that was sold with a supply agreement in fiscal 2019 discussed further in Note 3—Revenue Recognition.
−Removed: Unless otherwise indicated, references to the Consolidated Statements of Operations and the Consolidated Balance Sheets in the Notes to the Consolidated Financial Statements exclude all amounts related to discontinued operations.
−Removed: Refer to Note 19—Discontinued Operations for additional information, including accounting policies, about the Company’s discontinued operations.
+Added: Unless otherwise indicated, references to the Consolidated Statements of Operations and the Consolidated Balance Sheets in the Notes to Consolidated Financial Statements exclude all amounts related to discontinued operations.
+Added: Refer to Note 18—Discontinued Operations for additional information about the Company’s discontinued operations.
Discontinued Operations
−Removed: 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 (collectively “Retail”).
−Removed: As a result, the Company revised its Consolidated Financial Statements to reclassify Retail from discontinued operations to continuing operations.
−Removed: This change in financial statement presentation resulted in the inclusion of Retail’s results of operations, financial position, cash flows and related disclosures within continuing operations.
−Removed: Prior periods presented in the Consolidated Financial Statements have been conformed to the current period presentation, resulting in Retail being presented in continuing operations for all periods.
−Removed: Retail was acquired as part of SUPERVALU INC.
−Removed: (“Supervalu”) acquisition in the first quarter of fiscal 2019.
−Removed: The Company may incur additional costs and charges in the future related to the Retail business if these locations are subsequently sold, if indicators exist that the business may be impaired while classified as held and used, or if the Company incurs additional wind-down or employee-related costs or charges.
−Removed: Inventory Costing Correction
−Removed: As discussed in further detail in Note 20—Immaterial Correction to Prior Period Financial Statements , the Company has revised its prior period financial statements to correct immaterial misstatements related to the carrying value of inventory to include income received under certain vendor funds programs.
−Removed: Net sales consist primarily of sales of conventional, natural, organic, specialty, and produce grocery and non-food products, and provision of support services to retailers, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue .
+Added: In the fourth quarter of fiscal 2021, the Company determined it no longer met the held for sale criterion for a probable sale to be completed within 12 months for two of the four stores that were previously included within discontinued operations, as a result of criterion met as of the SUPERVALU INC.
+Added: (“Supervalu”) acquisition date.
+Added: As a result, the Company revised its Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations.
+Added: Prior periods presented in the Consolidated Financial Statements have been conformed to the current period presentation.
+Added: Our net sales consist primarily of product sales of natural, organic, specialty, produce and conventional grocery and non-food products, and support services revenue from retailers, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue.
Net sales also include amounts charged by the Company to customers for shipping and handling and fuel surcharges.
Vendor incentives do not reduce sales in circumstances where the vendor tenders the incentive to the customer, when the incentive is not a direct reimbursement from a vendor, when the incentive is not influenced by or negotiated in conjunction with any other incentive arrangements and when the incentive is not subject to an agency relationship with the vendor, whether expressed or implied.
+Added: The Company recognizes revenue in an amount that reflects the consideration that is expected to be received for goods or services when its performance obligations are satisfied by transferring control of those promised goods or services to its customers.
+Added: ASC 606 defines a five-step process to recognize revenue that requires judgment and estimates, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when or as the performance obligation is satisfied.
+Added: Revenues from wholesale product sales are recognized when control is transferred, which typically happens upon either shipment or delivery, depending on the contract terms with the customer.
+Added: Typically, shipping and customer receipt of wholesale products occur on the same business day.
+Added: Discounts and allowances provided to customers are recognized as a reduction in Net sales as control of the products is transferred to customers.
+Added: The Company recognizes freight revenue related to transportation of its products when control of the product is transferred, which is typically upon delivery.
+Added: Revenues from Retail product sales are recognized at the point of sale upon customer check-out.
+Added: Advertising income earned from our franchisees that participate in our Retail advertising program are recognized as Net sales.
+Added: The Company recognizes loyalty program expense in the form of fuel rewards as a reduction of Net sales.
+Added: Sales tax is excluded from Net sales.
+Added: Limited rights of return exist with our customers due to the nature of the products we sell.
Refer to Note 3—Revenue Recognition for additional information regarding the Company’s revenue recognition policies.
Cost of Sales
−Removed: Cost of sales consist primarily of amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, the Company’s distribution facilities and retail stores, offset by consideration received from suppliers in connection with the purchase, transportation, or promotion of the suppliers’ products.
−Removed: Cost of sales also includes production and labor costs for the Company’s Woodstock Farms manufacturing business.
−Removed: Retail store advertising expenses and Wholesale advertising services provided to Wholesale customers are components of Cost of sales and are expensed as incurred.
+Added: Cost of sales consist primarily of amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, the Company’s distribution facilities and retail stores, partially offset by consideration received from suppliers in connection with the purchase, transportation, or promotion of the suppliers’ products.
+Added: Retail store advertising expenses are components of Cost of sales and are expensed as incurred.
The Company receives allowances and credits from vendors for buying activities, such as volume incentives, promotional allowances directed by the Company to customers, cash discounts, and new product introductions (collectively referred to as “vendor funds”), which are typically based on contractual arrangements covering a period of one year or less.
2 unchanged sentences
When payments or rebates can be reasonably estimated and it is probable that the specified target will be met, the payment or rebate is accrued.
−Removed: However, when attaining the milestone is not probable, the payment or rebate is recognized only when and if the milestone is achieved.
+Added: However, when attaining the target is not probable, the payment or rebate is recognized only when and if the target is achieved.
Any upfront payments received for multi-period contracts are generally deferred and amortized over the life of the contracts.
4 unchanged sentences
Outbound shipping and handling costs, including allocated employee benefit expenses that are recorded in Operating expenses, totaled $ 1,513 million, $ 1,505 million and $ 1,299 million for fiscal 2021, 2020 and 2019, respectively.
−Removed: Operating Expenses and Other Expenses
+Added: Operating Expenses
Operating expenses include salaries and wages, employee benefits, warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation, depreciation, and amortization expense.
−Removed: Other expense (income), net includes interest on outstanding indebtedness, including direct financing and capital lease obligations, net periodic benefit plan income, excluding service costs, interest income and miscellaneous income and expenses.
+Added: These expenses include the departmental expenses of warehousing, delivery, purchasing, receiving, selecting and outbound transportation expenses.
Restructuring, Acquisition and Integration Expenses
Restructuring, acquisition and integration expenses reflect expenses resulting from restructuring activities, including severance costs, change-in-control related charges, facility closure asset impairment charges and costs, stock-based compensation acceleration charges and acquisition and integration expenses.
−Removed: Integration expenses include incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.
−Removed: Loss (Gain) on Sale of Assets
−Removed: Loss (gain) on sale of assets includes loss (gain) on sale of assets and non-cash charges related to changes in plans of sales of discontinued operations.
+Added: Integration expenses include certain professional consulting expenses related to business transformation and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.
+Added: (Gain) Loss on Sale of Assets
+Added: (Gain) loss on sale of assets includes (gain) loss on sale of assets and non-cash charges related to changes in plans of sales of discontinued operations.
In fiscal 2020, the Company recorded a non-cash charge of $ 50 million to reduce the carrying amount of Retail’s property and equipment, and intangible assets for any depreciation and amortization expense that would have been recognized had the assets been held and used as part of continuing operations since their acquisition date through the end of fiscal 2020, which was comprised of $ 39 million related to property and equipment, and $ 11 million related to intangible assets.
+Added: Interest expense, net
+Added: Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest income.
Use of Estimates
1 unchanged sentence
Actual results could differ from those estimates.
−Removed: Change in Accounting Estimate
−Removed: As a result of growth in net sales and inventory in fiscal 2018, and the changes in processing and the resulting increase in the Company’s estimate of its accrual for inventory purchases, the Company initiated a review of its vendor invoicing processes and undertook a review of its estimate of its accrual for inventory purchases.
−Removed: In the third quarter of fiscal 2018, the Company finalized its analysis and review of its accrual for inventory purchases, including a historical data analysis of unmatched and partially matched amounts that were aged greater than twelve months and the ultimate resolution of such aged accruals.
−Removed: Based on its analysis, the Company determined that it could reasonably estimate the outcome of its partially matched vendor invoices upon receipt of such invoice rather than when the amount was aged greater than twelve months and a liability was no longer considered probable.
−Removed: As a result of this change in estimate, Accounts payable was reduced by $ 20.9 million , resulting in an increase to net income of $ 13.9 million , or $ 0.27 per diluted share, for fiscal 2018.
−Removed: Change in Inventory Accounting Policy
−Removed: Inventories are valued at the lower of cost or market.
−Removed: Prior to fiscal 2019, inventory cost was determined using the first-in, first-out (“FIFO”) method.
−Removed: For a substantial portion of legacy Supervalu inventory, cost was determined using the last-in, first-out (“LIFO”) method, with the rest primarily determined using FIFO.
−Removed: Inventories acquired as part of the Supervalu acquisition were recorded at their fair market values as of the acquisition date.
−Removed: During the second quarter of fiscal 2019, the Company completed its evaluation of its combined inventory accounting policies and changed its method of inventory costing for certain historical United Natural Foods, Inc.
−Removed: inventory from the FIFO accounting method to the LIFO accounting method.
−Removed: The Company concluded that the LIFO method of inventory costing is preferable because it allows for better matching of costs and revenues, as historical inflationary inventory acquisition prices are expected to continue in the future and the LIFO method uses the current acquisition cost to value cost of goods sold as inventory is sold.
−Removed: Additionally, LIFO allows for better comparability of the results of the Company’s operations with those of similar companies in its peer group.
−Removed: As a result of the change to the LIFO method, the value of certain Company inventories, excluding Supervalu inventories, were reduced by $ 15.0 million for fiscal 2019, which resulted in increases to Cost of sales and Loss from continuing operations before income taxes of the same amount in the Consolidated Statements of Operations for fiscal 2019.
−Removed: This resulted in an increase to Net loss from continuing operations of $ 11.0 million , or $ 0.21 per diluted share, for fiscal 2019.
−Removed: The Company has not retrospectively adjusted amounts prior to fiscal 2019 in its Consolidated Balance Sheets or Consolidated Statements of Operations, as applying the change in accounting policy prior to fiscal 2019 is not practicable due to data limitations of inventory costs in prior periods.
Reclassifications
−Removed: Within the Consolidated Statements of Cash Flows certain immaterial amounts have been reclassified to conform with current year presentation:
−Removed: prior year amounts for Loss on debt extinguishment, Gain associated with disposal of investments and Non-cash interest expense have been combined into a line item titled Non-cash interest expense and other adjustments;
−Removed: a portion of prior year amounts for Loss (gain) on disposal of assets have been reclassified to Closed property and other restructuring charges;
−Removed: prior year amounts for Proceeds from disposal of investments have been combined into a line titled Proceeds from dispositions of assets;
−Removed: 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.
+Added: Within the Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current year presentation.
These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.
4 unchanged sentences
Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Consolidated Balance Sheets and are reflected as an operating activity in the Consolidated Statements of Cash Flows.
−Removed: As of August 1, 2020 and August 3, 2019 , the Company had net book overdrafts of $ 267.8 million and $ 236.9 million , respectively.
+Added: As of July 31, 2021 and August 1, 2020, the Company had net book overdrafts of $ 268 million and $ 268 million, respectively.
Accounts Receivable, Net
3 unchanged sentences
a failure to pay results in held or canceled orders.
−Removed: Inventories consist primarily of finished goods and are valued at the lower of cost or market.
−Removed: Allowances for vendor funds received from suppliers are recorded as a reduction to Inventories and subsequently within Cost of sales upon the sale of the related products.
−Removed: Substantially all of the Company’s inventories consist of finished goods and a substantial portion of its inventories have a LIFO reserve applied.
−Removed: We use the weighted average cost method, standard costs, the retail inventory method (“RIM”) or replacement cost method to value discrete inventory items at lower of cost or market under the FIFO method before application of any LIFO reserve.
+Added: Inventories, Net
+Added: Substantially all of the Company’s inventories consist of finished goods.
+Added: To value discrete inventory items at lower of cost or market before application of any last-in, first-out (“LIFO”) reserve, the Company utilizes the weighted average cost method, perpetual cost method, the retail inventory method (“RIM”) and the replacement cost method.
+Added: Allowances for vendor funds received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales upon the sale of the related products.
Inventories are evaluated for shortages throughout each fiscal year based on actual physical counts in our distribution facilities and stores.
Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the end of each fiscal year.
−Removed: As of August 1, 2020 and August 3, 2019 , approximately $ 1.8 billion and $ 1.6 billion , respectively, of inventory was valued under the LIFO method and primarily included grocery, frozen food and general merchandise products, with the remaining inventory valued under the FIFO method and primarily included meat, dairy and deli products.
+Added: As of July 31, 2021 and August 1, 2020, approximately $ 1.8 billion of inventory was valued under the LIFO method, before the application of a LIFO reserve, and primarily included grocery, frozen food and general merchandise products, with the remaining inventory valued under the FIFO method and primarily included meat, dairy and deli products.
Property and Equipment, Net
2 unchanged sentences
Applicable interest charges incurred during the construction of new facilities are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives if certain criteria are met.
−Removed: Refer to Note 6—Property and Equipment for additional information.
+Added: Refer to Note 5—Property and Equipment, Net for additional information.
The Company reviews long-lived assets, including amortizing intangible assets, for indicators of impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
26 unchanged sentences
The Company estimates the fair values of its reporting units in a quantitative assessment by using the market approach, applying a multiple of earnings based on guidelines for publicly traded companies, and/or the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit.
−Removed: Refer to Note 7—Goodwill and Intangible Assets for additional information regarding the Company’s fiscal 2020 and 2019 impairment reviews, changes to its reporting units and other information.
−Removed: Refer to Note 4—Acquisitions for further detail on the valuation of goodwill and intangible assets related to the Supervalu acquisition.
−Removed: Indefinite-lived intangible assets include a branded product line and a Tony’s Fine Foods (“Tony’s”) tradename.
+Added: Refer to Note 6—Goodwill and Intangible Assets, Net for additional information regarding the Company’s goodwill impairment reviews, changes to its reporting units and other information.
+Added: Indefinite-lived intangible assets include a branded product line and a Tony’s Fine Foods tradename.
Indefinite-lived intangible assets are reviewed for impairment at least annually as of the first day of the fourth fiscal quarter and if events occur or circumstances change that would indicate that the value of the asset may be impaired.
The Company performed qualitative reviews of its indefinite lived intangible assets in fiscal 2021 and 2020, which indicated a quantitative assessment was not required.
−Removed: During fiscal 2018, the Company performed its annual qualitative assessment of its indefinite lived intangible assets and determined that a quantitative analysis was required for the Tony’s tradename.
−Removed: Based on the results of its quantitative test performed, the Company determined that the fair value was in excess of its carrying value and no impairment existed.
−Removed: In determining the estimated fair value for intangible assets, we typically utilize the income approach, which discounts the projected future net cash flow using an appropriate discount rate that reflects the risks associated with such projected future cash flow.
−Removed: Refer to Note 7—Goodwill and Intangible Assets and Note 4—Acquisitions for additional information on the Company’s intangible assets.
−Removed: Intangible assets with definite lives are amortized on a straight-line basis over the following lives:
−Removed: Customer relationships
−Removed: Non-competition agreements
−Removed: Trademarks and tradenames
−Removed: Leases in place
−Removed: Favorable operating leases
−Removed: Unfavorable operating leases
−Removed: Pharmacy prescription files
+Added: In determining the estimated fair value for intangible assets, the Company typically utilizes the income approach, which discounts the projected future net cash flow using an appropriate discount rate that reflects the risks associated with such projected future cash flow.
+Added: Refer to Note 6—Goodwill and Intangible Assets, Net for additional information on the Company’s intangible assets.
+Added: Intangible assets with definite lives are amortized on a straight-line basis over the following years:
+Added: Customer relationships 7 - 20 years
+Added: Trademarks and tradenames 2 - 10 years
+Added: Favorable operating leases 2 - 8 years
+Added: Unfavorable operating leases 2 - 8 years
+Added: Pharmacy prescription files 7 years
Business Dispositions
11 unchanged sentences
The sale of a business can result in the recognition of a gain or loss that differs from that anticipated prior to closing.
−Removed: Investments in companies over which the Company has the ability to exercise significant influence are stated at cost plus our share of undistributed earnings or losses.
−Removed: Investments in companies the Company does not exercise a significant influence in are stated at fair value, unless a fair value is not determinable and then are carried at cost, plus or minus changes resulting from observable changes in the price of the same or similar investments.
−Removed: The carrying values of these investments were not material for fiscal 2020 or 2019 , either individually or in the aggregate, and are included within Other assets in the Consolidated Balance Sheets.
−Removed: Income attributable to investments accounted for using the equity method is not material for fiscal 2020 , 2019 or 2018 , and is recorded in Other, net, within the Consolidated Statements of Operations.
Fair Value of Financial Instruments
13 unchanged sentences
Share-Based Compensation
−Removed: Share-based compensation consists of restricted stock units, performance units, stock options and Supervalu replacement awards.
+Added: Share-based compensation consists of restricted stock units, performance units, stock options and SUPERVALU INC.
+Added: (“Supervalu”) replacement awards.
Share-based compensation expense is measured by the fair value of the award on the date of grant.
3 unchanged sentences
Supervalu Replacement Awards are liability classified awards as they may ultimately be settled in cash or shares at the discretion of the employee.
−Removed: The Company’s Chief Executive Officer and Chairman and other executive officers and members of senior management have been granted performance units which vest, when and if earned, in accordance with the terms of the related performance unit award agreements.
+Added: The Company’s executive officers and members of senior management have been granted performance units which vest, when and if earned, in accordance with the terms of the related performance unit award agreements.
The Company recognizes share-based compensation expense based on the target number of shares of common stock and the Company’s stock price on the date of grant and subsequently adjusts expense based on actual and forecasted performance compared to planned targets.
−Removed: Stock options are granted at exercise prices equal to the fair market value of the Company’s stock at the dates of grant.
−Removed: The fair value of stock option grants is estimated at the date of grant using the Black-Scholes option pricing model.
−Removed: Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield and expected life.
−Removed: Expected volatilities utilized in the model are based on the historical volatility of the Company’s stock price.
−Removed: The risk-free interest rate is derived from the U.S.
−Removed: Treasury yield curve in effect at the time of grant.
−Removed: The model incorporates exercise and post-vesting forfeiture assumptions based on an analysis of historical data.
−Removed: The expected term is derived from historical information and other factors.
−Removed: Share-based compensation expense is recognized within Operating expenses for ongoing employees and is recorded within Restructuring, acquisition and integration related expenses when an employee is notified of termination and their awards become accelerated.
+Added: Share-based compensation expense is recognized within Operating expenses for ongoing employees and in certain instances is recorded within Restructuring, acquisition and integration related expenses when an employee is notified of termination and their awards become accelerated.
Refer to Note 12—Share-Based Awards for additional information.
Benefit Plans
−Removed: The Company recognizes the funded status of its company-sponsored defined benefit plans, which it assumed in the first quarter of fiscal 2019 through the acquisition of Supervalu, in the Consolidated Balance Sheets and gains or losses and prior service costs or credits not yet recognized as a component of Accumulated other comprehensive loss, net of tax, in the Consolidated Balance Sheets.
+Added: The Company recognizes the funded status of its Company-sponsored defined benefit plans in the Consolidated Balance Sheets and gains or losses and prior service costs or credits not yet recognized as a component of Accumulated other comprehensive loss, net of tax, in the Consolidated Balance Sheets.
The Company measures its defined benefit pension and other postretirement plan obligations as of the nearest calendar month end.
−Removed: The Company records net periodic benefit income or expense related to interest cost, expected return on plan assets and the amortization of actuarial gains and losses, excluding service costs, in the Consolidated Statements of Operations within Total other expense, net.
+Added: The Company records net periodic benefit income or expense related to interest cost, expected return on plan assets and the amortization of actuarial gains and losses, excluding service costs, in the Consolidated Statements of Operations within Net periodic benefit income, excluding service cost.
Service costs are recorded in Operating expenses in the Consolidated Statements of Operations.
4 unchanged sentences
Actual results that differ from the assumptions are accumulated and amortized over future periods.
−Removed: The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans.
+Added: The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension.
Pension expense for these plans is recognized as contributions are funded.
+Added: In addition, the Company provides postretirement health and welfare benefits for certain groups of union and non-union employees.
See Note 13—Benefit Plans for additional information on participation in multiemployer plans.
Earnings Per Share
−Removed: Basic earnings per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period.
+Added: Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
Diluted earnings per share is calculated by adding the dilutive potential common shares to the weighted average number of common shares that were outstanding during the period.
6 unchanged sentences
The repurchase program is scheduled to expire upon the Company’s repurchase of shares of the Company’s common stock having an aggregate purchase price of $ 200 million.
−Removed: The Company repurchased 614,660 shares of its common stock at an aggregate cost of $ 24.2 million in fiscal 2018.
−Removed: The Company did no t repurchase any shares of its common stock in fiscal 2020 or fiscal 2019.
−Removed: Comprehensive (Loss) Income
+Added: The Company did no t repurchase any shares of its common stock in fiscal 2021, 2020 or 2019.
+Added: As of July 31, 2021, we have $ 176 million remaining authorized under the share repurchase program.
+Added: Additionally, our ABL Credit Facility, Term Loan Facility, and Senior Notes contain terms that limit our ability to repurchase shares of common stock above certain levels unless certain conditions and financial tests are met.
+Added: Comprehensive Income (Loss)
Comprehensive income (loss) is reported in the Consolidated Statements of Comprehensive Income.
Comprehensive income (loss) includes all changes in stockholders’ equity during the reporting period, other than those resulting from investments by and distributions to stockholders.
−Removed: The Company’s comprehensive income is calculated as Net (loss) income including noncontrolling interests , plus or minus adjustments for foreign currency translation related to the translation of UNFI Canada, Inc.
+Added: The Company’s comprehensive income (loss) is calculated as Net income (loss) including noncontrolling interests, plus or minus adjustments for foreign currency translation related to the translation of UNFI Canada, Inc.
(“UNFI Canada”) from the functional currency of Canadian dollars to U.S.
dollar reporting currency, changes in the fair value of cash flow hedges, net of tax, and changes in defined pension and other postretirement benefit plan obligations, net of tax, less comprehensive income attributable to noncontrolling interests.
−Removed: Accumulated other comprehensive loss represents the cumulative balance of other comprehensive (loss) income, net of tax, as of the end of the reporting period and relates to foreign current translation adjustments, and unrealized gains or losses on cash flow hedges, net of tax and changes in defined pension and other postretirement benefit plan obligations, net of tax.
+Added: Accumulated other comprehensive loss represents the cumulative balance of other comprehensive income (loss), net of tax, as of the end of the reporting period and relates to foreign currency translation adjustments, and unrealized gains or losses on cash flow hedges, net of tax and changes in defined pension and other postretirement benefit plan obligations, net of tax.
Derivative Financial Instruments
−Removed: The Company is exposed to market risks arising from changes in interest rates, fuel costs, and with the operation of UNFI Canada, foreign currency exchange rates.
−Removed: The Company uses derivatives principally in the management of interest rate and fuel price exposure.
−Removed: From time to time the Company may use contracts to hedge transactions in foreign currency.
−Removed: The Company does not utilize derivatives that contain leverage features.
−Removed: For derivative transactions accounted for as hedges, on the date the Company enters into the derivative transaction, the exposure is identified.
−Removed: The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction.
−Removed: In this documentation, the Company specifically identifies the asset, liability, firm commitment, forecasted transaction, or net investment that has been designated as the hedged item and states how the hedging instrument is expected to reduce the risks related to the hedged item.
−Removed: The Company measures effectiveness of its hedging relationships both at hedge inception and on an ongoing basis as needed.
+Added: The Company utilizes derivative financial instruments to manage its exposure to changes in interest rates, fuel costs, and with the operation of UNFI Canada, foreign currency exchange rates.
+Added: All derivatives are recognized on the Company’s Consolidated Balance Sheets at fair value based on quoted market prices or estimates, and are recorded in either current or noncurrent assets or liabilities based on their maturity.
+Added: Changes in the fair value of derivatives are recorded in comprehensive income or net earnings, based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction.
+Added: Gains or losses on derivative instruments are recorded in Accumulated other comprehensive loss and are reclassified to earnings in the period the hedged item affects earnings.
+Added: If the hedged relationship ceases to exist, any associated amounts reported in Accumulated other comprehensive loss are reclassified to earnings at that time.
+Added: The Company measures effectiveness of its hedging relationships both at hedge inception and on an ongoing basis.
Self-Insurance Liabilities
1 unchanged sentence
It is the Company’s policy to record the self-insured portion of workers’ compensation, general and automobile liabilities based upon actuarial methods to estimate the future cost of claims and related expenses that have been reported but not settled, and that have been incurred but not yet reported, discounted at a risk-free interest rate.
−Removed: The present value of such claims was calculated using discount rates ranging from 0.4 percent to 2.0 percent .
−Removed: Changes in the Company’s insurance liabilities consisted of the following:
−Removed: (in thousands)
+Added: The present value of such claims was calculated using a discount rate of 2.0 percent.
+Added: Changes in the Company’s self-insurance liabilities consisted of the following:
+Added: (in millions) 2021 2020 2019
Beginning balance $ 101 $ 89 $ 25
Assumed liabilities from the Supervalu acquisition — — 55
+Added: Expense 48 44 43
Claim payments ( 48 ) ( 36 ) ( 33 )
1 unchanged sentence
Ending balance $ 103 $ 101 $ 89
−Removed: The current portion of the self-insurance liability was $ 34.3 million and $ 32.7 million as of August 1, 2020 and August 3, 2019 , respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
−Removed: The long-term portion was $ 66.5 million and $ 56.1 million as of August 1, 2020 and August 3, 2019 , respectively, and is included in Other long-term liabilities in the Consolidated Balance Sheets.
−Removed: The insurance liabilities as of the end of the fiscal year are net of discounts of $ 6.5 million and $ 6.6 million as of August 1, 2020 and August 3, 2019 , respectively.
−Removed: Amounts due from insurance companies were $ 12.1 million and $ 11.1 million as of August 1, 2020 and August 3, 2019 recorded in Prepaid expenses and other current assets and Other assets .
+Added: The current portion of the self-insurance liability was $ 32 million and $ 34 million as of July 31, 2021 and August 1, 2020, respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.
+Added: The long-term portions were $ 71 million and $ 67 million as of July 31, 2021 and August 1, 2020, respectively, and are included in Other long-term liabilities in the Consolidated Balance Sheets.
+Added: The self-insurance liabilities as of the end of the fiscal year are net of discounts of $ 10 million and $ 7 million as of July 31, 2021 and August 1, 2020, respectively.
+Added: Amounts due from insurance companies were $ 17 million and $ 12 million as of July 31, 2021 and August 1, 2020, respectively, and are recorded in Prepaid expenses and other current assets and Other long-term assets.
Leases, After ASC 842 Adoption
6 unchanged sentences
The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received.
−Removed: The Company’s lease terms include option extension periods when it is reasonably certain that those options will be exercised.
+Added: The Company’s lease terms include optional extension periods when it is reasonably certain that those options will be exercised.
Leases with an initial expected term of 12 months or less are not recorded in the Consolidated Balance Sheets and the related lease expense is recognized on a straight-line basis over the lease term.
−Removed: For all classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed nonlease components.
+Added: For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed nonlease components.
The Company recognizes contractual obligations and receipts on a gross basis, such that the related lease obligation to the landlord is presented separately from the sublease created by the lease assignment to the assignee.
7 unchanged sentences
The Company calculates operating and finance lease impairments using a discount rate to calculate the present value of estimated subtenant rentals that could be reasonably obtained for the property.
−Removed: Lease impairment charges are recorded as a component of Restructuring, acquisition and integration related expenses in the Consolidated Statements of Operations.
+Added: Lease impairment charges for properties no longer used in operations are recorded as a component of Restructuring, acquisition and integration related expenses in the Consolidated Statements of Operations.
The calculation of lease impairment charges requires significant judgments and estimates, including estimated subtenant rentals, discount rates and future cash flows based on the Company’s experience and knowledge of the market in which the property is located, previous efforts to dispose of similar assets and the assessment of existing market conditions.
5 unchanged sentences
Deferred rent obligations are included in Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheets.
−Removed: For contractual obligations on properties where we remain the primary obligor upon assignment of the lease and do not obtain a release from landlords or retain the equity interests in the legal entities with the related rent contracts, the Company continues to recognize rent expense and rent income.
−Removed: In addition, the Company continues to recognize contractual obligations and receipts on a gross basis, such that the related lease obligation to the landlord is presented separately from the sublease created by the lease assignment to the assignee.
−Removed: As a result, the Company continues to recognize on its Consolidated Balance Sheets the carrying value of capital lease assets and obligations, and property and equipment where the Company determined it was the accounting owner pursuant to a lease agreement.
−Removed: The Company maintains reserves for costs associated with closures of retail stores, distribution centers and other properties that are no longer being utilized in current operations.
−Removed: We calculate closed property operating lease liabilities using a discount rate to calculate the present value of the remaining noncancellable lease payments after the closing date, reduced by estimated subtenant rentals that could be reasonably obtained for the property.
+Added: The Company continues to recognize contractual obligations and receipts on a gross basis, such that the related lease obligation to the landlord is presented separately from the sublease created by the lease assignment to the assignee.
Lease reserve impairment charges are recorded as a component of Restructuring, acquisition and integration related expenses in the Consolidated Statements of Operations.
−Removed: The closed property lease liabilities are usually paid over the remaining lease terms, which generally range from one to 12 years .
−Removed: Adjustments to closed property reserves primarily relate to changes in subtenant income or actual exit costs differing from original estimates.
−Removed: Adjustments are made for changes in estimates in the period in which the changes become known.
−Removed: The calculation of the closed property charges requires significant judgments and estimates, including estimated subtenant rentals, discount rates and future cash flows based on our experience and knowledge of the market in which the closed property is located, previous efforts to dispose of similar assets and the assessment of existing market conditions.
−Removed: Reserves for closed properties are included in Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheets.
NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS
1 unchanged sentence
In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No.
−Removed: 2016-02, Leases (Topic 842) (“ASC 842”), which provides new comprehensive lease accounting guidance that supersedes previous lease guidance.
−Removed: The objective of this ASU is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.
−Removed: Criteria for distinguishing between finance and operating leases are substantially similar to criteria for distinguishing between capital and operating leases in previous lease guidance.
−Removed: Lease agreements that are 12 months or less are permitted to be excluded from the balance sheet.
−Removed: In addition, this ASU expands the disclosure requirements of lease arrangements.
−Removed: The Company adopted this standard in the first quarter of fiscal 2020 on August 4, 2019, the effective and initial application date, using the additional transition method under ASU 2018-11, which allows for a cumulative effect adjustment within retained earnings in the period of adoption.
−Removed: In addition, the Company elected the “package of three” practical expedients which allows companies to not reassess whether arrangements contain leases, the classification of leases, and the capitalization of initial direct costs.
−Removed: The impact of the adoption to the Company’s Consolidated Balance Sheets includes the recognition of operating lease liabilities with corresponding right-of-use assets of approximately the same amount based on the present value of the remaining lease payments for existing operating leases.
−Removed: The difference between the amount of right-of-use assets and lease liabilities recognized is primarily related to adjustments to prepaid rent, deferred rent, lease intangible assets/liabilities, and closed property reserves.
−Removed: In addition, the adoption of the standard resulted in the derecognition of existing property and equipment for certain properties that did not previously qualify for sale accounting because the Company was determined to be the accounting owner during the construction phase and did not qualify for sale-leaseback accounting upon completion of the construction.
−Removed: At the transition date, the Company was constructing one facility, which was completed in the fourth quarter of fiscal 2020.
−Removed: The Company exercised a purchase option for the facility in the third quarter of fiscal 2020, which resulted in the Company continuing to account for the facility as its accounting owner.
−Removed: For properties where the Company was deemed the accounting owner during construction for which construction has been completed, the difference between the assets and liabilities derecognized, net of the deferred tax impact, was recorded as an adjustment to retained earnings.
−Removed: Lessor accounting guidance remained largely unchanged from previous guidance.
+Added: 2016-02, Leases (Topic 842) (“ASC 842”), which provided new comprehensive lease accounting guidance that supersedes previous lease guidance.
+Added: The Company adopted this standard in fiscal 2020, on August 4, 2019.
Adoption of this standard did not have a material impact to the Company’s Consolidated Statements of Operations, Consolidated Statements of Stockholders' Equity or Consolidated Statements of Cash Flows.
−Removed: The Company has revised its accounting policies, processes and controls, and systems as applicable to comply with the provisions and disclosure requirements of the standard.
−Removed: The effects of the changes, including those discussed above, made to the Company’s Consolidated Balance Sheets as of August 3, 2019 for the adoption of the new lease guidance were as follows (in thousands):
−Removed: Balance at August 3, 2019
−Removed: Adjustments due to adoption of the new lease guidance
−Removed: Adjusted Balance at August 4, 2019
−Removed: Prepaid expenses and other current assets
−Removed: Property and equipment, net
−Removed: Operating lease assets
−Removed: Intangible assets, net
−Removed: Deferred income taxes
−Removed: Total increase to assets
−Removed: Liabilities and Stockholders’ Equity
−Removed: Accrued expense and other current liabilities
−Removed: Current portion of operating lease liabilities
−Removed: Current portion of long-term debt and finance lease liabilities
−Removed: Long-term operating lease liabilities
−Removed: Long-term finance lease obligations
−Removed: Other long-term liabilities
−Removed: Total stockholders’ equity
−Removed: Total increase to liabilities and stockholders’ equity
−Removed: In October 2018, the FASB issued authoritative guidance under ASU No.
−Removed: 2018-16, Derivatives and Hedging (Topic 815):
−Removed: Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes .
−Removed: This ASU adds the Overnight Index Swap (OIS) rate based on Secured Overnight Financing Rate (SOFR) as a benchmark interest rate for hedge accounting purposes.
−Removed: This ASU is effective for public companies with interim and fiscal years beginning after December 15, 2018, which for the Company was the first quarter of fiscal year 2020.
−Removed: The Company adopted this standard in the first quarter of fiscal 2020 with no impact to the Company’s consolidated financial statements as LIBOR is still being used as a benchmark interest rate.
−Removed: In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017.
−Removed: This ASU is effective for all entities for annual and interim periods in fiscal years beginning after December 15, 2018.
−Removed: The Company adopted this ASU in the first quarter of fiscal 2020.
−Removed: The adoption of this ASU had no impact to Accumulated other comprehensive loss or Retained earnings.
+Added: In June 2016, the Financial Accounting Standards Board (“FASB”) issued accounting ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance:
+Added: ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-11 (collectively, “Topic 326”).
+Added: Topic 326 changed the impairment model for most financial assets and certain other instruments.
+Added: For trade and other receivables, guarantees and other instruments, entities are required to use a new forward-looking expected loss model that replaces the previous incurred loss model and generally results in earlier recognition of credit losses.
+Added: The Company adopted this standard in fiscal 2021, on August 2, 2020, the effective and initial application date, using a modified-retrospective basis as required by the standard by means of a cumulative-effect adjustment to the opening balance of Retained earnings in the Company’s Consolidated Statements of Stockholders' Equity.
+Added: The difference between reserves and allowances recorded under the former incurred loss model and the amount determined under the current expected loss model, net of the deferred tax impact, was recorded as an adjustment to Retained earnings.
+Added: Adoption of this standard did not have a material impact to the Company’s Consolidated Financial Statements.
In April 2019, the FASB issued ASU No.
3 unchanged sentences
Recognition and Measurement of Financial Assets and Financial Liabilities.
−Removed: Since the Company adopted ASU 2017-12 in the fourth quarter of fiscal 2018, the amendments in ASU 2019-04 related to clarifications on Accounting for Hedging Activities have been adopted by the Company in the first quarter of fiscal 2020.
−Removed: The Company adopted the relevant portions of this standard in the first quarter of fiscal 2020 with no impact to Accumulated other comprehensive loss or Retained earnings for fiscal 2020, as the Company did not have separately measured ineffectiveness related to its cash flow hedges.
−Removed: The remaining amendments within ASU 2019-04 pertaining to ASC 326 are effective for fiscal years beginning after December 15, 2019, which for the Company is the first quarter of fiscal 2021 (see Topic 326 below).
−Removed: In March 2020, the FASB issued ASU 2020-04, Reference rate reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting .
−Removed: This ASU provides optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for contracts, hedging relationships, and other transactions affected by reference rate reform.
−Removed: The Company adopted this ASU in the third quarter of fiscal 2020, which is effective on a prospective basis.
−Removed: The adoption of this ASU did not have a material impact on the consolidated financial statements.
−Removed: Optional expedients elected from Topic 848 are effective until superseded by subsequent documentation or December 31, 2022, whichever occurs first.
−Removed: Recently Issued Accounting Pronouncements
+Added: 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 fiscal 2020, with no impact to Accumulated other comprehensive loss or Retained earnings for fiscal 2020, as the Company did not have separately measured ineffectiveness related to its cash flow hedges.
+Added: The remaining amendments within ASU 2019-04 were adopted in fiscal 2021 with the adoption of Topic 326.
+Added: Adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software:
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .
−Removed: ASU 2018-05 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of 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.
−Removed: The Company is required to adopt this new guidance in the first quarter of fiscal 2021.
−Removed: The Company has outstanding cloud computing arrangements and continues to incur costs that it believes would be required to be capitalized under ASU 2018-05.
−Removed: The Company has reviewed the provisions of the new standard.
−Removed: Adopting the standard will not have a material effect on the Company’s consolidated financial statements.
−Removed: In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General:
+Added: ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e.
+Added: 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.
+Added: The Company adopted this standard on a prospective basis in fiscal 2021.
+Added: Under this standard, the Company is required to defer these costs and recognize these costs as a service expense over future periods.
+Added: Adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.
+Added: In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20):
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans .
−Removed: ASU 2018-14 eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans.
−Removed: The Company is required to adopt this guidance in fiscal 2021.
−Removed: The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s annual consolidated financial statements and related disclosures.
−Removed: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance:
−Removed: ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, “Topic 326”).
−Removed: Topic 326 changes the impairment model for most financial assets and certain other instruments.
−Removed: For trade and other receivables, guarantees and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace the current “incurred loss” model and generally will result in the earlier recognition of credit losses.
−Removed: The Company is required to adopt this new guidance in the first quarter of fiscal 2021 on a modified-retrospective basis as required by the standard by means of a cumulative-effect adjustment to the opening balance of retained earnings in the statements of financial position and stockholders’ equity as of the effective date.
−Removed: The Company has reviewed the provisions of the new standard;
−Removed: established revised processes and controls to estimate expected losses for trade and other receivables, guarantees and other instruments.
−Removed: Adopting the standard will not have a material effect on the Company’s consolidated financial statements.
+Added: 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.
+Added: The amendment also removed certain required disclosures.
+Added: The Company adopted this guidance in fiscal 2021.
+Added: The provisions of the new standard do not have an impact on the Consolidated Financial Statements as this ASU only modified disclosure requirements.
+Added: Refer to Note 13—Benefit Plans for disclosures presented for all periods in accordance with this amendment.
+Added: Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
3 unchanged sentences
The Company is required to adopt this guidance in the first quarter of fiscal 2022.
−Removed: The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s consolidated financial statements.
+Added: The Company has evaluated the impact of the standard and does not expect the adoption to have a material impact on the Company’s Consolidated Financial Statements.
NOTE 3—REVENUE RECOGNITION
−Removed: Revenue Recognition Accounting Policy
−Removed: The Company recognizes revenue in an amount that reflects the consideration that is expected to be received for goods or services when its performance obligations are satisfied by transferring control of those promised goods or services to its customers.
−Removed: ASC 606 defines a five-step process to recognize revenue that requires judgment and estimates, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when or as the performance obligation is satisfied.
−Removed: This footnote addresses the Company’s revenue recognition policies.
−Removed: Revenues from wholesale product sales are recognized when control is transferred, which typically happens upon either shipment or delivery, depending on the contract terms with the customer.
−Removed: Typically, shipping and customer receipt of wholesale products occur on the same business day.
−Removed: Discounts and allowances provided to customers are recognized as a reduction in Net sales as control of the products is transferred to customers.
−Removed: The Company recognizes freight revenue related to transportation of its products when control of the product is transferred, which is typically upon delivery.
−Removed: Revenues from Retail product sales are recognized at the point of sale upon customer check-out.
−Removed: Advertising income earned from our franchisees that participate in our Retail advertising program are recognized as Net sales.
−Removed: We recognize loyalty program expense in the form of fuel rewards as a reduction of Net sales.
−Removed: Sales tax is excluded from Net sales.
−Removed: Limited rights of return exist with our customers due to the nature of the products we sell.
Product sales
13 unchanged sentences
In circumstances where the vendors provide the Company consideration to promote the sale of their goods and the Company determines the specific performance requirements for its customers to earn these incentives, Net sales are reduced for these customer incentives as part of the determination of the transaction price.
−Removed: Sales from the Company’s Wholesale segment to its retail discontinued operations are presented within Net Sales when the Company holds the business for sale with a supply agreement that it anticipates the sale of the retail banner to include upon its disposal.
−Removed: The Company recorded $ 0.0 million and $ 12.4 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in fiscal 2020 and 2019 , respectively, related to retail disposal groups, which were sold with a supply agreement and were classified within discontinued operations prior to their disposal.
−Removed: These amounts were recorded at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business.
−Removed: No net sales were recorded within continuing operations for retail banners that the Company disposed of and expects to dispose of without a supply agreement, as they have been eliminated upon consolidation within continuing operations and amounted to $ 125.0 million and $ 221.4 million in fiscal 2020 and 2019 , respectively.
−Removed: Certain customer agreements provide for the right to license one or more of the Company’s tradenames, such as FESTIVAL FOODS®, SENTRY®, COUNTY MARKET®, NEWMARKET®, FOODLAND®, JUBILEE® and SUPERVALU®.
−Removed: In addition, the Company enters into franchise agreements to separately charge its customers, who the Company also sells wholesale products to, for the right to use its CUB FOODS® tradename.
+Added: Certain customer agreements provide for the right to license one or more of the Company’s tradenames, such as FESTIVAL FOODS®, SENTRY®, COUNTY MARKET®, NEWMARKET®, FOODLAND®, and SUPERVALU®.
+Added: In addition, the Company enters into franchise agreements to separately charge its customers, who the Company also sells wholesale products to, for the right to use its CUB® tradename.
The Company typically does not separately charge for the right to license its tradenames.
12 unchanged sentences
The Company provides incentives to its wholesale customers in various forms established under the applicable agreement, including advances, payments over time that are earned by achieving specified purchasing thresholds, and upon the passage of time.
−Removed: The Company typically records customer advances within Other assets and Other current assets and typically recognizes customer incentive payments that are based on expected purchases over the term of the agreement as a reduction to Net sales.
+Added: The Company typically records customer advances within Other long-term assets and Prepaid expenses and other current assets and typically recognizes customer incentive payments that are based on expected purchases over the term of the agreement as a reduction to Net sales.
To the extent that the transaction price for product sales includes variable consideration, such as certain of these customer incentives, the Company estimates the amount of variable consideration that should be included in the transaction price primarily by utilizing the expected value method.
4 unchanged sentences
Professional services and equipment sales
−Removed: Separate from the services provided in conjunction with the sale of product describe above, many of the Company’s agreements with customers also include distinct professional services and other promises to customers, in addition to the sale of the product itself, such as retail store support, advertising, store layout and design services, merchandising support, couponing, e-commerce, network and data hosting solutions, training and certifications classes, and administrative back-office solutions.
+Added: Separate from the services provided in conjunction with the sale of products described above, many of the Company’s agreements with customers also include distinct professional services and other promises to customers, in addition to the sale of the product itself, such as retail store support, advertising, store layout and design services, merchandising support, couponing, eCommerce, network and data hosting solutions, training and certifications classes, and administrative back-office solutions.
These professional services may contain a single performance obligation for each respective service, in which case such services revenues are recognized when delivered.
−Removed: Relative to total Net sales, revenue from professional services is insignificant.
+Added: Revenue from professional services are less than one percent of total Net sales.
Wholesale equipment sales are recorded as direct sales to customers when shipped or delivered, consistent with the recognition of product sales.
Disaggregation of Revenues
−Removed: The Company records revenue to five customer channels, which are described below:
+Added: 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;
−Removed: Independent retailers , which include smaller size accounts and include single store and multiple store locations, but are not classified within Chains above or Other discussed below ;
+Added: • Independent retailers , which include smaller size accounts and include single store and multiple store locations, and group purchasing entities, but are not classified within Chains above or Other discussed below;
• Supernatural , which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market;
−Removed: 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 ;
−Removed: Other , which includes international customers outside of Canada, foodservice, e-commerce, conventional military business and other sales .
+Added: • 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;
+Added: • Other , which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.
The following tables detail the Company’s net sales for the periods presented by customer channel for each of its segments.
The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly.
−Removed: (in millions)
−Removed: Net Sales for Fiscal 2020 (52 weeks)
−Removed: Customer Channel
+Added: (in millions) Net Sales for Fiscal 2021 (52 weeks)
+Added: Customer Channel Wholesale Retail Other Eliminations (2)
+Added: Chains $ 12,104 $ — $ — $ — $ 12,104
Independent retailers 6,638 — — — 6,638
−Removed: (in millions)
−Removed: Net Sales for Fiscal 2019 (1) (53 weeks)
−Removed: Customer Channel
+Added: Supernatural 5,050 — — — 5,050
+Added: Retail — 2,442 — — 2,442
+Added: Other 2,081 — 219 — 2,300
+Added: Eliminations — — — ( 1,584 ) ( 1,584 )
+Added: Total $ 25,873 $ 2,442 $ 219 $ ( 1,584 ) $ 26,950
+Added: (in millions) Net Sales for Fiscal 2020 (1) (52 weeks)
+Added: Customer Channel Wholesale Retail Other Eliminations (2)
+Added: Chains $ 12,010 $ — $ — $ — $ 12,010
Independent retailers 6,699 — — — 6,699
−Removed: (in millions)
−Removed: Net Sales for Fiscal 2018 (1) (52 weeks)
−Removed: Customer Channel
+Added: Supernatural 4,720 — — — 4,720
+Added: Retail — 2,375 — — 2,375
+Added: Other 2,096 — 228 — 2,324
+Added: Eliminations — — — ( 1,569 ) ( 1,569 )
+Added: Total $ 25,525 $ 2,375 $ 228 $ ( 1,569 ) $ 26,559
+Added: (in millions) Net Sales for Fiscal 2019 (1) (53 weeks)
+Added: Customer Channel Wholesale Retail Other Eliminations (2)
+Added: Chains $ 9,769 $ — $ — $ — $ 9,769
Independent retailers 5,536 — — — 5,536
−Removed: Certain prior period amounts in the above tables have been reclassified to conform with the Company’s current sales channel presentation.
+Added: Supernatural 4,394 — — — 4,394
+Added: Retail — 1,687 — — 1,687
+Added: Other 1,852 — 235 — 2,087
+Added: Eliminations — — — ( 1,132 ) ( 1,132 )
+Added: Total $ 21,551 $ 1,687 $ 235 $ ( 1,132 ) $ 22,341
+Added: (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.
+Added: There was no impact to the Consolidated Statements of Operations.
+Added: The Company believes this modified basis better reflects its channel presentation, as it further aligns with segment presentation.
+Added: (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.
Whole Foods Market, Inc.
16 unchanged sentences
Customer incentives are not considered contract assets as they are not generated through the transfer of goods or services to the customers.
−Removed: No material contract asset or liability exist for any period reported within these Consolidated Financial Statements.
+Added: No material contract asset or liability exists for any period reported within these Consolidated Financial Statements.
+Added: Accounts and Notes Receivable Balances
Accounts and notes receivable are as follows:
−Removed: (in thousands)
−Removed: August 1, 2020
−Removed: August 3, 2019
+Added: (in millions) July 31, 2021 August 1, 2020
Customer accounts receivable $ 1,115 $ 1,157
3 unchanged sentences
Notes receivable, net, included within Prepaid expenses and other current assets $ 7 $ 49
−Removed: Long-term notes receivable, net, included within Other assets
+Added: Long-term notes receivable, net, included within Other long-term assets $ 15 $ 26
The allowance for uncollectible receivables, and estimated variable consideration allowed for as sales concessions consists of the following:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019
Balance at beginning of year $ 56 $ 21 $ 16
−Removed: Additions charged to operating expenses
+Added: Impact of adoption of new credit loss standard 4 — —
+Added: Provision for losses in Operating expenses ( 9 ) 38 10
Reductions of Net sales 3 12 7
+Added: Write-offs charged against the allowance ( 26 ) ( 15 ) ( 12 )
Balance at end of year $ 28 $ 56 $ 21
−Removed: NOTE 4—ACQUISITIONS
−Removed: Supervalu Acquisition
−Removed: On July 25, 2018, the Company entered into an agreement and plan of merger to acquire all of the outstanding equity securities of Supervalu, which was then the largest publicly traded conventional grocery distributor in the United States.
−Removed: The acquisition of Supervalu diversifies the Company’s customer base, further enables cross-selling opportunities, expands market reach and scale, enhances technology, capacity and systems, and is expected to deliver significant synergies and accelerate potential growth.
−Removed: The merger was completed on October 22, 2018 (the “Closing Date”).
−Removed: At the effective time of the acquisition, each share of Supervalu common stock, par value $ 0.01 per share, issued and outstanding, was canceled and converted into the right to receive a cash payment equal to $ 32.50 per share, without interest.
−Removed: Total consideration related to this acquisition was $ 2.3 billion , $ 1.3 billion of which was paid in cash to Supervalu shareholders and $ 1.0 billion of which was used to satisfy Supervalu’s outstanding debt obligations.
−Removed: Included in the liabilities assumed in the Supervalu acquisition were the Supervalu Senior Notes with a fair value of $ 546.6 million .
−Removed: These Senior Notes were redeemed in the second quarter of fiscal 2019 following the required 30-day notice period, resulting in their satisfaction and discharge.
−Removed: The assets and liabilities of Supervalu were recorded in the Company’s Consolidated Financial Statements at their estimated fair values as of the acquisition date.
−Removed: In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu.
−Removed: In the fourth quarter of the current fiscal year, the Company announced its plan to retain certain retail operations and as a result the acquired retail assets and assumed liabilities of Supervalu were recast to reflect the revised discontinued operations of the Company.
−Removed: Refer to Note 19—Discontinued Operations for more information on discontinued operations.
−Removed: The following table summarizes the final consideration, fair value of assets acquired and liabilities assumed, and the resulting goodwill.
−Removed: (in thousands)
−Removed: Final Acquisition Date Fair Values As Recast
−Removed: Consideration:
−Removed: Outstanding shares
−Removed: Outstanding debt, excluding acquired senior notes
−Removed: Equity-based awards
−Removed: Total consideration
−Removed: Fair value of assets acquired and liabilities assumed:
−Removed: Cash and cash equivalents
−Removed: Accounts receivable
−Removed: Prepaid expenses and other current assets
−Removed: Current assets of discontinued operations
−Removed: Property, plant and equipment
−Removed: Intangible assets
−Removed: Long-term assets of discontinued operations
−Removed: Accounts payable
−Removed: Current portion of long-term debt and finance lease obligations
−Removed: Other current liabilities
−Removed: Current liabilities of discontinued operations
−Removed: Long-term debt
−Removed: Long-term finance lease obligations
−Removed: Pension and other postretirement benefit obligations
−Removed: Deferred income taxes
−Removed: Other long-term liabilities
−Removed: Long-term liabilities of discontinued operations
−Removed: Noncontrolling interests
−Removed: Total consideration
−Removed: Cash and cash equivalents (1)
−Removed: Total consideration, net of cash and cash equivalents acquired
−Removed: Includes cash and cash equivalents acquired attributable to continuing operations and discontinued operations.
−Removed: Goodwill represents the future economic benefits arising largely from the synergies expected from combining the operations of the Company and Supervalu that could not be individually identified and separately recognized.
−Removed: A substantial portion of goodwill is deductible for income tax purposes.
−Removed: Goodwill from the acquisition was attributed to the Company’s Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit, which in the first quarter of fiscal 2020 was reorganized into a single U.S.
−Removed: Wholesale reporting unit, as discussed further in Note 7—Goodwill and Intangible Assets .
−Removed: No goodwill was attributed to the Company’s Retail reporting unit or any other reporting units.
−Removed: During the first quarter of fiscal 2020, the Company finalized its fair value estimates of the acquired net assets, which primarily related to immaterial changes to income taxes and property and equipment.
−Removed: The fair value of assets acquired and liabilities assumed has been revised to present Retail within continuing operations.
−Removed: The following table summarizes the identifiable intangible assets and liabilities recorded based on final valuations, as recast.
−Removed: The identifiable intangible assets are expected to be amortized on a straight-line basis over the estimated useful lives indicated.
−Removed: The fair value of identifiable intangible assets acquired was determined using income approaches.
−Removed: Significant assumptions utilized in the income approach were based on Company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.
−Removed: Final Acquisition Date Fair Values As Recast
−Removed: (in thousands)
−Removed: Estimated Useful Life
−Removed: Continuing Operations
−Removed: Discontinued Operations
−Removed: Customer relationship assets
−Removed: Favorable operating leases
−Removed: Leases in place
−Removed: Pharmacy prescription files
−Removed: Non-compete agreement
−Removed: Unfavorable operating leases
−Removed: The Company incurred acquisition-related costs in conjunction with the Supervalu acquisition, which are quantified in Note 5—Restructuring, Acquisition and Integration Related Expenses .
−Removed: The accompanying Consolidated Statements of Operations for fiscal 2019 include the results of operations of Supervalu since the October 22, 2018 acquisition date through August 3, 2019, which consisted of net sales from continuing operations of $ 11.40 billion .
−Removed: Supervalu’s net sales from discontinued operations for this time period are reported in Note 19—Discontinued Operations
−Removed: The following table presents unaudited supplemental pro forma consolidated Net sales and Net (loss) income from continuing operations, as recast, based on the Company’s historical reporting periods as if the acquisition of Supervalu had occurred as of July 30, 2017:
−Removed: (unaudited, in thousands, except per share data)
−Removed: August 3, 2019
−Removed: As Recast (1)
−Removed: July 28, 2018
−Removed: As Recast (2)
−Removed: Net (loss) income from continuing operations
−Removed: Basic net (loss) income from continuing operations per share
−Removed: Diluted net (loss) income from continuing operations per share
−Removed: Includes 12 weeks of pro forma Supervalu results for the period ended September 8, 2018.
−Removed: Includes 52 weeks of pro forma Supervalu results for the period ended July 28, 2018, including 19 weeks of pro forma Associated Grocers of Florida, Inc.
−Removed: results, which was acquired by Supervalu on December 8, 2017.
−Removed: These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined companies would have been had the acquisitions occurred at the beginning of the periods being presented, nor are they indicative of future results of operations.
NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES
Restructuring, acquisition and integration related expenses were as follows:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019
2019 SUPERVALU INC.
restructuring expenses $ — $ 5 $ 74
−Removed: Integration and acquisition costs
+Added: Restructuring and integration costs 50 42 51
Closed property charges and costs 6 40 23
−Removed: 2018 Earth Origins Market restructuring expenses and loss on sale
+Added: Total $ 56 $ 87 $ 148
2019 SUPERVALU INC.
4 unchanged sentences
Incremental and identifiable expenses associated with integrating the legacy companies operations and information technology systems are reflected within integration costs, and asset impairments related to retail are included in closed property charges and costs.
−Removed: Integration and Acquisition Costs
−Removed: Integration and acquisition costs for fiscal 2020 primarily relate to expenses associated with integrating and consolidating distribution centers and certain professional fees for distribution center network and administrative integration activities.
+Added: Restructuring and Integration Costs
+Added: Restructuring and integration costs for fiscal 2021 primarily relate to certain professional fees for advisory and transformational activities.
+Added: Fiscal 2020 restructuring and integration costs primarily relate to expenses associated with integrating and consolidating distribution centers, certain professional fees for distribution center network and administrative integration activities.
Fiscal 2019 acquisition and integration costs primarily reflect transaction expenses and professional fees related to the Supervalu acquisition.
Closed Property Charges and Costs
−Removed: Prior to the adoption of ASC 842, reserves for closed property were included in the Consolidated Balance Sheets within Accrued expenses and other current liabilities and Other long-term liabilities.
+Added: In fiscal 2021 and 2020, closed property charges relate to lease, and property and equipment asset impairments related to retail stores, lease terminations of non-operating stores and distribution center consolidation.
Closed property charges recorded in fiscal 2019 primarily relate to retail stores and non-operating properties for which leases were terminated.
−Removed: In fiscal 2020, subsequent to the adoption of ASC 842, closed property charges relate to lease and property and equipment asset impairments related to retail stores, lease terminations of non-operating stores and distribution center consolidation and are included within Restructuring, acquisition and integration related expenses .
−Removed: Restructuring Programs
−Removed: The following is a summary of the restructuring reserves by reserve type included in the Consolidated Balance Sheets, primarily within Accrued compensation and benefits for severance and other employee separation costs and tax payments.
−Removed: (in thousands)
−Removed: 2019 SUPERVALU INC.
−Removed: 2018 Earth Origins Market
−Removed: 2017 Cost Saving and Efficiency Initiatives
−Removed: Balances at July 28, 2018
−Removed: Restructuring program charge (1)
−Removed: Acquired restructuring liability
−Removed: Cash payments
−Removed: Balances at August 3, 2019
−Removed: Restructuring program charge
−Removed: Cash payments
−Removed: Balances at August 1, 2020
−Removed: Cumulative program charges incurred from inception to date
−Removed: Includes $ 43.0 million of charges related to change-in-control expense to satisfy outstanding equity awards and severance related costs.
−Removed: NOTE 6—PROPERTY AND EQUIPMENT
+Added: NOTE 5—PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
−Removed: (in thousands)
−Removed: Buildings and improvements
−Removed: Leasehold improvements
−Removed: Motor vehicles
−Removed: Finance lease assets
+Added: (in millions) Original
+Added: Useful Lives 2021 2020
+Added: Land $ 138 $ 143
+Added: Buildings and improvements 10 - 40 years
+Added: Leasehold improvements 10 - 20 years
+Added: Equipment 3 - 25 years
+Added: Motor vehicles 5 - 8 years
+Added: Finance lease assets 1 - 11 years
Construction in progress 209 79
2 unchanged sentences
Property and equipment, net $ 1,784 $ 1,701
−Removed: The Company capitalized $ 5.3 million and $ 3.3 million of interest during fiscal 2020 and 2019, respectively.
−Removed: The Company did no t capitalize interest during fiscal 2018 .
+Added: The Company capitalized $ 3 million, $ 5 million, and $ 3 million of interest during fiscal 2021, 2020 and 2019, respectively.
Depreciation and amortization expense on property and equipment was $ 209 million, $ 198 million and $ 180 million for fiscal 2021, 2020 and 2019, respectively.
−Removed: NOTE 7—GOODWILL AND INTANGIBLE ASSETS
+Added: NOTE 6—GOODWILL AND INTANGIBLE ASSETS, NET
The Company has five goodwill reporting units:
1 unchanged sentence
Wholesale and Canada Wholesale);
−Removed: one separate Retail operating and reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments.
+Added: one separate Retail operating and reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments and are included in the Other segment.
The Canada Wholesale operating segment, which is aggregated with U.S.
Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria.
−Removed: Supervalu Acquisition Goodwill
−Removed: In conjunction with the acquisition of Supervalu, goodwill resulting from the acquisition was assigned to the previous Supervalu Wholesale reporting unit and the previous legacy Company Wholesale reporting unit, as both of these reporting units were expected to benefit from the synergies of the business combination.
−Removed: The assignment was based on the relative synergistic value estimated as of the acquisition date.
−Removed: This systematic approach utilized the relative cash flow contributions and value created from the acquisition to each reporting unit on a stand-alone basis.
−Removed: As of the acquisition date, approximately $ 80.9 million was assigned to the legacy Company Wholesale reporting unit.
−Removed: As discussed below, the Company impaired all goodwill attributed to the Supervalu Wholesale reporting unit prior to finalization of its purchase accounting.
−Removed: In the first quarter of fiscal 2020, as discussed further in Note 4—Acquisitions , the Company finalized purchase accounting and the opening balance sheet related to Supervalu acquisition.
−Removed: Adjustments to the opening balance sheet goodwill in the first quarter of fiscal 2020, resulted in an additional goodwill impairment charge of $ 2.5 million .
+Added: In the fourth quarter of fiscal 2021, the Company performed its annual goodwill qualitative impairment review and determined that a quantitative impairment test was not required for any of its reporting units.
Fiscal 2020 Goodwill Impairment Reviews
1 unchanged sentence
Wholesale reporting unit, and experienced a further sustained decline in market capitalization and enterprise value.
−Removed: 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.
+Added: 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.
−Removed: 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.
+Added: 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.
−Removed: The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization.
+Added: The Company confirmed the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization.
Based on this analysis, the Company determined that the carrying value of its U.S.
1 unchanged sentence
As a result, the Company recorded a goodwill impairment charge of $ 422 million in the first quarter of fiscal 2020.
−Removed: The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Consolidated Statements of Operations.
−Removed: The goodwill impairment charge reflects the impairment of all of the U.S.
+Added: The goodwill impairment charge is reflected in Goodwill impairment charges in the Consolidated Statements of Operations.
+Added: The goodwill impairment charge reflected the impairment of all of the U.S.
Wholesale reporting unit’s goodwill.
−Removed: In the fourth quarter of fiscal 2020, the Company performed its annual goodwill qualitative impairment test and determined that a quantitative impairment test was not required for any of its reporting units.
+Added: In the fourth quarter of fiscal 2020, the Company performed its annual goodwill qualitative impairment review and determined that a quantitative impairment test was not required for any of its reporting units.
Fiscal 2019 Goodwill Impairment Reviews
5 unchanged sentences
The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 10 %, which considered guidelines for publicly traded companies, capital structure and risk premiums, including those reflected in the Company’s then-current market capitalization.
−Removed: The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling those fair values to its enterprise value and market capitalization.
−Removed: Based on this analysis, the Company determined that the carrying value of its Supervalu Wholesale reporting unit exceeded its fair value by an amount that exceeded the assigned goodwill as of the acquisition date.
+Added: The Company confirmed the reasonableness of the estimated reporting unit fair values by reconciling those fair values to its enterprise value and market capitalization.
+Added: Based on this analysis, the Company determined that the carrying value
+Added: of its Supervalu Wholesale reporting unit exceeded its fair value by an amount that exceeded the assigned goodwill as of the acquisition date.
As a result, the Company recorded a goodwill impairment charge of $ 293 million in fiscal 2019, which reflects the preliminary goodwill impairment charge recorded in the second quarter of fiscal 2019 and adjustments to the charge recorded in the third and fourth quarters of fiscal 2019.
The goodwill impairment charge adjustments recorded in the third and fourth quarters of fiscal 2019 were attributable to changes in the preliminary fair value of net assets, most notably changes in tax assets and liabilities, intangible assets and property and equipment, which affected the initial goodwill resulting from the Supervalu acquisition.
−Removed: The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Consolidated Statements of Operations.
+Added: The goodwill impairment charge is reflected in Goodwill impairment charges in the Consolidated Statements of Operations.
The goodwill impairment charge reflects all of Supervalu Wholesale’s reporting unit goodwill, based on preliminary acquisition date assigned fair values.
3 unchanged sentences
There were no material increases or decreases to the recorded goodwill impairment charge based upon the final purchase price allocations.
−Removed: Refer to Note 4—Acquisitions for further information about the preliminary purchase price allocation and provisional goodwill estimated as of the acquisition date.
In fiscal 2019, the Company performed quarterly reviews of the composition of its reporting units.
−Removed: Any future changes in the Company’s goodwill reporting units would require a relative fair value allocation of goodwill, and may require a quantitative impairment assessment of goodwill, which may result in material goodwill impairment charges.
In the fourth quarter of fiscal 2019, the Company performed its annual goodwill qualitative impairment test and determined that a quantitative impairment test was not required for any of its reporting units.
−Removed: 2018 Earth Origins Market Impairment
−Removed: During the second quarter of fiscal 2018, the Company made the decision to close three non-core, under-performing stores of its total twelve stores.
−Removed: Based on this decision, coupled with the decline in results in the first half of fiscal 2018 and the future outlook as a result of competitive pressure, the Company determined that both a test for recoverability of long-lived assets and a goodwill impairment analysis should be performed.
−Removed: The determination of the need for a goodwill analysis was based on the assertion that it was more likely than not that the fair value of the reporting unit was below its carrying amount.
−Removed: As a result of both these analyses, the Company recorded a total impairment charge of $ 3.4 million on long-lived assets and $ 7.9 million to goodwill, respectively, during the second quarter of fiscal 2018.
−Removed: During the fourth quarter of fiscal 2018 the Company disposed of its Earth Origins retail business.
Goodwill and Intangible Assets Changes
Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
−Removed: (in thousands)
−Removed: Goodwill as of July 28, 2018 (1)(2)
+Added: (in millions) Wholesale Other Total
+Added: Goodwill as of August 3, 2019 (1)(2)
+Added: $ 432 $ 10 $ 442
Goodwill from current fiscal year business combinations 1 — 1
Impairment charge ( 424 ) — ( 424 )
−Removed: Other adjustments
Change in foreign exchange rates 1 — 1
Goodwill as of August 1, 2020 (1)(2)
−Removed: Goodwill adjustment from prior fiscal year business combinations
−Removed: Impairment charge
Change in foreign exchange rates — — —
−Removed: Goodwill as of August 1, 2020 (1)(2)
+Added: Goodwill as of July 31, 2021 (1)(2)
+Added: $ 10 $ 10 $ 20
(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 293 million, $ 717 million and $ 717 million for fiscal 2019, 2020 and 2021, respectively.
(2) Other amounts are net of accumulated goodwill impairment charges of $ 9 million, $ 10 million and $ 10 million for fiscal 2019, 2020 and 2021, respectively.
−Removed: Intangible assets, net consisted of the following:
−Removed: (in thousands)
−Removed: Gross Carrying Amount
−Removed: Accumulated Amortization
−Removed: Gross Carrying Amount
−Removed: Accumulated Amortization
+Added: Identifiable intangible assets, net consisted of the following:
+Added: (in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net
Amortizing intangible assets:
9 unchanged sentences
Amortization expense was $ 78 million, $ 91 million and $ 70 million for fiscal 2021, 2020 and 2019, respectively.
−Removed: The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of August 1, 2020 is shown below:
−Removed: (In thousands)
+Added: The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of July 31, 2021 is shown below:
+Added: (In millions)
+Added: Thereafter 483
NOTE 7—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Recurring Fair Value Measurements
−Removed: The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
−Removed: Fair Value at August 1, 2020
−Removed: (In thousands)
−Removed: Consolidated Balance Sheets Location
−Removed: Foreign currency derivatives not designated as hedging instruments
−Removed: Prepaid expenses and other current assets
+Added: The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
+Added: Fair Value at July 31, 2021
+Added: (In millions) Consolidated Balance Sheets Location
+Added: Level 1 Level 2 Level 3
Fuel derivatives designated as hedging instruments
Prepaid expenses and other current assets $ — $ 1 $ —
−Removed: Foreign currency derivatives designated as hedging instruments
−Removed: Prepaid expenses and other current assets
−Removed: Fuel derivatives designated as hedging instruments
−Removed: Fuel derivatives designated as hedging instruments
−Removed: Accrued expenses and other current liabilities
+Added: Other long-term assets $ 2 $ — $ —
Foreign currency derivatives designated as hedging instruments
5 unchanged sentences
Fair Value at August 1, 2020
−Removed: (In thousands)
−Removed: Consolidated Balance Sheets Location
−Removed: Interest rate swaps designated as hedging instruments
−Removed: Prepaid expenses and other current assets
−Removed: Prepaid expenses and other current assets
−Removed: Interest rate swaps designated as hedging instruments
+Added: (In millions) Consolidated Balance Sheets Location
+Added: Level 1 Level 2 Level 3
+Added: Other long-term assets $ 2 $ — $ —
Interest rate swaps designated as hedging instruments
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.
−Removed: As of August 1, 2020 , a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 60.4 million ;
+Added: As of July 31, 2021, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 31 million;
a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $ 32 million.
6 unchanged sentences
The fair values of fuel derivative agreements are measured using Level 2 inputs.
−Removed: As of August 1, 2020, the Company’s outstanding fuel supply agreements and derivative agreements had fair values with a net liability of $ 0.1 million .
−Removed: As of August 3, 2019, the Company had no outstanding fuel supply agreements and derivative agreements.
Foreign Exchange Derivatives
1 unchanged sentence
The fair values of foreign exchange derivatives are measured using Level 2 inputs.
−Removed: As of August 1, 2020, the Company’s outstanding foreign exchange derivatives had fair values with a net liability of $ 0.2 million .
−Removed: As of August 3, 2019, the Company’s outstanding foreign currency forward contracts were immaterial.
Fair Value Estimates
For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities.
−Removed: The fair value of notes receivable is estimated by using a discounted cash flow approach calculated by applying a market rate for similar instruments using Level 3 inputs.
+Added: The fair value of 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.
1 unchanged sentence
Refer to Note 1—Significant Accounting Policies for additional information regarding the fair value hierarchy.
−Removed: August 1, 2020
−Removed: August 3, 2019
−Removed: (in thousands)
−Removed: Carrying Value
−Removed: Carrying Value
+Added: July 31, 2021 August 1, 2020
+Added: (in millions) Carrying Value Fair Value Carrying Value Fair Value
Notes receivable, including current portion $ 29 $ 26 $ 78 $ 79
4 unchanged sentences
Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.
−Removed: The Company’s interest rate swap contracts are designated as cash flow hedges at August 1, 2020 .
+Added: The Company’s interest rate swap contracts are designated as cash flow hedges.
Interest rate swap contracts are reflected at their fair values in the Consolidated Balance Sheets.
Refer to Note 7—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.
−Removed: Details of outstanding swap contracts as of August 1, 2020 , which are all pay fixed and receive floating, are as follows:
−Removed: Effective Date
−Removed: Swap Maturity
−Removed: Outstanding Notional Value (in millions)
−Removed: Pay Fixed Rate
−Removed: Receive Floating Rate (7)
+Added: Details of active swap contracts as of July 31, 2021, which are all pay fixed and receive floating, are as follows:
+Added: Effective Date Swap Maturity Notional Value (in millions) Pay Fixed Rate Receive Floating Rate (2)
Floating Rate Reset Terms
−Removed: October 26, 2018
−Removed: October 31, 2020
−Removed: One-Month LIBOR
−Removed: April 29, 2021
−Removed: One-Month LIBOR
−Removed: June 24, 2016
−Removed: April 29, 2021
−Removed: One-Month LIBOR
−Removed: January 23, 2019
−Removed: April 29, 2021
−Removed: One-Month LIBOR
−Removed: April 2, 2019
−Removed: June 30, 2021
−Removed: One-Month LIBOR
−Removed: June 10, 2019
−Removed: June 30, 2021
−Removed: One-Month LIBOR
−Removed: November 30, 2018
−Removed: October 29, 2021
−Removed: One-Month LIBOR
−Removed: March 21, 2019
−Removed: April 15, 2022
−Removed: One-Month LIBOR
−Removed: April 2, 2019
−Removed: June 30, 2022
−Removed: One-Month LIBOR
−Removed: June 28, 2019
−Removed: June 30, 2022
−Removed: One-Month LIBOR
August 3, 2015 (1)
−Removed: August 15, 2022
−Removed: One-Month LIBOR
−Removed: August 3, 2015 (2)
−Removed: August 15, 2022
−Removed: One-Month LIBOR
−Removed: October 26, 2018
−Removed: October 31, 2022
−Removed: One-Month LIBOR
−Removed: January 11, 2019
−Removed: October 31, 2022
−Removed: One-Month LIBOR
−Removed: January 23, 2019
−Removed: October 31, 2022
−Removed: One-Month LIBOR
−Removed: October 30, 2020 (3)
−Removed: October 31, 2022
−Removed: One-Month LIBOR
−Removed: November 16, 2018
−Removed: March 31, 2023
−Removed: One-Month LIBOR
−Removed: January 23, 2019
−Removed: March 31, 2023
−Removed: One-Month LIBOR
−Removed: April 29, 2021 (4)
−Removed: April 28, 2023
−Removed: One-Month LIBOR
−Removed: June 30, 2021 (5)
−Removed: June 30, 2023
−Removed: One-Month LIBOR
−Removed: November 30, 2018
−Removed: September 30, 2023
−Removed: One-Month LIBOR
−Removed: October 29, 2021 (6)
−Removed: October 20, 2023
−Removed: One-Month LIBOR
−Removed: October 26, 2018
−Removed: October 31, 2023
−Removed: One-Month LIBOR
−Removed: January 11, 2019
−Removed: March 28, 2024
−Removed: One-Month LIBOR
−Removed: January 23, 2019
−Removed: March 28, 2024
−Removed: One-Month LIBOR
−Removed: November 30, 2018
−Removed: October 31, 2024
−Removed: One-Month LIBOR
−Removed: January 11, 2019
−Removed: October 31, 2024
−Removed: One-Month LIBOR
−Removed: January 24, 2019
−Removed: October 31, 2024
−Removed: One-Month LIBOR
−Removed: October 26, 2018
−Removed: October 22, 2025
−Removed: One-Month LIBOR
−Removed: November 16, 2018
−Removed: October 22, 2025
−Removed: One-Month LIBOR
−Removed: November 16, 2018
−Removed: October 22, 2025
−Removed: One-Month LIBOR
−Removed: January 24, 2019
−Removed: October 22, 2025
−Removed: One-Month LIBOR
−Removed: On March 31, 2015, the Company amended the original contract to reduce the beginning notional principal amount from $ 140 million to $ 84 million .
−Removed: The swap contract has an amortizing notional principal amount which is reduced by $ 1.5 million on a quarterly basis.
+Added: August 15, 2022 $ 33 1.7950 % One-Month LIBOR Monthly
+Added: October 26, 2018 October 31, 2022 100 2.8915 % One-Month LIBOR Monthly
+Added: January 11, 2019 October 31, 2022 50 2.4678 % One-Month LIBOR Monthly
+Added: January 23, 2019 October 31, 2022 50 2.5255 % One-Month LIBOR Monthly
+Added: November 16, 2018 March 31, 2023 150 2.8950 % One-Month LIBOR Monthly
+Added: January 23, 2019 March 31, 2023 50 2.5292 % One-Month LIBOR Monthly
+Added: November 30, 2018 September 30, 2023 50 2.8315 % One-Month LIBOR Monthly
+Added: October 26, 2018 October 31, 2023 100 2.9210 % One-Month LIBOR Monthly
+Added: January 11, 2019 March 28, 2024 100 2.4770 % One-Month LIBOR Monthly
+Added: January 23, 2019 March 28, 2024 100 2.5420 % One-Month LIBOR Monthly
+Added: November 30, 2018 October 31, 2024 100 2.8480 % One-Month LIBOR Monthly
+Added: January 11, 2019 October 31, 2024 100 2.5010 % One-Month LIBOR Monthly
+Added: January 24, 2019 October 31, 2024 50 2.5210 % One-Month LIBOR Monthly
+Added: October 26, 2018 October 22, 2025 50 2.9550 % One-Month LIBOR Monthly
+Added: November 16, 2018 October 22, 2025 50 2.9590 % One-Month LIBOR Monthly
+Added: November 16, 2018 October 22, 2025 50 2.9580 % One-Month LIBOR Monthly
+Added: January 24, 2019 October 22, 2025 50 2.5558 % One-Month LIBOR Monthly
(1) The swap contract has an amortizing notional principal amount which is reduced by $ 1 million on a quarterly basis.
−Removed: This forward starting swap contract has a notional principal amount of $ 100.0 million .
−Removed: This forward starting swap contract has a notional principal amount of $ 100.0 million .
−Removed: This forward starting swap contract has a notional principal amount of $ 150.0 million .
−Removed: This forward starting swap contract has a notional principal amount of $ 100.0 million .
(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.
+Added: In 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 million to terminate certain outstanding interest rate swaps with a notional amount of $ 250 million.
+Added: In addition, in fiscal 2021, in conjunction with the $ 500 million fixed rate senior unsecured notes offering described below in Note 9—Long-Term Debt, the Company paid $ 11 million to terminate or novate certain outstanding interest rate swaps with a notional amount of $ 504 million and certain forward starting interest rate swaps with a notional amount of $ 450 million.
+Added: The payments equaled the fair value of the interest rate swaps at the time of their termination or novation.
+Added: No gain or loss was recorded as a result of the swap termination and novations.
+Added: Since the hedged interest payments remain probable of occurring, the unrecognized gains and losses that existed as of the early termination or novation of these interest rate swap agreements will be amortized out of Accumulated other comprehensive loss and into Interest expense, net over the remaining period of the original terminated or novated interest rate swap agreements.
+Added: 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.
+Added: 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
Interest Expense, net
−Removed: (In thousands)
+Added: (In millions) 2021 2020 2019
Total amounts of expense line items presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
−Removed: (Loss) or gain on cash flow hedging relationships:
−Removed: (Loss) or gain reclassified from comprehensive income into income
−Removed: Gain or (loss) on interest rate swap contracts not designated as hedging instruments:
−Removed: Gain or (loss) recognized as interest expense
+Added: $ 204 $ 192 $ 181
+Added: Loss on cash flow hedging relationships:
+Added: Loss reclassified from comprehensive income into earnings $ ( 46 ) $ ( 25 ) $ —
+Added: (Loss) gain on interest rate swap contracts not designated as hedging instruments:
+Added: (Loss) gain recognized in earnings $ — $ — $ —
NOTE 9—LONG-TERM DEBT
The Company’s long-term debt consisted of the following:
−Removed: (in thousands)
−Removed: Average Interest Rate at
−Removed: August 1, 2020
−Removed: Fiscal Maturity Year
−Removed: August 1, 2020
−Removed: August 3, 2019
+Added: (in millions) Average Interest Rate at
+Added: July 31, 2021
+Added: Fiscal Maturity Year July 31, 2021 August 1, 2020
Term Loan Facility 3.59 % 2026 $ 1,002 $ 1,773
ABL Credit Facility 1.52 % 2024 701 757
+Added: Senior Notes 6.75 % 2029 500 —
Other secured loans 5.16 % 2024-2025 37 50
4 unchanged sentences
Long-term debt $ 2,175 $ 2,427
−Removed: Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on debt, as of August 1, 2020 , consist of the following:
−Removed: (In thousands)
+Added: Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on debt, and contractual interest payments based on the face value and applicable interest rate as of July 31, 2021, consist of the following (in millions):
+Added: Fiscal Year Long-term debt maturity Interest on long-term debt
+Added: 2022 $ 14 $ 82
+Added: 2026 1,002 42
2027 and thereafter 500 85
+Added: $ 2,240 $ 434
+Added: Refinancing Activities
+Added: On August 14, 2020, the Company executed a third amendment to its revolving credit agreement dated as of August 30, 2018, (as amended, the “ABL Loan Agreement”), which provides for, among other things, (i) adding certain assets to the Borrowing Base (as defined below), (ii) increasing the Company’s capacity to issue letters of credit under the facility, and (iii) other administrative changes.
+Added: On February 11, 2021, the Company entered into an amendment to its secured term loan agreement, dated as of October 22, 2018, as amended (the “Term Loan Agreement”).
+Added: 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.
+Added: The amendments did not change the aggregate amounts or maturity dates of either credit facility.
+Added: During fiscal 2021, the Company prepaid an aggregate of $ 771 million under the Term Loan Facility (defined below), including:
+Added: (i) a $ 500 million prepayment funded primarily by the net proceeds from the issuance of the Senior Notes (defined below);
+Added: (ii) voluntary prepayments of $ 186 million funded with incremental borrowings under the ABL Credit Facility (defined below) that reduces its interest costs;
+Added: (iii) a $ 72 million prepayment related to the material cash flow generation in fiscal 2020, as required under the Term Loan Agreement (as described below);
+Added: and (iv) $ 13 million of prepayments with asset sale proceeds.
+Added: In connection with the prepayments, the Company incurred losses on debt extinguishment related to unamortized debt issuance costs and unamortized original issue discount of $ 15 million and $ 15 million, respectively, which were recorded within Interest expense, net in the Consolidated Statements of Operations in fiscal 2021.
+Added: On October 22, 2020, the Company issued $ 500 million of unsecured 6.750 % senior notes due October 15, 2028 (the “Senior Notes”).
+Added: The Senior Notes are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility (defined below) or the Term Loan Facility (defined below).
+Added: 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 million of the amounts outstanding under the Term Loan Facility (defined below) and for the payment of all financing costs related to the offering of the Senior Notes.
+Added: Financing costs of $ 9 million were paid and capitalized in fiscal 2021.
ABL Credit Facility
−Removed: On August 30, 2018, the Company entered into a loan agreement (as amended by that certain First Amendment to Loan Agreement, dated as of October 19, 2018, as further amended by that certain Second Amendment to Loan Agreement, dated January 24, 2019, and as further amended by that certain Third Amendment to Loan Agreement, dated as of August 14, 2020, the “ABL Loan Agreement”), by and among the Company and United Natural Foods West, Inc.
+Added: The ABL Loan Agreement by and among the Company and United Natural Foods West, Inc.
(together with the Company, the “U.S.
2 unchanged sentences
Borrowers, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Bank of America, N.A.
−Removed: as administrative agent for the ABL Lenders (the “ABL Administrative Agent”), Bank of America, N.A.
−Removed: (acting through its Canada branch), as Canadian agent for the ABL Lenders, and the other parties thereto.
−Removed: 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 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.
−Removed: 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.
+Added: as administrative agent for the ABL Lenders, Bank of America, N.A.
+Added: (acting through its Canada branch), as Canadian agent for the ABL Lenders, and the other parties thereto, 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) $ 2.05 billion is available to the U.S.
Borrowers and (ii) $ 50 million is available to the Canadian Borrower.
−Removed: The ABL Loan Agreement also provides for (i) a $ 300.0 million sublimit of availability for letters of credit of which there is a further $ 25.0 million sublimit for the Canadian Borrower, and (ii) a $ 100.0 million sublimit for short-term borrowings on a swingline basis of which there is a further $ 3.5 million sublimit for the Canadian Borrower.
+Added: The ABL Loan Agreement also provides for (i) a $ 300 million sublimit of availability for letters of credit of which there is a further $ 25 million sublimit for the Canadian Borrower.
The ABL Credit Facility replaced the Company’s $ 900 million prior asset-based revolving credit facility.
−Removed: In addition, $ 1,475.0 million of proceeds from the ABL Credit Facility were drawn to finance the Supervalu acquisition and related transaction costs on the Supervalu acquisition date (the “Closing Date”).
+Added: In addition, $ 1.5 billion of proceeds from the ABL Credit Facility were drawn to finance the Supervalu acquisition and related transaction costs.
Under the ABL Loan Agreement, the Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $ 600 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding.
There is no assurance that additional funding would be available.
−Removed: The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s wholly-owned subsidiaries who are not also Borrowers (collectively, the “ABL Guarantors”), subject to customary exceptions and limitations.
−Removed: The Borrowers’ obligations under the ABL Credit Facility and the ABL Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Borrowers’ and ABL Guarantors’ accounts receivable, inventory and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and ABL Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.
−Removed: Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90 % of eligible accounts receivable, plus 90 % of eligible credit card receivables, plus 90 % of the net orderly liquidation value of eligible inventory, plus 90 % of eligible pharmacy receivables, plus certain pharmacy scripts availability of the Borrowers, after adjusting for customary reserves.
−Removed: The aggregate amount of the ABL Loans made and letters of credit issued under the ABL Credit Facility shall at no time exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $ 2,100.0 million or, if increased at the Borrowers’ option as described above, up to $ 2,700.0 million ) or the Borrowing Base.
−Removed: To the extent that the Borrowers’ Borrowing Base declines, the availability under the ABL Credit Facility may decrease below $ 2,100.0 million .
−Removed: As of August 1, 2020 , the U.S.
−Removed: Borrowers’ Borrowing Base, net of $ 254.7 million of reserves, was $ 2,047.8 million , which is below the $ 2,050.0 million limit of availability to the U.S.
+Added: The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s wholly-owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations.
+Added: The Borrowers’ obligations under the ABL Credit Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Borrowers’ and Guarantors’ accounts receivable, inventory and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.
+Added: Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90 % of eligible accounts receivable, plus 90 % of eligible credit card receivables, plus 90 % of the net orderly liquidation value of eligible inventory, plus 90 % of eligible pharmacy receivables, plus certain pharmacy prescription files availability of the Borrowers, after adjusting for customary reserves, but at no time shall exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $ 2,100 million) or the Borrowing Base.
+Added: The assets included in the Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:
+Added: Assets securing the ABL Credit Facility (in millions) (1) :
+Added: July 31, 2021 August 1, 2020
+Added: Certain inventory assets included in Inventories, net and Current assets of discontinued operations $ 2,297 $ 2,271
+Added: Certain receivables included in Accounts receivable, net and Current assets of discontinued operations $ 1,041 $ 1,078
+Added: (1) The ABL Credit Facility is also secured by all of the Company’s pharmacy prescription files, which are included in Intangibles, net in the Consolidated Balance Sheets.
+Added: Refer to Note 6—Goodwill and Intangible Assets, Net in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
+Added: As of July 31, 2021, the U.S.
+Added: Borrowers’ Borrowing Base, net of $ 175 million of reserves, was $ 2,218 million, which is above the $ 2.05 billion limit of availability to the U.S.
Borrowers under the ABL Credit Facility.
−Removed: As of August 1, 2020 , the Canadian Borrower’s Borrowing Base, net of $ 3.9 million of reserves, was $ 39.6 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 $ 2,087.4 million for ABL Loans and letters of credit under the ABL Credit Facility.
−Removed: As of August 1, 2020 , the U.S.
−Removed: Borrowers had $ 756.7 million of ABL Loans outstanding, which are presented net of debt issuance costs of $ 9.9 million and are included in Long-term debt in the Consolidated Balance Sheets, and the Canadian Borrower had no ABL Loans outstanding under the ABL Credit Facility.
−Removed: As of August 1, 2020 , the U.S.
+Added: As of July 31, 2021, the Canadian Borrower’s Borrowing Base, net of $ 5 million of reserves, was $ 49 million, which is below the $ 50 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $ 2,099 million for ABL Loans and letters of credit under the ABL Credit Facility.
+Added: As of July 31, 2021, the U.S.
+Added: Borrowers had $ 701 million of ABL Loans and the Canadian Borrower had no ABL Loans outstanding under the ABL Credit Facility, which are presented net of debt issuance costs of $ 8 million and are included in Long-term debt on the Consolidated Balance Sheets.
+Added: As of July 31, 2021, the U.S.
Borrowers had $ 118 million in letters of credit and the Canadian Borrower had no letters of credit outstanding under the ABL Credit Facility.
−Removed: The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,234.8 million as of August 1, 2020 .
−Removed: The ABL Loans of the U.S.
−Removed: Borrowers under the ABL Credit Facility bear interest at rates that, at the U.S.
−Removed: Borrowers’ option, can be either:
−Removed: (i) a base rate and an applicable margin, or (ii) a LIBOR rate and an applicable margin.
−Removed: As of August 1, 2020 , the applicable margin for base rate loans was 0.25 % , and the applicable margin for LIBOR loans was 1.25 % .
+Added: The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,280 million as of July 31, 2021.
+Added: ABL availability (in millions):
+Added: July 31, 2021
+Added: Total availability for ABL Loans and letters of credit $ 2,099
+Added: ABL Loans $ 701
+Added: Letters of credit $ 118
+Added: Unused credit $ 1,280
+Added: The applicable interest rates, letter of credit fees and unutilized commitment fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Agreement), and were as follows:
+Added: Interest rates and fees under the ABL Credit Facility:
+Added: Range of Facility Rates and Fees (per annum) July 31, 2021
+Added: and Canadian Borrowers’ applicable margin for base rate loans 0.00 % - 0.50 %
+Added: and Canadian Borrowers’ applicable margin for LIBOR and BA loans (1)
+Added: 1.00 % - 1.50 %
+Added: Unutilized commitment fees 0.25 % - 0.375 %
+Added: Letter of credit fees 1.125 % - 1.625 %
+Added: Borrowers utilize LIBOR-based loans and the Canadian Borrower utilizes bankers’ acceptance rate-based loans.
The ABL Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available.
−Removed: The ABL Loans of the Canadian Borrower under the ABL Credit Facility bear interest at rates that, at the Canadian Borrower’s option, can be either:
−Removed: (i) prime rate and an applicable margin, or (ii) a Canadian dollar bankers’ acceptance equivalent rate and an applicable margin.
−Removed: As of August 1, 2020 , the applicable margin for prime rate loans was 0.25 % , and the applicable margin for Canadian dollar bankers’ acceptance equivalent rate loans was 1.25 % .
−Removed: Commencing on the first day of the calendar month following the ABL Administrative Agent’s receipt of the Company’s aggregate availability calculation for the prior fiscal quarter, the applicable margins for borrowings by the U.S.
−Removed: Borrowers and Canadian Borrower will be subject to adjustment based upon the aggregate availability under the ABL Credit Facility.
−Removed: Unutilized commitments under the ABL Credit Facility are subject to a per annum fee of (i) 0.375 % if the average daily total outstandings were less than 25 % of the aggregate commitments during the preceding fiscal quarter, or (ii) 0.25 % if such average daily total outstandings were 25 % or more of the aggregate commitments during the preceding fiscal quarter.
−Removed: As of August 1, 2020 , the unutilized commitment fee was 0.25 % per annum.
−Removed: 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.
The ABL Loan Agreement subjects the Company to a fixed charge coverage ratio (as defined in the ABL Loan Agreement) of at least 1.0 to 1.0 calculated at the end of each fiscal quarter on a rolling four quarter basis when the adjusted aggregate availability (as defined in the ABL Loan Agreement) is less than the greater of (i) $ 235 million and (ii) 10 % of the aggregate borrowing base.
The Company has not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Annual Report.
−Removed: The assets included in the Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:
−Removed: Assets securing the ABL Credit Facility (in thousands) (1) :
−Removed: August 1, 2020
−Removed: Certain inventory assets included in Inventories and Current assets of discontinued operations
−Removed: Certain receivables included in Accounts receivable, net and Current assets of discontinued operations
−Removed: The ABL Credit Facility is also secured by all of the Company’s pharmacy scripts, which are included in Intangible assets, net in the Consolidated Balance Sheets as of August 1, 2020 .
−Removed: Unused available credit and fees under the ABL Credit Facility (in thousands, except percentages):
−Removed: August 1, 2020
−Removed: Outstanding letters of credit
−Removed: Letter of credit fees
−Removed: Unused available credit
−Removed: Unused facility fees
−Removed: 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.
−Removed: The ABL Loan Agreement also contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the ABL Credit Facility to be in full force and effect, and a change of control.
−Removed: If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the ABL Loan Agreement.
Term Loan Facility
−Removed: On the Closing Date, the Company entered into a new term loan agreement (the “Term Loan Agreement”), by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ Term Lenders”), Goldman Sachs Bank USA, as administrative agent for the Lenders, and the other parties thereto.
−Removed: The Term Loan Agreement provides for senior secured first lien term loans in an aggregate principal amount of $ 1,950.0 million , consisting of a $ 1,800.0 million seven -year tranche (the “Term B Tranche”) and a $ 150.0 million 364 -day tranche (the “ 364 -day Tranche” and, together with the Term B Tranche, collectively, the “Term Loan Facility”).
−Removed: The entire amount of the net proceeds from the Term Loan Facility was used to finance the Supervalu acquisition and related transaction costs.
−Removed: The loans under the Term B Tranche will be payable in full on October 22, 2025;
−Removed: provided that if on or prior to December 31, 2024 that certain Agreement for Distribution of Products, dated as of October 30, 2015, by and between Whole Foods Market Distribution, Inc., a Delaware corporation, and the Company has not been extended until at least October 23, 2025 on terms not materially less favorable, taken as a whole, to the Company and its subsidiaries than those in effect on the Closing Date, then the loans under the Term B Tranche will be payable in full on December 31, 2024.
−Removed: In fiscal 2020, the Company made mandatory prepayments and voluntary prepayments of $ 15.3 million and $ 5.8 million , respectively, on the 364 -day Tranche with asset sale proceeds.
−Removed: In connection with the prepayments, the Company incurred a loss on debt extinguishment related to unamortized debt issuance costs of $ 0.1 million , which was recorded within Interest expense, net in the Consolidated Statements of Operations for the first quarter of fiscal 2020.
−Removed: The loans under the 364 -day Tranche were then paid in full on October 21, 2019.
−Removed: The Company funded the scheduled maturity of the $ 52.8 million outstanding borrowings under the 364-day Tranche with incremental borrowings under the ABL Credit Facility on October 21, 2019.
−Removed: Under the Term Loan Agreement, the Term Borrowers may, at their option, increase the amount of the Term B Tranche, add one or more additional tranches of term loans or add one or more additional tranches of revolving credit commitments, without the consent of any Term Lenders not participating in such additional borrowings, up to an aggregate amount of $ 656.3 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding.
+Added: The Term Loan Agreement, by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ Term Lenders”), Credit Suisse, as administrative agent for the Lenders, and the other parties thereto, provides for senior secured first lien term loans in an aggregate principal amount of $ 1,950 million, primarily consisting of a $ 1,800 million seven -year tranche (the “Term Loan Facility”).
+Added: The entire amount of the net proceeds from the Term Loan Facility, which included a $ 150 million 364 -day tranche that was repaid in fiscal 2020, was used to finance the Supervalu acquisition and related transaction costs.
+Added: The loans under the Term Loan Facility will be payable in full on October 22, 2025, as the extension requirement related to the Company’s distribution agreement with Whole Foods Market Distribution, Inc.
+Added: was satisfied during fiscal 2021.
+Added: Under the Term Loan Agreement, the Company may, at its option, increase the amount of the Term Loan Facility, add one or more additional tranches of term loans or add one or more additional tranches of revolving credit commitments, without the consent of any Term Lenders not participating in such additional borrowings, up to an aggregate amount of $ 656 million plus
+Added: additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding.
There can be no assurance that additional funding would be available.
−Removed: The Term Borrowers’ obligations under the Term Loan Facility are guaranteed by most of the Company’s wholly-owned domestic subsidiaries who are not also Term Borrowers (collectively, the “Term Guarantors”), subject to customary exceptions and limitations, including an exception for immaterial subsidiaries designated by the Company from time to time.
−Removed: The Term Borrowers’ obligations under the Term Loan Facility and the Term Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Term Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Term Guarantors’ ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property with net book values of less than $ 10.0 million .
−Removed: As of August 1, 2020 , there was $ 599.9 million of owned real property pledged as collateral that was included in Property and equipment, net in the Consolidated Balance Sheets.
+Added: The obligations under the Term Loan Facility are guaranteed by the Guarantors, subject to customary exceptions and limitations.
+Added: The Term Borrowers’ obligations under the Term Loan Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the 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 million.
+Added: As of July 31, 2021 and August 1, 2020, there was $ 676 million and $ 600 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Consolidated Balance Sheets.
The loans under the Term Loan Facility may be voluntarily prepaid, subject to certain minimum payment thresholds and the payment of breakage or other similar costs.
Under the Term Loan Facility, the Company is required, subject to certain exceptions and customary reinvestment rights, to apply 100 percent of Net Cash Proceeds (as defined in the Term Loan Agreement) from certain types of asset sales to prepay the loans outstanding under the Term Loan Facility.
−Removed: Commencing with the fiscal year ending August 1, 2020, the Company must also prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio (as defined in the Term Loan Agreement) as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement) in excess of $ 10 million for the fiscal year then ended, minus any voluntary prepayments of the loans under the Term Loan Facility, the ABL Credit Facility (to the extent they permanently reduce commitments under the ABL Facility) and certain other indebtedness made during such fiscal year.
−Removed: The amount of prepayment from Excess Cash Flow generated in fiscal 2020 that is required in fiscal 2021 is $ 72.0 million .
−Removed: 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:
−Removed: (i) a base rate and a margin of 3.25 % or (ii) a LIBOR rate and a margin of 4.25 % ;
+Added: Commencing with the fiscal year ending August 1, 2020, the Company must also prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio of Excess Cash Flow (as defined in the Term Loan Agreement as of the last day of such fiscal year), minus any voluntary prepayments made during such fiscal year of the loans under the Term Loan Facility, the ABL Credit Facility (to the extent they permanently reduce commitments under the ABL Facility) and certain other indebtedness.
+Added: Based on the Company’s Excess Cash Flow in fiscal 2020, a $ 72 million prepayment was required and paid in fiscal 2021 (as described above).
+Added: Based on the Company’s Consolidated First Lien Net Leverage Ratio at the end of fiscal 2021, no prepayment from Excess Cash Flow in fiscal 2021 is required to be made in fiscal 2022.
+Added: As of July 31, 2021, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:
+Added: (i) a base rate plus a margin of 2.50 % or (ii) a LIBOR rate plus a margin of 3.50 %;
provided that the LIBOR rate shall never be less than 0.0 %.
The Term Loan Agreement contains provisions for the establishment of an alternative rate of interest in the event that LIBOR is no longer available.
−Removed: The Term Loan Agreement does not include any financial maintenance covenants but contains other customary affirmative and negative covenants and customary representations and warranties.
−Removed: The Term Loan Agreement also contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the Term Loan Facility to be in full force and effect, and a change of control.
−Removed: If an event of default occurs and is continuing, the Term Borrowers may be required immediately to repay all amounts outstanding under the Term Loan Agreement.
−Removed: As of August 1, 2020 , the Company had borrowings of $ 1,773.0 million and no amounts outstanding under the Term B Tranche and 364-day Tranche, respectively, which are presented net of debt issuance costs of $ 36.0 million and an original issue discount on debt of $ 35.2 million .
−Removed: As of August 1, 2020 , $ 72.0 million of the Term B Tranche was classified as current, excluding debt issuance costs and original issue discount on debt.
−Removed: NOTE 11—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
−Removed: Changes in Accumulated other comprehensive (loss) income by component net of tax for fiscal 2020 , fiscal 2019 and fiscal 2018 are as follows:
−Removed: (in thousands)
−Removed: Other Cash Flow Derivatives
−Removed: Benefit Plans
−Removed: Foreign Currency
−Removed: Swap Agreements
−Removed: Accumulated other comprehensive (loss) income at July 29, 2017
−Removed: Other comprehensive (loss) income before reclassifications
−Removed: Amortization of cash flow hedge
−Removed: Net current period Other comprehensive (loss) income
+Added: As of July 31, 2021, the Company had borrowings of $ 1,002 million outstanding under the Term Loan Facility, which are presented net of debt issuance costs of $ 18 million and an original issue discount on debt of $ 17 million.
+Added: As of July 31, 2021, no amount of the Term Loan Facility was classified as current.
+Added: The Company’s Senior Notes, ABL Credit Facility and Term Loan Facility contain covenants customary for debt securities and credit facilities of these types, 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.
+Added: These debt securities and credit facilities also contain other customary affirmative and negative covenants, representations and warranties, and events of default.
+Added: If an event of default occurs and is continuing, the Company may be required to immediately repay all amounts outstanding under these debt arrangements.
+Added: The Company was in compliance with all such covenants for all periods presented, including through the filing date of this Annual Report.
+Added: NOTE 10—COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE LOSS
+Added: Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2021, fiscal 2020 and fiscal 2019 are as follows:
+Added: (in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Swap Agreements Total
Accumulated other comprehensive (loss) income at July 28, 2018 $ — $ — $ ( 19 ) $ 5 $ ( 14 )
6 unchanged sentences
Amortization of cash flow hedges — — — 18 18
−Removed: Pension settlement charge
+Added: Settlement charge — 9 — — 9
Net current period Other comprehensive loss — ( 83 ) ( 1 ) ( 46 ) ( 130 )
Accumulated other comprehensive loss at August 1, 2020 $ — $ ( 116 ) $ ( 21 ) $ ( 102 ) $ ( 239 )
+Added: Other comprehensive income before reclassifications 1 167 5 8 181
+Added: Amortization of amounts included in net periodic benefit income — ( 2 ) — — ( 2 )
+Added: Amortization of cash flow hedges ( 1 ) — — 34 33
+Added: Settlement gain — ( 12 ) — — ( 12 )
+Added: Net current period Other comprehensive income — 153 5 42 200
+Added: Accumulated other comprehensive income (loss) at July 31, 2021 $ — $ 37 $ ( 16 ) $ ( 60 ) $ ( 39 )
Items reclassified out of Accumulated other comprehensive loss had the following impact on the Consolidated Statements of Operations:
−Removed: (in thousands)
−Removed: Affected Line Item on the Consolidated Statements of Operations
+Added: (in millions) 2021 2020 2019 Affected Line Item on the Consolidated Statements of Operations
Pension and postretirement benefit plan obligations:
1 unchanged sentence
$ ( 1 ) $ ( 3 ) $ — Net periodic benefit income, excluding service cost
−Removed: Pension settlement charges
−Removed: Net periodic benefit income, excluding service cost
+Added: Settlement (gain) charge ( 17 ) 11 — Net periodic benefit income, excluding service cost
Total reclassifications ( 18 ) 8 —
−Removed: Income tax benefit
−Removed: (Benefit) provision for income taxes
+Added: Income tax expense (benefit) 4 ( 2 ) — Provision (benefit) for income taxes
Total reclassifications, net of tax $ ( 14 ) $ 6 $ —
Swap agreements:
−Removed: Reclassification of cash flow hedge
−Removed: Interest expense, net
−Removed: Income tax benefit (expense)
−Removed: (Benefit) provision for income taxes
+Added: Reclassification of cash flow hedge $ 46 $ 25 $ — Interest expense, net
+Added: Income tax benefit ( 12 ) ( 7 ) — Provision (benefit) for income taxes
Total reclassifications, net of tax $ 34 $ 18 $ —
Other cash flow hedges:
−Removed: Reclassification of cash flow hedge
−Removed: Cost of sales
−Removed: Income tax benefit
−Removed: (Benefit) provision for income taxes
+Added: Reclassification of cash flow hedge $ ( 1 ) $ — $ — Cost of sales
+Added: Income tax expense — — — Provision (benefit) for income taxes
Total reclassifications, net of tax $ ( 1 ) $ — $ —
−Removed: Amortization of amounts included in net periodic benefit income include amortization of prior service benefit and amortization of net actuarial loss as reflected in Note 14—Benefit Plans .
−Removed: As of August 1, 2020 , the Company expects to reclassify $ 46.4 million out of Accumulated other comprehensive loss into Interest expense, net during the following twelve-month period.
+Added: (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 13—Benefit Plans.
+Added: As of July 31, 2021, the Company expects to reclassify $ 40 million related to unrealized derivative losses out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.
NOTE 11—LEASES
2 unchanged sentences
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
−Removed: Lease assets and liabilities are as follows (in thousands):
−Removed: Consolidated Balance Sheets Location
−Removed: August 1, 2020
−Removed: Operating lease assets
−Removed: Operating lease assets
−Removed: Finance lease assets
−Removed: Property and equipment, net
+Added: Lease assets and liabilities, net, are as follows (in millions):
+Added: Lease Type Consolidated Balance Sheets Location
+Added: July 31, 2021 August 1, 2020
+Added: Operating lease assets Operating lease assets $ 1,064 $ 983
+Added: Finance lease assets Property and equipment, net 112 129
Total lease assets $ 1,176 $ 1,112
−Removed: Operating liabilities
−Removed: Current portion of operating lease liabilities
−Removed: Finance liabilities
−Removed: Current portion of long-term debt and finance lease liabilities
−Removed: Operating liabilities
−Removed: Long-term operating lease liabilities
−Removed: Finance liabilities
−Removed: Long-term finance lease liabilities
+Added: Operating liabilities Current portion of operating lease liabilities $ 135 $ 131
+Added: Finance liabilities Current portion of long-term debt and finance lease liabilities 107 12
+Added: Operating liabilities Long-term operating lease liabilities 962 874
+Added: Finance liabilities Long-term finance lease liabilities 35 143
Total lease liabilities $ 1,239 $ 1,160
Lease assets and liabilities presented in the table above include lease contracts related to our discontinued operations, as the Company expects to remain primarily obligated under these leases.
−Removed: The Company’s lease cost under ASC 842 is as follows:
−Removed: (in thousands)
−Removed: Consolidated Statements of Operations Location
−Removed: August 1, 2020
−Removed: Operating lease cost
−Removed: Operating expenses
−Removed: Short-term lease cost
−Removed: Operating expenses
−Removed: Variable lease cost
−Removed: Operating expenses
−Removed: Sublease income
−Removed: Operating expenses
−Removed: Sublease income
−Removed: Other sublease income, net
−Removed: Restructuring, acquisition and integration related expenses (2)
+Added: The Company’s lease cost under ASC 842 is as follows (in millions):
+Added: Lease Expense Type Consolidated Statements of Operations Location
+Added: Operating lease cost Operating expenses $ 229 $ 223
+Added: Short-term lease cost Operating expenses 29 31
+Added: Variable lease cost Operating expenses 64 151
+Added: Sublease income Operating expenses ( 8 ) ( 3 )
+Added: Sublease income Net sales ( 20 ) ( 23 )
+Added: Other sublease income, net Restructuring, acquisition and integration related expenses (2)
Net operating lease cost (1)
−Removed: Amortization of leased assets
−Removed: Operating expenses
−Removed: Interest on lease liabilities
−Removed: Interest expense, net
+Added: Amortization of leased assets Operating expenses 13 16
+Added: Interest on lease liabilities Interest expense, net 19 12
Finance lease cost 32 28
Total net lease cost $ 323 $ 402
−Removed: Rent expense as presented here includes $ 6.8 million in fiscal 2020 of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as the Company expects to remain primarily obligated under these leases.
+Added: (1) Rent expense as presented here includes $ 2 million and $ 6 million in fiscal 2021 and 2020 of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as the Company expects to remain primarily obligated under these leases.
Rent expense as presented here also includes immaterial amounts of variable lease expense of discontinued operations.
−Removed: Includes $ 35.5 million of lease expense and $( 40.6 ) million of lease income that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations .
+Added: (2) Includes $ 31 million and $ 36 million of lease expense in fiscal 2021 and 2020 and $( 33 ) million and $( 41 ) million of lease income in fiscal 2021 and 2020 that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations.
+Added: The Company leases certain of its distribution centers and leases most of its retail stores, and leases certain office facilities and equipment from third parties.
+Added: Many of these leases include renewal options and, in certain instances, also include options to purchase.
+Added: Rent expense, other operating lease expense and subtenant rentals all under operating leases included within Operating expenses, and subtenant rentals under operating leases with customers included within Net sales, consisted of the following.
+Added: Rent expense as presented below under ASC 840 excludes variable lease rent that is included in total net lease cost under ASC 842 in the table above.
+Added: (in millions) 2019
+Added: Rent expense (1)
+Added: Less subtenant rentals recorded in Net sales ( 17 )
+Added: Less subtenant rentals recorded in Operating expenses ( 14 )
+Added: Total net rent expense $ 181
+Added: (1) Rent expense as presented in fiscal 2019 includes $ 10 million of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as we expect to remain primarily obligated under these leases.
On October 23, 2018, the Company received $ 101 million in aggregate proceeds, excluding taxes and closing costs, for the sale and leaseback of its final distribution center of eight distribution center sale-leaseback transactions entered into by Supervalu in April 2018.
4 unchanged sentences
The Company had identified two buildings on the same distribution center campus:
−Removed: one in which it was deemed the accounting owner of related to construction activity and another for which it was a lessee.
+Added: one in which it was deemed the accounting owner due to construction activity and another for which it was a lessee.
Upon the adoption of ASC 842, the Company continued to account for the building as if it was the accounting owner of due to ongoing construction activity.
−Removed: On February 24, 2020, the Company executed a purchase option to acquire the entire distribution center campus.
+Added: On February 24, 2020, the Company executed a purchase option to acquire the entire distribution center campus which is expected to close in fiscal 2022.
Upon execution of the purchase option, the previously constructed facility accounted for as an operating lease has been re-classified as a finance lease.
Upon completion of the construction in fiscal 2020, the Company did not qualify for sale accounting on the other building due to the outstanding purchase option.
−Removed: The Company leases certain of its distribution centers and leases most of its retail stores, and leases certain office facilities and equipment from third parties.
−Removed: Many of these leases include renewal options and, in certain instances, also include options to purchase.
−Removed: Rent expense, other operating lease expense and subtenant rentals all under operating leases included within Operating expenses, and subtenant rentals under operating leases with customers included within Net sales, consisted of the following.
−Removed: Rent expense as presented below under ASC 840 excludes variable lease rent that is included in total net lease cost under ASC 842 in the table above.
−Removed: (in thousands)
−Removed: Rent expense (1)
−Removed: Less subtenant rentals recorded in Net sales
−Removed: Less subtenant rentals recorded in Operating expenses
−Removed: Total net rent expense
−Removed: Rent expense as presented here includes $ 9.5 million and $ 0.0 million in fiscal 2019 and 2018, respectively, of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as we expect to remain primarily obligated under these leases.
The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases, including assigned leases for which the Company has future minimum lease payment obligations.
1 unchanged sentence
Future minimum lease and subtenant rentals (“Lease Receipts”) include expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to third parties, which they operate.
−Removed: As of August 1, 2020 , these Lease Liabilities and Lease Receipts consisted of the following (in thousands):
−Removed: Lease Liabilities
−Removed: Lease Receipts
−Removed: Net Lease Obligations
−Removed: Operating Leases (1)
−Removed: Finance Leases (2)
−Removed: Operating Leases
−Removed: Finance Leases
−Removed: Operating Leases
+Added: As of July 31, 2021, these Lease Liabilities and Lease Receipts consisted of the following (in millions):
+Added: Lease Liabilities Lease Receipts Net Lease Obligations
+Added: Fiscal Year Operating Leases (1)
Finance Leases (2)
+Added: Operating Leases Finance Leases Operating Leases Finance Leases
+Added: 2022 $ 221 $ 118 $ ( 53 ) $ — $ 168 $ 118
+Added: 2023 214 14 ( 44 ) — 170 14
+Added: 2024 195 13 ( 35 ) — 160 13
+Added: 2025 154 8 ( 24 ) — 130 8
+Added: 2026 118 4 ( 14 ) — 104 4
+Added: Thereafter 962 2 ( 34 ) — 928 2
Total undiscounted lease liabilities and receipts $ 1,864 $ 159 $ ( 204 ) $ — $ 1,660 $ 159
Less interest (3)
+Added: ( 767 ) ( 17 )
Present value of lease liabilities 1,097 142
2 unchanged sentences
(1) Operating lease payments include $ 4 million related to extension options that are reasonably certain of being exercised and exclude $ 52 million of legally binding minimum lease payments for leases signed but not yet commenced.
−Removed: Finance lease payments include $ 0.0 million related to extension options that are reasonably certain of being exercised and exclude $ 0.4 million of legally binding minimum lease payments for leases signed but not yet commenced.
(2) This table excludes a $ 55 million payment related to a facility the Company is deemed the accounting owner, which is recognized as a residual obligation, and is subject to an underlying lease.
(3) Calculated using the interest rate for each lease.
−Removed: As of August 3, 2019 , future minimum lease payments to be made by the Company or certain third parties in the case of assigned leases for noncancellable operating leases and finance leases, which have not been reduced for future minimum subtenant rentals under certain operating subleases, including assignments, consisted of the following amounts (in thousands):
−Removed: Lease Obligations
−Removed: Lease Receipts
−Removed: Net Lease Obligations
−Removed: Operating Leases
−Removed: Capital Leases
−Removed: Operating Leases
−Removed: Capital Leases
−Removed: Operating Leases
−Removed: Capital Leases
−Removed: Total future minimum obligations (receipts)
−Removed: Less interest
−Removed: Present value of capital lease obligations
−Removed: Less current capital lease obligations
−Removed: Long-term capital lease obligations
The following tables provide other information required by ASC 842:
−Removed: Lease Term and Discount Rate
−Removed: August 1, 2020
+Added: Lease Term and Discount Rate July 31, 2021 August 1, 2020
Weighted-average remaining lease term (years)
−Removed: Operating leases
−Removed: Finance leases
+Added: Operating leases 10.7 years 10.4 years
+Added: Finance leases 2.0 years 3.1 years
Weighted-average discount rate
2 unchanged sentences
Other Information
−Removed: (in thousands)
+Added: (in millions) 2021 2020
Cash paid for amounts included in the measurement of lease liabilities
5 unchanged sentences
NOTE 12—SHARE-BASED AWARDS
−Removed: As of August 1, 2020 , the Company has restricted stock awards and performance share units and stock options under four equity incentive plans:
+Added: As of July 31, 2021, the Company has restricted stock awards and performance share units and stock options under four equity incentive plans:
the 2002 Stock Incentive Plan;
1 unchanged sentence
the 2012 Equity Incentive Plan, as amended and restated;
−Removed: and the 2020 Equity Incentive Plan.
−Removed: The terms of each stock-based award will be determined by the Board of Directors or the Compensation Committee.
−Removed: As of August 1, 2020 , the Company has 2,865,125 shares authorized and available for grant under the 2020 Equity Incentive Plan and the 2012 Equity Incentive Plan.
−Removed: The authorization for new grants under the 2002 Plan and 2004 Plan has expired.
+Added: and the Amended and Restated 2020 Equity Incentive Plan.
+Added: The terms of each stock-based award will be determined by the Board of Directors or the Compensation Committee thereof.
+Added: During 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.
+Added: As of July 31, 2021, the Company has 3.9 million shares authorized and available for grant under the Amended and Restated 2020 Equity Incentive Plan.
+Added: The authorization for new grants under the 2002 Plan, 2004 Plan and 2012 Equity Incentive Plan has expired.
Share-Based Compensation Expense
The following table presents information regarding share-based compensation expenses and the related tax impacts:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019
Restricted stock awards $ 36 $ 23 $ 23
1 unchanged sentence
Performance-based share awards 8 2 3
−Removed: Stock option awards
Share-based compensation expense recorded in Operating expenses 49 34 40
4 unchanged sentences
Share-based compensation expense recorded in Restructuring, acquisition and integration related expenses, net of tax $ 1 $ 1 $ 24
−Removed: Amounts are derived entirely from liability classified awards.
−Removed: Includes liability classified awards of $ 1.0 million and equity classified awards of $ 0.0 million for fiscal 2020, and liability classified awards $ 31.7 million and equity classified awards of $ 1.4 million for fiscal 2019.
−Removed: Amounts recorded in fiscal 2018 are derived entirely from equity classified awards.
+Added: (1) Amounts are derived primarily from liability classified awards.
+Added: (2) Includes equity classified awards of $ 1 million for fiscal 2021, liability classified awards of $ 1 million for fiscal 2020, and liability classified awards of $ 32 million and equity classified awards of $ 1 million for fiscal 2019.
Vesting requirements for awards are generally at the discretion of the Company’s Board of Directors, or the Compensation Committee thereof.
Time-based vesting awards for employees typically vest in three or four equal installments.
−Removed: The Board has adopted a policy in connection with the 2020 Equity Incentive Plan that sets forward grant, vesting and settlement dates for equity awards, a one-year vesting period for awards issued to non-employee directors has been established, and a three-year equal installment vesting period for designated employee restricted stock awards.
−Removed: Performance awards are now set at a three-year cliff vest, subject to achievement of the performance objective.
−Removed: As of August 1, 2020 , there was $ 47.2 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including stock options, restricted stock units, Supervalu replacement awards and performance-based restricted stock units) of which $ 6.3 million relates to Supervalu Replacement Awards.
+Added: The Board of Directors has adopted a policy in connection with the 2020 Equity Incentive Plan that sets forth grant, vesting and settlement dates for equity awards, a one-year vesting period for awards issued to non-employee directors, and a three-year equal installment vesting period for designated employee restricted stock awards.
+Added: Performance awards have a three-year cliff vest, subject to achievement of the performance objective.
+Added: As of July 31, 2021, there was $ 41 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including stock options, restricted stock units, Supervalu replacement awards and performance-based restricted stock units).
Unrecognized compensation cost related to Replacement Options is de minimis.
2 unchanged sentences
The fair value of restricted stock units and performance share units are determined based on the number of units granted and the quoted price of the Company’s common stock as of the grant date.
−Removed: The following summary presents information regarding restricted stock units, Supervalu replacement awards and performance units:
−Removed: Weighted Average
−Removed: Outstanding at July 29, 2017
+Added: The following summary presents information regarding restricted stock units, Supervalu replacement awards and performance stock units:
+Added: (in millions) Weighted Average
Outstanding at July 28, 2018 1.3 $ 41.78
Supervalu replacement awards 4.3 32.50
+Added: Granted 1.7 23.30
+Added: Vested ( 2.0 ) 34.81
+Added: Forfeited/Canceled ( 0.9 ) 30.83
Outstanding at August 3, 2019 4.4 31.11
+Added: Granted 6.0 7.67
+Added: Vested ( 1.0 ) 20.59
+Added: Forfeited/Canceled ( 2.0 ) 12.39
Outstanding at August 1, 2020 7.4 18.54
−Removed: (in thousands)
+Added: Granted 2.4 17.55
+Added: Vested ( 2.6 ) 19.94
+Added: Forfeited/Canceled ( 0.4 ) 24.11
+Added: Outstanding at July 31, 2021 6.8 $ 17.33
+Added: (in millions) 2021 2020 2019
Intrinsic value of restricted stock units vested $ 51 $ 21 $ 36
Performance-Based Share Awards
−Removed: During fiscal 2020 , the Company granted 977,860 performance share units to its executives (subject to the issuance of up to 977,860 additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 8.07 .
+Added: During fiscal 2021, the Company granted 0.5 million performance share units to its executives (subject to the issuance of up to 0.3 million additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 18.19 .
These performance units are tied to fiscal 2021, 2022 and 2023 performance metrics, including adjusted EPS growth, adjusted return on invested capital (“ROIC”) and adjusted EBITDA leverage.
−Removed: There were no performance share units forfeited during fiscal 2020 , and as of August 1, 2020 , there are 977,860 performance share units outstanding.
−Removed: During fiscal 2019 , the Company granted 339,282 performance share units to its executives (subject to the issuance of up to 339,282 additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 22.56 .
+Added: No performance share units granted in fiscal 2021 were forfeited during the current year.
+Added: During fiscal 2020, the Company granted 1.0 million performance share units to its executives (subject to the issuance of up to 1.0 million additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 8.07 .
+Added: These performance units are tied to fiscal 2020, 2021 and 2022 performance metrics, including adjusted EPS growth, ROIC and adjusted EBITDA leverage.
+Added: No performance share units granted in fiscal 2020 were forfeited during the current year.
+Added: During fiscal 2019, the Company granted 0.3 million performance share units to its executives (subject to the issuance of up to 0.3 million additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 22.56 .
These performance units were tied to fiscal 2020 performance metrics, including adjusted EBITDA and ROIC.
−Removed: During fiscal 2020 and fiscal 2019 , there were 261,483 and 6,620 , respectively, of performance share units forfeited, and as of August 1, 2020 , 71,539 performance share units have been earned and will be issued in fiscal 2021.
−Removed: During fiscal 2018 , the Company granted 109,100 performance share units to its executives (subject to the issuance of 109,100 additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 39.74 .
−Removed: These performance units were tied to fiscal 2019 performance metrics, the majority of which did not vest.
+Added: During fiscal 2020, 0.3 million of performance share units expired, and as of August 1, 2020, 0.1 million performance share units have been earned and were issued in fiscal 2021.
Stock Options
The Company did no t grant stock options in fiscal 2021, 2020 or 2019.
−Removed: The following summary presents information regarding outstanding stock options as of August 1, 2020 and changes during the fiscal year then ended:
−Removed: Outstanding at beginning of year
−Removed: Outstanding at end of year
−Removed: Exercisable at end of year
−Removed: The aggregate intrinsic value of options exercised during fiscal 2020 , 2019 and 2018 was less than $ 0.1 million , $ 0.1 million and $ 0.7 million , respectively.
+Added: The following summary presents information regarding outstanding stock options as of July 31, 2021 and changes during the fiscal year then ended:
+Added: (in millions) Weighted
+Added: Price Weighted
+Added: Term Aggregate
+Added: Outstanding at beginning of year 1.1 $ 46.46 4.4 years
+Added: Exercised ( 0.1 ) 15.50
+Added: Canceled ( 0.2 ) 45.48
+Added: Outstanding at end of year 0.8 — 2.2 years
+Added: Exercisable at end of year 0.8 $ 49.02 2.2 years
+Added: The aggregate intrinsic value of options exercised during fiscal 2021, 2020 and 2019 was $ 1 million, $ — million and $ — million , respectively.
Supervalu Replacement Awards
−Removed: Pursuant to the Merger Agreement, dated as of July 25, 2018, as amended, each outstanding Supervalu stock option, whether vested or unvested, that was unexercised immediately prior to the effective time of the Merger (“SVU Option”) was converted, effective as of the effective time of the Merger, into a stock option exercisable for shares of common stock of the Company (“Replacement Option”) in accordance with the adjustment provisions of the Supervalu stock plan pursuant to which such SVU Option was granted and the Merger Agreement, with such Replacement Option generally having the same terms and conditions as the underlying SVU Option.
−Removed: In addition, pursuant to the Merger Agreement, each outstanding Supervalu restricted share award, restricted stock unit award, deferred share unit award and performance share unit award (“SVU Equity Award”) was converted, effective as of the effective time of the Merger, into time-vesting awards (“Replacement Award”) with a settlement value equal to the merger consideration ( $ 32.50 per share) multiplied by the number of shares of Supervalu common stock subject to such SVU Equity Award, and generally upon the same terms of the SVU Equity Award including the applicable change in control termination protections.
+Added: Pursuant to the Merger Agreement, dated as of July 25, 2018, as amended, each outstanding Supervalu stock option, whether vested or unvested, that was unexercised immediately prior to the effective time of the Merger (“SVU Option”) was converted, effective as of the effective time of the Merger, into a stock option exercisable for shares of common stock of the Company (“Replacement Option”) in accordance with the adjustment provisions of the Supervalu stock.
+Added: In addition, each outstanding Supervalu restricted share award, restricted stock unit award, deferred share unit award and performance share unit award (“SVU Equity Award”) was converted, effective as of the effective time of the Merger, into time-vesting awards (“Replacement Award”) with a settlement value equal to the merger consideration of $ 32.50 per share multiplied by the number of shares of Supervalu common stock subject to such SVU Equity Award.
The Merger Agreement originally provided that the Replacement Awards were payable in cash, however, the Merger Agreement was amended on October 10, 2018, to provide that the Replacement Awards could be settled in cash and/or an equal value in shares of common stock of the Company.
−Removed: On October 22, 2018, the Company authorized for issuance and registered on a Registration Statement on Form S-8 filed with the SEC 5,000,000 shares of common stock for issuance in order to satisfy the Replacement Options and Replacement Awards.
−Removed: During fiscal 2019, the Company issued 2,004,730 shares of common stock at an average price of $ 12.00 per share for $ 23.9 million of cash, of which $ 0.4 million was received subsequent to the end of fiscal 2019.
−Removed: During fiscal 2020, the Company issued 1,349,655 shares of common stock at an average price of $ 10.66 per share for $ 14.3 million of cash.
−Removed: The Replacement Awards are liability classified awards as they may ultimately be settled in cash or shares at the discretion of the employee.
+Added: The Replacement Awards are liability classified awards as they were ultimately settled in cash or shares at the discretion of the employee.
The Replacement Awards liabilities are expensed over the service period based on the fixed value of $ 32.50 per share.
−Removed: Retirement Provision
−Removed: During the second quarter of fiscal 2019, after reviewing retirement provisions and practices for the treatment of equity awards at comparable companies, the Compensation Committee of the Company’s Board of Directors determined to change the terms of its long-term compensation awards to executives who might consider retiring and to better assure that their awards provided an incentive to work for the long term best interests of the Company up to their termination date, and regardless of their retirement plans.
−Removed: Accordingly, the Compensation Committee determined that time-based vesting restricted stock units, with the exception of Replacement Awards, will continue to vest during retirement after termination of employment on the same terms as they would if the executive had not retired, but without the requirement that they remain employed.
−Removed: Performance share-units will be treated similarly on retirement, but subject to actual performance at the time achievement of performance objectives is measured.
−Removed: In addition, an executive’s equity awards granted in the year of retirement will be prorated to reflect the service period prior to the date of retirement.
−Removed: Retirement vesting will only be available to employees age 59 or older who voluntarily terminate employment after at least 10 years of service to the Company.
−Removed: As a result of these retirement provisions, the Company recorded a share-based compensation charge of approximately $ 6.6 million during the second quarter of fiscal 2019 related to the amendment of outstanding awards.
−Removed: Future grants made to employees who are retirement eligible will result in an accelerated pattern of expense recognition compared to non-retirement eligible employees.
+Added: On October 22, 2018, the Company authorized for issuance and registered on a Registration Statement on Form S-8 filed with the Securities and Exchange Commission 5 million shares of common stock for issuance in order to satisfy the Replacement Options and Replacement Awards.
+Added: During fiscal 2019, the Company issued 2.0 million shares of common stock at an average price of $ 12.00 per share for $ 24 million of cash.
+Added: During fiscal 2020, the Company issued 1.3 million shares of common stock at an average price of $ 10.66 per share for $ 14 million of cash.
NOTE 13—BENEFIT PLANS
−Removed: The Company’s employees who participate are covered by various contributory and non-contributory pension, profit sharing or 401(k) plans.
+Added: The Company’s employees who participate are covered by various contributory and non-contributory pension, 401(k) plans, and other health and welfare benefits.
The Company’s primary defined benefit pension plans are the SUPERVALU INC.
−Removed: Retirement Plan, Unified Grocers pension plan and certain supplemental executive retirement plans.
+Added: Retirement Plan, Unified Grocers, Inc.
+Added: Cash Balance Plan and certain supplemental executive retirement plans.
These plans were closed to new participants and service crediting ended for all participants as of December 31, 2007.
Pay increases were reflected in the amount of benefits accrued in these plans until December 31, 2012.
−Removed: Approximately 60 % of the union employees participate in multiemployer retirement plans under collective bargaining agreements.
+Added: Approximately 62 % of the union employees participate in multiemployer defined benefit pension plans under collective bargaining agreements.
The remaining either participate in plans sponsored by the Company or are not currently eligible to participate in a retirement plan.
3 unchanged sentences
For many retirees, the Company provides a fixed dollar contribution and retirees pay contributions to fund the remaining cost.
+Added: Defined Benefit Pension and Other Postretirement Benefit Plans
For the defined benefit pension plans, the accumulated benefit obligation is equal to the projected benefit obligation.
The benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans and other postretirement benefit plans consisted of the following:
−Removed: (in thousands)
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
+Added: (in millions) Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
Changes in Benefit Obligation
Benefit Obligation at beginning of year $ 2,260 $ 37 $ 2,709 $ 38
−Removed: Benefit obligation at acquisition date of October 22, 2018
−Removed: Plan amendment
+Added: Actuarial (gain) loss ( 103 ) ( 9 ) 277 1
+Added: Benefits paid ( 101 ) ( 3 ) ( 94 ) ( 3 )
Interest cost 37 — 57 1
−Removed: Actuarial loss (gain)
Settlements paid — ( 18 ) ( 689 ) —
−Removed: Benefits paid
+Added: Plan amendment — 11 — —
Benefit obligation at end of year 2,093 18 2,260 37
1 unchanged sentence
Fair value of plan assets at beginning of year 1,991 12 2,497 11
−Removed: Fair value of plan assets at acquisition date of October 22, 2018
Actual return on plan assets 226 — 262 1
−Removed: Employer contributions
−Removed: Settlements paid
Benefits paid ( 101 ) ( 3 ) ( 94 ) ( 3 )
+Added: Settlements paid — ( 18 ) ( 690 ) —
+Added: Employer contributions 2 9 16 3
Fair value of plan assets at end of year 2,118 — 1,991 12
+Added: Funded (unfunded) status at end of year $ 25 $ ( 18 ) $ ( 269 ) $ ( 25 )
+Added: The actuarial gain on projected pension benefit obligations in fiscal 2021 was primarily the result of a 35 basis points increase in the discount rate on the SUPERVALU INC.
+Added: Retirement Plan and updated mortality assumptions.
+Added: The actuarial loss on projected pension benefit obligations in fiscal 2020 was primarily the result of a 113 basis points decrease in the discount rate on the SUPERVALU INC.
+Added: Retirement Plan, and updated assumptions from lump sum settlements and mortality.
+Added: The funded status of our pension benefits contains plans with individually funded and underfunded statuses.
+Added: Our other postretirement benefits consist of one plan as shown above.
+Added: The following table provides the funded status of individual projected pension benefit plan obligations and the fair value of plan assets for these plans:
+Added: (in millions) SUPERVALU INC.
+Added: Retirement Plan Unified Grocers, Inc.
+Added: Cash Balance Plan and Other
+Added: Total Pension Benefits
+Added: July 31, 2021:
+Added: Fair value of plan assets at end of year $ 1,860 $ 258 $ 2,118
+Added: Benefit obligation at end of year ( 1,796 ) ( 297 ) ( 2,093 )
+Added: Funded (unfunded) status at end of year $ 64 $ ( 39 ) $ 25
+Added: August 1, 2020:
+Added: Fair value of plan assets at end of year $ 1,761 $ 230 $ 1,991
+Added: Benefit obligation at end of year ( 1,939 ) ( 321 ) ( 2,260 )
Unfunded status at end of year $ ( 178 ) $ ( 91 ) $ ( 269 )
Net periodic benefit (income) cost and other changes in plan assets and benefit obligations recognized consist of the following:
−Removed: (in thousands)
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
+Added: 2021 2020 2019
+Added: (in millions) Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
Net Periodic Benefit (Income) Cost
−Removed: Interest cost
Expected return on plan assets $ ( 104 ) $ — $ ( 105 ) $ — $ ( 112 ) $ —
−Removed: Amortization of net actuarial gain
−Removed: Pension settlement charge
+Added: Interest cost 37 — 57 1 76 1
+Added: Settlement (gain) charge — ( 17 ) 11 — — —
+Added: Amortization of prior service credit — ( 1 ) — ( 1 ) — —
+Added: Amortization of net actuarial loss (gain) 1 ( 1 ) — ( 2 ) — —
Net periodic benefit (income) cost ( 66 ) ( 19 ) ( 37 ) ( 2 ) ( 36 ) 1
−Removed: Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Loss) Income
−Removed: Prior service benefit
+Added: Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive Income (Loss)
+Added: Net actuarial (gain) loss ( 225 ) ( 8 ) 109 — 58 ( 10 )
+Added: Prior service cost (benefit) — 25 — — — ( 4 )
Amortization of prior service benefit — 3 — 1 — —
−Removed: Net actuarial loss (gain)
−Removed: Amortization of net actuarial loss
−Removed: Total expense (benefit) recognized in Other comprehensive (loss) income
−Removed: Total expense (benefit) recognized in net periodic benefit cost (income) and Other comprehensive (loss) income
−Removed: On August 1, 2019, the Company amended the SUPERVALU Retirement Plan to provide for a lump sum settlement window.
+Added: Amortization of net actuarial (gain) loss ( 1 ) 1 — 2 — —
+Added: Total (benefit) expense recognized in Other comprehensive income (loss) ( 226 ) 21 109 3 58 ( 14 )
+Added: Total (benefit) expense recognized in net periodic benefit cost (income) and Other comprehensive income (loss) $ ( 292 ) $ 2 $ 72 $ 1 $ 22 $ ( 13 )
+Added: On August 1, 2019, the Company amended the SUPERVALU INC.
+Added: 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.
1 unchanged sentence
Benefit obligations associated with the lump sum offering have been incorporated into the funded status utilizing the actuarially determined lump sum payments based on offer acceptances.
−Removed: As disclosed in the preceding two tables, in fiscal 2020, the plan made aggregate lump sum settlement payments, which resulted in a non-cash pension settlement charges 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.
−Removed: As a result of the settlement payments reported in the second quarter of fiscal 2020, the SUPERVALU Retirement Plan obligations were remeasured using a discount rate of 3.1 percent and the MP-2019 mortality improvement scale.
+Added: As disclosed in the preceding two tables, in fiscal 2020, the plan made aggregate lump sum settlement payments, which resulted in a non-cash pension settlement charges from the acceleration of a portion of the accumulated unrecognized actuarial loss, which was based on the fair value of SUPERVALU INC.
+Added: Retirement Plan assets and remeasured liabilities.
+Added: As a result of the settlement payments reported in the second quarter of fiscal 2020, SUPERVALU INC.
+Added: 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 $ 2 million decrease to Accumulated other comprehensive loss.
−Removed: Estimated net actuarial loss expected to be amortized from Accumulated other comprehensive loss into net periodic benefit cost for the defined benefit pension plans during fiscal 2021 is $ 0.8 million .
−Removed: The estimated net amount of prior service benefit and net actuarial gain for the postretirement benefit plans that will be amortized from Accumulated other comprehensive loss into net periodic benefit cost during fiscal 2021 is $ 2.7 million .
−Removed: Amounts recognized in the Consolidated Balance Sheets as of August 1, 2020 and August 3, 2019 consist of the following:
−Removed: August 1, 2020
−Removed: August 3, 2019
−Removed: (in thousands)
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
−Removed: Accrued compensation and benefits
+Added: Amounts recognized in the Consolidated Balance Sheets as of July 31, 2021 and August 1, 2020 consist of the following:
+Added: July 31, 2021 August 1, 2020
+Added: (in millions) Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
+Added: Other long-term assets $ 64 $ — $ — $ —
Pension and other postretirement benefit obligations ( 38 ) ( 15 ) ( 267 ) ( 25 )
+Added: Accrued compensation and benefits ( 1 ) ( 3 ) ( 2 ) —
+Added: Total $ 25 $ ( 18 ) $ ( 269 ) $ ( 25 )
+Added: Benefit Plan Assumptions
Weighted average assumptions used to determine benefit obligations and net periodic benefit cost consisted of the following:
+Added: 2021 2020 2019
Benefit obligation assumptions:
10 unchanged sentences
2.00 % - 5.75 %
+Added: 2.25 % - 6.50 %
+Added: Interest credit 5.00 % 5.00 % 5.00 %
(1) Expected return on plan assets is estimated by utilizing forward-looking, long-term return, risk and correlation assumptions developed and updated annually by the Company.
−Removed: These assumptions are weighted by the actual or target allocation to each underlying asset class represented in the pension plan asset portfolio.
−Removed: We also assess the expected long-term return on plan assets assumption by comparison to long-term historical performance on an asset class to ensure the assumption is reasonable.
+Added: These assumptions are weighted by the actual or target allocation to each underlying asset class represented in the pension plan master trust.
+Added: The Company also assess the expected long-term return on plan assets assumption by comparison to long-term historical performance on an asset class to ensure the assumption is reasonable.
Long-term trends are also evaluated relative to market factors such as inflation, interest rates, and fiscal and monetary policies in order to assess the capital market assumptions.
4 unchanged sentences
This resulting weighted average discount rate is then used in evaluating the final discount rate to be used.
−Removed: For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation before age 65 was 7.80 percent as of August 1, 2020 .
+Added: For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation before age 65 was 8.10 percent as of July 31, 2021.
The assumed healthcare cost trend rate for retirees before age 65 will decrease each year through fiscal 2030, until it reaches the ultimate trend rate of 4.50 percent.
−Removed: For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation after age 65 was 8.00 percent as of August 1, 2020 .
−Removed: The assumed healthcare cost trend rate for retirees after age 65 will decrease through fiscal 2029, until it reaches the ultimate trend rate of 4.50 percent .
−Removed: For those retirees whose health plans provide for a fixed employer contribution rate, a healthcare cost trend is not applicable.
−Removed: The healthcare cost trend rate assumption would have had the following impact on the amounts reported:
−Removed: a 100 basis point increase in the trend rate would increase the accumulated postretirement benefit obligation by approximately $ 0.8 million as of the end of fiscal 2020 and would increase service and interest cost by less than $ 0.1 million .
−Removed: Conversely, a 100 basis point decrease in the healthcare cost trend rate would decrease the Company’s accumulated postretirement benefit obligation as of the end of fiscal 2020 by approximately $ 0.7 million and would decrease service and interest cost by less than $ 0.1 million .
+Added: For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation after age 65 was 5.40 percent as of July 31, 2021.
Pension Plan Assets
−Removed: Pension plan assets are held in a master trust and invested in separately managed accounts and other commingled investment vehicles holding domestic and international equity securities, domestic fixed income securities and other investment classes.
−Removed: The Company employs a total return approach whereby a diversified mix of asset class investments is used to maximize the long-term return of plan assets for an acceptable level of risk.
−Removed: Alternative investments are also used to enhance risk-adjusted long-term returns while improving portfolio diversification.
+Added: Pension plan assets are held in a master trust and invested in separately managed accounts and other commingled investment vehicles holding fixed income securities, domestic equity securities, private equity securities, international equity securities, and real estate securities.
+Added: The Company employs a liability hedging approach whereby the target asset allocation adjusts based on the funded nature of the plans, targeting a level of risk commensurate with keeping pace with the growth of plan liabilities.
Risk is managed through diversification across asset classes, multiple investment manager portfolios and both general and portfolio-specific investment guidelines.
−Removed: Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and our financial condition.
+Added: Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and the Company’s financial condition.
This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis.
5 unchanged sentences
The asset allocation targets and the actual allocation of pension plan assets are as follows:
−Removed: Asset Category
+Added: Asset Category Target 2021 2020
+Added: Fixed income 85.3 % 82.8 % 60.4 %
Domestic equity 6.9 % 7.7 % 22.6 %
−Removed: International equity
Private equity 5.4 % 5.4 % 4.7 %
+Added: International equity 1.4 % 1.0 % 6.0 %
+Added: Real estate 1.0 % 3.1 % 6.3 %
+Added: Total 100.0 % 100.0 % 100.0 %
The following is a description of the valuation methodologies used for investments measured at fair value:
16 unchanged sentences
Furthermore, while the Company believes our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement.
−Removed: The fair value of assets of our defined benefit pension plans held in master trusts as of August 1, 2020 , by asset category, consisted of the following (in thousands):
−Removed: Measured at NAV as a Practical Expedient
+Added: The fair value of assets held in master trusts for defined benefit pension plans as of July 31, 2021, by asset category, consisted of the following (in millions):
+Added: Level 1 Level 2 Level 3 Measured at NAV as a Practical Expedient Total
+Added: Common stock $ 103 $ — $ — $ — $ 103
Common collective trusts — 1,044 — 61 1,105
1 unchanged sentence
Government securities — 218 — — 218
+Added: Mutual funds — 58 — — 58
Mortgage-backed securities — 2 — — 2
+Added: Other 11 10 — — 21
Private equity and real estate partnerships — — — 179 179
Total plan assets at fair value $ 114 $ 1,764 $ — $ 240 $ 2,118
−Removed: The fair value of assets of our defined benefit pension plans held in master trusts as of August 3, 2019 , by asset category, consisted of the following (in thousands):
−Removed: Measured at NAV as a Practical Expedient
+Added: The fair value of assets held in master trusts for defined benefit pension plans as of August 1, 2020, by asset category, consisted of the following (in millions):
+Added: Level 1 Level 2 Level 3 Measured at NAV as a Practical Expedient Total
+Added: Common stock $ 334 $ — $ — $ — $ 334
Common collective trusts — 902 — 59 961
1 unchanged sentence
Government securities — 131 — — 131
+Added: Mutual funds — 43 — — 43
Mortgage-backed securities — 4 — — 4
+Added: Other 11 23 — — 34
Private equity and real estate partnerships — — — 173 173
1 unchanged sentence
Contributions
−Removed: No minimum pension contributions are required to be made under either the SUPERVALU Retirement Plan or the Unified Grocers, Inc.
+Added: No minimum pension contributions were required to be made under either the SUPERVALU INC.
+Added: Retirement Plan or the Unified Grocers, Inc.
Cash Balance Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2021.
4 unchanged sentences
Estimated Future Benefit Payments
−Removed: The estimated future benefit payments to be made from our defined benefit pension and other postretirement benefit plans, which reflect expected future service, are as follows (in thousands):
−Removed: Pension Benefits
−Removed: Other Postretirement Benefits
+Added: The estimated future benefit payments to be made from our defined benefit pension and other postretirement benefit plans, which reflect expected future service, are as follows (in millions):
+Added: Fiscal Year Pension Benefits Other Postretirement Benefits
+Added: 2022 $ 122 $ 3
Years 2027-2031 582 4
3 unchanged sentences
We match a portion of certain employee contributions by contributing cash into the investment options selected by the employees.
−Removed: The total amount contributed by us to the plans is determined by plan provisions or at our discretion.
+Added: The total amount contributed by us to the plans is determined by plan provisions or at the Company’s discretion.
Total employer contribution expenses for these plans were $ 27 million, $ 21 million and $ 21 million for fiscal 2021, 2020 and 2019, respectively.
2 unchanged sentences
The Company is self-insured for certain disability plan programs, which comprise the primary benefits paid to inactive employees prior to retirement.
−Removed: Amounts recognized in the Consolidated Balance Sheets consisted of the following (in thousands):
−Removed: Post-Employment Benefits
−Removed: August 1, 2020
−Removed: August 3, 2019
−Removed: Accrued compensation and benefits
−Removed: Other long-term liabilities
+Added: Amounts recognized in the Consolidated Balance Sheets consisted of $ 2 million of Accrued compensation and benefits and $ 5 million of Other long-term liabilities as of July 31, 2021 and August 1, 2020.
Multiemployer Pension Plans
5 unchanged sentences
Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP.
−Removed: The Company acquired multiemployer plan obligations related to continuing and discontinued operations as part of the Supervalu acquisition.
The risks of participating in these multiemployer plans are different from the risks associated with single-employer plans in the following respects:
6 unchanged sentences
The zone status is based on information that we received from the plan and is annually certified by each plan’s actuary.
−Removed: Among other factors, red zone status plans are generally less than 65 percent funded and are considered in critical status, plans in yellow zone status are less than 80 percent funded and are considered in endangered or seriously endangered status, and green zone plans are at least 80 percent funded.
+Added: Among other factors, red zone status plans are generally less than 65 percent funded and are considered in critical status, plans in yellow zone status are less than 80 percent funded and are considered in endangered or seriously endangered status, and green zone plans are at
+Added: least 80 percent funded.
The Multiemployer Pension Reform Act of 2014 (“MPRA”) created a new zone status called “critical and declining” or “Deep Red”.
3 unchanged sentences
None of our collective bargaining agreements require that a minimum contribution be made to these plans.
−Removed: At the date the financial statements were issued, Forms 5500 of the plans were generally not available for the plan years ending in 2019.
+Added: At the date the financial statements were issued, Form 5500 for these plans were generally not available for the plan years ending in 2020.
The following table contains information about the Company’s significant multiemployer plans (in millions):
−Removed: Pension Protection Act Zone Status
−Removed: Contributions
−Removed: FIP/RP Status Pending/Implemented
−Removed: Surcharges Imposed (1)
−Removed: Amortization Provisions
+Added: Pension Protection Act Zone Status Contributions
+Added: Pension Fund EIN-Pension
+Added: Plan Number Plan
+Added: End Date 2020 FIP/RP Status Pending/Implemented 2021 2020 2019 Surcharges Imposed (1)
Minneapolis Food Distributing Industry Pension Plan
−Removed: 416047047-001
+Added: 416047047-001 12/31 Green No $ 12 $ 11 $ 8 No
Minneapolis Retail Meat Cutters and Food Handlers Pension Fund
−Removed: 410905139-001
−Removed: Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Fund
−Removed: 832598425-001
−Removed: Central States, Southeast and Southwest Areas Pension Fund
−Removed: 366044243-001
−Removed: UFCW Unions and Participating Employer Pension Fund (2)
−Removed: 526117495-001
−Removed: Western Conference of Teamsters Pension Plan Trust
−Removed: 916145047-001
+Added: 410905139-001 2/28 Red Implemented 10 9 7 No
+Added: Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Plan 832598425-001 12/31 NA NA 4 3 1 NA
+Added: Central States, Southeast and Southwest Areas Pension Plan 366044243-001 12/31 Deep Red Implemented 6 6 5 No
+Added: UFCW Unions and Participating Employer Pension Plan (2)
+Added: 526117495-001 12/31 Red Implemented 3 7 4 No
+Added: Western Conference of Teamsters Pension Plan 916145047-001 12/31 Green No 10 13 12 No
UFCW Unions and Employers Pension Plan (4)
−Removed: 396069053-001
+Added: 396069053-001 10/31 Deep Red Implemented 1 1 1 No
All Other Multiemployer Pension Plans (3)
+Added: Total $ 48 $ 52 $ 41
(1) PPA surcharges are 5 percent or 10 percent of eligible contributions and may not apply to all collective bargaining agreements or total contributions to each plan.
−Removed: These multiemployer pension plans are associated with continued and discontinued operations.
−Removed: All Other Multiemployer Pension Plans include 7 plans, none of which is individually significant when considering contributions to the plan, severity of the underfunded status or other factors.
+Added: (2) This multiemployer pension plan is associated with continued and discontinued operations.
+Added: (3) All Other Multiemployer Pension Plans includes 9 plans, none of which are individually significant when considering contributions to the plan, severity of the underfunded status or other factors.
+Added: As of the fourth quarter of fiscal 2021 , the Company withdrew from 2 of these 9 plans.
+Added: Fiscal 2021 contributions to these plans are included in the total contributions above.
+Added: (4) As of the fourth quarter of fiscal 2021 , the Company withdrew from this plan.
+Added: The plan is still relevant for the table above as contributions were made in fiscal 2021 prior to the withdrawal.
The following table describes the expiration of the Company’s collective bargaining agreements associated with the significant multiemployer plans in which we participate:
Most Significant Collective Bargaining Agreement
−Removed: Range of Collective Bargaining Agreement Expiration Dates
−Removed: Total Collective Bargaining Agreements
−Removed: Expiration Date
−Removed: % of Associates under Collective Bargaining Agreement (1)
+Added: Pension Fund Range of Collective Bargaining Agreement Expiration Dates Total Collective Bargaining Agreements Expiration Date % of Associates under Collective Bargaining Agreement (1)
Over 5% Contributions 2020
Minneapolis Food Distributing Industry Pension Plan
+Added: 5/31/2022 1 5/31/2022 100.0 % ☒
Minneapolis Retail Meat Cutters and Food Handlers Pension Fund
+Added: 3/4/2023 1 3/4/2023 100.0 % ☒
Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Fund
+Added: 3/4/2023 1 3/4/2023 100.0 % ☒
Central States, Southeast and Southwest Areas Pension Fund
1 unchanged sentence
UFCW Unions and Participating Employer Pension Fund (2)
+Added: 11/8/2020 (3)
+Added: 2 11/8/2020 66.3 % ☒
Western Conference of Teamsters Pension Plan Trust
1 unchanged sentence
UFCW Unions and Employers Pension Plan
−Removed: Company participating employees in the most significant collective bargaining agreement as a percent of all Company employees participating in the respective fund.
−Removed: These multiemployer pension plans are associated with continued and discontinued operations.
−Removed: In connection with the closure of the Shop ‘n Save locations and the acquisition of Supervalu, we acquired a $ 35.7 million multiemployer pension plan withdrawal liability, under which payments will be made over the next 20 years and is included in Other long-term liabilities.
−Removed: In addition, the Company had withdrawal liabilities related to five of its other multi-employer plans of approximately $ 9.7 million .
−Removed: 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.
−Removed: The withdrawal liability is included in Other long-term liabilities and the withdrawal charge was recorded within Restructuring, acquisition and integration related expenses.
−Removed: Accrued multiemployer pension plan withdrawal liabilities included in other-long-term liabilities were $ 51.6 million and $ 43.2 million , in fiscal 2020 and 2019 respectively for seven multiemployer plans.
−Removed: The Company contributed $ 52.3 million , $ 41.3 million and $ 0.5 million in fiscal 2020 , 2019 and 2018 , respectively, to multiemployer pension plans.
−Removed: Multiemployer Postretirement Benefit Plans Other than Pensions
+Added: 4/9/2022 1 4/9/2022 100.0 % ☒
+Added: (1) Company participating employees in the most significant collective bargaining agreement as a percent of all Company employees represented under the applicable collective bargaining agreements.
+Added: (2) This multiemployer pension plan is associated with continued and discontinued operations.
+Added: (3) This collective bargaining agreement has been extended.
+Added: In fiscal 2021, the Company withdrew from participating in three Retail multiemployer pension plans, resulting in a $ 63 million withdrawal charge, which is recorded within Operating expenses within our Consolidated Statements of Operations, Other long-term liabilities on the Consolidated Balance Sheets and within changes in operating assets and liabilities within Accrued expenses and other liabilities in the Consolidated Statements of Cash Flows.
+Added: In fiscal 2020, in connection with the Company’s consolidation of distribution centers in the Pacific Northwest, the Company recorded an $ 11 million multiemployer pension plan withdrawal liability.
+Added: Accrued multiemployer pension plan withdrawal liabilities included in Other-long-term liabilities were $ 110 million and $ 52 million, in fiscal 2021 and 2020, respectively, for 13 multiemployer plans.
+Added: Payments associated with these liabilities are required to be made over varying time periods, but principally over the next 20 years.
+Added: Multiemployer Benefit Plans Other than Pensions
The Company also makes contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining agreements.
2 unchanged sentences
However, the Company is unable to separate contribution amounts to postretirement benefit plans from contribution amounts paid to benefit active employees.
−Removed: The company contributed $ 88.5 million and $ 72.5 million in fiscal 2020 and fiscal 2019 , respectively, to multiemployer health and welfare plans.
+Added: The Company contributed $ 78 million, $ 89 million and $ 73 million in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, to multiemployer health and welfare plans.
If healthcare provisions within these plans cannot be renegotiated in a manner that reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.
Collective Bargaining Agreements
−Removed: As of August 1, 2020 , we had approximately 28,300 employees.
+Added: As of July 31, 2021, we had approximately 28,300 employees.
Approximately 11,000 employees are covered by 48 collective bargaining agreements.
3 unchanged sentences
NOTE 14—INCOME TAXES
−Removed: Income Tax (Benefit) Expense
−Removed: For the fiscal year ended August 1, 2020 , (loss) income before income taxes, consists of $( 340.8 ) million from U.S.
+Added: Income Tax Expense (Benefit)
+Added: Income before income taxes for fiscal 2021 consists of $ 175 million from U.S.
continuing operations and $ 8 million from foreign continuing operations.
−Removed: For the fiscal year ended August 3, 2019 , (loss) income before income taxes consists of $( 351.6 ) million from U.S.
+Added: Loss before income taxes for fiscal 2020 consists of $( 338 ) million from U.S.
continuing operations and $( 4 ) million from foreign continuing operations.
−Removed: For the fiscal year ended July 28, 2018 , income before income taxes consists of $ 202.6 million from U.S.
−Removed: operations and $ 7.4 million from foreign operations.
−Removed: The total (benefit) provision for income taxes included in the Consolidated Statements of Operations consisted of the following:
−Removed: (in thousands)
+Added: (Loss) income before income taxes for fiscal 2019 consists of $( 348 ) million from U.S.
+Added: continuing operations and $ 7 million from foreign continuing operations.
+Added: The total provision (benefit) for income taxes included in the Consolidated Statements of Operations consisted of the following:
+Added: (in millions) 2021 2020 2019
Continuing operations $ 34 $ ( 91 ) $ ( 59 )
Discontinued operations ( 1 ) ( 5 ) ( 3 )
−Removed: The income tax expense (benefit) in continuing operations for fiscal 2020, 2019 and 2018 was allocated as follows:
−Removed: (in thousands)
−Removed: Income tax expense
+Added: Total $ 33 $ ( 96 ) $ ( 62 )
+Added: The income tax expense (benefit) in continuing operations was allocated as follows:
+Added: (in millions) 2021 2020 2019
+Added: Income tax expense (benefit) $ 34 $ ( 91 ) $ ( 59 )
Other comprehensive income 65 ( 45 ) ( 34 )
+Added: Total $ 99 $ ( 136 ) $ ( 93 )
Total federal, state, and foreign income tax (benefit) expense in continuing operations consists of the following:
−Removed: (in thousands)
+Added: (in millions) Current Deferred Total
+Added: Federal $ 30 $ ( 8 ) $ 22
State and Local 7 2 9
+Added: Foreign 2 1 3
+Added: $ 39 $ ( 5 ) $ 34
+Added: Federal $ ( 23 ) $ ( 45 ) $ ( 68 )
State and Local 1 ( 24 ) ( 23 )
+Added: Foreign 2 ( 2 ) —
+Added: $ ( 20 ) $ ( 71 ) $ ( 91 )
+Added: Federal $ 11 $ ( 59 ) $ ( 48 )
State and Local ( 11 ) ( 2 ) ( 13 )
+Added: Foreign 2 — 2
+Added: $ 2 $ ( 61 ) $ ( 59 )
Total income tax expense (benefit) in continuing operations was different than the amounts computed by applying the statutory federal income tax rate to income before income taxes because of the following:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019
Computed “expected” tax expense $ 39 $ ( 72 ) $ ( 71 )
5 unchanged sentences
Nondeductible goodwill impairment — 44 33
−Removed: Impacts related to the TCJA
+Added: Enhanced Inventory Donations ( 3 ) ( 2 ) ( 1 )
Impacts related to the CARES Act — ( 39 ) —
−Removed: Total income tax expense
+Added: Other, net ( 6 ) 2 2
+Added: Total income tax expense (benefit) $ 34 $ ( 91 ) $ ( 59 )
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019
Unrecognized tax benefits at beginning of period $ 32 $ 40 $ 1
8 unchanged sentences
The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company.
−Removed: As of August 1, 2020 , the Company is no longer subject to federal income tax examinations for fiscal years before 2014 and in most states is no longer subject to state income tax examinations for fiscal years before 2008 and 2015 for Supervalu and United Natural Foods, Inc., respectively.
+Added: As of July 31, 2021, the Company is no longer subject to federal income tax examinations for fiscal years before 2014 and in most states is no longer subject to state income tax examinations for fiscal years before 2008 and 2015 for Supervalu and United Natural Foods, Inc., respectively.
Due to the implementation of the CARES Act, NOLs were carried back into fiscal years 2014 and 2015, which extends the federal statute of limitations on those years up to the amount of the carryback claim.
1 unchanged sentence
Deferred Tax Assets and Liabilities
−Removed: The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at August 1, 2020 and August 3, 2019 are presented below:
−Removed: (in thousands)
+Added: The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at July 31, 2021 and August 1, 2020 are presented below:
+Added: (in millions) July 31,
+Added: 2021 August 1,
Deferred tax assets:
7 unchanged sentences
Intangible assets 61 67
+Added: Lease liabilities 336 339
Interest rate swap agreements 25 37
5 unchanged sentences
Plant and equipment, principally due to differences in depreciation $ 125 $ 164
−Removed: Intangible assets
+Added: Inventories 39 43
+Added: Lease right of use assets 321 300
Total deferred tax liabilities 485 507
Net deferred tax assets $ 57 $ 108
−Removed: The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 and contains significant business tax provision changes to the U.S.
−Removed: tax code, including temporary expansion to the deductibility of interest expense and the ability to treat qualified improvement property as eligible for bonus depreciation as well as the ability to carry back net operating losses.
−Removed: In addition, the CARES Act changed the required filing of the Company’s federal income tax return from May 2020 to July 2020, and allows remittances of employer FICA payments previously due between March 2020 and December 2020 to be deferred until December 2021 and December 2022.
−Removed: Prior to the application of the CARES Act, the Company had a deferred tax asset related to $ 203 million of federal net operating losses that were available for unlimited carryforward (but no carryback) pursuant to provisions of the 2017 Tax Cuts and Jobs Act, which permitted taxpayers to carryforward net operating losses indefinitely.
−Removed: The CARES Act provides the Company the ability to carry these losses back at a 35 % federal tax rate during the carry back periods, as compared to the current 21 % federal tax rate.
−Removed: This resulted in a tax benefit of approximately $ 39.5 million , an estimate of which the Company recorded in the third quarter of Fiscal 2020, and which was finalized during the fourth quarter of fiscal 2020.
−Removed: The entire tax benefit associated with the net operating loss carry back has been recorded as a current tax receivable in the Consolidated Balance Sheet as of August 1, 2020.
Tax Credits and Valuation Allowances
−Removed: At August 1, 2020, the Company had gross deferred tax assets of approximately $ 278.8 million .
+Added: At July 31, 2021, the Company had gross deferred tax assets of approximately $ 550 million.
The Company regularly reviews its deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized.
2 unchanged sentences
A valuation allowance is provided when the Company concludes, based on all available evidence, that it is more likely than not that the deferred tax assets will not be realized during the applicable recovery period.
−Removed: The Company has reviewed these factors
−Removed: in evaluating the recoverability of its deferred tax assets.
−Removed: As of August 1, 2020, the Company anticipates sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception of certain foreign tax credits and state net operating losses.
+Added: The Company has reviewed these factors in evaluating the recoverability of its deferred tax assets.
+Added: As of July 31, 2021, the Company anticipates sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception of certain foreign tax credits and state net operating losses.
Accordingly, the Company has established valuation allowances against that portion of its state net operating losses and foreign tax credits that, in the Company’ s judgment, are not likely to be realized within the applicable recovery periods.
−Removed: At August 1, 2020 , the Company had net operating loss carryforwards of approximately $ 4.1 million for federal income tax purposes.
−Removed: Of this amount, approximately $ 2.3 million of the federal carryforwards are subject to an annual limitation of approximately $ 0.3 million under Internal Revenue Code Section 382.
+Added: At July 31, 2021, the Company had net operating loss carryforwards of approximately $ 2 million for federal income tax purposes that are subject to an annual limitation of approximately $ 1 million under Internal Revenue Code Section 382.
These Section 382-limited carryforwards expire at various times between fiscal years 2022 and 2027.
−Removed: As of August 1, 2020 , the Company anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized.
+Added: As of July 31, 2021, the Company anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized.
The Company also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the future.
−Removed: Therefore, the ultimate realization of net operating losses for federal purposes appears more likely than not at August 1, 2020 and correspondingly no valuation allowance has been established.
−Removed: At August 1, 2020, the Company had disallowed charitable contribution carryforwards of approximately $ 26.7 million that are available for carryforward over five years.
−Removed: As of August 1, 2020, the Company anticipates sufficient future taxable income to fully utilize the charitable contribution carryovers within the applicable five-year carryforward period and correspondingly, no valuation allowance has been established.
+Added: Therefore, the ultimate realization of net operating losses for federal purposes appears more likely than not at July 31, 2021 and correspondingly no valuation allowance has been established.
+Added: At July 31, 2021, the Company had disallowed charitable contribution carryforwards of approximately $ 15 million that are available for carryforward over five years.
+Added: As of July 31, 2021, the Company anticipates sufficient future taxable income to
+Added: fully utilize the charitable contribution carryovers within the applicable five-year carryforward period and correspondingly, no valuation allowance has been established.
The retained earnings of the Company’s non-U.S.
subsidiary were subject to deemed U.S.
−Removed: repatriation and taxation during fiscal 2017 pursuant to the TCJA, and existing foreign tax credits were utilized to offset the resulting liability.
+Added: repatriation and taxation during fiscal 2017 pursuant to the Tax Cuts and Jobs Act, and existing foreign tax credits were utilized to offset the resulting liability.
We have established a deferred tax asset for the remaining U.S.
2 unchanged sentences
Effective Tax Rate
−Removed: Our effective income tax rate for continuing operations was a benefit rate of 26.3 % and 17.1 % on pre-tax losses for fiscal 2020 and 2019 respectively and an expense rate of 22.1 % on pre-tax income for fiscal 2018.
−Removed: The increase in the benefit rate for fiscal 2020 was primarily driven by the NOL carryback provisions of the CARES Act.
−Removed: Under ASU 2016-09, the Company accounts for excess tax benefits or tax deficiencies related to share-based payments in its provision for income taxes as opposed to additional paid-in capital.
−Removed: The Company recognized income tax expense of $ 4.2 million related to tax deficiencies for share-based payments for fiscal 2020, $ 1.6 million of income tax expense related to tax deficiencies for share-based payments for fiscal 2019 and $ 1.1 million of income tax expense related to tax deficiencies for share-based payments for fiscal 2018.
+Added: Our effective income tax rate for continuing operations was an expense rate of 18.6 % on pre-tax income for fiscal 2021, respectively, and a benefit rate of 26.6 % and 17.3 % on pre-tax losses for fiscal 2020 and 2019, respectively.
+Added: The fiscal 2020 effective tax rate was primarily driven by the impact of non-deductible goodwill impairment charges recorded in fiscal 2020, partially offset by the NOL carryback provisions of the CARES Act.
+Added: For fiscal 2021, the effective tax rate was reduced by solar and employment tax credits, including the tax credit impact of a fiscal 2021 investment in an equity method partnership, the recognition of previously unrecognized tax benefits, excess tax deductions attributable to share-based compensation and inventory deductions, as well as the impact of favorable return-to-provision adjustments.
NOTE 15—EARNINGS PER SHARE
The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:
−Removed: (in thousands, except per share data)
+Added: (in millions, except per share data) 2021 2020 2019
Basic weighted average shares outstanding 56.1 53.8 51.2
1 unchanged sentence
Diluted weighted average shares outstanding 60.0 53.8 51.2
−Removed: Basic (loss) earnings per share:
+Added: Basic earnings (loss) per share:
Continuing operations $ 2.55 $ ( 4.76 ) $ ( 5.51 )
Discontinued operations $ 0.10 $ ( 0.34 ) $ ( 0.05 )
−Removed: Basic (loss) income per share
−Removed: Diluted (loss) earnings per share:
+Added: Basic earnings (loss) per share $ 2.65 $ ( 5.10 ) $ ( 5.56 )
+Added: Diluted earnings (loss) per share:
Continuing operations $ 2.38 $ ( 4.76 ) $ ( 5.51 )
Discontinued operations $ 0.09 $ ( 0.34 ) $ ( 0.05 )
−Removed: Diluted (loss) income per share
+Added: Diluted earnings (loss) income per share $ 2.48 $ ( 5.10 ) $ ( 5.56 )
Anti-dilutive stock-based awards excluded from the calculation of diluted earnings per share 0.9 3.6 3.4
−Removed: The computation of diluted earnings per share from discontinued operations is calculated using diluted weighted average shares outstanding, which includes the net effect of dilutive stock awards, of approximately 0 thousand and 292 thousand shares for fiscal 2020 and 2019, respectively.
NOTE 16—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.
−Removed: 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.
+Added: The Wholesale reportable segment is engaged in the national distribution of natural, organic, specialty, produce and conventional grocery and non-food products, and providing professional 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.
The Company has additional operating segments that do not meet the quantitative thresholds for reportable segments and are therefore aggregated under the caption of Other.
−Removed: Other includes a manufacturing division, which engages in the importing, roasting, packaging, and distributing of nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s branded product lines.
−Removed: Other also includes certain corporate operating expenses that are not allocated to operating segments, which include, among other expenses, restructuring, acquisition and integration related expenses, share-based compensation, and salaries, retainers, and other related expenses of certain officers and all directors.
+Added: Other includes a manufacturing division, which engages in the importing, roasting, packaging and distributing of nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s natural branded product lines, primarily Blue Marble Brands.
+Added: Other also includes certain corporate operating expenses that are not allocated to operating segments, which include, among other expenses, restructuring,
+Added: acquisition and integration related expenses, share-based compensation, and salaries, retainers, and other related expenses of certain officers and all directors.
Wholesale records revenues related to sales to Retail at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business.
1 unchanged sentence
The Company allocates certain corporate capital expenditures and identifiable assets to its business segments and retains certain depreciation expense related to those assets within Other.
−Removed: In fiscal 2020, the Company changed its measurement of segment profit, which resulted in additional corporate expenses that were previously included in Other now being attributed to the Wholesale segment, and updated its segment profit measure to Adjusted EBITDA.
−Removed: Prior period amounts have been recast to reflect these changes in segment profit.
−Removed: Non-operating expenses that are not allocated to the operating segments are under the caption of Unallocated (Income)/Expenses.
−Removed: The following table provides continuing operations net sales and Adjusted EBITDA by reportable segment and reconciles that information to (Loss) income from continuing operations before income taxes :
−Removed: (in thousands)
+Added: Non-operating expenses that are not allocated to the operating segments are included in the Other segment.
+Added: 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:
+Added: (in millions) 2021 2020 2019
Wholesale (1)
+Added: $ 25,873 $ 25,525 $ 21,551
+Added: 2,442 2,375 1,687
+Added: ( 1,584 ) ( 1,569 ) ( 1,132 )
Total Net sales $ 26,950 $ 26,559 $ 22,341
Continuing operations Adjusted EBITDA:
+Added: $ 654 $ 593 $ 465
+Added: ( 9 ) ( 16 ) 42
+Added: 1 ( 2 ) ( 1 )
Net income attributable to noncontrolling interests 6 5 —
−Removed: Total other expense, net
+Added: Net periodic benefit income, excluding service cost 85 39 35
+Added: Interest expense, net ( 204 ) ( 192 ) ( 181 )
+Added: Other, net 8 4 1
Depreciation and amortization ( 285 ) ( 282 ) ( 248 )
Share-based compensation ( 49 ) ( 34 ) ( 40 )
−Removed: Restructuring, impairment, acquisition, and integration related expenses
−Removed: Goodwill and asset impairment
−Removed: (Loss) gain on sale of assets
−Removed: Note receivable and lost customer bankruptcy charge
+Added: Restructuring, acquisition, and integration related expenses ( 56 ) ( 87 ) ( 148 )
+Added: Goodwill impairment charges — ( 425 ) ( 293 )
+Added: Gain (loss) on sale of assets 4 ( 18 ) 1
+Added: Multi-employer pension plan withdrawal charges ( 63 ) — —
+Added: Note receivable charges — ( 13 ) —
Inventory fair value adjustment — — ( 10 )
−Removed: Legal reserve charge
+Added: Legal (settlement income) reserve charge — ( 1 ) 1
Other retail expense ( 5 ) ( 1 ) —
−Removed: (Loss) income from continuing operations before income taxes
+Added: Income (loss) from continuing operations before income taxes $ 183 $ ( 342 ) $ ( 341 )
Depreciation and amortization:
+Added: $ 252 $ 267 $ 228
Total depreciation and amortization
−Removed: Capital expenditures:
+Added: $ 285 $ 282 $ 248
+Added: Payments for capital expenditures:
+Added: $ 285 $ 160 $ 207
Total capital expenditures
−Removed: As presented in Note 3—Revenue Recognition , for fiscal 2020 and 2019, the Company recorded $ 1,319 million and $ 937 million , respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.
−Removed: For fiscal 2020 and 2019, the Company recorded $ 0.0 million and $ 12.4 million , respectively, within Net sales in its Wholesale reportable segment attributable to discontinued operations inter-company product purchases for certain retail banners it sold with a supply agreement.
+Added: $ 310 $ 173 $ 228
+Added: (1) As presented in Note 3—Revenue Recognition, for fiscal 2021, 2020 and 2019, the Company recorded $ 1,381 million, $ 1,348 million and $ 958 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.
+Added: For fiscal 2021, 2020 and 2019, the Company recorded $ 0 million , $ 0 million , and $ 12 million, respectively, within Net sales in its Wholesale reportable segment attributable to discontinued operations inter-company product purchases for certain retail banners it sold with a supply agreement.
+Added: 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:
−Removed: (in thousands)
+Added: (in millions) July 31,
+Added: 2021 August 1,
+Added: Wholesale $ 6,536 $ 6,589
+Added: Retail 566 548
+Added: Other 462 498
+Added: Eliminations ( 43 ) ( 55 )
Total assets of continuing operations $ 7,521 $ 7,580
1 unchanged sentence
Guarantees and Contingent Liabilities
−Removed: The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of August 1, 2020 .
+Added: The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of July 31, 2021.
These guarantees were generally made to support the business growth of wholesale customers.
−Removed: The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to ten years , with a weighted average remaining term of approximately six years .
+Added: The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to 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.
−Removed: Generally, the guarantees are secured by indemnification agreements or personal guarantees of the primary obligor/retailer.
+Added: Generally, the guarantees are secured by indemnification agreements or personal guarantees.
The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance.
−Removed: As of August 1, 2020 , the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 32.3 million ( $ 26.9 million on a discounted basis).
−Removed: Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.
−Removed: Accordingly, no amount has been recorded in the Consolidated Balance Sheets for these contingent obligations under the Company’s guarantee arrangements as the fair value has been determined to be de minimis.
−Removed: The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.
−Removed: The Company could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations.
−Removed: Due to the wide distribution of the Company’s lease assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.
−Removed: For leases that have been assigned, the Company has recorded the associated right of use operating lease assets and obligations within the Consolidated Balance Sheets.
−Removed: No associated lessor receivables are reflected on the Consolidated Balance Sheets;
−Removed: however, within Note 12—Leases expected cash flows from lease receipts reflecting the assignees payments to the landlord are reflected as Lease Receipts within the future maturity table, along with the Wholesale customers future Lease Receipts.
−Removed: For the Company’s lease guarantee arrangements, no amounts have been recorded within the Consolidated Balance Sheets as the fair value has been determined to be de minimis.
+Added: As of July 31, 2021, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 28 million ($ 25 million on a discounted basis).
+Added: Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of July 31, 2021, a total estimated loss of $ 1 million is recorded in the Consolidated Balance Sheets.
The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise.
7 unchanged sentences
Because NAI remains a primary obligor on these self-insurance and other obligations and has collateralized most of the self-insurance obligations for which the Company remains contingently liable, the Company believes that the likelihood that it will be required to assume a material amount of these obligations is remote.
−Removed: no amount has been recorded in the Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis.
+Added: Accordingly, no amount has been recorded in the Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis.
Agreements with Save-A-Lot and Onex
1 unchanged sentence
Similarly, Supervalu entered into a Separation Agreement (the “Separation Agreement”) with Moran Foods, LLC d/b/a Save-A-Lot (“Moran Foods”), which contains indemnification obligations and covenants related to the separation of the assets and liabilities of the Save-A-Lot business from the Company.
−Removed: The Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company is providing Save-A-Lot various technical, human resources, finance and other operational services for a term of five years , subject to termination provisions that can be exercised by each party.
+Added: The Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company is providing Save-A-Lot with various technical, human resources, finance and other operational services for a term of five years , subject to termination provisions that can be exercised by each party.
The initial annual base charge under the Services Agreement is $ 30 million, subject to adjustments.
+Added: 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.
−Removed: As of August 1, 2020 , the Company had approximately $ 181 million of non-cancelable future purchase obligations.
+Added: As of July 31, 2021, the Company had approximately $ 225 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.
Legal Proceedings
−Removed: In December 2008, a class action complaint was filed in the United States District Court for the Western District of Wisconsin against Supervalu alleging that a 2003 transaction between Supervalu and C&S Wholesale Grocers, Inc.
−Removed: (“C&S”) was a conspiracy to restrain trade and allocate markets.
−Removed: As previously disclosed, the Company settled with the certain plaintiffs in November 2017.
−Removed: The remaining plaintiff (the “New England plaintiff”) was not a party to the settlement and pursued its individual claims and potential class action claims against Supervalu.
−Removed: On February 15, 2018, Supervalu filed a summary judgment and Daubert motion and the New England plaintiff filed a motion for class certification and on July 27, 2018, the District Court granted Supervalu’s motions.
−Removed: The New England plaintiff appealed to the 8th Circuit on August 15, 2018, and a hearing was held on October 15, 2019.
−Removed: In the second quarter of fiscal 2020, the 8th Circuit Court of Appeals denied the appeal, and this matter is now closed.
The Company is one of dozens of companies that have been named in various lawsuits alleging that drug manufacturers, retailers and distributors contributed to the national opioid epidemic.
1 unchanged sentence
In accordance with the Stock Purchase Agreement dated January 10, 2013, between New Albertson’s Inc.
−Removed: and the Company (the “Stock Purchase Agreement”), New Albertson’s Inc.
−Removed: is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies.
+Added: (“New Albertson’s”) and the Company (the “Stock Purchase Agreement”), New Albertson’s is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies.
In one of the MDL cases, MDL No.
2 unchanged sentences
UNFI is vigorously defending these matters, which it believes are without merit.
+Added: 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.
+Added: alleging the defendants committed fraud by improperly reporting inflated prices for prescription drugs for members of health plans.
+Added: The Plaintiffs assert six causes of action against the defendants:
+Added: 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.
+Added: 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.
+Added: Plaintiffs seek an unspecified amount of damages.
+Added: Similar to the above case, for the majority of the relevant period Supervalu and Albertson’s operated as a combined company.
+Added: In March 2013, Supervalu divested Albertson’s and pursuant to the Stock Purchase Agreement, Albertson’s is responsible for any claims regarding its pharmacies.
+Added: 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.
+Added: On February 26, 2021, defendants filed a motion to dismiss.
+Added: The hearing on the remand motion and motions to dismiss occurred on May 20, 2021.
+Added: 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").
2 unchanged sentences
Supervalu, New Albertson's, Inc., et al, which is pending in the U.S.
−Removed: 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.
+Added: 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
+Added: 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.
−Removed: Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertsons in excess of $ 100 million , not including trebling and statutory penalties.
+Added: 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.
−Removed: In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant the Stock Purchase Agreement.
−Removed: 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
−Removed: by relators) would be approximately $ 24 million , not including trebling and statutory penalties.
+Added: In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant to the Stock Purchase Agreement.
+Added: 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.
−Removed: On August 5, 2019, the Court granted one of relators’ summary judgment motions finding that defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices.
−Removed: On July 2, 2020, the Court granted defendants’ summary judgment motion and denied relators’ motion, dismissing the case.
−Removed: On July 9, 2020 the relators filed a notice of appeal with the 7th Circuit Court of Appeals.
−Removed: In November 2018, a putative nationwide class action was filed in Rhode Island state court, which the Company removed to U.S.
−Removed: District Court for the District of Rhode Island.
−Removed: In North Country Store v.
−Removed: 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.
−Removed: On March 5, 2019, the Company answered the complaint denying the allegations.
−Removed: 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.
−Removed: On August 10, 2020, the Court granted final approval of the settlement and this matter is now closed.
−Removed: From time to time, the Company receives notice of claims or potential claims, becomes involved in litigation, alternative dispute resolution such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business, including investigations and claims regarding employment law;
+Added: On August 5, 2019, the Court granted one of the relators’ summary judgment motions finding that the defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices.
+Added: On July 2, 2020 the Court granted the defendants’ summary judgment motion and denied the relators’ motion, dismissing the case.
+Added: On July 9, 2020 the relators filed a notice of appeal with the 7th Circuit Court of Appeals, and on September 30, 2020 filed an appellate brief.
+Added: On November 30, 2020, the Company filed its response.
+Added: The hearing before the 7th Circuit Court of Appeals occurred on January 19, 2021.
+Added: On August 12, 2021, the 7th Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor.
+Added: On September 23, 2021, the Relators filed a petition for rehearing.
+Added: 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, including wage and hour (including class actions);
pension plans;
−Removed: labor union disputes, including unfair labor practices, such as claims for back-pay it the context of labor contract negotiations;
−Removed: supplier, customer and service provider contract terms and claims including matter related to supplier or customer insolvency or general inability to pay obligations as they become due;
−Removed: real estate and environmental matters, including claims in connection with our ownership and lease of a substantial amount of real property, both retail and warehouse properties;
+Added: labor union disputes, including unfair labor practices, such as claims for back-pay in the context of labor contract negotiations and other matters;
+Added: 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;
+Added: product liability claims, including those where the supplier may be insolvent and customers and consumers are seeking recovery against the Company;
+Added: 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;
and antitrust.
1 unchanged sentence
Predicting the outcomes of claims and litigation and estimating related costs and exposures involves substantial uncertainties that could cause actual outcomes, costs and exposures to vary materially from current expectations.
−Removed: We regularly monitor our exposure to the loss contingencies associated with these matters and may from time to time change our predictions with respect to outcomes and estimates with respect to related costs and exposures.
−Removed: As of August 1, 2020, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.
+Added: 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.
+Added: As of July 31, 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.
1 unchanged sentence
NOTE 18—DISCONTINUED OPERATIONS
−Removed: In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu.
−Removed: Since the acquisition, the Company sold Hornbacher’s, and sold and exited the retail operations of certain Shoppers locations, Shop ‘n Save St.
−Removed: Louis and Shop ‘n Save East.
−Removed: As discussed further in Note 1—Significant Accounting Policies , in the fourth quarter of fiscal 2020, the Company determined Retail no longer qualified for held for sale presentation and the results of operations, financial position and cash flows of Retail have been revised in order to present Retail within continuing operations.
−Removed: Subsequent to the presentation changes in the fourth quarter of fiscal 2020, discontinued operations contains the historical results of operations, financial position and cash flows of Hornbacher’s, certain Shoppers locations, Shop ‘n Save St.
−Removed: Louis and Shop ‘n Save East.
−Removed: As of August 1, 2020, only certain Shoppers locations are contained in remaining disposal groups that continue to be classified as operations held for sale as discontinued operations.
−Removed: In the second quarter of fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations.
−Removed: During fiscal 2020, within discontinued operations the Company incurred approximately $ 31.1 million in pre-tax aggregate costs and charges related to Shoppers stores that remain within discontinued operations, consisting of $ 24.6 million of operating losses, severance costs and transaction costs during the period of wind-down and $ 6.5 million of property and equipment impairment charges related to impairment reviews.
−Removed: In the second, third and fourth quarters of fiscal 2020, the Company reviewed the recoverability of the remaining assets held for sale and assessed the remaining composition of the Shoppers disposal group based on updated fair values.
+Added: As discussed further in Note 1—Significant Accounting Policies, in the fourth quarter of fiscal 2021, the Company determined it no longer met the held for sale criterion for a probable sale to be completed within 12 months for two of the four Shoppers retail stores remaining in discontinued operations.
+Added: As a result, the Company revised its Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations.
+Added: Prior periods presented in the Consolidated Financial Statements have been conformed to the current period presentation.
+Added: Subsequent to the presentation changes, discontinued operations contain the historical results of stores already disposed of and two remaining Shoppers locations that continue to be classified as operations held for sale as discontinued operations.
+Added: In fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations.
+Added: During fiscal 2020, the Company incurred approximately $ 31 million in pre-tax aggregate costs and charges related to Shoppers stores that remain within discontinued operations, consisting of $ 25 million of operating losses, severance costs and transaction costs during the period of wind-down and $ 6 million of property and equipment impairment charges related to impairment reviews.
In fiscal 2019, the Company closed three of its eight Shop ‘n Save East stores and sold the remaining five Shop ‘n Save East stores to GIANT Food Store, LLC, and did not incur a gain or loss on the sale of this disposal group.
6 unchanged sentences
As part of the sale, Coborn's entered into a long-term agreement for the Company to serve as the primary supplier of the Hornbacher's locations and expand its existing supply arrangements for other Coborn’s locations.
−Removed: In the fourth quarter of fiscal 2019, the Company completed the sale of the pharmacy prescription files and inventory of the Shoppers disposal group.
+Added: In addition, the Company sold the pharmacy prescription files and inventory of all Shoppers stores.
Operating results of discontinued operations are summarized below:
−Removed: (in thousands)
+Added: (in millions) 2021 2020 2019 (1)
+Added: Net sales $ 42 $ 184 $ 407
Cost of sales 28 131 290
+Added: Gross profit 14 53 117
Operating expenses 9 43 98
Restructuring expenses and charges — 33 25
−Removed: Operating loss
+Added: Operating income (loss) 5 ( 23 ) ( 6 )
Other (income) expense, net — — —
−Removed: Loss from discontinued operations before income taxes
+Added: Income (loss) from discontinued operations before income taxes 5 ( 23 ) ( 6 )
Benefit for income taxes ( 1 ) ( 5 ) ( 3 )
−Removed: (Loss) income from discontinued operations, net of tax
+Added: Income (loss) from discontinued operations, net of tax $ 6 $ ( 18 ) $ ( 3 )
(1) These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to August 3, 2019.
−Removed: The Company recorded $ 0.0 million and $ 12.4 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in fiscal 2020 and 2019 , respectively, related to retail disposal groups, which were sold with a supply agreement and were classified within discontinued operations prior to their disposal.
+Added: The Company recorded $ 0 million , $ 0 million and $ 12 million within Net sales from continuing operations attributable to discontinued operations inter-company product purchases in fiscal 2021, 2020 and 2019, respectively, related to retail disposal groups, which were sold with a supply agreement and were classified within discontinued operations prior to their disposal.
These amounts were recorded at gross margin rates consistent with sales to other similar wholesale customers of the acquired Supervalu business.
−Removed: No net sales were recorded within continuing operations for retail banners that the Company disposed of and expects to dispose of without a supply agreement, as they have been eliminated upon consolidation within continuing operations and amounted to $ 125.0 million and $ 221.4 million in fiscal 2020 and 2019 , respectively.
−Removed: The carrying amounts (in thousands) of major classes of assets and liabilities that were classified as held-for-sale on the Consolidated Balance Sheets follows in the table below.
−Removed: (in thousands)
−Removed: August 1, 2020
−Removed: August 3, 2019
+Added: 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.
+Added: These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 22 million, $ 97 million and $ 201 million in fiscal 2021, 2020 and 2019, respectively.
+Added: The following table summarizes the carrying amounts of major classes of assets and liabilities that were classified as held-for-sale on the Consolidated Balance Sheets:
+Added: (in millions) July 31, 2021 August 1, 2020
Current assets
−Removed: Cash and cash equivalents
−Removed: Receivables, net
−Removed: Other current assets
+Added: Inventories, net $ 2 $ 3
Total current assets of discontinued operations 2 3
1 unchanged sentence
Property and equipment 1 3
+Added: Other long-term assets 1 1
Total long-term assets of discontinued operations 2 4
8 unchanged sentences
Total liabilities of discontinued operations 4 12
−Removed: Net (liabilities) assets of discontinued operations
−Removed: NOTE 20—IMMATERIAL CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS
−Removed: For certain of the Company’s subsidiaries prior to fiscal 2020, the Company recognized vendor consideration for vendor rebate programs, product defect allowances, slotting fees and similar programs when received in connection with inventory procurement, instead of deferring the recognition of the vendor consideration as a reduction of inventory on its Consolidated Balance Sheets and subsequently recognizing the vendor consideration within Cost of goods sold when the inventory was sold.
−Removed: The Company considered both the quantitative and qualitative factors within the provisions of SEC Staff Accounting Bulletin No.
−Removed: 99, Materiality , and Staff Accounting Bulletin No.
−Removed: 108, Considering the Effect of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements .
−Removed: Based on evaluation of the misstatements on an individual and aggregate basis, the Company concluded the prior period errors were immaterial to the previously issued consolidated financial statements.
−Removed: As such, the Company has elected to correct the identified error in the prior periods within the current Consolidated Financial Statements.
−Removed: Components of this assessment included that the identified misstatements accumulated over several years and the income statement effect of the correction in any period never materially impacted results of operations.
−Removed: Previously reported balances were revised for these identified misstatements.
−Removed: The revisions reflect the accounting treatment that would have been in place had the vendor consideration been appropriately deferred against the procured inventory and recognized when the inventory was sold.
−Removed: In doing so, balances in the Consolidated Financial Statements to which this note relates have been adjusted to reflect the correction in the proper periods.
−Removed: The correction of the error resulted in a decrease to Inventories of $ 9.0 million in fiscal 2019 and an increase to Deferred income taxes (asset) of $ 2.4 million in fiscal 2019.
−Removed: This resulted in a decrease to Retained earnings of $ 6.6 million , $ 6.9 million and $ 4.0 million for fiscal 2019, 2018 and 2017, respectively.
−Removed: The correction of the error resulted in a Cost of sales decrease of $ 0.4 million and an increase of $ 2.8 million in fiscal 2019 and 2018, respectively, and an increase to (Benefit) provision for income taxes of $ 0.1 million and $ 0.1 million in fiscal 2019 and 2018, respectively.
−Removed: NOTE 21—QUARTERLY FINANCIAL DATA (UNAUDITED)
−Removed: Selected quarterly data provided below has been revised, as compared to the selected quarterly financial data presented in the Company’s Quarterly Reports on Form 10-Q, to present Retail within continuing operations of the Company’s Consolidated Financial Statements and for the immaterial correction discussed within Note 20—Immaterial Correction to Prior Period Financial Statements .
−Removed: In the first quarter of fiscal 2019, the Company acquired Supervalu and recognized certain of its retail disposal groups as businesses held for sale as discontinued operations, which impacted Net (loss) income attributable to United Natural Foods, Inc.
−Removed: and basic and total basic and diluted earnings per share.
−Removed: The following table sets forth certain interim financial information for fiscal 2020 ( 52 weeks) and 2019 ( 53 weeks):
−Removed: (In thousands except per share data)
−Removed: Full Year (1)
−Removed: Net (loss) income from continuing operations
−Removed: (Loss) income from discontinued operations, net of tax
−Removed: Net (loss) income including noncontrolling interests
−Removed: Net (loss) income attributable to United Natural Foods, Inc.
−Removed: Basic (loss) earnings per share:
−Removed: Continuing operations
−Removed: Basic (loss) earnings per share
−Removed: Diluted (loss) earnings per share:
−Removed: Continuing operations
−Removed: Diluted (loss) earnings per share
−Removed: Fiscal 2020 results reflect 52 weeks of operating results, as compared to fiscal 2019 53 weeks.
−Removed: The fourth quarter of fiscal 2020 includes 13 weeks and the fourth quarter of fiscal 2019 contains 14 weeks.
−Removed: (In thousands except per share data)
−Removed: Net income from continuing operations
−Removed: Income from discontinued operations, net of tax
−Removed: Net income (loss) including noncontrolling interests
−Removed: Net income (loss) attributable to United Natural Foods, Inc.
−Removed: Basic earnings per share:
−Removed: Continuing operations
−Removed: Basic income (loss) per share
−Removed: Diluted earnings per share:
−Removed: Continuing operations
−Removed: Diluted income (loss) per share
+Added: Net liabilities of discontinued operations $ — $ ( 5 )
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
1 unchanged sentence
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.