What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-09-27 compared with 2021-09-28 · 358 added, 441 removed, 1401 unchanged (36% of the section changed)

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Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

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We have audited the accompanying consolidated balance sheets of United Natural Foods, Inc.

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).

and subsidiaries (the Company) as of July 30, 2022 and July 31, 2021, 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 30, 2022, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of July 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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.

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 30, 2022 and July 31, 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended July 30, 2022, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 30, 2022, 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

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of August 4, 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases .

Basis for Opinions

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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;

expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(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;

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.

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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.

As discussed in Note 13 to the consolidated financial statements, the Company sponsors a defined benefit pension plan, covering primarily former Supervalu employees who meet certain eligibility requirements.

The fair value of the defined benefit pension obligation at year end was $1.71 billion, offset by plan assets totaling $1.72 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.

We identified the assessment of the value of the defined benefit pension obligation as a critical audit matter because of the subjectivity in evaluating the discount rates used, and the impact small changes in this assumption would have on the measurement of the defined benefit pension obligation.

Additionally, the audit effort associated with the evaluation of the discount rates required specialized skills and knowledge.

The determination of the Company’s defined benefit pension obligation with respect to the plan is dependent, in part, on the selection of certain actuarial assumptions, including the discount rate and mortality rate used.

We identified the assessment of the value of the defined benefit pension obligation as a critical audit matter because of the subjectivity in evaluating the discount rate used, and the impact small changes in this assumption would have on the measurement of the defined benefit pension obligation.

Additionally, the audit effort associated with the evaluation of the discount rate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s defined benefit pension obligation process, including a control related to the development of the discount rates used.

We compared the methodology used in the current year to develop the discount rates to the methodology used in prior periods.

In addition, we involved an actuarial professional with specialized skills and knowledge, who assisted in the evaluation of the Company’s discount rates, by evaluating the methodology utilized by the Company and assessing the selected discount rates against publicly available discount rate benchmark information.

We compared the methodology used in the current year to develop the discount rate to the methodology used in prior periods.

In addition, we involved an actuarial professional with specialized skills and knowledge, who assisted in the evaluation of the Company’s discount rate by evaluating the methodology utilized by the Company and assessing the selected discount rate against publicly available discount rate benchmark information.

We have served as the Company’s auditor since 1993.

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CONSOLIDATED BALANCE SHEETS

(In millions, except for per share data)

2021 August 1,

(in millions, except for par amounts)

2022 July 31,

Cash and cash equivalents $ 44 $ 41

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Pension and other postretirement benefit obligations 18 53

Deferred income taxes 8 —

Other long-term liabilities 194 299

Long-term liabilities of discontinued operations — 2

Total liabilities 5,836 6,011

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58.9 shares issued and 58.3 shares outstanding at July 30, 2022;

55.3 shares issued and 54.7 shares outstanding at August 1, 2020

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

Additional paid-in capital 608 599

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July 30, 2022

August 1, 2020

July 31, 2021

August 1, 2020

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July 30, 2022

August 1, 2020

July 31, 2021

August 1, 2020

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

42 ( 46 ) ( 61 )

Foreign currency translation adjustments ( 3 ) 5 ( 1 )

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

Total other comprehensive income (loss) 19 200 ( 130 )

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$ 267 $ 349 $ ( 404 )

(1) Amounts are net of tax expense (benefit) of $ 52 million, $( 29 ) million and $( 11 ) million, respectively.

(1) Amounts are net of tax (benefit) expense of $( 12 ) million, $ 52 million and $( 29 ) million, respectively.

(2) Amounts are net of tax expense (benefit) of $ 22 million, $ 13 million and $( 16 ) million, respectively.

(3) Amount is net of tax expense of $ 1 million, $ 0 million , and $ 0 million , respectively.

See accompanying Notes to Consolidated Financial Statements.

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Shares Amount Shares Amount

Balances at July 28, 2018 51.0 $ 1 0.6 $ ( 24 ) $ 484 $ ( 14 ) $ 1,393 $ 1,840 $ — $ 1,840

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

Restricted stock vestings 0.5 — — — ( 1 ) — — ( 1 ) — ( 1 )

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Other comprehensive loss — — — — — ( 130 ) — ( 130 ) — ( 130 )

Acquisition of noncontrolling interests — — — — — — — — ( 2 ) ( 2 )

Distributions to noncontrolling interests — — — — — — — — ( 5 ) ( 5 )

Proceeds from issuance of common stock, net 1.3 — — — 14 — — 14 — 14

Net loss — — — — — — ( 285 ) ( 285 ) — ( 285 )

Net (loss) income — — — — — — ( 274 ) ( 274 ) 5 ( 269 )

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

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Share-based compensation — — — — 45 — — 45 — 45

Other comprehensive loss — — — — — ( 130 ) — ( 130 ) — ( 130 )

Other comprehensive income — — — — — 200 — 200 — 200

Distributions to noncontrolling interests — — — — — — — — ( 4 ) ( 4 )

Proceeds from issuance of common stock, net 0.1 — — — 1 — — 1 — 1

Net (loss) income — — — — — — ( 274 ) ( 274 ) 5 ( 269 )

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

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

Acquisition of noncontrolling interests — — — — ( 2 ) — — ( 2 ) — ( 2 )

Net income — — — — — — 149 149 6 155

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

Restricted stock vestings 1.7 — — — ( 41 ) — — ( 41 ) — ( 41 )

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Distributions to noncontrolling interests — — — — — — — — ( 4 ) ( 4 )

Proceeds from the issuance of common stock, net 0.1 — — — 1 — — 1 — 1

Proceeds from issuance of common stock, net 0.2 — — — 8 — — 8 — 8

Acquisition of noncontrolling interests — — — — ( 2 ) — — ( 2 ) — ( 2 )

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(in millions) July 30, 2022

August 1, 2020

July 31, 2021

August 1, 2020

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Net pension and other postretirement benefit income ( 40 ) ( 85 ) ( 39 )

Deferred income tax benefit ( 5 ) ( 71 ) ( 61 )

Deferred income tax expense (benefit) 55 ( 5 ) ( 71 )

LIFO charge 158 24 18

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Accrued expenses and other liabilities 75 137 ( 42 )

Net cash provided by operating activities of continuing operations 614 457 293

Net cash used in operating activities of discontinued operations — — ( 8 )

Net cash provided by operating activities 331 614 457

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Payments for capital expenditures ( 251 ) ( 310 ) ( 173 )

Purchases of acquired businesses, net of cash acquired — — ( 2,292 )

Proceeds from dispositions of assets 230 82 147

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Other 2 ( 1 ) —

Net cash (used in) provided by financing activities ( 384 ) ( 453 ) 1,996

Net cash used in financing activities ( 279 ) ( 384 ) ( 453 )

EFFECT OF EXCHANGE RATE ON CASH — 1 ( 1 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 6 ) 2 22

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3 ( 6 ) 2

Cash and cash equivalents, at beginning of period 41 47 45

Cash and cash equivalents, at end of period $ 44 $ 41 $ 47

cash and cash equivalents of discontinued operations — — ( 1 )

Cash and cash equivalents $ 41 $ 47 $ 44

Supplemental disclosures of cash flow information:

Cash paid for interest $ 134 $ 146 $ 182

Cash (refunds) payments for federal, state and foreign income taxes, net $ ( 16 ) $ ( 22 ) $ 78

Cash payments (refunds) for federal, state and foreign income taxes, net $ 5 $ ( 16 ) $ ( 22 )

Additions of property and equipment included in Accounts payable $ 45 $ 35 $ 27

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

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.

References to fiscal 2022, fiscal 2021 and fiscal 2020, or 2022, 2021 and 2020, as presented in tabular disclosure, relate to the 52-week, 52-week and 52-week fiscal periods ended July 30, 2022, July 31, 2021 and August 1, 2020, respectively.

Basis of Presentation

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The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).

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.

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

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.

Refer to Note 18—Discontinued Operations for additional information about the Company’s discontinued operations.

Discontinued Operations

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.

(“Supervalu”) acquisition date.

As a result, the Company revised its Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations.

Prior periods presented in the Consolidated Financial Statements have been conformed to the current period presentation.

The remaining two stores previously included in discontinued operations were sold in fiscal 2022.

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.

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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.

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.

Accounting Standards Codification (“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.

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.

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Operating Expenses

Operating expenses include salaries and wages, employee benefits, warehousing and delivery, selling, occupancy, insurance, administrative, share-based compensation, depreciation, and amortization expense.

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.

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.

Operating expenses include distribution expenses of warehousing, delivery, purchasing, receiving, selecting, and outbound transportation expenses, and selling and administrative expenses.

These expenses include salaries and wages, employee benefits, occupancy, insurance, depreciation and amortization expense, and share-based compensation expense.

Restructuring, Acquisition and Integration Related Expenses

Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, facility closure asset impairment charges and costs, share-based compensation acceleration charges and acquisition and integration related expenses.

Integration related 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.

(Gain) Loss on Sale of Assets

(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 2022, the Company recorded a gain on sale related to our Riverside, California distribution center.

Refer to Note 11—Leases for additional information on this gain on sale.

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.

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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.

As of July 31, 2021 and August 1, 2020, the Company had net book overdrafts of $ 268 million and $ 268 million, respectively.

As of July 30, 2022 and July 31, 2021, the Company had net book overdrafts of $ 266 million and $ 268 million, respectively.

Accounts Receivable, Net

Accounts receivable primarily consist of trade receivables from customers and net receivable balances from suppliers.

In determining the adequacy of the allowances, management analyzes customer creditworthiness, aging of receivables, payment terms, the value of the collateral, customer financial statements, historical collection experience, aging of receivables and other economic and industry factors.

In instances where a reserve has been recorded for a particular customer, future sales to the customer are conducted using either cash-on-delivery terms, or the account is closely monitored so that as agreed upon payments are received, orders are released;

Accounts receivable, net primarily consist of trade receivables from customers and net receivable balances from suppliers.

a failure to pay results in held or canceled orders.

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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 (“RIM”) 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.

Inventories are evaluated for shortages throughout each fiscal year based on actual physical counts in our distribution facilities and stores.

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 and cash discounts received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales upon the sale of the related products.

Inventory quantities are evaluated 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.

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

As of July 30, 2022 and July 31, 2021, approximately $ 1.9 billion and $ 1.8 billion, respectively, 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 first-in, first-out (“FIFO”) method and primarily included meat, dairy and deli products.

The LIFO reserve was approximately $ 225 million and $ 65 million as of July 30, 2022 and July 31, 2021, respectively, which is recorded within Inventories, net on the Consolidated Balance Sheets.

Property and Equipment, Net and Amortizing Intangible Assets

Property and equipment are stated at cost, less accumulated depreciation and amortization.

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Relative fair value allocations are performed when components of an aggregated goodwill reporting unit become separate reporting units or move from one reporting unit to another.

Goodwill is 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 performs qualitative assessments of Goodwill for impairment.

If the qualitative assessment indicates it is more likely than not that a reporting unit’s fair value is less than the carrying value, or the Company bypasses the qualitative assessment, a quantitative assessment would be performed.

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.

When a quantitative assessment is required, the Company estimates the fair values of its reporting units 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.

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.

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.

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.

Indefinite-lived intangible assets are reviewed for impairment at least annually as of the first day of the fourth fiscal quarter and more frequently if events occur or circumstances change that would indicate that the value of the asset may be impaired.

The Company performed annual qualitative reviews of its indefinite lived intangible assets, including Goodwill, in fiscal 2022, 2021 and 2020, which indicated a quantitative assessment was not required.

When a quantitative assessment is required, the Company estimates the fair value for intangible assets utilizing 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.

Refer to Note 6—Goodwill and Intangible Assets, Net for additional information on the Company’s intangible assets.

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• Level 3 Inputs—One or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation.

Level 3 assets and liabilities include those whose fair value

measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation.

The carrying amounts of the Company’s financial instruments including Cash and cash equivalents, Accounts receivable, Accounts payable and certain Accrued expenses and Other assets and liabilities approximate fair value due to the short-term nature of these instruments.

Share-Based Compensation

Share-based compensation consists of restricted stock units, performance units, stock options and SUPERVALU INC.

(“Supervalu”) replacement awards.

Share-based compensation consists of time-based restricted stock units, performance-based restricted units, stock options and SUPERVALU INC.

(“Supervalu”) Replacement Awards (as defined below).

Share-based compensation expense is measured by the fair value of the award on the date of grant.

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The grant date closing price per share of the Company’s stock is used to determine the fair value of restricted stock units.

Supervalu Replacement Awards are liability classified awards as they may ultimately be settled in cash or shares at the discretion of the employee.

Supervalu Replacement Awards were liability classified awards as they may ultimately be settled in cash or shares at the discretion of the employee.

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.

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Actual results that differ from the assumptions are accumulated and amortized over future periods.

The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension.

The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans.

Pension expense for these plans is recognized as contributions are funded.

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Treasury stock is included in authorized and issued shares but excluded from outstanding shares.

On October 6, 2017, the Company announced that its Board of Directors authorized a share repurchase program for up to $ 200 million of the Company’s outstanding common stock.

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.

The Company did no t repurchase any shares of its common stock in fiscal 2021, 2020 or 2019.

As of July 31, 2021, we have $ 176 million remaining authorized under the share repurchase program.

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.

Comprehensive Income (Loss)

In September 2022, our Board of Directors authorized a new repurchase program for up to $ 200 million of our Common stock over a term of four years (the “2022 Repurchase Program”).

Upon approval of the 2022 Repurchase Program, our Board terminated the repurchase program authorized in October 2017, which provided for the purchase of up to $ 200 million of our outstanding Common stock (the "2017 Repurchase Program").

We did not repurchase any shares of our Common stock in fiscal 2022, 2021 or 2020 pursuant to the 2017 Repurchase Program.

As of July 30, 2022, we had $ 176 million remaining authorized under the 2017 Repurchase Program.

Refer to Note 9—Long-Term Debt for information the Company’s credit facilities’ limitations on its ability to repurchase shares of Common stock above certain levels unless certain conditions and financial tests are met.

Comprehensive Income

Comprehensive income (loss) is reported in the Consolidated Statements of Comprehensive Income.

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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.

The present value of such claims was calculated using a discount rate of 2.0 percent.

The present value of such claims was calculated using a discount rate of 3 % and 2 % as of July 30, 2022 and July 31, 2021, respectively.

Changes in the Company’s self-insurance liabilities consisted of the following:

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Beginning balance $ 103 $ 101 $ 89

Assumed liabilities from the Supervalu acquisition — — 55

Expense 44 48 44

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Ending balance $ 98 $ 103 $ 101

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.

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.

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.

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

The current portion of the self-insurance liability was $ 34 million and $ 32 million as of July 30, 2022 and July 31, 2021, respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The long-term portions were $ 64 million and $ 71 million as of July 30, 2022 and July 31, 2021, respectively, and are included in Other long-term liabilities in the Consolidated Balance Sheets.

The self-insurance liabilities as of the end of the fiscal year are net of discounts of $ 11 million and $ 10 million as of July 30, 2022 and July 31, 2021, respectively.

Amounts due from insurance companies were $ 12 million and $ 17 million as of July 30, 2022 and July 31, 2021, respectively, and are recorded in Prepaid expenses and other current assets and Other long-term assets .

At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement.

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Refer to Note 11—Leases for additional information.

Leases, Prior to Adoption of ASC 842

The Company records lease expense and income using the straight-line method within Operating expenses.

For leases with step rent provisions whereby the rental payments increase over the life of the lease, and for leases where the Company receives rent-free periods, the Company recognizes expense and income based on a straight-line basis based on the total minimum lease payments to be made over the expected lease term.

Deferred rent obligations are included in Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheets.

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.

For transactions in which an owned property is sold and leased back from the buyer, the Company recognizes a sale, and lease accounting is applied if the Company has transferred control of the property to the buyer.

For such transactions, the Company removes the transferred assets from the Consolidated Balance Sheets and a gain or loss on the sale is recognized for the difference between the carrying amount of the asset and the fair value of the transaction as of the transaction date.

If control of the underlying asset is not transferred, the Company does not recognize an asset sale and recognizes a financing lease liability for consideration received.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

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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 .

ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e.

hosting arrangements) to be capitalized under the same premises as authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider.

The Company adopted this standard on a prospective basis in fiscal 2021.

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

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

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

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans .

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

The amendment also removed certain required disclosures.

The Company adopted this guidance in fiscal 2021.

The provisions of the new standard do not have an impact on the Consolidated Financial Statements as this ASU only modified disclosure requirements.

Refer to Note 13—Benefit Plans for disclosures presented for all periods in accordance with this amendment.

Recently Issued Accounting Pronouncements

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

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ASU 2019-12 eliminates certain exceptions to Topic 740’s general principles.

The amendments also improve consistent application and simplifies its application.

The amendments also improve consistency in and simplify its application.

The Company adopted this standard in fiscal 2022.

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

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The temporary guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

ASU 2020-04 is effective from March 12, 2020 and may be applied prospectively through December 31, 2022.

In fiscal 2020, the Company elected the initial expedient to assert probability of its hedged interest rate payments regardless of any expected modification in terms related to reference rate reform.

The Company adopted the remaining applicable practical expedients of the standard in fiscal 2022 when it converted its LIBOR-based contracts to Secured Overnight Financing Rate (“SOFR”).

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

Recently Issued Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments in this update also require additional disclosures for equity securities subject to contractual sale restrictions.

The Company is required to adopt this guidance in the first quarter of fiscal 2025.

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.

The Company is in the process of reviewing the provisions of the new standard but does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

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Typically, when vendor incentives are offered directly by vendors to the Company’s customers, require the achievement of vendor-specified requirements to be earned by customers, and are not negotiated by the Company or in conjunction with any other incentive agreement whereby the Company does not control the direction or earning of these incentives, then Net sales are not reduced as part of the Company’s determination of the transaction price.

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.

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 and Cost of sales are reduced for these customer incentives as part of the determination of the transaction price.

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®.

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These professional services may contain a single performance obligation for each respective service, in which case such services revenues are recognized when delivered.

Revenue from professional services are less than one percent of total Net sales.

Revenues from professional services are less than 1 % 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.

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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;

• 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;

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

• Independent retailers , which includes smaller size accounts including single store and multiple store locations, and group purchasing entities that 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;

• 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 locations that were held for sale within discontinued operations;

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

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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.

(in millions) Net Sales for Fiscal 2021 (52 weeks)

(in millions) Net Sales for Fiscal 2022

Customer Channel Wholesale Retail Other Eliminations (1)

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Total $ 27,824 $ 2,468 $ 219 $ ( 1,583 ) $ 28,928

(in millions) Net Sales for Fiscal 2020 (1) (52 weeks)

(in millions) Net Sales for Fiscal 2021

Customer Channel Wholesale Retail Other Eliminations (1)

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Total $ 25,873 $ 2,442 $ 219 $ ( 1,584 ) $ 26,950

(in millions) Net Sales for Fiscal 2019 (1) (53 weeks)

(in millions) Net Sales for Fiscal 2020

Customer Channel Wholesale Retail Other Eliminations (1)

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Total $ 25,525 $ 2,375 $ 228 $ ( 1,569 ) $ 26,559

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

There was no impact to the Consolidated Statements of Operations.

The Company believes this modified basis better reflects its channel presentation, as it further aligns with segment presentation.

(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.

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

However, all of the Company’s revenue is earned in the U.S.

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

However, all of the Company’s revenue is earned in the United States and Canada, and international distribution occurs through freight-forwarders.

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

Contract Balances

The Company does not typically incur costs that are required to be capitalized in connection with obtaining a contract with a customer.

The Company typically does not incur costs that are required to be capitalized in connection with obtaining a contract with a customer.

The Company typically does not have any performance obligations to deliver products under its contracts until its customers submit a purchase order, as it stands ready to deliver product upon receipt of a purchase order under contracts with its customers.

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Accounts and notes receivable are as follows:

(in millions) July 31, 2021 August 1, 2020

(in millions) July 30, 2022 July 31, 2021

Customer accounts receivable $ 1,213 $ 1,115

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(in millions) 2022 2021 2020

2019 SUPERVALU INC.

restructuring expenses $ — $ 5 $ 74

Restructuring and integration costs $ 20 $ 50 $ 42

Closed property charges and costs 1 6 40

Total $ 56 $ 87 $ 148

SUPERVALU INC.

As part of its acquisition of Supervalu and in order to achieve synergies from this combination, the Company has taken certain actions, which began during the first quarter of fiscal 2019 to:

(i) review its organizational structure and the strategic needs of the business going forward to identify and place talent with the appropriate skills, experience and qualifications to meet these needs;

and (ii) dispose of and exit certain Supervalu legacy retail operations, as efficiently and economically as possible in order to focus on the Company’s core wholesale distribution business.

Expenses related to this program primarily related to actions associated the Company’s core cost-structure, which resulted in headcount reductions and other costs and charges.

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.

restructuring expenses — — 5

Total $ 21 $ 56 $ 87

Restructuring and Integration Costs

Restructuring and integration costs for fiscal 2021 primarily relate to certain professional fees for advisory and transformational activities.

Restructuring and integration costs for fiscal 2022 primarily relate to the finalization of integration costs related to the Supervalu acquisition.

Fiscal 2021 restructuring and integration costs primarily relate to certain professional fees for advisory and transformational activities.

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

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.

NOTE 5—PROPERTY AND EQUIPMENT, NET

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

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.

In the fourth quarter of fiscal 2022 and 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

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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

During the first quarter of fiscal 2019, the Company experienced a decline in its stock price and market capitalization.

During the second quarter of fiscal 2019, the stock price continued to decline, and the decline in the stock price and market capitalization became significant and sustained.

Due to this sustained decline in stock price, the Company determined that it was more likely than not that the carrying value of the Supervalu Wholesale reporting unit exceeded its fair value and performed an interim quantitative impairment test of goodwill.

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

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

The 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.

The Company confirmed the reasonableness of the estimated reporting unit fair values by reconciling those fair values to its enterprise value and market capitalization.

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.

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.

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.

The quantitative goodwill impairment review indicated that the estimated fair value of the legacy Company Wholesale and Canada Wholesale reporting units were in excess of their carrying values by over 20 %.

Other continuing operations reporting units were substantially in excess of their carrying value.

The goodwill impairment charge recorded in fiscal 2019 was subject to change based upon the final purchase price allocation during the measurement period for estimated fair values of assets acquired and liabilities assumed from the Supervalu acquisition.

There were no material increases or decreases to the recorded goodwill impairment charge based upon the final purchase price allocations.

In fiscal 2019, the Company performed quarterly reviews of the composition of its reporting units.

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.

Goodwill and Intangible Assets Changes

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$ 10 $ 10 $ 20

Goodwill from current fiscal year business combinations 1 — 1

Impairment charge ( 424 ) — ( 424 )

Change in foreign exchange rates — — —

Goodwill as of August 1, 2020 (1)(2)

Goodwill as of July 31, 2021 (1)(2)

Change in foreign exchange rates — — —

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Pharmacy prescription files 33 18 15 33 13 20

Non-compete agreements — — — 13 12 1

Operating lease intangibles 6 4 2 7 4 3

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Prepaid expenses and other current assets $ — $ 3 $ —

Other long-term assets $ 2 $ — $ —

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 $ — $ 33 $ —

Prepaid expenses and other current assets $ — $ 3 $ —

Interest rate swaps designated as hedging instruments

Other long-term assets $ — $ 1 $ —

Interest rate swaps designated as hedging instruments

Other long-term liabilities $ — $ 2 $ —

Fair Value at August 1, 2020

Fair Value at July 31, 2021

(in millions) Consolidated Balance Sheets Location

Level 1 Level 2 Level 3

Fuel derivatives designated as hedging instruments

Prepaid expenses and other current assets $ — $ 1 $ —

Other long-term assets $ 2 $ — $ —

Foreign currency derivatives designated as hedging instruments

Accrued expenses and other current liabilities $ — $ 1 $ —

Interest rate swaps designated as hedging instruments

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The fair values of interest rate swap contracts are measured using Level 2 inputs.

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 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.

The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, SOFR swap rates for fiscal 2022, LIBOR swap rates for fiscal 2021 and credit default swap rates.

As of July 30, 2022, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $ 17 million;

a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately $ 18 million.

Refer to Note 8—Derivatives for further information on interest rate swap contracts.

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Fuel Supply Agreements and Derivatives

To reduce diesel price risk, the Company has entered into derivative financial instruments and/or forward purchase commitments for a portion of our projected monthly diesel fuel requirements at fixed prices.

To reduce diesel fuel price risk, the Company has entered into derivative financial instruments and/or forward purchase commitments for a portion of our projected monthly diesel fuel requirements at fixed prices.

The fair values of fuel derivative agreements are measured using Level 2 inputs.

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Refer to Note 1—Significant Accounting Policies for additional information regarding the fair value hierarchy.

July 31, 2021 August 1, 2020

July 30, 2022 July 31, 2021

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

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Details of active swap contracts as of July 30, 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)

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

Receive Floating Rate (2)

Floating Rate Reset Terms

August 3, 2015 (1)

August 15, 2022 $ 33 1.7950 % One-Month LIBOR Monthly

October 26, 2018 October 31, 2022 100 2.8915 % One-Month LIBOR Monthly

January 11, 2019 October 31, 2022 50 2.4678 % One-Month LIBOR Monthly

January 23, 2019 October 31, 2022 50 2.5255 % One-Month LIBOR Monthly

November 16, 2018 March 31, 2023 150 2.8950 % One-Month LIBOR Monthly

January 23, 2019 March 31, 2023 50 2.5292 % One-Month LIBOR Monthly

November 30, 2018 September 30, 2023 50 2.8315 % One-Month LIBOR Monthly

October 26, 2018 October 31, 2023 100 2.9210 % One-Month LIBOR Monthly

January 11, 2019 March 28, 2024 100 2.4770 % One-Month LIBOR Monthly

January 23, 2019 March 28, 2024 100 2.5420 % One-Month LIBOR Monthly

November 30, 2018 October 31, 2024 100 2.8480 % One-Month LIBOR Monthly

January 11, 2019 October 31, 2024 100 2.5010 % One-Month LIBOR Monthly

January 24, 2019 October 31, 2024 50 2.5210 % One-Month LIBOR Monthly

October 26, 2018 October 22, 2025 50 2.9550 % One-Month LIBOR Monthly

November 16, 2018 October 22, 2025 50 2.9590 % One-Month LIBOR Monthly

November 16, 2018 October 22, 2025 50 2.9580 % One-Month LIBOR Monthly

January 24, 2019 October 22, 2025 50 2.5558 % One-Month LIBOR Monthly

August 15, 2022 $ 29 1.7950 % One-Month Term SOFR Monthly

October 26, 2018 October 31, 2022 100 2.8170 % One-Month Term SOFR Monthly

January 11, 2019 October 31, 2022 50 2.3770 % One-Month Term SOFR Monthly

January 23, 2019 October 31, 2022 50 2.2740 % One-Month Term SOFR Monthly

November 16, 2018 March 31, 2023 150 2.7770 % One-Month Term SOFR Monthly

January 23, 2019 March 31, 2023 50 2.4245 % One-Month Term SOFR Monthly

November 30, 2018 September 30, 2023 50 2.6980 % One-Month Term SOFR Monthly

October 26, 2018 October 31, 2023 100 2.7880 % One-Month Term SOFR Monthly

January 11, 2019 March 28, 2024 100 2.3600 % One-Month Term SOFR Monthly

January 23, 2019 March 28, 2024 100 2.4250 % One-Month Term SOFR Monthly

November 30, 2018 October 31, 2024 100 2.7385 % One-Month Term SOFR Monthly

January 11, 2019 October 31, 2024 100 2.4025 % One-Month Term SOFR Monthly

January 24, 2019 October 31, 2024 50 2.4090 % One-Month Term SOFR Monthly

October 26, 2018 October 22, 2025 50 2.8725 % One-Month Term SOFR Monthly

November 16, 2018 October 22, 2025 50 2.8750 % One-Month Term SOFR Monthly

November 16, 2018 October 22, 2025 50 2.8380 % One-Month Term SOFR Monthly

January 24, 2019 October 22, 2025 50 2.4750 % One-Month Term SOFR Monthly

(1) The swap contract has an amortizing notional principal amount which is reduced by $ 1 million on a quarterly basis.

(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.

(2) In fiscal 2022, the Company amended the reference rate in all of its outstanding interest rate swap contracts to replace One-Month LIBOR with One-Month Term SOFR and certain credit spread adjustments.

The Company did not record any gains or losses upon the conversion of the reference rates in these interest rate swap contracts, and the Company believes these amendments will not have a material impact on its Consolidated Financial Statements.

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.

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

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

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

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.

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

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

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

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The entire change in the fair value of the derivative is initially reported in Other comprehensive income (outside of earnings) in the Consolidated Statements of Comprehensive Income and subsequently reclassified to earnings in Interest expense, net in the Consolidated Statements of Operations when the hedged transactions affect earnings.

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

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

Interest Expense, net

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July 30, 2022

Fiscal Maturity Year July 31, 2021 August 1, 2020

Fiscal Maturity Year July 30, 2022 July 31, 2021

Term Loan Facility 5.69 % 2026 $ 800 $ 1,002

10 unchanged sentences

2023 $ 14 $ 107

2026 1,002 42

2028 and thereafter 500 51

$ 2,163 $ 516

Refinancing Activities

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.

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”).

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

The amendments did not change the aggregate amounts or maturity dates of either credit facility.

During fiscal 2021, the Company prepaid an aggregate of $ 771 million under the Term Loan Facility (defined below), including:

(i) a $ 500 million prepayment funded primarily by the net proceeds from the issuance of the Senior Notes (defined below);

(ii) voluntary prepayments of $ 186 million funded with incremental borrowings under the ABL Credit Facility (defined below) that reduces its interest costs;

(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);

and (iv) $ 13 million of prepayments with asset sale proceeds.

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.

On October 22, 2020, the Company issued $ 500 million of unsecured 6.750 % senior notes due October 15, 2028 (the “Senior Notes”).

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

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.

Financing costs of $ 9 million were paid and capitalized in fiscal 2021.

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

ABL Credit Facility

The ABL Loan Agreement by and among the Company and United Natural Foods West, Inc.

(together with the Company, the “U.S.

Borrowers”) and UNFI Canada, Inc.

On June 3, 2022, the Company entered into a new loan agreement (the “ABL Loan Agreement”), by and among the Company (the “2022 U.S.

Borrower”) and UNFI Canada.

(the “2022 Canadian Borrower” and, together with the 2022 U.S.

Borrowers, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Bank of America, N.A.

as administrative agent for the ABL Lenders, Bank of America, N.A.

(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.

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.

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.

Borrower, the “2022 Borrowers”), and the financial institutions that are parties thereto as lenders (collectively, the “2022 ABL Lenders”), Wells Fargo Bank, N.A.

as administrative agent for the 2022 ABL Lenders, and the other parties thereto, which provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”), of which up to $ 2,600 million is available to the 2022 Borrowers, including a U.S.

Dollar equivalent of $ 100 million sublimit for borrowings in Canadian dollars.

The ABL Credit Facility replaced the Company’s existing $ 2,100 million ABL credit facility.

Under the new ABL Loan Agreement, the 2022 Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $ 750 million without the consent of any 2022 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.

Effective June 3, 2022, the Company used borrowings under the ABL Loan Agreement to repay all amounts outstanding under the existing $ 2,100 million ABL credit facility and terminated the existing ABL credit facility.

The ABL Loan Agreement utilizes Term SOFR and Prime rates as the benchmark interest rates.

Borrowings under the ABL Credit Facility bear interest at rates that, at the 2022 Borrowers’ option, can be either:

(i) a base rate plus a 0.00 % - 0.25 % margin or (ii) a Term SOFR rate plus a 1.00 % - 1.25 % margin.

Unutilized commitments under the ABL Credit Facility are subject to a per annum fee of 0.20 %.

The ABL Credit Facility will expire at the earlier of (i) June 3, 2027, and (ii) the date that is 90 days prior to the maturity date of the Term Loan Facility (defined below) if on such date more than $ 100 million of borrowings under the Term Loan Facility remain outstanding and mature prior to June 3, 2027.

The ABL Loan Agreement subjects the Company to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of the Company’s fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $ 210 million and (ii) 10 % of the aggregate Borrowing Base (as defined below).

The ABL Loan Agreement contains certain operational and informational covenants customary for this type of secured revolving credit facility, which limit the Company’s and its restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to its stockholders, 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 Company’s and its subsidiaries’ assets on a consolidated basis.

If the Company fails to comply with any of these covenants, it may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable.

The 2022 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.

The 2022 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 2022 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 2022 Borrowers’ and Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.

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.

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 % - 92.5 % of the net orderly liquidation value of eligible inventory, plus 90 % of eligible pharmacy receivables, plus certain pharmacy prescription files availability to 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 $ 2,600 million) or the Borrowing Base.

The assets included in the Consolidated Balance Sheets securing the outstanding obligations under the 2022 ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:

Assets securing the ABL Credit Facility (in millions) (1) :

July 31, 2021 August 1, 2020

July 30, 2022 July 31, 2021

Certain inventory assets included in Inventories, net and Current assets of discontinued operations $ 1,789 $ 2,297

1 unchanged sentence

(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.

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.

As of July 31, 2021, the U.S.

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.

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.

As of July 31, 2021, the U.S.

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.

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.

Refer to Note 6—Goodwill and Intangible Assets, Net for additional information.

As of July 30, 2022, the Borrowers’ Borrowing Base, net of $ 120 million of reserves, was $ 2,612 million, which is above the $ 2,600 million limit of availability, resulting in total availability of $ 2,600 million for loans and letters of credit under the ABL Credit Facility.

As of July 30, 2022, the Borrowers had $ 840 million of loans outstanding under the ABL Credit Facility, which are presented net of debt issuance costs of $ 10 million and are included in Long-term debt on the Consolidated Balance Sheets.

As of July 30, 2022, the Borrowers had $ 133 million in letters of credit outstanding under the ABL Credit Facility.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,627 million as of July 30, 2022.

ABL availability (in millions):

Availability under the ABL Credit Facility (in millions):

July 30, 2022

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Range of Facility Rates and Fees (per annum) July 30, 2022

and Canadian Borrowers’ applicable margin for base rate loans 0.00 % - 0.50 %

and Canadian Borrowers’ applicable margin for LIBOR and BA loans (1)

2022 Borrowers’ applicable margin for base rate loans 0.00 % - 0.25 %

2022 Borrowers’ applicable margin for SOFR and BA loans (1)

1.00 % - 1.25 %

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Letter of credit fees 1.125 % - 1.375 %

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.

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.

Borrower utilizes SOFR-based loans and the Canadian Borrower utilizes bankers’ acceptance rate-based loans.

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 (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”).

The term loan agreement (“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 (the “Term Lenders”), provides for senior secured first lien term loans in an initial aggregate principal amount of $ 1,950 million, primarily consisting of a $ 1,800 million seven-year tranche (the “Term Loan Facility”).

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.

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.

was satisfied during fiscal 2021.

additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding.

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

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 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.

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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 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.

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.

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).

As of July 30, 2022 and July 31, 2021, there was $ 629 million and $ 676 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the 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 2022, no prepayment from Excess Cash Flow in fiscal 2022 is required to be made in fiscal 2023.

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:

(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.

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.

As of July 30, 2022, the Company had borrowings of $ 800 million outstanding under the Term Loan Facility, which are presented in the Consolidated Balance Sheets net of debt issuance costs of $ 12 million and an original issue discount on debt of $ 11 million.

As of July 30, 2022, no amount of the Term Loan Facility was classified as current.

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.

These debt securities and credit facilities also contain other customary affirmative and negative covenants, representations and warranties, and events of default.

If an event of default occurs and is continuing, the Company may be required to immediately repay all amounts outstanding under these debt arrangements.

The Company was in compliance with all such covenants for all periods presented, including through the filing date of this Annual Report.

As of July 30, 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 SOFR rate plus a margin of 3.25 %;

provided that the SOFR rate shall never be less than 0.0 %.

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.

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

In conjunction with the Second Term Loan Amendment, the Company made a voluntary prepayment of $ 150 million on the Term Loan Facility funded with incremental borrowings under the then outstanding ABL Credit Facility that reduced its interest costs.

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.

On March 1, 2022, the Company made a $ 44 million voluntary prepayment on the Term Loan Facility from the majority of the after-tax net proceeds from the sale-leaseback of an acquired distribution center that was previously leased.

On June 3, 2022, the Company entered into an amendment (the “Third Term Loan Amendment”) to the Term Loan Agreement to amend the reference rate thereunder from LIBOR to Term SOFR.

There were no other changes to the Term Loan Agreement as a result of the Third Term Loan Amendment.

The Company did not record any gains or losses on the conversion of the reference rate for Borrowings under the Term Loan Agreement from LIBOR to SOFR.

NOTE 10—COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE LOSS

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(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 )

Other comprehensive loss before reclassifications — ( 33 ) ( 1 ) ( 61 ) ( 95 )

Amortization of cash flow hedge — — — — —

Net current period Other comprehensive loss — ( 33 ) ( 1 ) ( 61 ) ( 95 )

Accumulated other comprehensive loss at August 3, 2019 $ — $ ( 33 ) $ ( 20 ) $ ( 56 ) $ ( 109 )

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

Other comprehensive (loss) income before reclassifications — ( 42 ) ( 3 ) 34 ( 11 )

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

Amortization of cash flow hedges 2 — — 26 28

Net current period Other comprehensive income (loss) 2 ( 40 ) ( 3 ) 60 19

Accumulated other comprehensive income (loss) at July 30, 2022 $ 2 $ ( 3 ) $ ( 19 ) $ — $ ( 20 )

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

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Pension and postretirement benefit plan obligations:

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

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

$ 4 $ ( 1 ) $ ( 3 ) Net periodic benefit income, excluding service cost

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Total reclassifications 4 ( 18 ) 8

Income tax expense (benefit) 4 ( 2 ) — Provision (benefit) for income taxes

Income tax (benefit) expense ( 2 ) 4 ( 2 ) Provision (benefit) for income taxes

Total reclassifications, net of tax $ 2 $ ( 14 ) $ 6

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Reclassification of cash flow hedge $ 2 $ ( 1 ) $ — Cost of sales

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

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

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

(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.

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.

As of July 30, 2022, the Company expects to reclassify $ 5 million related to unrealized derivative gains on interest rate swap hedges out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 11—LEASES

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Lease Type Consolidated Balance Sheets Location

July 31, 2021 August 1, 2020

July 30, 2022 July 31, 2021

Operating lease assets Operating lease assets $ 1,176 $ 1,064

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Lease Expense Type Consolidated Statements of Operations Location

2022 2021 2020

Operating lease cost Operating expenses $ 241 $ 229 $ 223

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Other sublease income, net Restructuring, acquisition and integration related expenses (2)

( 2 ) ( 3 ) ( 5 )

Net operating lease cost (1)

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Total net lease cost $ 327 $ 323 $ 402

(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.

(1) Rent expense as presented here includes $ 0 million , $ 2 million and $ 6 million in fiscal 2022, 2021 and 2020, 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 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.

(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.

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.

Many of these leases include renewal options and, in certain instances, also include options to purchase.

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.

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.

(in millions) 2019

Rent expense (1)

Less subtenant rentals recorded in Net sales ( 17 )

Less subtenant rentals recorded in Operating expenses ( 14 )

Total net rent expense $ 181

(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.

On October 26, 2018, the Company received $ 49 million in aggregate proceeds, excluding taxes and closing costs, for the sale and leaseback of a separate distribution center under an agreement entered into by Supervalu in March 2018, as amended.

Both distribution center sale-leasebacks qualified for sale accounting, with the lease-backs being classified as operating leases.

No gain or loss was recognized or deferred on the sale of these facilities, as the fair value of these facilities as of the Supervalu acquisition date was determined to be equal to their contractual sale–leaseback amounts.

In fiscal 2019, the Company entered into a lease for a new distribution facility in California for approximately 1.2 million square feet.

The Company had identified two buildings on the same distribution center campus:

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.

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.

(2) Includes $ 29 million, $ 31 million and $ 36 million of lease expense in fiscal 2022, 2021 and 2020, respectively, and $( 31 ) million, $( 33 ) million, and $( 41 ) million of lease income in fiscal 2022, 2021 and 2020, respectively, 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.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center, which was classified as a finance lease, 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, which reflected the fair value 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, which was classified as an operating lease.

The Company recorded a pre-tax gain on sale of approximately $ 87 million in fiscal 2022 as a result of the transactions, which primarily represented the pre-tax net proceeds.

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.

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(1) Operating lease payments include $ 2 million related to extension options that are reasonably certain of being exercised and exclude $ 254 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.

(2) There were no finance leases for which the extension options are reasonably certain of being exercised and excluded from legally binding minimum lease payments for leases signed but not yet commenced.

(3) Calculated using the interest rate for each lease.

The following tables provide other information required by ASC 842:

Lease Term and Discount Rate July 31, 2021 August 1, 2020

Lease Term and Discount Rate July 30, 2022 July 31, 2021

Weighted-average remaining lease term (years)

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Operating cash flows from operating leases

$ 224 $ 220 $ 231

Operating cash flows from finance leases

Financing cash flows from finance leases

$ 160 $ 9 $ 20

Leased assets obtained in exchange for new finance lease liabilities $ 1 $ — $ 93

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NOTE 12—SHARE-BASED AWARDS

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;

the 2004 Equity Incentive Plan, as amended;

the 2012 Equity Incentive Plan, as amended and restated;

and the Amended and Restated 2020 Equity Incentive Plan.

As of July 30, 2022, the Company has restricted stock awards and performance share units and stock options outstanding under three equity incentive plans:

the 2004 Equity Incentive Plan, as amended (the “2004 Plan”);

the 2012 Equity Incentive Plan, as amended and restated (the “2012 Plan”);

and the Amended and Restated 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”).

The terms of each stock-based award will be determined by the Board of Directors or the Compensation Committee thereof.

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.

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.

The authorization for new grants under the 2002 Plan, 2004 Plan and 2012 Equity Incentive Plan has expired.

As of July 30, 2022, the Company has 2.9 million shares authorized and available for grant under the 2020 Equity Incentive Plan.

The authorization for new grants under the 2004 Plan and 2012 Plan has expired.

Share-Based Compensation Expense

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(1) Amounts are derived primarily from liability classified awards.

(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.

(2) Includes equity classified awards of $ 1 million for fiscal 2022, equity classified awards of $ 1 million for fiscal 2021, and liability classified awards of $ 1 million for fiscal 2020.

Vesting requirements for awards are generally at the discretion of the Company’s Board of Directors or the Compensation Committee thereof.

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Performance awards have a three-year cliff vest, subject to achievement of the performance objective.

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.

As of July 30, 2022, there was $ 47 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including restricted stock units and performance-based restricted stock units).

This cost is expected to be recognized over a weighted-average period of 2.0 years.

Unrecognized compensation cost related to Supervalu Replacement Options (defined below) is de minimis.

Restricted Stock Awards

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(in millions) Weighted Average

Outstanding at July 28, 2018 1.3 $ 41.78

Supervalu replacement awards 4.3 32.50

Outstanding at August 3, 2019 4.4 $ 31.11

Granted 6.0 7.67

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Forfeited/Canceled ( 0.4 ) 24.11

Outstanding at August 1, 2020 7.4 18.54

Outstanding at July 31, 2021 6.8 17.33

Granted 1.2 45.46

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Performance-Based Share Awards

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.

No performance share units granted in fiscal 2021 were forfeited during the current year.

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 .

During fiscal 2022, the Company granted 0.3 million performance share units to its executives and other senior leaders (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 $ 49.31 .

These performance units are tied to fiscal 2022, 2023 and 2024 performance metrics, including adjusted EPS growth and adjusted return on invested capital (“ROIC”).

An insignificant amount of performance share units granted in fiscal 2022 were forfeited during the current year.

During fiscal 2021, the Company granted 0.5 million performance share units to its executives and other senior leaders (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, ROIC and adjusted EBITDA leverage.

No performance share units granted in fiscal 2020 were forfeited during the current year.

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.

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.

An insignificant amount of performance share units granted in fiscal 2021 were forfeited during the current year.

During fiscal 2020, the Company granted 1.0 million performance share units to its executives and other senior leaders (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 .

These performance units were tied to fiscal 2020, 2021 and 2022 performance metrics, including adjusted EBITDA, adjusted EBITDA leverage and ROIC.

An insignificant amount of performance share units granted in fiscal 2020 were forfeited during the current year.

Based on performance through the performance period ended July 30, 2022, 1.0 million performance share units have been earned and will be issued in fiscal 2023.

Stock Options

The Company did no t grant stock options in fiscal 2021, 2020 or 2019.

The Company did no t grant options in fiscal 2022, 2021 or 2020.

The following summary presents information regarding outstanding stock options as of July 30, 2022 and changes during the fiscal year then ended:

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Supervalu Replacement Awards

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.

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.

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.

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.

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.

Pursuant to the Agreement and Plan of Merger, dated July 25, 2018, by and among Supervalu, SUPERVALU Enterprises, Inc., the company and Jedi Merger Sub, Inc., dated as of July 25, 2018, as amended on October 10, 2018 (the “Merger Agreement”), 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 (“Supervalu Replacement Options”) in accordance with the adjustment provisions of the Supervalu stock.

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 (“Supervalu 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 Supervalu Replacement Awards were payable in cash, however, the Merger Agreement was amended on October 10, 2018, to provide that the Supervalu Replacement Awards could be settled in cash and/or an equal value in shares of common stock of the Company.

The Supervalu Replacement Awards were liability classified awards as they were ultimately settled in cash or shares at the discretion of the employee.

The Supervalu Replacement Awards liabilities were expensed over the service period based on the fixed value of $ 32.50 per share.

As of the end of fiscal 2022, there are no longer any outstanding Supervalu Replacement Awards.

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 5.0 million shares of common stock for issuance in order to satisfy the Supervalu Replacement Options and Supervalu Replacement Awards.

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.

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For many retirees, the Company provides a fixed dollar contribution and retirees pay contributions to fund the remaining cost.

Defined Benefit Plan Merger

In 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 going forward.

As such, the funded status of the remaining plan has been presented within a single asset balance within Other long-term assets on the Consolidated Balance Sheets as of July 30, 2022.

Defined Benefit Pension and Other Postretirement Benefit Plans

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Benefit Obligation at beginning of year $ 2,093 $ 18 $ 2,260 $ 37

Actuarial (gain) loss ( 103 ) ( 9 ) 277 1

Actuarial gain ( 322 ) ( 4 ) ( 103 ) ( 9 )

Benefits paid ( 103 ) ( 1 ) ( 101 ) ( 3 )

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The actuarial gain on projected pension benefit obligations in fiscal 2022 was primarily the result of a 158 basis points increase in the discount rate on the SUPERVALU INC.

Retirement Plan.

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.

Retirement Plan, and updated mortality assumptions.

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.

Retirement Plan, and updated assumptions from lump sum settlements and mortality.

The funded status of our pension benefits contains plans with individually funded and underfunded statuses.

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(in millions) SUPERVALU INC.

Retirement Plan Unified Grocers, Inc.

Cash Balance Plan and Other

Retirement Plan Other Pension Plan

Total Pension Benefits

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Funded (unfunded) status at end of year $ 18 $ ( 8 ) $ 10

August 1, 2020:

SUPERVALU INC.

Retirement Plan Unified Grocers, Inc.

Cash Balance Plan and Other

Total Pension Benefits

July 31, 2021:

Fair value of plan assets at end of year $ 1,860 $ 258 $ 2,118

Benefit obligation at end of year ( 1,796 ) ( 297 ) ( 2,093 )

Unfunded status at end of year $ ( 178 ) $ ( 91 ) $ ( 269 )

Funded (unfunded) status at end of year $ 64 $ ( 39 ) $ 25

Net periodic benefit (income) cost and other changes in plan assets and benefit obligations recognized consist of the following:

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Interest cost 38 — 37 — 57 1

Settlement (gain) charge — ( 17 ) 11 — — —

Amortization of prior service credit — 3 — ( 1 ) — ( 1 )

Amortization of net actuarial loss (gain) 1 — 1 ( 1 ) — ( 2 )

Settlement (gain) charge — — — ( 17 ) 11 —

Net periodic benefit (income) cost ( 43 ) 3 ( 66 ) ( 19 ) ( 37 ) ( 2 )

Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive Income (Loss)

Net actuarial (gain) loss ( 225 ) ( 8 ) 109 — 58 ( 10 )

Prior service cost (benefit) — 25 — — — ( 4 )

Net actuarial loss (gain) 59 ( 3 ) ( 225 ) ( 8 ) 109 —

Prior service (benefit) cost — — — 25 — —

Amortization of prior service benefit — ( 3 ) — 3 — 1

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Total (benefit) expense recognized in net periodic benefit cost (income) and Other comprehensive income (loss) $ 16 $ ( 3 ) $ ( 292 ) $ 2 $ 72 $ 1

On August 1, 2019, the Company amended the SUPERVALU INC.

Retirement Plan to provide for a lump sum settlement window.

On August 2, 2019, the Company sent plan participants lump sum settlement election offerings that committed the plan to pay certain deferred vested pension plan participants and retirees, who make such an election, a lump sum payment in exchange for their rights to receive ongoing payments from the plan.

The lump sum payment amounts are equal to the present value of the participant’s pension benefits, and were made to certain former (i) retired associates and beneficiaries who are receiving their monthly pension benefit payment and (ii) terminated associates who are deferred vested in the plan, had not yet begun receiving monthly pension benefit payments and who are not eligible for any prior lump sum offerings under the plan.

Benefit obligations associated with the lump sum offering have been incorporated into the funded status utilizing the actuarially determined lump sum payments based on offer acceptances.

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.

In fiscal 2020, the SUPERVALU INC.

Retirement plan made aggregate lump sum settlement payments, which resulted in 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.

Retirement Plan assets and remeasured liabilities.

As a result of the settlement payments reported in the second quarter of fiscal 2020, SUPERVALU INC.

Retirement Plan obligations were remeasured using a discount rate of 3.1 percent and the MP-2019 mortality improvement scale.

Retirement Plan obligations were remeasured using a discount rate of 3.1 % and the MP-2019 mortality improvement scale.

This remeasurement resulted in a $ 2 million decrease to Accumulated other comprehensive loss.

Amounts recognized in the Consolidated Balance Sheets as of July 31, 2021 and August 1, 2020 consist of the following:

July 31, 2021 August 1, 2020

Amounts recognized in the Consolidated Balance Sheets as of July 30, 2022 and July 31, 2021 consist of the following:

July 30, 2022 July 31, 2021

(in millions) Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits

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Benefit Plan Assumptions

Weighted average assumptions used to determine benefit obligations and net periodic benefit cost consisted of the following:

Weighted average assumptions used to determine benefit obligations and net periodic benefit (income) cost consisted of the following:

2022 2021 2020

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1.74 % - 2.37 %

Net periodic benefit cost assumptions:

Net periodic benefit (income) cost assumptions:

Discount rate 2.62 % - 2.75 %

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These assumptions are weighted by the actual or target allocation to each underlying asset class represented in the pension plan master trust.

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.

The Company also assesses the expected long-term return on plan assets assumption by comparison to long-term historical performance on an asset class basis 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.

The Company reviews and selects the discount rate to be used in connection with measuring our pension and other postretirement benefit obligations annually.

The Company reviews and selects the discount rate to be used in connection with measuring its pension and other postretirement benefit obligations annually.

In determining the discount rate, the Company uses the yield on corporate bonds (rated AA or better) that coincides with the cash flows of the plans’ estimated benefit payouts.

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This resulting weighted average discount rate is then used in evaluating the final discount rate to be used.

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.

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 %.

Pension Plan Assets

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.

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.

The Company employs a liability hedging approach, 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.

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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.

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):

The fair value of assets held in the master trust for defined benefit pension plans as of July 30, 2022, by asset category, consisted of the following (in millions):

Level 1 Level 2 Level 3 Measured at NAV as a Practical Expedient Total

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Government securities — 175 — — 175

Mutual funds — 58 — — 58

Mortgage-backed securities — 28 — — 28

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Total plan assets at fair value $ 54 $ 1,544 $ — $ 118 $ 1,716

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):

The fair value of assets held in the master trust for defined benefit pension plans as of July 31, 2021, by asset category, consisted of the following (in millions):

Level 1 Level 2 Level 3 Measured at NAV as a Practical Expedient Total

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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.

The Company expects to contribute approximately $ 2 million to $ 3 million to its other defined benefit pension plans and postretirement benefit plans in fiscal 2022.

The Company funds its defined benefit pension plans based on the minimum contribution required under the Code, ERISA the Pension Protection Act of 2006 and other applicable laws, as determined by our external actuarial consultant, and additional contributions made at its discretion.

Cash Balance Plan under ERISA in fiscal 2022.

The Company expects to contribute approximately $ 1 million to its other defined benefit pension plans and $ 1 million to its postretirement benefit plans in fiscal 2023.

The Company funds its defined benefit pension plans based on the minimum contribution required under the Internal Revenue Code, ERISA the Pension Protection Act of 2006 and other applicable laws, as determined by our external actuarial consultant, and additional contributions made at its discretion.

The Company may accelerate contributions or undertake contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing needs or other factors as may be applicable.

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Years 2028-2032 569 4

Defined Contribution Plans

The Company sponsors defined contribution and profit sharing plans pursuant to Section 401(k) of the Internal Revenue Code.

Employees may contribute a portion of their eligible compensation to the plans on a pre-tax basis.

We match a portion of certain employee contributions by contributing cash into the investment options selected by the employees.

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.

Defined Contribution Plan

The Company sponsors a defined contribution and profit sharing plan pursuant to Section 401(k) of the Internal Revenue Code.

Employees may contribute a portion of their eligible compensation to the plan on a pre-tax or after-tax Roth basis.

The Company matches a portion of certain employee contributions by contributing cash into the investment options selected by the employees.

The total amount contributed by the Company to the plan is determined by plan provisions or at the Company’s discretion.

Total employer contribution expenses for this plan were $ 29 million, $ 27 million and $ 21 million for fiscal 2022, 2021 and 2020, respectively.

Post-Employment Benefits

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The Company is self-insured for certain disability plan programs, which comprise the primary benefits paid to inactive employees prior to retirement.

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.

As of July 30, 2022 there was $ 4 million of Accrued compensation and benefits and $ 5 million of Other long-term liabilities recognized in the Consolidated Balance Sheets.

As of July 31, 2021 there was $ 2 million of Accrued compensation and benefits and $ 5 million of Other long-term liabilities .

Multiemployer Pension Plans

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• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

If we choose to stop participating in some multiemployer plans, or make market exits or closures or otherwise have participation in the plan drop below certain levels, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

• If the Company chose to stop participating in some multiemployer plans, or make market exits or closures or otherwise have participation in the plan drop below certain levels, it may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans is outlined in the table below.

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The zone status is based on information that we received from the plan and is annually certified by each plan’s actuary.

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.

Among other factors,

red zone status plans are generally less than 65% funded and are considered in critical status, plans in yellow zone status are less than 80% funded and are considered in endangered or seriously endangered status, and green zone plans are at least 80% funded.

The Multiemployer Pension Reform Act of 2014 (“MPRA”) created a new zone status called “critical and declining” or “Deep Red”.

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Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Plan 832598425-001 12/31 NA NA 4 4 3 NA

Central States, Southeast and Southwest Areas Pension Plan 366044243-001 12/31 Deep Red Implemented 6 6 5 No

UFCW Unions and Participating Employer Pension Plan (2)

526117495-001 12/31 Red Implemented 3 7 4 No

Central States, Southeast & Southwest Areas Pension Plan 366044243-001 12/31 Deep Red Implemented 5 6 6 No

UFCW Unions and Participating Employers Pension Plan 526117495-001 12/31 Deep Red Implemented 3 3 7 No

Western Conference of Teamsters Pension Plan 916145047-001 12/31 Green No 10 10 13 No

UFCW Unions and Employers Pension Plan (2)

396069053-001 10/31 Deep Red Implemented 1 1 1 No

396069053-001 NA NA NA — 1 1 NA

All Other Multiemployer Pension Plans (3)

Total $ 45 $ 48 $ 52

(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.

(2) This multiemployer pension plan is associated with continued and discontinued operations.

(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.

As of the fourth quarter of fiscal 2021 , the Company withdrew from 2 of these 9 plans.

Fiscal 2021 contributions to these plans are included in the total contributions above.

(4) As of the fourth quarter of fiscal 2021 , the Company withdrew from this plan.

The plan is still relevant for the table above as contributions were made in fiscal 2021 prior to the withdrawal.

(1) PPA surcharges are 5 % or 10 % of eligible contributions and may not apply to all collective bargaining agreements or total contributions to each plan.

(2) The Company withdrew from this plan in fiscal 2021 and made no contributions in fiscal 2022.

The plan was included in the table above for contributions made in prior presented periods.

(3) All Other Multiemployer Pension Plans includes 6 plans, no ne of which are individually significant when considering contributions to the plan, severity of the underfunded status or other factors.

The following table describes the expiration of the Company’s collective bargaining agreements associated with the significant multiemployer plans in which we participate:

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6/03/2024 - 5/31/2025 4 8/3/2024 37.6 % ☐

UFCW Unions and Participating Employer Pension Fund (2)

11/8/2020 (3)

UFCW Unions and Participating Employers Pension Fund 11/8/2020 (2)

2 11/8/2020 (2)

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4/22/2023 - 9/20/2026 13 9/20/2026 43.2 % ☐

UFCW Unions and Employers Pension Plan

4/9/2022 1 4/9/2022 100.0 % ☒

(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.

(2) This multiemployer pension plan is associated with continued and discontinued operations.

(3) This collective bargaining agreement has been extended.

(2) These collective bargaining agreements have been extended.

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.

In fiscal 2022, the Company updated its estimated withdrawal liability, which resulted in an $ 8 million benefit recorded within Operating expenses.

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.

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.

As of July 30, 2022, accrued multiemployer pension plan withdrawal liabilities included in Other long-term liabilities and Accrued compensation and benefits were $ 94 million and $ 7 million, respectively, for 13 multiemployer plans.

As of July 31, 2021 amounts included in Other long-term liabilities and Accrued compensation and benefits were $ 110 million and $ 7 million, respectively.

Payments associated with these liabilities are required to be made over varying time periods, but principally over the next 20 years.

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continuing operations and $ 8 million from foreign continuing operations.

Loss before income taxes for fiscal 2020 consists of $( 338 ) million from U.S.

Income before income taxes for fiscal 2021 consists of $ 175 million from U.S.

continuing operations and $ 8 million from foreign continuing operations.

(Loss) income before income taxes for fiscal 2019 consists of $( 348 ) million from U.S.

Loss before income taxes for fiscal 2020 consists of ($ 338 ) million from U.S.

continuing operations and ($ 4 ) million from foreign continuing operations.

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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.

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.

As of July 30, 2022, the Company is no longer subject to federal income tax examinations for fiscal years before 2015 and in most states is no longer subject to state income tax examinations for fiscal years before 2009 and 2016 for Supervalu and the Company, 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

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:

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at July 30, 2022 and July 31, 2021 are presented below:

(in millions) July 30,

2021 August 1,

2022 July 31,

Deferred tax assets:

Inventories, principally due to additional costs inventoried for tax purposes $ — $ —

Compensation and benefits related $ 50 $ 54

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Lease right of use assets 304 321

Interest rate swap agreements 1 —

Total deferred tax liabilities 493 485

Net deferred tax assets $ 57 $ 108

Net deferred tax (liabilities) assets $ ( 8 ) $ 57

Tax Credits and Valuation Allowances

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At July 30, 2022, the Company had net operating loss carryforwards of approximately $ 1 million for federal income tax purposes that are subject to an annual limitation of approximately $ 0.3 million under Internal Revenue Code Section 382.

These Section 382-limited carryforwards expire at various times between fiscal years 2022 and 2027.

These Section 382-limited carryforwards expire at various times through fiscal year 2027.

As of July 30, 2022, the Company anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized.

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At July 30, 2022, the Company had disallowed charitable contribution carryforwards of approximately $ 34 million that are available for carryforward over five years.

As of July 31, 2021, 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.

As of July 30, 2022, 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.

The retained earnings of the Company’s non-U.S.

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Effective Tax Rate

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.

Our effective income tax rate for continuing operations was an expense rate of 18.1 % and 18.6 % on pre-tax income for fiscal 2022 and fiscal 2021, respectively, and a benefit rate of 26.6 % on pre-tax losses for fiscal 2020.

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.

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.

For fiscal 2022, the effective tax rate was reduced by the impact of discrete tax benefits related to employee stock awards and the release of unrecognized tax positions, partially offset by non-deductible executive compensation.

NOTE 15—EARNINGS PER SHARE

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Discontinued operations $ — $ 0.09 $ ( 0.34 )

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

Diluted earnings (loss) per share $ 4.07 $ 2.48 $ ( 5.10 )

Anti-dilutive share-based awards excluded from the calculation of diluted earnings per share 0.5 0.9 3.6

NOTE 16—BUSINESS SEGMENTS

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These reportable segments are two distinct businesses, each with a different customer base, marketing strategy and management structure.

The Wholesale reportable segment is the aggregation of two operating segments:

Wholesale and Canada Wholesale.

The Company organizes and operates the Wholesale reportable segment through four U.S geographic regions:

Central and Pacific, and Canada Wholesale, which is operated separately from the U.S.

Wholesale business.

Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics.

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

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

The Wholesale reportable segment is engaged in the distribution of grocery and non-food products, and support services provider to retailers 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.

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.

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.

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.

Segment earnings include revenues and costs attributable to each of the respective business segments and allocated corporate overhead, based on the segment’s estimated consumption of corporately managed resources.

Other includes a single location food manufacturing business, 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.

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.

Wholesale records revenues related to sales to Retail at gross margin rates consistent with sales to other similar wholesale customers.

Segment earnings include revenues and costs attributable to each of the respective business segments and certain allocated corporate overhead, based on the segment’s estimated consumption of corporately managed resources.

The Company’s measure of segment profit is Adjusted EBITDA, as disclosed below.

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.

Non-operating expenses that are not allocated to the operating segments are included in the Other segment.

In fiscal 2022, the Company changed its measure of segment profit to exclude the non-cash LIFO charge or benefit from Adjusted EBITDA.

Prior period Adjusted EBITDA amounts and the reconciliation to Income (loss) from continuing operations before income taxes have been recast to reflect this change in the measure of segment profit.

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:

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Share-based compensation (2)

( 43 ) ( 49 ) ( 34 )

LIFO charge (3)

( 158 ) ( 24 ) ( 18 )

Restructuring, acquisition, and integration related expenses ( 21 ) ( 56 ) ( 87 )

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Gain (loss) on sale of assets 87 4 ( 18 )

Multi-employer pension plan withdrawal charges ( 63 ) — —

Multi-employer pension plan withdrawal benefit (charges) 8 ( 63 ) —

Note receivable charges — — ( 13 )

Inventory fair value adjustment — — ( 10 )

Legal (settlement income) reserve charge — ( 1 ) 1

Legal settlement income — — ( 1 )

Other retail expense — ( 5 ) ( 1 )

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$ 251 $ 310 $ 173

(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.

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.

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

(1) For fiscal 2022, 2021 and 2020, the Company recorded $ 1,358 million, $ 1,381 million and $ 1,348 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale sales to its Retail segment that have been eliminated upon consolidation.

(2) Includes an immaterial amount of liability-settled share compensation expense.

(3) As a result of the segment profit measurement revision discussed above, previously reported Adjusted EBITDA disclosures by segment and the reconciliation to Income from continuing operations before income taxes has been recast to exclude the impact of the non-cash LIFO charge.

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

(in millions) July 30,

2021 August 1,

2022 July 31,

Wholesale $ 6,733 $ 6,536

2 unchanged sentences

Eliminations ( 39 ) ( 43 )

Total assets of continuing operations $ 7,521 $ 7,580

Total assets $ 7,628 $ 7,521

NOTE 17—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

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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 four 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.

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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.

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.

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 Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company provided Save-A-Lot with various technical, human resources, finance and other operational services.

The Company primarily ceased providing services under the Services Agreement in fiscal 2022.

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.

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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 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.

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

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

medication who requested that defendants match competitor prices.

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

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On August 12, 2021, the 7th Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor.

On September 23, 2021, the Relators filed a petition for rehearing.

On September 23, 2021, the Relators filed a petition for rehearing and defendants filed a response on November 9, 2021.

On December 3, 2021, the 7th Circuit denied the petition for rehearing.

On April 1, 2022, the Relators filed a petition for a writ of certiorari with the United States Supreme Court.

The Company filed its response on June 20, 2022.

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);

2 unchanged sentences

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

product liability claims, including those where the supplier may be insolvent and customers and consumers are seeking recovery against the Company;

product liability claims, including those where the supplier may be insolvent and customers or consumers are seeking recovery against the Company;

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;

7 unchanged sentences

NOTE 18—DISCONTINUED OPERATIONS

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.

As a result, the Company revised its Consolidated Financial Statements to reclassify two Shoppers stores from discontinued operations to continuing operations.

Prior periods presented in the Consolidated Financial Statements have been conformed to the current period presentation.

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.

In early fiscal 2022, the Company disposed of the last two remaining Shoppers locations that were classified in discontinued operations.

In fiscal 2020, the Company entered into agreements to sell 13 Shoppers stores and decided to close six locations.

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.

The Company closed the remaining Shop ‘n Save St.

Louis retail stores and the distribution center that were not sold prior to the Supervalu acquisition date.

In fiscal 2019, the Company completed the sale of seven of its eight Hornbacher's locations, as well as a Hornbacher’s store that was previously being developed in West Fargo, North Dakota, to Coborn's Inc.

(“Coborn’s”).

The Company did not incur a gain or loss on the sale of this disposal group.

The Hornbacher’s store in Grand Forks, North Dakota was not included in the sale to Coborn’s and has closed pursuant to the terms of the definitive agreement.

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.

In addition, the Company sold the pharmacy prescription files and inventory of all Shoppers stores.

During fiscal 2020, the Company incurred approximately $ 31 million in pre-tax aggregate costs and charges related to Shoppers stores that remained 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.

Operating results of discontinued operations are summarized below:

5 unchanged sentences

Restructuring expenses and charges — 33

Operating income (loss) 5 ( 23 ) ( 6 )

Other (income) expense, net — — —

Income (loss) from discontinued operations before income taxes 5 ( 23 )

1 unchanged sentence

Income (loss) from discontinued operations, net of tax $ 6 $ ( 18 )

(1) These results reflect retail operations from the Supervalu acquisition date of October 22, 2018 to August 3, 2019.

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.

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

These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 22 million, $ 97 million and $ 201 million in fiscal 2021, 2020 and 2019, respectively.

These net sales have been eliminated upon consolidation within the Wholesale segment of continuing operations and amounted to $ 22 million and $ 97 million in fiscal, 2021 and 2020, respectively.

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:

(in millions) July 31, 2021 August 1, 2020

(in millions) July 31, 2021

Current assets

9 unchanged sentences

Accrued compensation and benefits 2

Other current liabilities — 4

Total current liabilities of discontinued operations 4

Long-term liabilities

Other long-term liabilities — 2

Total liabilities of discontinued operations $ 4

3 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data