What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-09-26 compared with 2022-09-27 · 237 added, 354 removed, 1405 unchanged (30% of the section changed)

47 unchanged sentences

The fair value of the defined benefit pension obligation at year end was $1.54 billion, offset by plan assets totaling $1.56 billion.

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.

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CONSOLIDATED BALANCE SHEETS

(in millions, except for par amounts)

(in millions, except for par values)

2023 July 30,

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Prepaid expenses and other current assets 245 184

Current assets of discontinued operations — 2

Total current assets 3,463 3,797

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Other long-term assets 162 126

Long-term assets of discontinued operations — 2

Total assets $ 7,394 $ 7,628

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Current portion of long-term debt and finance lease liabilities 18 27

Current liabilities of discontinued operations — 4

Total current liabilities 2,405 2,417

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July 30, 2022

August 1, 2020

July 31, 2021

Net sales $ 30,272 $ 28,928 $ 26,950

2 unchanged sentences

Operating expenses 3,973 3,825 3,593

Goodwill impairment charges — — 425

Restructuring, acquisition and integration related expenses 8 21 56

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

Operating income (loss) 423 294 ( 193 )

Loss (gain) on sale of assets and other asset charges 30 ( 87 ) ( 4 )

Operating income 120 423 294

Net periodic benefit income, excluding service cost ( 29 ) ( 40 ) ( 85 )

Interest expense, net 144 155 204

Other, net ( 2 ) ( 8 ) ( 4 )

Income (loss) from continuing operations before income taxes 310 183 ( 342 )

Provision (benefit) for income taxes 56 34 ( 91 )

Net income (loss) from continuing operations 254 149 ( 251 )

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

Net income (loss) including noncontrolling interests 254 155 ( 269 )

Other income, net ( 2 ) ( 2 ) ( 8 )

Income from continuing operations before income taxes 7 310 183

(Benefit) provision for income taxes ( 23 ) 56 34

Net income from continuing operations 30 254 149

Income from discontinued operations, net of tax — — 6

Net income including noncontrolling interests 30 254 155

Less net income attributable to noncontrolling interests ( 6 ) ( 6 ) ( 6 )

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

Net income attributable to United Natural Foods, Inc.

$ 24 $ 248 $ 149

Basic earnings (loss) per share:

Basic earnings per share:

Continuing operations $ 0.41 $ 4.28 $ 2.55

Discontinued operations $ — $ — $ 0.10

Basic earnings (loss) per share $ 4.28 $ 2.65 $ ( 5.10 )

Diluted earnings (loss) per share:

Basic earnings per share $ 0.41 $ 4.28 $ 2.65

Diluted earnings per share:

Continuing operations $ 0.40 $ 4.07 $ 2.38

Discontinued operations $ — $ — $ 0.09

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

Diluted earnings per share $ 0.40 $ 4.07 $ 2.48

Weighted average shares outstanding:

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July 30, 2022

August 1, 2020

Net income (loss) including noncontrolling interests $ 254 $ 155 $ ( 269 )

Other comprehensive income (loss):

July 31, 2021

Net income including noncontrolling interests $ 30 $ 254 $ 155

Other comprehensive (loss) income:

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

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

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

Total other comprehensive (loss) income ( 8 ) 19 200

Less comprehensive income attributable to noncontrolling interests ( 6 ) ( 6 ) ( 6 )

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

Total comprehensive income attributable to United Natural Foods, Inc.

$ 16 $ 267 $ 349

(1) Amounts are net of tax (benefit) expense of $( 7 ) million, $( 12 ) million and $ 52 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.

(2) Amounts are net of tax (benefit) expense of $ 5 million, $ 22 million and $ 13 million, respectively.

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

See accompanying Notes to Consolidated Financial Statements.

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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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Share-based compensation — — — — 38 — — 38 — 38

Other comprehensive income — — — — — 19 — 19 — 19

Repurchases of common stock — — 1.9 ( 62 ) — — — ( 62 ) — ( 62 )

Other comprehensive loss — — — — — ( 8 ) — ( 8 ) — ( 8 )

Distributions to noncontrolling interests — — — — — — — — ( 6 ) ( 6 )

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

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

Net income — — — — — — 24 24 6 30

7 unchanged sentences

July 30, 2022

August 1, 2020

July 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) including noncontrolling interests $ 254 $ 155 $ ( 269 )

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

Net income (loss) from continuing operations 254 149 ( 251 )

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

Net income including noncontrolling interests $ 30 $ 254 $ 155

Income from discontinued operations, net of tax — — 6

Net income from continuing operations 30 254 149

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

Depreciation and amortization 304 285 285

Share-based compensation 38 44 45

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

Gain on sale of property and equipment ( 9 ) ( 87 ) ( 4 )

Closed property and other restructuring charges — 2 6

Goodwill impairment charges — — 425

Intangible asset impairment charges 25 — —

Net pension and other postretirement benefit income ( 29 ) ( 40 ) ( 85 )

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

Deferred income tax (benefit) expense ( 36 ) 55 ( 5 )

LIFO charge 119 158 24

Provision for losses on receivables 2 ( 5 ) 46

(Recoveries) provisions for losses on receivables ( 1 ) 2 ( 5 )

Non-cash interest expense and other adjustments 13 24 51

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Proceeds from dispositions of assets 16 230 82

Other ( 28 ) ( 11 ) ( 2 )

Payments for investments ( 32 ) ( 28 ) ( 11 )

Net cash used in investing activities of continuing operations ( 339 ) ( 49 ) ( 239 )

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Proceeds from borrowings under revolving credit line 2,976 4,425 3,676

Proceeds from issuance of other loans — — 6

Repayments of borrowings under revolving credit line ( 3,004 ) ( 4,287 ) ( 3,731 )

Repayments of long-term debt and finance leases ( 154 ) ( 376 ) ( 792 )

Repurchases of common stock ( 62 ) — —

Proceeds from the issuance of common stock and exercise of stock options — 8 1

Payment of employee restricted stock tax withholdings ( 41 ) ( 14 ) ( 1 )

Payments of employee restricted stock tax withholdings ( 40 ) ( 41 ) ( 14 )

Payments for debt issuance costs — ( 6 ) ( 13 )

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EFFECT OF EXCHANGE RATE ON CASH — — 1

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

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 7 ) 3 ( 6 )

Cash and cash equivalents, at beginning of period 44 41 47

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Cash paid for interest $ 133 $ 134 $ 146

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

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

Additions of property and equipment included in Accounts payable $ 32 $ 45 $ 35

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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 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.

References to fiscal 2023, fiscal 2022 and fiscal 2021, or 2023, 2022 and 2021, as presented in tabular disclosure, relate to the 52-week, 52-week and 52-week fiscal periods ended July 29, 2023, July 30, 2022 and July 31, 2021, respectively.

Basis of Presentation

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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.

Our Net sales consist primarily of product sales of natural, organic, specialty, produce, and conventional grocery and non-food products, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue.

Net sales also include amounts charged by the Company to customers for shipping and handling and fuel surcharges.

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Revenues from Retail product sales are recognized at the point of sale upon customer check-out.

Advertising income earned from our franchisees that participate in our Retail advertising program are recognized as Net sales.

Advertising income earned from our franchisees that participate in our Retail advertising program is recognized as Net sales.

The Company recognizes loyalty program expense in the form of fuel rewards as a reduction of Net sales.

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Any upfront payments received for multi-period contracts are generally deferred and amortized over the life of the contracts.

The majority of the vendor fund contracts have terms of less than a year, with a small proportion of the contracts longer than one year.

The majority of the vendor funds contracts have terms of less than a year, with a small proportion of the contracts longer than one year.

Shipping and Handling Fees and Costs

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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.

Integration related expenses include certain professional consulting expenses and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.

Loss (Gain) on Sale of Assets and Other Asset Charges

Loss (gain) on sale of assets and other asset charges primarily includes losses (gains) on sales of assets, losses on sales of financial assets, and asset impairments.

In fiscal 2023, the Company recorded an impairment charge related to intangible assets associated with its Blue Marble Brands portfolio.

Refer to Note 6—Goodwill and Intangible Assets, Net for additional information on this impairment charge.

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.

Interest Expense, Net

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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.

Inventory quantities are evaluated throughout each fiscal year based on actual physical counts in the Company’s distribution facilities and stores.

Allowances for inventory shortages are recorded based on the results of these counts.

As of July 29, 2023 and July 30, 2022, approximately $ 2.0 billion and $ 1.9 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.

The LIFO reserve was $ 344 million and $ 225 million as of July 29, 2023 and July 30, 2022, respectively, which is recorded within Inventories, net on the Consolidated Balance Sheets.

Property and Equipment, Net and Amortizing Intangible Assets

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If the evaluation indicates that the carrying amount of an asset group may not be recoverable, the potential impairment is measured based on a fair value discounted cash flow model or a market approach method.

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

The Company accounts for income taxes under the asset and liability method.

22 unchanged sentences

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.

Refer to Note 6—Goodwill and Intangible Assets, Net for additional information regarding the Company’s goodwill impairment reviews and other information.

Indefinite-lived intangible assets include the Tony’s Fine Foods tradename, and prior to July 29, 2023 included the Blue Marble Brands portfolio.

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.

In fiscal 2023, the Company recorded an impairment charge related to intangible assets associated with its Blue Marble Brands portfolio.

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

Intangible assets with definite lives are amortized on a straight-line basis over the following years:

2 unchanged sentences

Favorable operating leases 2 - 8 years

Unfavorable operating leases 2 - 8 years

Pharmacy prescription files 7 years

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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 time-based restricted stock units, performance-based restricted units, stock options and SUPERVALU INC.

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

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

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Earnings Per Share

Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is calculated by adding the dilutive potential common shares to the weighted average number of common shares that were outstanding during the period.

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

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.

On September 21, 2022, our Board of Directors authorized a new repurchase program for up to $ 200 million of the Company’s common stock over a term of four years (the “2022 Repurchase Program”).

Under the 2022 Repurchase Program, the Company repurchased approximately 1.9 million shares of its common stock for a total cost of $ 62 million in fiscal 2023.

The Company did not repurchase any shares of its common stock in fiscal 2022 or 2021.

As of July 29, 2023, the Company had $ 138 million remaining authorized under the 2022 Repurchase Program.

Refer to Note 9—Long-Term Debt for information on 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.

Comprehensive income (loss) includes all changes in Stockholders’ equity during the reporting period, other than those resulting from investments by and distributions to stockholders.

The Company’s comprehensive income (loss) is calculated as Net income (loss) including noncontrolling interests, plus or minus adjustments for foreign currency translation related to the translation of UNFI Canada, Inc.

Comprehensive income is reported in the Consolidated Statements of Comprehensive Income.

Comprehensive income includes all changes in Stockholders’ equity during the reporting period, other than those resulting from investments by and distributions to stockholders.

The Company’s comprehensive income is calculated as Net income including noncontrolling interests, plus or minus adjustments for foreign currency translation related to the translation of UNFI Canada, Inc.

(“UNFI Canada”) from the functional currency of Canadian dollars to U.S.

dollar reporting currency, changes in the fair value of cash flow hedges, net of tax, and changes in defined pension and other postretirement benefit plan obligations, net of tax, less comprehensive income attributable to noncontrolling interests.

Accumulated other comprehensive loss represents the cumulative balance of Other comprehensive income (loss), net of tax, as of the end of the reporting period and relates to foreign currency translation adjustments, and unrealized gains or losses on cash flow hedges, net of tax and changes in defined pension and other postretirement benefit plan obligations, net of tax.

Accumulated other comprehensive loss represents the cumulative balance of Other comprehensive (loss) income, net of tax, as of the end of the reporting period and relates to foreign currency translation adjustments, and unrealized gains or losses on cash flow hedges, net of tax and changes in defined pension and other postretirement benefit plan obligations, net of tax.

Derivative Financial Instruments

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Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No.

2016-02, Leases (Topic 842) (“ASC 842”), which provided new comprehensive lease accounting guidance that supersedes previous lease guidance.

The Company adopted this standard in fiscal 2020, on August 4, 2019.

Adoption of this standard did not have a material impact to the Company’s Consolidated Statements of Operations, Consolidated Statements of Stockholders' Equity or Consolidated Statements of Cash Flows.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued accounting ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

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

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326 Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 .

This ASU clarifies the accounting treatment for the measurement of credit losses under ASC 326 and provides further clarification on previously issued updates including ASU 2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities and ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities.

Since the Company adopted ASU 2017-12 in the fourth quarter of fiscal 2018, the amendments in ASU 2019-04 related to clarifications on Accounting for Hedging Activities which were adopted by the Company in fiscal 2020, with no impact to Accumulated other comprehensive loss or Retained earnings for fiscal 2020, as the Company did not have separately measured ineffectiveness related to its cash flow hedges.

The remaining amendments within ASU 2019-04 were adopted in fiscal 2021 with the adoption of Topic 326.

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

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

Simplifying the Accounting for Income Taxes .

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

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

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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®.

Certain customer agreements provide for the right to license one or more of the Company’s tradenames, such as FESTIVAL FOODS®, SENTRY®, COUNTY MARKET®, FOODLAND®, and SUPERVALU®.

In addition, the Company enters into franchise agreements to separately charge its customers, who the Company also sells wholesale products to, for the right to use its CUB® tradename.

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• 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 Cub Foods and Shoppers stores, excluding Shoppers locations that were held for sale within discontinued operations;

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

• Retail , which reflects the Company's 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.

28 unchanged sentences

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

(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.

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

Whole Foods Market, Inc.

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Balance at end of year $ 17 $ 18 $ 28

On October 31, 2022, the Company entered into a purchase agreement with a third-party financial institution for the sale of certain customer accounts receivable up to a maximum outstanding amount of $ 300 million, without recourse, subject to eligibility criteria established by the financial institution.

Pursuant to the terms of the agreement, certain customer receivables are sold to the third-party financial institution on a revolving basis, subject to certain limitations.

After these sales, the Company does not retain any interest in the receivables.

The Company’s continuing involvement in transferred receivables is limited to servicing the receivables.

On June 27, 2023, the Company entered into an amendment to the purchase agreement, which increased the maximum outstanding amount from $ 300 million to $ 350 million.

Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of July 29, 2023, was approximately $ 310 million.

Net proceeds received are included within net cash provided by operating activities in the Consolidated Statements of Cash Flows in the period of sale.

The loss on sale of receivables was $ 14 million for fiscal 2023, and is recorded within Loss (gain) on sale of assets and other asset charges in the Consolidated Statements of Operations.

NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES

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Closed property charges and costs — 1 6

SUPERVALU INC.

restructuring expenses — — 5

Total $ 8 $ 21 $ 56

Restructuring and Integration Costs

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

Restructuring and integration costs for fiscal 2023 primarily relate to severance costs due to the regional restructuring during the fourth quarter.

Fiscal 2022 restructuring and integration costs 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.

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.

In fiscal 2021, 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.

NOTE 5—PROPERTY AND EQUIPMENT, NET

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Wholesale and Canada Wholesale);

one separate Retail operating and reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments and are included in the Other segment.

one of which is a separate Retail operating and reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments and are included in the Other segment.

The Canada Wholesale operating segment, which is aggregated with U.S.

1 unchanged sentence

In the fourth quarter of fiscal 2023, 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

During the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting, which resulted in the requirement to combine the Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit into one U.S.

Wholesale reporting unit, and experienced a further sustained decline in market capitalization and enterprise value.

As a result of the change in reporting units and the sustained decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Wholesale reporting units, which included a determination of the fair value of all reporting units.

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

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

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

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

Based on this analysis, the Company determined that the carrying value of its U.S.

Wholesale reporting unit exceeded its fair value by an amount that exceeded its assigned goodwill.

As a result, the Company recorded a goodwill impairment charge of $ 422 million in the first quarter of fiscal 2020.

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

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

Wholesale reporting unit’s goodwill.

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.

Goodwill and Intangible Assets Changes

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(in millions) Wholesale Other Total

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

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

$ 10 $ 10 $ 20

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$ 10 $ 10 $ 20

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million, $ 717 million and $ 717 million for fiscal 2020, 2021 and 2022, respectively.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million, $ 10 million and $ 10 million for fiscal 2020, 2021 and 2022, respectively.

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million for fiscal 2021, 2022 and 2023.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million for fiscal 2021, 2022 and 2023.

Identifiable intangible assets, net consisted of the following:

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Intangibles assets, net $ 1,160 $ 438 $ 722 $ 1,186 $ 367 $ 819

The Company performed annual qualitative reviews of its indefinite lived trademarks and tradenames in fiscal 2022 and 2021, which indicated a quantitative assessment was not required.

In the fourth quarter of fiscal 2023, the Company decided to rationalize certain of its brands within its Blue Marble Brands portfolio, resulting in an abandonment of certain brands and a shortened life of remaining brand-related intangible assets.

These changes are part of an effort for the Company to focus on its core private brand offerings.

As a result, the Company recorded a $ 25 million intangible asset impairment charge in fiscal 2023 and began amortizing the remaining intangible assets associated with its Blue Marble Brands portfolio.

The fair values utilized in the Company’s quantitative assessment were determined using the income approach, discounting projected future net cash flows based on management’s expectations of the current and future operating environment for each brand.

The impairment charge is recorded within Loss (gain) on sale of assets and other asset charges in the Consolidated Statements of Operations.

Amortization expense was $ 72 million, $ 72 million and $ 78 million for fiscal 2023, 2022 and 2021, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of July 30, 2022 is shown below:

The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of July 29, 2023 is as shown below:

(in millions)

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Level 1 Level 2 Level 3

Fuel derivatives designated as hedging instruments

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

Interest rate swaps designated as hedging instruments

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Other long-term assets $ — $ 5 $ —

Interest rate swaps designated as hedging instruments

Other long-term liabilities $ — $ 2 $ —

Fuel derivatives designated as hedging instruments

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

Fair Value at July 30, 2022

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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 $ —

Interest rate swaps designated as hedging instruments 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

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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, SOFR swap rates for fiscal 2022, LIBOR swap rates for fiscal 2021 and credit default swap rates.

As of July 29, 2023, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $ 8 million;

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

Mutual fund assets consist of balances held in investments to fund certain deferred compensation plans.

The fair values of mutual fund assets are based on quoted market prices of the mutual funds held by the plan at each reporting period.

Mutual funds traded in active markets are classified within Level 1 of the fair value hierarchy.

Fuel Supply Agreements and Derivatives

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Details of active swap contracts as of July 29, 2023, which are all pay fixed and receive floating, are as follows:

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 $ 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

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

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

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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) 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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Loss on cash flow hedging relationships:

Loss reclassified from comprehensive income into earnings $ ( 36 ) $ ( 46 ) $ ( 25 )

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

(Loss) gain recognized in earnings $ — $ — $ —

Gain (loss) reclassified from comprehensive income into earnings $ 12 $ ( 36 ) $ ( 46 )

NOTE 9—LONG-TERM DEBT

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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 or the Term Loan Facility (defined below).

The Senior Notes, which are presented net of debt issuance costs of $ 7 million as of July 29, 2023 and $ 7 million as of July 30, 2022 in the Consolidated Balance Sheets, 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

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.

The revolving credit agreement dated as of June 3, 2022, (the “ABL Loan Agreement”), by and among the Company (the “ U.S.

Borrower”) and UNFI Canada (the “Canadian Borrower” and, together with the U.S.

Borrower, the “Borrowers”), and the financial institutions that are parties thereto as lenders (collectively, the “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.

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

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 $ 750 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding.

There is no assurance that additional funding would be available.

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.

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The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s wholly-owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations.

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 % - 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 Borrowers’ obligations under the ABL Credit Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on certain accounts receivable, inventory and certain other assets arising therefrom or related thereto of the Borrowers and Guarantors (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.

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 % to 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 ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:

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July 29, 2023 July 30, 2022

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

Certain receivables included in Accounts receivable, net and Current assets of discontinued operations $ 878 $ 1,041

(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 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.

Certain inventory assets included in Inventories, net $ 1,861 $ 1,789

Certain receivables included in Accounts receivable, net 571 878

Pharmacy prescription files included in Intangible assets, net 11 15

Total $ 2,443 $ 2,682

As of July 29, 2023, the Borrowers’ Borrowing Base, net of $ 121 million of reserves, was $ 2,442 million, which is below the $ 2,600 million limit of availability, resulting in total availability of $ 2,442 million for loans and letters of credit under the ABL Credit Facility.

As of July 29, 2023, the Borrowers had $ 812 million of 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 in the Consolidated Balance Sheets.

As of July 29, 2023, the U.S.

Borrowers had $ 150 million in letters of credit outstanding under the ABL Credit Facility.

The Company’s resulting remaining availability under the ABL Credit Facility was $ 1,480 million as of July 29, 2023.

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Unused credit $ 1,480

The applicable interest rates, letter of credit fees and unutilized commitment fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Agreement), and were as follows:

The applicable interest rates, unutilized commitment fees and letter of credit fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Loan Agreement), and were as follows:

Interest rates and fees under the ABL Credit Facility:

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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.

The term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”), by and among the Company and SUPERVALU INC.

(“Supervalu” and, collectively with the Company, the “Term Borrowers”), the financial institutions that are parties thereto as lenders, Credit Suisse, as administrative agent for the Term Lenders, and the other parties thereto, provides for senior secured first lien term loans in an initial aggregate principal amount of $ 1,950 million, consisting of a $ 1,800 million seven-year tranche and a $ 150 million 364 -day tranche that was repaid in fiscal 2020 (the “Term Loan Facility”).

The net proceeds from the Term Loan Facility were used to finance the Supervalu acquisition and related transaction costs.

Any amounts then outstanding 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.

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As of July 29, 2023, 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.

(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 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.

On November 7, 2022, the Company made a $ 125 million voluntary prepayment on the Term Loan Facility with a portion of the proceeds received from monetizing certain receivables previously within accounts receivable, net associated with the Company’s purchase agreement with a third-party financial institution as previously discussed within Note 3—Revenue Recognition.

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

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2022, fiscal 2021 and fiscal 2020 are as follows:

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2023, 2022 and 2021 are as follows:

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

Accumulated other comprehensive loss at August 1, 2020 $ — $ ( 116 ) $ ( 21 ) $ ( 102 ) $ ( 239 )

Other comprehensive loss before reclassifications — ( 89 ) ( 1 ) ( 64 ) ( 154 )

Amortization of amounts included in net periodic benefit income — ( 3 ) — — ( 3 )

Amortization of cash flow hedges — — — 18 18

Settlement charge — 9 — — 9

Net current period Other comprehensive loss — ( 83 ) ( 1 ) ( 46 ) ( 130 )

Accumulated other comprehensive loss at August 1, 2020 $ — $ ( 116 ) $ ( 21 ) $ ( 102 ) $ ( 239 )

Other comprehensive income before reclassifications 1 167 5 8 181

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

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

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

Amortization of cash flow hedges 2 — — 26 28

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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:

Other comprehensive (loss) income before reclassifications — ( 20 ) ( 2 ) 23 1

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

Amortization of cash flow hedges ( 2 ) — — ( 9 ) ( 11 )

Net current period Other comprehensive (loss) income ( 2 ) ( 18 ) ( 2 ) 14 ( 8 )

Accumulated other comprehensive (loss) income at July 29, 2023 $ — $ ( 21 ) $ ( 21 ) $ 14 $ ( 28 )

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

(in millions) 2023 2022 2021 Affected Line Item on the Consolidated Statements of Operations

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

Settlement (gain) charge — ( 17 ) 11 Net periodic benefit income, excluding service cost

Settlement gain — — ( 17 ) Net periodic benefit income, excluding service cost

Total reclassifications 3 4 ( 18 )

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

Income tax (benefit) expense ( 1 ) ( 2 ) 4 Provision for income taxes

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

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Reclassification of cash flow hedge $ ( 12 ) $ 36 $ 46 Interest expense, net

Income tax benefit ( 10 ) ( 12 ) ( 7 ) Provision (benefit) for income taxes

Income tax expense (benefit) 3 ( 10 ) ( 12 ) Provision for income taxes

Total reclassifications, net of tax $ ( 9 ) $ 26 $ 34

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Reclassification of cash flow hedge $ ( 3 ) $ 2 $ ( 1 ) Cost of sales

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

Income tax expense 1 — — Provision for income taxes

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

(1) Reclassification of amounts included in net periodic benefit income include reclassification of prior service cost and reclassification of net actuarial loss as reflected in Note 13—Benefit Plans.

As of July 29, 2023, the Company expects to reclassify $ 16 million related to unrealized derivative gains 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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Long-term lease liabilities $ 1,099 $ 12

(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.

(1) Operating lease payments include $ 2 million related to extension options that are reasonably certain of being exercised and exclude $ 787 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced.

(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.

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NOTE 12—SHARE-BASED AWARDS

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”).

As of July 29, 2023, the Company has restricted stock awards and performance share units and stock options outstanding under two equity incentive plans:

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

As of July 29, 2023, the Company has 1.6 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.

The authorization for new grants under the 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 2022, equity classified awards of $ 1 million for fiscal 2021, and liability classified awards of $ 1 million for fiscal 2020.

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

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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This cost is expected to be recognized over a weighted-average period of 1.9 years.

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

Restricted Stock Awards

The fair value of restricted stock units and performance share units are determined based on the number of units granted and the quoted price of the Company’s common stock as of the grant date.

The following summary presents information regarding restricted stock units, Supervalu Replacement Awards and performance stock units:

The following summary presents information regarding restricted stock units, Supervalu Replacement Awards and performance share units:

(in millions) Weighted Average

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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 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 2023, the Company granted 0.4 million performance share units, included in the granted number in the above table, to its executives and other senior leaders (subject to the issuance of up to 0.4 million additional shares if the Company’s performance exceeds specified targeted levels) with a weighted average grant-date fair value of $ 36.87 .

These performance units are tied to fiscal 2023, 2024 and 2025 performance metrics, including adjusted earnings per share (“EPS”) growth and adjusted return on invested capital (“ROIC”).

An insignificant amount of performance share units granted in fiscal 2023 were forfeited during fiscal 2023.

These performance units are tied to fiscal 2021, 2022 and 2023 performance metrics, including adjusted EPS growth, ROIC and adjusted EBITDA leverage.

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

These performance units are tied to fiscal 2022, 2023 and 2024 performance metrics, including adjusted EPS growth and adjusted ROIC.

An insignificant amount of performance share units granted in fiscal 2022 were forfeited during fiscal 2023.

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 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.

These performance units were tied to fiscal 2021, 2022 and 2023 performance metrics, including adjusted EPS growth, adjusted ROIC and adjusted EBITDA leverage.

An insignificant amount of performance share units granted in fiscal 2021 were forfeited during fiscal 2023.

Based on performance through the performance period ended July 29, 2023, 0.3 million performance share units have been earned and will be issued in fiscal 2024.

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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.

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

NOTE 13—BENEFIT PLANS

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The Company’s primary defined benefit pension plans are the SUPERVALU INC.

Retirement Plan, Unified Grocers, Inc.

Cash Balance Plan and certain supplemental executive retirement plans.

Retirement Plans and certain supplemental executive retirement plans.

These plans were closed to new participants and service crediting ended for all participants as of December 31, 2007.

6 unchanged sentences

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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Settlements paid — — — ( 1 )

Plan amendment — — — 11

Benefit obligation at end of year 1,545 11 1,706 12

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SUPERVALU INC.

Retirement Plan Unified Grocers, Inc.

Cash Balance Plan and Other

Retirement Plan Other Pension Plan

Total Pension Benefits

9 unchanged sentences

Interest cost 63 — 38 — 37 —

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

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

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

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

Settlement gain — — — — — ( 17 )

Net periodic benefit (income) cost ( 32 ) 3 ( 43 ) 3 ( 66 ) ( 19 )

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

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

Net actuarial loss (gain) 29 ( 1 ) 59 ( 3 ) ( 225 ) ( 8 )

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

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

Prior service cost — — — — — 25

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

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

Total (benefit) expense recognized in Other comprehensive income (loss) 59 ( 6 ) ( 226 ) 21 109 3

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

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 % and the MP-2019 mortality improvement scale.

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

Total expense (benefit) recognized in Other comprehensive (loss) income 29 ( 4 ) 59 ( 6 ) ( 226 ) 21

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

Amounts recognized in the Consolidated Balance Sheets as of July 29, 2023 and July 30, 2022 consist of the following:

20 unchanged sentences

1.00 % - 5.50 %

2.00 % - 5.75 %

Interest credit 5.00 % 5.00 % 5.00 %

42 unchanged sentences

When quoted prices are not available for identical or similar securities, the fair value is based upon an industry valuation model, which maximizes observable inputs.

Mutual funds - Mutual funds are valued at the closing price reported in the active market in which the individual securities are traded.

Private equity and real estate partnerships - Valued based on NAV provided by the investment manager, updated for any subsequent partnership interests’ cash flows or expected changes in fair value.

19 unchanged sentences

Government securities — 175 — — 175

Mutual funds — 58 — — 58

Mortgage-backed securities — 28 — — 28

3 unchanged sentences

Contributions

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

Retirement Plan or the Unified Grocers, Inc.

Cash Balance Plan under ERISA in fiscal 2022.

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

Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2023.

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 2024.

33 unchanged sentences

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% 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”.

Plans are generally considered Deep Red if they are projected to become insolvent within 15 years.

Among other factors, deep red zone status or critical and declining plans are generally less than 65 % funded and are projected to become insolvent within 15 to 20 years, red zone status plans are generally less than 65 % funded and are considered in critical status, yellow zone status plans are less than 80 % funded and are considered in endangered or seriously endangered status, and green zone plans are at least 80 % funded.

The FIP/RP Status Pending/Implemented column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented by the trustees of each plan.

The American Rescue Plan Act of 2021 (“ARPA”) created the Special Financial Assistance (“SFA”) Program to permit financially troubled multiemployer plans to apply for a cash payment intended to keep plans solvent and able to pay benefits through 2051.

As July 29, 2023, certain plans in which the Company participates have applied for or received SFA, and other plans in which the Company participates are expected to apply.

Certain plans have been aggregated in the All Other Multiemployer Pension Plans line in the following table, as the contributions to each of these plans are not individually material.

1 unchanged sentence

At the date the financial statements were issued, Form 5500 for these plans were generally not available for the plan years ending in 2022.

The following table contains information about the Company’s significant multiemployer plans (in millions):

The following table contains information about the Company’s significant multiemployer plans from which the Company has not withdrawn (in millions):

Pension Protection Act Zone Status Contributions

8 unchanged sentences

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

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

UFCW Unions and Participating Employers Pension Plan 526117495-002 12/31 Red Implemented 3 3 3 No

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

4 unchanged sentences

(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.

(2) The Company withdrew from this plan in fiscal 2021 and made no contributions in fiscal 2022 or fiscal 2023.

The plan was included in the table above for contributions made in fiscal 2021.

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

12 unchanged sentences

UFCW Unions and Participating Employers Pension Fund 07/12/2024 2 7/12/2024 75.0 % ☒

2 11/8/2020 (2)

Western Conference of Teamsters Pension Plan Trust

1 unchanged sentence

(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) 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.

As of July 29, 2023, accrued multiemployer pension plan withdrawal liabilities included in Other long-term liabilities and Accrued compensation and benefits were $ 73 million and $ 7 million, respectively, for 13 multiemployer plans.

15 unchanged sentences

NOTE 14—INCOME TAXES

Income Tax Expense (Benefit)

Income before income taxes for fiscal 2022 consists of $ 302 million from U.S.

Income Tax (Benefit) Expense

For fiscal 2023, (loss) income before income taxes consists of $( 1 ) million from U.S.

continuing operations and $ 8 million from foreign continuing operations.

1 unchanged sentence

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.

The total provision (benefit) for income taxes included in the Consolidated Statements of Operations consisted of the following:

The total (benefit) provision for income taxes included in the Consolidated Statements of Operations consisted of the following:

(in millions) 2023 2022 2021

2 unchanged sentences

Total $ ( 23 ) $ 56 $ 33

The income tax expense (benefit) in continuing operations was allocated as follows:

The income tax (benefit) expense in continuing operations was allocated as follows:

(in millions) 2023 2022 2021

Income tax expense (benefit) $ 56 $ 34 $ ( 91 )

Other comprehensive income 11 65 ( 45 )

Income tax (benefit) expense $ ( 23 ) $ 56 $ 34

Other comprehensive (loss) income ( 2 ) 11 65

Total $ ( 25 ) $ 67 $ 99

13 unchanged sentences

$ 39 $ ( 5 ) $ 34

Total income tax expense (benefit) in continuing operations was different than the amounts computed by applying the statutory federal income tax rate to income before income taxes because of the following:

Total income tax (benefit) expense in continuing operations was different than the amounts computed by applying the statutory federal income tax rate to income before income taxes because of the following:

(in millions) 2023 2022 2021

5 unchanged sentences

Unrecognized tax benefits ( 16 ) ( 6 ) ( 4 )

Nondeductible goodwill impairment — — 44

Enhanced inventory donations ( 1 ) ( 2 ) ( 3 )

Impacts related to the CARES Act — — ( 39 )

Changes in valuation allowance (1)

Other, net (1)

Total income tax expense (benefit) $ 56 $ 34 $ ( 91 )

Total income tax (benefit) expense $ ( 23 ) $ 56 $ 34

(1) Immaterial prior period amounts that were included in the other, net category have been reclassified to conform with current period presentation.

Uncertain Tax Positions

3 unchanged sentences

Unrecognized tax benefits added during the period 5 — 6

Unrecognized tax benefits assumed in a business combination — — —

Decreases in unrecognized tax benefits due to statute expiration ( 5 ) ( 7 ) ( 8 )

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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.

Based on the possibility of the closing of pending audits and appeals, or expiration of the statute of limitations, it is reasonably possible that the amount of unrecognized tax benefits will decrease by up to $ 6 million during the next 12 months.

Based on the possibility of the closing of pending audits and appeals, or expiration of the statute of limitations, the Company does not anticipate that the amount of unrecognized tax benefits will change significantly during the next 12 months.

Deferred Tax Assets and Liabilities

11 unchanged sentences

Lease liabilities 333 319

Interest rate swap agreements — 25

Other deferred tax assets 6 —

8 unchanged sentences

Total deferred tax liabilities 478 493

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

Net deferred tax assets (liabilities) $ 32 $ ( 8 )

Tax Credits and Valuation Allowances

5 unchanged sentences

The Company has reviewed these factors in evaluating the recoverability of its deferred tax assets.

As of July 30, 2022, the Company anticipates sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception of certain foreign tax credits and state net operating losses.

Accordingly, the Company has established valuation allowances against that portion of its state net operating losses and foreign tax credits that, in the Company’ s judgment, are not likely to be realized within the applicable recovery periods.

As of July 29, 2023, the Company anticipates sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception of certain foreign tax credits, charitable contribution carryovers and state net operating losses.

Accordingly, the Company has established valuation allowances against that portion of its charitable contribution carryovers, state net operating losses and foreign tax credits that, in the Company’s judgment, are not likely to be realized within the applicable recovery periods.

At July 29, 2023, 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.

4 unchanged sentences

At July 29, 2023, the Company had disallowed charitable contribution carryforwards of approximately $ 45 million that are available for carryforward over five years.

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.

As of July 29, 2023, the Company anticipates sufficient future taxable income to utilize $ 30 million of these charitable contribution carryovers within the applicable five-year carryforward periods.

The Company has established a valuation allowance against the $ 15 million of charitable contribution carryovers that, in the Company’s judgement, are not likely to be realized within the applicable recovery period.

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

5 unchanged sentences

Effective Tax Rate

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.

The Company’s effective income tax rate for continuing operations was a benefit rate of 328.6 % on pre-tax income for fiscal 2023 as compared to an expense rate of 18.1 % and 18.6 % on pre-tax income for fiscal 2022 and 2021, respectively.

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.

For fiscal 2023, the effective tax rate was impacted by solar credits, including the tax credit impact of a fiscal 2023 investment in an equity method partnership and solar credits associated with a solar array installation at the Company’s Howell Township, New Jersey facility.

The effective tax rate was also impacted by the recognition of previously unrecognized tax benefits and excess tax deductions attributable to share-based compensation.

The combined impact of these fiscal 2023 tax benefits exceeded pre-tax income, generating an overall tax benefit rate for fiscal 2023.

NOTE 15—EARNINGS PER SHARE

4 unchanged sentences

Diluted weighted average shares outstanding 60.7 61.0 60.0

Basic earnings (loss) per share:

Basic earnings per share (1) :

Continuing operations $ 0.41 $ 4.28 $ 2.55

Discontinued operations $ — $ — $ 0.10

Basic earnings (loss) per share $ 4.28 $ 2.65 $ ( 5.10 )

Diluted earnings (loss) per share:

Basic earnings per share $ 0.41 $ 4.28 $ 2.65

Diluted earnings per share (1) :

Continuing operations $ 0.40 $ 4.07 $ 2.38

Discontinued operations $ — $ — $ 0.09

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

Diluted earnings per share $ 0.40 $ 4.07 $ 2.48

Anti-dilutive share-based awards excluded from the calculation of diluted earnings per share 0.8 0.5 0.9

(1) Earnings per share amounts are calculated using actual unrounded figures.

NOTE 16—BUSINESS SEGMENTS

2 unchanged sentences

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

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.

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

East, Central and West, 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.

Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics, and therefore have been aggregated into a single reportable segment.

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 distribution of grocery and non-food products, and support services provider to retailers in the United States and Canada.

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

7 unchanged sentences

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:

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

(in millions) 2023 2022 2021

7 unchanged sentences

( 1 ) ( 9 ) 1

( 9 ) 1 ( 2 )

Net income attributable to noncontrolling interests 6 6 6

1 unchanged sentence

Interest expense, net ( 144 ) ( 155 ) ( 204 )

Other, net 2 8 4

Other income, net 2 2 8

Depreciation and amortization ( 304 ) ( 285 ) ( 285 )

2 unchanged sentences

LIFO charge ( 119 ) ( 158 ) ( 24 )

( 158 ) ( 24 ) ( 18 )

Restructuring, acquisition, and integration related expenses ( 8 ) ( 21 ) ( 56 )

Goodwill impairment charges — — ( 425 )

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

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

Note receivable charges — — ( 13 )

Legal settlement income — — ( 1 )

(Loss) gain on sale of assets and other asset charges ( 30 ) 87 4

Multi-employer pension plan withdrawal (charges) benefit ( 1 ) 8 ( 63 )

Other retail expense ( 1 ) — ( 5 )

Income (loss) from continuing operations before income taxes $ 310 $ 183 $ ( 342 )

Business transformation costs ( 25 ) — —

Income from continuing operations before income taxes $ 7 $ 310 $ 183

Depreciation and amortization:

6 unchanged sentences

$ 323 $ 251 $ 310

(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:

(1) For fiscal 2023, 2022 and 2021, as presented in Note 3—Revenue Recognition, the Company recorded $ 1,331 million, $ 1,358 million and $ 1,381 million, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail sales that have been eliminated upon consolidation.

(2) Fiscal 2022 and 2021 include an immaterial amount of liability-settled share compensation expense.

Total assets by reportable segment were as follows:

(in millions) July 29,

9 unchanged sentences

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 eight years , with a weighted average remaining term of approximately four 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 seven 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.

20 unchanged sentences

While the Company’s aggregate indemnification obligations to Save-A-Lot and Onex, the purchaser of Save-A-Lot, could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability.

The Company has recorded the fair value of the guarantee in the Consolidated Balance Sheets within Other long-term liabilities.

The Company has recorded the de minimis fair value of the guarantee in the Consolidated Balance Sheets within Other long-term liabilities.

Other Contractual Commitments

4 unchanged sentences

The Company is one of dozens of companies that have been named in various lawsuits alleging that drug manufacturers, retailers and distributors contributed to the national opioid epidemic.

Currently, UNFI, primarily through its subsidiary, Advantage Logistics, is named in approximately 43 suits pending in the United States District Court for the Northern District of Ohio where over 1,800 cases have been consolidated as Multi-District Litigation (“MDL”).

Currently, UNFI, primarily through its subsidiary, Advantage Logistics, is named in approximately 43 suits pending in the United States District Court for the Northern District of Ohio where thousands of cases have been consolidated as Multi-District Litigation (“MDL”).

In accordance with the Stock Purchase Agreement dated January 10, 2013, between New Albertson’s Inc.

3 unchanged sentences

To date, no discovery has been conducted against UNFI in any of the actions.

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

On October 7, 2022, the MDL Court issued an order directing the Company and numerous other “non-litigating” defendants to submit by November 1, 2022, a list of opioid cases where the Company is named and opioid dispensing and distribution data.

The Company produced the data in compliance with the order.

On March 8, 2023, the Company received a subpoena from the Consumer Protection Division of the Maryland Attorney General’s Office seeking records related to the distribution and dispensing of opioids.

The Company is in the process of gathering responsive documents and responding to the subpoena.

The Company believes these claims are without merit and is vigorously defending this matter.

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

27 unchanged sentences

On July 2, 2020, the Court granted the defendants’ summary judgment motion and denied the relators’ motion, dismissing the case.

On July 9, 2020, the relators filed a notice of appeal with the 7th Circuit Court of Appeals, and on September 30, 2020 filed an appellate brief.

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

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

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 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.

On July 9, 2020, the relators filed a notice of appeal with the Seventh Circuit Court of Appeal.

On August 12, 2021, the Seventh 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 December 3, 2021, the Seventh 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 which was granted on January 13, 2023.

Oral argument took place in the Supreme Court on April 18, 2023.

On June 1, 2023, the Supreme Court reversed and vacated the lower court’s judgement and remanded the case to the Seventh Circuit for further proceedings.

On July 27, 2023, the Seventh Circuit vacated the summary judgement order and remanded to the District Court.

On August 22, 2023, the District Court set the trial date for April 29, 2024, and indicated it would allow further summary judgement motions, which the Company anticipates filing.

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);

10 unchanged sentences

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

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

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

NOTE 18—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 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:

The following table summarizes the operating results of discontinued operations included in the Consolidated Statements of Operations:

(in millions) 2021

3 unchanged sentences

Operating expenses 9

Restructuring expenses and charges — 33

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

Income from discontinued operations before income taxes 5

Benefit for income taxes ( 1 )

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

Income from discontinued operations, net of tax $ 6

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 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

Current assets

Inventories, net $ 2

Total current assets of discontinued operations 2

Long-term assets

Property and equipment 1

Other long-term assets 1

Total long-term assets of discontinued operations 2

Total assets of discontinued operations $ 4

Current liabilities

Accounts payable $ 2

Accrued compensation and benefits 2

Total current liabilities of discontinued operations 4

Total liabilities of discontinued operations $ 4

Net liabilities of discontinued operations $ —

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

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data