What changed in this filing

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Item 1. Financial Statements

2022-03-09 compared with 2021-12-08 · 223 added, 122 removed, 571 unchanged (38% of the section changed)

38 unchanged sentences

Common stock, $ 0.01 par value, authorized 100.0 shares;

58.7 shares issued and 58.1 shares outstanding at October 30, 2021;

58.8 shares issued and 58.2 shares outstanding at January 29, 2022;

57.0 shares issued and 56.4 shares outstanding at July 31, 2021

13 unchanged sentences

(in millions, except for per share data)

13-Week Period Ended

2021 October 31,

13-Week Period Ended 26-Week Period Ended

2022 January 30,

2021 January 29,

2022 January 30,

Net sales $ 7,416 $ 6,900 $ 14,413 $ 13,584

3 unchanged sentences

Restructuring, acquisition and integration related expenses 5 18 8 34

Loss on sale of assets 1 — 1 —

Operating income 125 107 232 157

2 unchanged sentences

Other, net ( 2 ) ( 2 ) ( 1 ) ( 3 )

Income (loss) from continuing operations before income taxes 76 ( 1 )

Benefit for income taxes ( 1 ) ( 1 )

Income from continuing operations before income taxes 93 75 169 74

Provision for income taxes 25 17 24 16

Net income from continuing operations 68 58 145 58

2 unchanged sentences

Less net income attributable to noncontrolling interests ( 2 ) ( 2 ) ( 3 ) ( 3 )

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

Basic earnings (loss) per share:

Net income attributable to United Natural Foods, Inc.

$ 66 $ 59 $ 142 $ 58

Basic earnings per share:

Continuing operations $ 1.13 $ 1.01 $ 2.47 $ 0.99

Discontinued operations $ — $ 0.04 $ — $ 0.05

Basic earnings (loss) per share $ 1.34 $ ( 0.02 )

Diluted earnings (loss) per share:

Basic earnings per share $ 1.13 $ 1.05 $ 2.47 $ 1.04

Diluted earnings per share:

Continuing operations $ 1.08 $ 0.96 $ 2.33 $ 0.93

Discontinued operations $ — $ 0.04 $ — $ 0.05

Diluted earnings (loss) per share $ 1.25 $ ( 0.02 )

Diluted earnings per share $ 1.08 $ 1.00 $ 2.33 $ 0.98

Weighted average shares outstanding:

6 unchanged sentences

(in millions)

13-Week Period Ended

2021 October 31,

13-Week Period Ended 26-Week Period Ended

2022 January 30,

2021 January 29,

2022 January 30,

Net income including noncontrolling interests $ 68 $ 61 $ 145 $ 61

Other comprehensive income:

Other comprehensive income (loss):

Recognition of pension and other postretirement benefit obligations, net of tax 1 ( 1 ) 2 ( 1 )

5 unchanged sentences

Total comprehensive income attributable to United Natural Foods, Inc.

(1) Amounts are net of tax expense of $ 4 million for the first quarters of fiscal 2022 and fiscal 2021.

$ 81 $ 71 $ 172 $ 82

(1) Amounts are net of tax expense of $ 6 million, $ 3 million, $ 10 million and $ 7 million, respectively.

(2) Amounts are net of tax expense of $ 1 million, $ 0 million , $ 1 million and $ 0 million , respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 13-week periods ended October 30, 2021 and October 31, 2020

For the 13-week periods ended January 29, 2022 and January 30, 2021

(in millions)

4 unchanged sentences

Shares Amount Shares Amount

Balances at July 31, 2021 57.0 $ 1 0.6 $ ( 24 ) $ 599 $ ( 39 ) $ 978 $ 1,515 $ ( 1 ) $ 1,514

Balances at October 30, 2021 58.7 $ 1 0.6 $ ( 24 ) $ 582 $ ( 24 ) $ 1,054 $ 1,589 $ ( 2 ) $ 1,587

Restricted stock vestings 0.1 — — — ( 2 ) — — ( 2 ) — ( 2 )

4 unchanged sentences

Net income — — — — — — 66 66 2 68

Balances at January 29, 2022 58.8 $ 1 0.6 $ ( 24 ) $ 596 $ ( 9 ) $ 1,120 $ 1,684 $ ( 1 ) $ 1,683

Balances at October 31, 2020 56.7 $ 1 0.6 $ ( 24 ) $ 572 $ ( 227 ) $ 828 $ 1,150 $ ( 2 ) $ 1,148

Restricted stock vestings 0.1 — — — ( 2 ) — — ( 2 ) — ( 2 )

Share-based compensation — — — — 11 — — 11 — 11

Other comprehensive income — — — — — 12 — 12 — 12

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

Net income — — — — — — 59 59 2 61

Balances at January 30, 2021 56.8 $ 1 0.6 $ ( 24 ) $ 581 $ ( 215 ) $ 887 $ 1,230 $ ( 1 ) $ 1,229

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED NATURAL FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 26-week periods ended January 29, 2022 and January 30, 2021

(in millions)

Common Stock Treasury Stock Additional

Paid-in Capital Accumulated

Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.

Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity

Shares Amount Shares Amount

Balances at July 31, 2021 57.0 $ 1 0.6 $ ( 24 ) $ 599 $ ( 39 ) $ 978 $ 1,515 $ ( 1 ) $ 1,514

Restricted stock vestings 1.8 — — — ( 35 ) — — ( 35 ) — ( 35 )

Share-based compensation — — — — 23 — — 23 — 23

Other comprehensive income — — — — — 30 — 30 — 30

Distributions to noncontrolling interests — — — — — — — — ( 3 ) ( 3 )

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

Net income — — — — — — 142 142 3 145

Balances at January 29, 2022 58.8 $ 1 0.6 $ ( 24 ) $ 596 $ ( 9 ) $ 1,120 $ 1,684 $ ( 1 ) $ 1,683

Balances at August 1, 2020 55.3 $ 1 0.6 $ ( 24 ) $ 569 $ ( 239 ) $ 838 $ 1,145 $ ( 3 ) $ 1,142

3 unchanged sentences

Other comprehensive income — — — — — 24 — 24 — 24

Net (loss) income — — — — — — ( 1 ) ( 1 ) 1 —

Balances at October 31, 2020 56.7 $ 1 0.6 $ ( 24 ) $ 572 $ ( 227 ) $ 828 $ 1,150 $ ( 2 ) $ 1,148

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

Net income — — — — — — 58 58 3 61

Balances at January 30, 2021 56.8 $ 1 0.6 $ ( 24 ) $ 581 $ ( 215 ) $ 887 $ 1,230 $ ( 1 ) $ 1,229

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

26-Week Period Ended

(in millions) October 30,

2021 October 31,

(in millions) January 29,

2022 January 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Net income from continuing operations 145 58

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 138 144

Share-based compensation 23 23

Loss on sale of assets 1 —

Closed property and other restructuring charges 1 3

2 unchanged sentences

LIFO charge 30 13

Provision for losses on receivables 1 —

Provision (recoveries) for losses on receivables 1 ( 4 )

Non-cash interest expense and other adjustments 15 39

Changes in operating assets and liabilities ( 291 ) ( 34 )

Net cash used in operating activities of continuing operations

( 81 ) ( 55 )

Net cash used in operating activities of discontinued operations

Net cash used in operating activities

( 81 ) ( 58 )

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

16 unchanged sentences

Distributions to noncontrolling interests ( 3 ) ( 1 )

Repayments of other loans — ( 1 )

Net cash provided by financing activities

Other — ( 1 )

Net cash provided by (used in) financing activities

EFFECT OF EXCHANGE RATE ON CASH — —

NET INCREASE IN CASH AND CASH EQUIVALENTS 5 2

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5 ( 6 )

Cash and cash equivalents, at beginning of period 40 47

2 unchanged sentences

Cash paid for interest $ 67 $ 75

Cash (refunds) payments for federal, state, and foreign income taxes, net $ ( 1 ) $ 6

Cash payments for federal, state, and foreign income taxes, net $ — $ 43

Leased assets obtained in exchange for new operating lease liabilities $ 123 $ 117

Leased assets obtained in exchange for new finance lease liabilities $ 1 $ —

Additions of property and equipment included in Accounts payable $ 16 $ 31

9 unchanged sentences

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

References to the first quarters of fiscal 2022 and 2021 relate to the 13-week fiscal quarters ended October 30, 2021 and October 31, 2020, respectively.

References to the second quarter of fiscal 2022 and 2021 relate to the 13-week fiscal quarters ended January 29, 2022 and January 30, 2021, respectively.

References to fiscal 2022 and 2021 year-to-date relate to the 26-week fiscal periods ended January 29, 2022 and January 30, 2021, respectively.

Basis of Presentation

12 unchanged sentences

The prior period presented in the Condensed Consolidated Financial Statements have been conformed to the current period presentation.

The remaining two stores included in discontinued operations were sold subsequent to the end of the first quarter of fiscal 2022.

The remaining two stores included in discontinued operations were sold in the second quarter of fiscal 2022.

Use of Estimates

6 unchanged sentences

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

As of October 30, 2021 and July 31, 2021, the Company had net book overdrafts of $ 280 million and $ 268 million, respectively.

As of January 29, 2022 and July 31, 2021, the Company had net book overdrafts of $ 292 million and $ 268 million, respectively.

Reclassifications

3 unchanged sentences

Substantially all of the Company’s inventories consist of finished goods.

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 and the replacement cost method.

To value discrete inventory items at lower of cost or net realizable value 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 and the replacement cost method.

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.

1 unchanged sentence

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.

If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 78 million and $ 67 million at October 30, 2021 and July 31, 2021, respectively.

If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $ 97 million and $ 67 million at January 29, 2022 and July 31, 2021, respectively.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

19 unchanged sentences

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

• Retail , which 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;

• Retail , which reflects our Retail segment, including Cub Foods and Shoppers stores, excluding Shoppers stores that were held for sale within discontinued operations;

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

2 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) October 30, 2021

(in millions) January 29, 2022

Customer Channel Wholesale Retail Other Eliminations (1)

7 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) October 31, 2020

(in millions) January 30, 2021

Customer Channel Wholesale Retail Other Eliminations (1)

6 unchanged sentences

Total $ 6,618 $ 633 $ 55 $ ( 406 ) $ 6,900

Net Sales for the 26-Week Period Ended

(in millions) January 29, 2022

Customer Channel Wholesale Retail Other Eliminations (1)

Chains $ 6,325 $ — $ — $ — $ 6,325

Independent retailers 3,655 — — — 3,655

Supernatural 2,831 — — — 2,831

Retail — 1,245 — — 1,245

Other 1,055 — 106 — 1,161

Eliminations — — — ( 804 ) ( 804 )

Total $ 13,866 $ 1,245 $ 106 $ ( 804 ) $ 14,413

Net Sales for the 26-Week Period Ended

(in millions) January 30, 2021

Customer Channel Wholesale Retail Other Eliminations (1)

Chains $ 6,133 $ — $ — $ — $ 6,133

Independent retailers 3,373 — — — 3,373

Supernatural 2,512 — — — 2,512

Retail — 1,239 — — 1,239

Other 1,038 — 111 — 1,149

Eliminations — — — ( 822 ) ( 822 )

Total $ 13,056 $ 1,239 $ 111 $ ( 822 ) $ 13,584

(1) 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.

4 unchanged sentences

Accounts and notes receivable are as follows:

(in millions) October 30, 2021 July 31, 2021

(in millions) January 29, 2022 July 31, 2021

Customer accounts receivable $ 1,254 $ 1,115

6 unchanged sentences

Restructuring, acquisition and integration related expenses were as follows:

13-Week Period Ended

(in millions) October 30, 2021 October 31, 2020

13-Week Period Ended 26-Week Period Ended

(in millions) January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

Restructuring and integration costs $ 4 $ 14 $ 7 $ 29

6 unchanged sentences

Change in foreign exchange rates — — —

Goodwill as of October 30, 2021 $ 10 (1)

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million as of July 31, 2021 and October 30, 2021.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million as of July 31, 2021 and October 30, 2021.

Goodwill as of January 29, 2022

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million as of July 31, 2021 and January 29, 2022.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million as of July 31, 2021 and January 29, 2022.

Identifiable intangible assets, net consisted of the following:

October 30, 2021 July 31, 2021

January 29, 2022 July 31, 2021

(in millions) Gross Carrying

12 unchanged sentences

Intangibles assets, net $ 1,187 $ 332 $ 855 $ 1,187 $ 296 $ 891

Amortization expense was $ 18 million and $ 23 million for the first quarters of fiscal 2022 and 2021, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of October 30, 2021 is as follows:

Amortization expense was $ 18 million and $ 19 million for the second quarters of fiscal 2022 and 2021, respectively, and $ 36 million and $ 42 million for fiscal 2022 and 2021 year-to-date, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of January 29, 2022 is as follows:

(in millions)

4 unchanged sentences

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

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

Condensed Consolidated Balance Sheets Location Fair Value at January 29, 2022

(in millions) Level 1 Level 2 Level 3

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

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

Mutual funds Other long-term assets

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

Interest rate swaps designated as hedging instruments Accrued expenses and other current liabilities

10 unchanged sentences

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

As of October 30, 2021, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 27 million;

As of January 29, 2022, a 100 basis point increase in forward LIBOR interest rates would increase the fair value of the interest rate swaps by approximately $ 24 million;

a 100 basis point decrease in forward LIBOR interest rates would decrease the fair value of the interest rate swaps by approximately $ 25 million.

5 unchanged sentences

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

October 30, 2021 July 31, 2021

January 29, 2022 July 31, 2021

(in millions) Carrying Value Fair Value Carrying Value Fair Value

5 unchanged sentences

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

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

The Company’s interest rate swap contracts are designated as cash flow hedges as of January 29, 2022.

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

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

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

Details of active swap contracts as of January 29, 2022, which are all pay fixed and receive floating, are as follows:

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

20 unchanged sentences

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

In the first quarter of fiscal 2021, in conjunction with the $ 500 million fixed rate senior unsecured notes offering described below in Note 8—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.

In fiscal 2021 year-to-date, in conjunction with the $ 500 million fixed rate senior unsecured notes offering described below in Note 8—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.

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

9 unchanged sentences

The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pretax basis, are as follows:

13-Week Period Ended

October 30, 2021 October 31, 2020

(in millions) Interest expense, net

13-Week Period Ended 26-Week Period Ended

January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

(in millions) Interest expense, net Interest expense, net

Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded

$ 44 $ 51 $ 84 $ 120

Loss on cash flow hedging relationships:

3 unchanged sentences

(in millions) Average Interest Rate at

October 30, 2021

Fiscal Maturity Year October 30,

January 29, 2022

Fiscal Maturity Year January 29,

2022 July 31,

32 unchanged sentences

Refer to Note 5—Goodwill and Intangible Assets, Net for additional information.

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

As of January 29, 2022, the U.S.

Borrowers’ Borrowing Base, net of $ 178 million of reserves, was $ 2,439 million, which is above the $ 2,050 million limit of availability to the U.S.

Borrowers under the ABL Credit Facility.

As of October 30, 2021, the Canadian Borrower’s Borrowing Base, net of $ 6 million of reserves, was $ 44 million, which is below the $ 50 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $ 2,094 million for ABL Loans and letters of credit under the ABL Credit Facility.

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

As of January 29, 2022, the Canadian Borrower’s Borrowing Base, net of $ 5 million of reserves, was $ 46 million, which is below the $ 50 million limit of availability to the Canadian Borrower under the ABL Credit facility, resulting in total availability of $ 2,096 million for ABL Loans and letters of credit under the ABL Credit Facility.

As of January 29, 2022, the U.S.

Borrowers had $ 990 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 $ 6 million and are included in Long-term debt on the Condensed Consolidated Balance Sheets.

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

As of January 29, 2022, the U.S.

Borrowers had $ 115 million in letters of credit and the Canadian Borrower had no letters of credit outstanding under the ABL Credit Facility.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,066 million as of October 30, 2021.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 991 million as of January 29, 2022.

ABL availability (in millions):

October 30, 2021

January 29, 2022

Total availability for ABL Loans and letters of credit $ 2,096

4 unchanged sentences

Interest rates and fees under the ABL Credit Facility:

Range of Facility Rates and Fees (per annum) October 30, 2021

Range of Facility Rates and Fees (per annum) January 29, 2022

and Canadian Borrowers’ applicable margin for base rate loans — % - 0.50 %

6 unchanged sentences

Term Loan Facility

The Term Loan Agreement, by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as 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 $ 1,800 million in a seven-year tranche (the “Term Loan Facility”).

The Term Loan Agreement, by and among the Company and Supervalu (collectively, the “Term Borrowers”), the financial institutions that are parties thereto as lenders, Credit Suisse, as administrative agent for the Lenders, and the other parties thereto, provides for senior secured first lien term loans in an initial aggregate principal amount of $ 1,800 million in a seven-year tranche (the “Term Loan Facility”).

The loans under the Term Loan Facility will be payable in full on October 22, 2025.

3 unchanged sentences

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.

As of October 30, 2021 and July 31, 2021, there was $ 672 million and $ 676 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

As of January 29, 2022 and July 31, 2021, there was $ 668 million and $ 676 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

The Company must 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 of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year.

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.

The potential amount of prepayment from Excess Cash Flow in fiscal 2022 that may be required in fiscal 2023 is not reasonably estimable as of October 30, 2021.

As of October 30, 2021, the Company had borrowings of $ 994 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $ 17 million and an original issue discount on debt of $ 16 million.

As of October 30, 2021, no amount of the Term Loan Facility was classified as current.

As of October 30, 2021, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:

The potential amount of prepayment from Excess Cash Flow in fiscal 2022 that may be required in fiscal 2023 is not reasonably estimable as of January 29, 2022.

As of January 29, 2022, the Company had borrowings of $ 844 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $ 15 million and an original issue discount on debt of $ 12 million.

As of January 29, 2022, no amount of the Term Loan Facility was classified as current.

As of January 29, 2022, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:

(i) a base rate plus a margin of 2.25 % or (ii) a LIBOR rate plus a margin of 3.25 %;

1 unchanged sentence

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

Subsequent to the end of the first quarter of fiscal 2022, on November 10, 2021, the Company entered into an amendment (the “Second Term Loan Amendment”) amending the Term Loan Agreement.

On November 10, 2021, the Company entered into an amendment (the “Second Term Loan Amendment”) amending the Term Loan Agreement.

The amendment provides for (i) the reduction of the applicable margin for LIBOR loans from 3.50 % to 3.25 % and the applicable margin for base rate loans from 2.50 % to 2.25 %, and (ii) other administrative changes.

2 unchanged sentences

This prepayment will count towards any requirement to prepay the Term Loan Facility from Excess Cash Flow (as defined in the Term Loan Agreement) generated during fiscal 2022, which would be due in fiscal 2023.

In connection with this prepayment, the Company incurred a loss on debt extinguishment of $ 5 million related to unamortized debt issuance costs and a loss on unamortized original issue discount, which will be recorded within Interest expense, net in the second quarter of fiscal 2022.

In connection with this prepayment, the Company incurred a loss on debt extinguishment of $ 5 million related to unamortized debt issuance costs and a loss on unamortized original issue discount, which was recorded within Interest expense, net in the second quarter of fiscal 2022.

Subsequent to the end of the second quarter of fiscal 2022, in March 2022, the Company made a $ 44 million voluntary prepayment on the Term Loan Facility from the majority of the anticipated after-tax net proceeds from the transactions described further in Note 16—Subsequent Events.

NOTE 9—COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2022 are as follows:

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2022 year-to-date are as follows:

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

Accumulated other comprehensive income (loss) at July 31, 2021 $ — $ 37 $ ( 16 ) $ ( 60 ) $ ( 39 )

Other comprehensive income before reclassifications 1 — — 5 6

Other comprehensive income (loss) before reclassifications 1 — ( 2 ) 13 12

Amortization of amounts included in net periodic benefit income — 2 — — 2

Amortization of cash flow hedges 1 — — 15 16

Net current period Other comprehensive income 1 1 — 13 15

Accumulated other comprehensive income (loss) at October 30, 2021 $ 1 $ 38 $ ( 16 ) $ ( 47 ) $ ( 24 )

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

Net current period Other comprehensive income (loss) 2 2 ( 2 ) 28 30

Accumulated other comprehensive income (loss) at January 29, 2022 $ 2 $ 39 $ ( 18 ) $ ( 32 ) $ ( 9 )

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

(in millions) Benefit Plans Foreign Currency Translation Swap Agreements Total

1 unchanged sentence

Other comprehensive income before reclassifications — 3 5 8

Amortization of amounts included in net periodic benefit income ( 1 ) — — ( 1 )

Amortization of cash flow hedges — — 17 17

Net current period Other comprehensive income — — 12 12

Accumulated other comprehensive loss at October 31, 2020 $ ( 116 ) $ ( 21 ) $ ( 90 ) $ ( 227 )

Net current period Other comprehensive (loss) income ( 1 ) 3 22 24

Accumulated other comprehensive loss at January 30, 2021 $ ( 117 ) $ ( 18 ) $ ( 80 ) $ ( 215 )

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

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

(in millions) October 30,

2021 October 31,

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

(in millions) January 29,

2022 January 30,

2021 January 29,

2022 January 30,

Pension and postretirement benefit plan net assets:

1 unchanged sentence

$ 1 $ ( 1 ) $ 2 $ ( 1 ) Net periodic benefit income, excluding service cost

Income tax benefit — — Benefit for income taxes

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

Total reclassifications, net of tax $ 1 $ ( 1 ) $ 2 $ ( 1 )

1 unchanged sentence

Reclassification of cash flow hedges $ 10 $ 12 $ 21 $ 24 Interest expense, net

Income tax benefit ( 3 ) ( 3 ) Benefit for income taxes

Income tax benefit ( 3 ) ( 4 ) ( 6 ) ( 7 ) Provision for income taxes

Total reclassifications, net of tax $ 7 $ 8 $ 15 $ 17

Other cash flow hedges:

Reclassification of cash flow hedge $ 2 $ — $ 2 $ — Cost of sales

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

Total reclassification, net of tax $ 1 $ — $ 1 $ —

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

As of October 30, 2021, the Company expects to reclassify $ 35 million related to unrealized derivative losses out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

As of January 29, 2022, the Company expects to reclassify $ 24 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 10—SHARE-BASED AWARDS

In the first quarter of fiscal 2022, the Company granted restricted stock units and performance share units to its directors, executive officers and certain employees representing a right to receive an aggregate of 1.1 million shares.

As of October 30, 2021, there were 2.8 million shares available for issuance under the Amended and Restated 2020 Equity Incentive Plan.

In fiscal 2022 year-to-date, the Company granted restricted stock units and performance share units to its directors, executive officers and certain employees representing a right to receive an aggregate of 1.1 million shares.

As of January 29, 2022, there were 2.9 million shares available for issuance under the Amended and Restated 2020 Equity Incentive Plan.

NOTE 11—BENEFIT PLANS

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Pension Benefits Other Postretirement Benefits

(in millions) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

(in millions) January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

Net Periodic Benefit (Income) Cost

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Expected return on plan assets ( 20 ) ( 26 ) — —

Amortization of prior service credit — — 1 —

Amortization of prior service cost (credit) — — 1 ( 1 )

Amortization of net actuarial loss (gain) — 1 — ( 1 )

Net periodic benefit (income) cost $ ( 11 ) $ ( 16 ) $ 1 $ ( 1 )

Contributions to benefit plans $ — $ ( 1 ) $ ( 1 ) $ ( 1 )

26-Week Period Ended

Pension Benefits Other Postretirement Benefits

(in thousands) January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

Net Periodic Benefit (Income) Cost

Interest cost $ 19 $ 18 $ — $ 1

Expected return on plan assets ( 41 ) ( 52 ) — —

Amortization of prior service cost (credit) — — 2 ( 1 )

Amortization of net actuarial loss (gain) — 1 — ( 1 )

Net periodic benefit (income) cost $ ( 22 ) $ ( 33 ) $ 2 $ ( 1 )

Contributions to benefit plans $ — $ ( 1 ) $ ( 2 ) $ ( 2 )

Defined Benefit Plan Merger

In the second quarter of fiscal 2022, the Company merged the Unified Grocers, Inc.

Cash Balance Plan into the SUPERVALU INC.

Retirement Plan.

The merger did not impact the amount of plan assets and accumulated benefit plan obligations;

however, as a result of the merger, former Unified Grocers, Inc.

Cash Balance Plan participants will receive all benefits from the SUPERVALU INC.

Retirement Plan.

As such, the funded status of the remaining plan in the Condensed Consolidated Balance Sheets has been presented within a single asset balance within Other long-term assets.

Pension Contributions

No minimum pension contributions are required to be made under either the SUPERVALU INC.

Retirement Plan or the Unified Grocers, Inc.

Cash Balance Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2022.

No minimum pension contributions are required to be made under the SUPERVALU INC.

Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2022.

The Company expects to contribute approximately $ 2 million and $ 3 million, respectively, to its other non-qualified pension plans and postretirement benefit plans in fiscal 2022.

Multiemployer Pension Plans

The Company contributed $ 11 million and $ 12 million in the first quarters of fiscal 2022 and 2021, respectively, to continuing and discontinued operations multiemployer pension plans.

The Company contributed $ 11 million and $ 12 million in the second quarters of fiscal 2022 and 2021, respectively, and $ 22 million and $ 24 million in fiscal 2022 and 2021 year-to-date, respectively, to multiemployer pension plans.

NOTE 12—INCOME TAXES

The effective tax rate for the first quarter of fiscal 2022 was a benefit of 1.3 % on pre-tax income, primarily driven by discrete tax benefits from employee stock award vestings and the release of uncertain tax positions that occurred in the quarter.

NOTE 13—EARNINGS (LOSS) PER SHARE

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

13-Week Period Ended

(in millions, except per share data) October 30,

2021 October 31,

The effective tax rate for the second quarter of fiscal 2022 was 26.9 % compared to 22.7 % for the second quarter of fiscal 2021.

The change in the effective tax rate was primarily driven by a tax benefit in the second quarter of fiscal 2021 from the release of reserves for unrecognized tax positions.

The effective tax rate for fiscal 2022 year-to-date was 14.2 % compared to 21.6 % for fiscal 2021 year-to-date primarily driven by discrete tax benefits from employee stock award vestings that occurred in fiscal 2022 year-to-date.

The impacts from the release of unrecognized tax positions in fiscal 2022 year-to-date were comparable to fiscal 2021 year-to-date.

NOTE 13—EARNINGS PER SHARE

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

13-Week Period Ended 26-Week Period Ended

(in millions, except per share data) January 29,

2022 January 30,

2021 January 29,

2022 January 30,

Basic weighted average shares outstanding 58.3 56.1 57.6 55.7

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

2.7 3.1 3.4 3.4

Diluted weighted average shares outstanding 61.0 59.2 61.0 59.1

Basic earnings (loss) per share:

Basic earnings per share:

Continuing operations $ 1.13 $ 1.01 $ 2.47 $ 0.99

Discontinued operations $ — $ 0.04 $ — $ 0.05

Basic earnings (loss) per share $ 1.34 $ ( 0.02 )

Diluted earnings (loss) per share:

Basic earnings per share $ 1.13 $ 1.05 $ 2.47 $ 1.04

Diluted earnings per share:

Continuing operations $ 1.08 $ 0.96 $ 2.33 $ 0.93

Discontinued operations $ — $ 0.04 $ — $ 0.05

Diluted earnings (loss) per share $ 1.25 $ ( 0.02 )

Diluted earnings per share $ 1.08 $ 1.00 $ 2.33 $ 0.98

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

(1) The computation of diluted earnings per share from discontinued operations is calculated using diluted weighted average shares outstanding, which includes the net effect of dilutive stock awards based on the treasury stock method of approximately 3.9 million shares for the first quarter of fiscal 2021.

0.4 1.1 0.9 1.2

NOTE 14—BUSINESS SEGMENTS

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

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

13-Week Period Ended

(in millions) October 30, 2021 October 31, 2020

The following table provides continuing operations information by reportable segment, including Net sales, Adjusted EBITDA with a reconciliation to Income from continuing operations before income taxes, depreciation and amortization, and payments for capital expenditures:

13-Week Period Ended 26-Week Period Ended

(in millions) January 29, 2022 January 30, 2021 January 29, 2022 January 30, 2021

Wholesale (1)

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Retail 643 633 1,245 1,239

Other 50 55 106 111

Eliminations ( 409 ) ( 406 ) ( 804 ) ( 822 )

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Wholesale $ 159 $ 188 $ 323 $ 311

Retail 30 26 52 51

Other 12 ( 8 ) 16 ( 4 )

Eliminations — ( 2 ) ( 1 ) 4

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Restructuring, acquisition and integration related expenses ( 5 ) ( 18 ) ( 8 ) ( 34 )

Other retail expense — ( 2 )

Income (loss) from continuing operations before income taxes $ 76 $ ( 1 )

Loss on sale of assets ( 1 ) — ( 1 ) —

Multi-employer pension plan withdrawal benefit 8 — 8 —

Other retail benefit (expense) 1 ( 1 ) 1 ( 3 )

Income from continuing operations before income taxes $ 93 $ 75 $ 169 $ 74

Depreciation and amortization:

Wholesale $ 61 $ 59 $ 122 $ 127

Retail 8 7 15 14

Other — 1 1 3

Total depreciation and amortization $ 69 $ 67 $ 138 $ 144

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Wholesale $ 46 $ 46 $ 98 $ 84

Retail 4 5 8 8

Total capital expenditures $ 50 $ 51 $ 106 $ 92

(1) As presented in Note 3—Revenue Recognition, for the first quarters of fiscal 2022 and 2021, the Company recorded $ 339 million and $ 365 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.

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

(1) As presented in Note 3—Revenue Recognition, for the second quarters of fiscal 2022 and 2021, the Company recorded $ 356 million and $ 354 million, respectively, and $ 695 million and $ 719 million in fiscal 2022 and 2021 year-to-date, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.

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

(in millions) October 30,

(in millions) January 29,

2022 July 31,

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Guarantees and Contingent Liabilities

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

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of January 29, 2022.

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

The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to nine years , with a weighted average remaining term of approximately five years .

The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to eight years , with a weighted average remaining term of approximately five years .

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

1 unchanged sentence

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

As of October 30, 2021, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 27 million ($ 23 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of October 30, 2021, a total estimated loss of $ 1 million is recorded in the Condensed Consolidated Balance Sheets.

As of January 29, 2022, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 25 million ($ 22 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of January 29, 2022, a total estimated loss of $ 1 million is recorded in the Condensed 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.

20 unchanged sentences

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

As of October 30, 2021, the Company had approximately $ 243 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

As of January 29, 2022, 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

18 unchanged sentences

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

On September 21, 2021, the Federal District Court remanded the case to Minnesota state court and did not rule on the motion to dismiss which will be refiled in state court.

On September 21, 2021, the Federal District Court remanded the case to Minnesota state court and did not rule on the motion to dismiss, which was refiled in state court.

On February 1, 2022, the state court denied the motion to dismiss.

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

30 unchanged sentences

Management regularly monitors the Company’s exposure to the loss contingencies associated with these matters and may from time to time change its predictions with respect to outcomes and estimates with respect to related costs and exposures.

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

As of January 29, 2022, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

Although management believes it has made appropriate assessments of potential and contingent loss in each of these cases based on current facts and circumstances, and application of prevailing legal principles, there can be no assurance that material differences in actual outcomes from management’s current assessments, costs and exposures relative to current predictions and estimates, or material changes in such predictions or estimates will not occur.

The occurrence of any of the foregoing, could have a material adverse effect on our financial condition, results of operations or cash flows.

NOTE 16—SUBSEQUENT EVENTS

Subsequent to the end of the second quarter of fiscal 2022, in February 2022, the Company acquired the real property of a previously leased distribution center for approximately $ 153 million.

Immediately following this acquisition, the Company monetized this property through a sale-leaseback transaction, pursuant to which the Company received $ 225 million in aggregate proceeds for the sale of the property.

Under the terms of the sale-leaseback agreement, the Company entered into a lease for the distribution center for a term of 15 years.

The Company expects to record a pre-tax gain on sale in the third quarter of fiscal 2022 currently estimated to be approximately $ 85 million as a result of the transactions, which primarily reflects the pre-tax net proceeds of the transactions.

Refer to Note 8—Long-Term Debt for discussion on a voluntary prepayment made under the Term Loan Facility subsequent to the end of the second quarter of fiscal 2022.

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

What changed 10-Q

Item 1. Financial Statements