What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-10-01 compared with 2023-09-26 · 333 added, 398 removed, 1244 unchanged (37% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Stockholders’ Equity

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

and subsidiaries (the Company) as of July 29, 2023 and July 30, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended July 29, 2023, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of July 29, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 29, 2023 and July 30, 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended July 29, 2023, in conformity with U.S.

and subsidiaries (the Company) as of August 3, 2024 and July 29, 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended August 3, 2024, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of August 3, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 3, 2024 and July 29, 2023, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended August 3, 2024, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 29, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 3, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

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Assessment of the value of the defined benefit pension obligation

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

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

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

The value of the defined benefit pension obligation at year end was $1.50 billion, offset by plan assets totaling $1.53 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 used.

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

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

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

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

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

Providence, Rhode Island

September 26, 2023

Minneapolis, Minnesota

October 1, 2024

UNITED NATURAL FOODS, INC.

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Pension and other postretirement benefit obligations 15 16

Deferred income taxes — 8

Other long-term liabilities 151 162

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

61.0 shares issued and 58.5 shares outstanding at July 29, 2023;

62.0 shares issued and 59.5 shares outstanding at August 3, 2024;

61.0 shares issued and 58.5 shares outstanding at July 29, 2023

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Fiscal Year Ended

July 29, 2023

August 3, 2024

July 29, 2023

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

Income from continuing operations before income taxes 7 310 183

(Loss) income before income taxes ( 137 ) 7 310

(Benefit) provision for income taxes ( 27 ) ( 23 ) 56

Net income from continuing operations 30 254 149

Income from discontinued operations, net of tax — — 6

Net income including noncontrolling interests 30 254 155

Net (loss) income including noncontrolling interests ( 110 ) 30 254

Less net income attributable to noncontrolling interests ( 2 ) ( 6 ) ( 6 )

Net income attributable to United Natural Foods, Inc.

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

$ ( 112 ) $ 24 $ 248

Basic earnings per share:

Continuing operations $ 0.41 $ 4.28 $ 2.55

Discontinued operations $ — $ — $ 0.10

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 per share $ 0.40 $ 4.07 $ 2.48

Basic (loss) earnings per share $ ( 1.89 ) $ 0.41 $ 4.28

Diluted (loss) earnings per share $ ( 1.89 ) $ 0.40 $ 4.07

Weighted average shares outstanding:

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

Fiscal Year Ended

July 29, 2023

August 3, 2024

July 29, 2023

July 30, 2022

Net income including noncontrolling interests $ 30 $ 254 $ 155

Net (loss) income including noncontrolling interests $ ( 110 ) $ 30 $ 254

Other comprehensive (loss) income:

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Less comprehensive income attributable to noncontrolling interests ( 2 ) ( 6 ) ( 6 )

Total comprehensive income attributable to United Natural Foods, Inc.

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

$ ( 131 ) $ 16 $ 267

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Shares Amount Shares Amount

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 )

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

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Share-based compensation — — — — 39 — — 39 — 39

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

Other comprehensive loss — — — — — ( 19 ) — ( 19 ) — ( 19 )

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

Net income — — — — — — 24 24 6 30

Balances at July 29, 2023 61.0 $ 1 2.5 $ ( 86 ) $ 606 $ ( 28 ) $ 1,250 $ 1,743 $ 1 $ 1,744

Acquisition of noncontrolling interests — — — — ( 3 ) — — ( 3 ) 1 ( 2 )

Net (loss) income — — — — — — ( 112 ) ( 112 ) 2 ( 110 )

Balances at August 3, 2024 62.0 $ 1 2.5 $ ( 86 ) $ 635 $ ( 47 ) $ 1,138 $ 1,641 $ — $ 1,641

See accompanying Notes to Consolidated Financial Statements.

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Fiscal Year Ended

(in millions) July 29, 2023

(in millions) August 3, 2024

July 29, 2023

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CASH FLOWS FROM 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:

Net (loss) income including noncontrolling interests $ ( 110 ) $ 30 $ 254

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

Depreciation and amortization 319 304 285

Share-based compensation 39 38 44

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

Gain on sale of assets ( 7 ) ( 9 ) ( 87 )

Long-lived asset impairment charges 43 25 —

Closed property and other restructuring charges — — 2

Intangible asset impairment charges 25 — —

Net pension and other postretirement benefit income ( 15 ) ( 29 ) ( 40 )

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LIFO charge 7 119 158

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

Provision (recoveries) for losses on receivables 3 ( 1 ) 2

Non-cash interest expense and other adjustments 18 13 24

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Payments for investments ( 22 ) ( 32 ) ( 28 )

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

Net cash provided by investing activities of discontinued operations — — 2

Net cash used in investing activities ( 342 ) ( 339 ) ( 49 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings of long-term debt — — 500

Proceeds from borrowings under revolving credit line 2,571 2,976 4,425

Proceeds from issuance of other loans 15 — —

Repayments of borrowings under revolving credit line ( 2,270 ) ( 3,004 ) ( 4,287 )

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Other ( 2 ) — 2

Net cash used in financing activities ( 292 ) ( 279 ) ( 384 )

Net cash provided by (used in) financing activities 92 ( 292 ) ( 279 )

EFFECT OF EXCHANGE RATE ON CASH — — —

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

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

Cash and cash equivalents, at beginning of period 37 44 41

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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 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.

Fiscal 2024 contained 53 weeks with the fourth quarter of fiscal 2024 containing 14 weeks.

References to fiscal 2024, fiscal 2023 and fiscal 2022, or 2024, 2023 and 2022, as presented in tabular disclosure, relate to the 53-week, 52-week and 52-week fiscal periods ended August 3, 2024, July 29, 2023 and July 30, 2022, respectively.

Basis of Presentation

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

Unless otherwise indicated, references to the Consolidated Statements of Operations and the Consolidated Balance Sheets in the Notes to Consolidated Financial Statements exclude all amounts related to discontinued operations.

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

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, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue.

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Accounting Standards Codification (“ASC”) 606 defines a five-step process to recognize revenue that requires judgment and estimates, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when or as the performance obligation is satisfied.

Revenues from wholesale product sales are recognized when control is transferred, which typically happens upon either shipment or delivery, depending on the contract terms with the customer.

Revenues from wholesale product sales are recognized when control is transferred, which typically happens upon delivery, depending on the contract terms with the customer.

Typically, shipping and customer receipt of wholesale products occur on the same business day.

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Cost of Sales

Cost of sales consist primarily of amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, the Company’s distribution facilities and retail stores, partially offset by consideration received from suppliers in connection with the purchase, transportation or promotion of the suppliers’ products.

Cost of sales consist primarily of amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, the Company’s distribution centers and retail stores, partially offset by consideration received from suppliers in connection with the purchase, transportation or promotion of the suppliers’ products.

Retail store advertising expenses are components of Cost of sales and are expensed as incurred.

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Restructuring, Acquisition and Integration Related Expenses

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

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

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.

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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 2024, the Company recorded impairment charges related to one of our corporate-owned office locations, certain leased and owned distribution centers and certain retail store locations.

Refer to Note 5—Property and Equipment, Net for additional information on these impairment charges.

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

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Within the Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current year presentation.

These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

These reclassifications had no impact on reported net (loss) income, cash flows, or total assets and liabilities.

Cash and Cash Equivalents

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

As of July 29, 2023 and July 30, 2022, the Company had net book overdrafts of $ 308 million and $ 266 million, respectively.

As of August 3, 2024 and July 29, 2023, the Company had net book overdrafts of $ 243 million and $ 308 million, respectively.

Accounts Receivable, 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 the Company’s distribution facilities and stores.

Inventory quantities are evaluated throughout each fiscal year based on physical counts in the Company’s distribution centers 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 $ 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.

During fiscal 2024, inventory quantities in certain LIFO layers were reduced.

These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2024 purchases, the effect of which decreased Cost of sales by approximately $ 15 million in fiscal 2024.

As of August 3, 2024 and July 29, 2023, approximately $ 1.9 billion and $ 2.0 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 $ 351 million and $ 344 million as of August 3, 2024 and July 29, 2023, 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.

Refer to Note 5—Property and Equipment, Net and Note 6—Goodwill and Intangible Assets, Net for additional information regarding the Company’s long-lived asset impairment reviews and other information.

Cloud Computing Arrangements

The Company enters into certain cloud-based software hosting arrangements for internal use that are accounted for as service contracts.

The capitalized implementation costs associated with these cloud computing arrangements are included in Prepaid expenses and other current assets and Other long-term assets within the Consolidated Balance Sheets, and the related cash flows are included within operating activities in the Consolidated Statements of Cash Flows.

Once a cloud computing arrangement is ready for its intended use, the capitalized implementation costs are amortized on a straight-line basis over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised, and expensed in the same line item in the Consolidated Statements of Operations as the associated hosting fees.

The net book value of these capitalized implementation costs was $ 51 million and $ 28 million as of August 3, 2024 and July 29, 2023, respectively.

Amortization expense was $ 4 million, $ 2 million and $ 1 million for fiscal 2024, 2023 and 2022, respectively.

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

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Under this approach, the Company first determines the total tax expense or benefit (current and deferred) for the period.

The Company then calculates the tax effect of pretax income from continuing operations only.

The Company then calculates the tax effect of pretax income.

The residual tax expense is allocated on a proportional basis to other financial statement components (i.e.

discontinued operations, other comprehensive income).

other comprehensive income).

Goodwill and Intangible Assets, Net

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

Goodwill is reviewed for impairment at least annually as of the first day of the fourth fiscal quarter and if events occur or circumstances change that would indicate that the value of the reporting unit may be impaired.

Goodwill is 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 reporting unit may be impaired.

The Company performs qualitative assessments of Goodwill for impairment.

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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.

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.

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Pharmacy prescription files 7 years

Business Dispositions

The Company reviews the presentation of planned business dispositions in the Consolidated Financial Statements based on the available information and events that have occurred.

The review consists of evaluating whether the business meets the definition of a component for which the operations and cash flows are clearly distinguishable from the other components of the business, and if so, whether it is anticipated that after the disposal the cash flows of the component would be eliminated from continuing operations and whether the disposition represents a strategic shift that has a major effect on operations and financial results.

In addition, the Company evaluates whether the business has met the criteria as a business held for sale.

In order for a planned disposition to be classified as a business held for sale, the established criteria must be met as of the reporting date, including an active program to market the business and the expected disposition of the business within one year.

Planned business dispositions are presented as discontinued operations when all the criteria described above are met.

Operations of the business components meeting the discontinued operations requirements are presented within Income from discontinued operations, net of tax in the Consolidated Statements of Operations, and assets and liabilities of the business component planned to be disposed of are presented as separate lines within the Consolidated Balance Sheets.

See Note 18—Discontinued Operations for additional information.

The carrying value of the business held for sale is reviewed for recoverability upon meeting the classification requirements.

Evaluating the recoverability of the assets of a business classified as held for sale follows a defined order in which property and intangible assets subject to amortization are considered only after the recoverability of Goodwill, indefinite lived intangible assets and other assets are assessed.

After the valuation process is completed, the held for sale business is reported at the lower of its carrying value or fair value less cost to sell, and no additional depreciation or amortization expense is recognized.

There are inherent judgments and estimates used in determining the fair value less costs to sell of a business and any impairment charges.

The sale of a business can result in the recognition of a gain or loss that differs from that anticipated prior to closing.

Fair Value of Financial Instruments

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Share-Based Compensation

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).

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

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

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

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

The Company’s executive officers and members of senior management have been granted performance units which vest, when and if earned, in accordance with the terms of the related performance unit award agreements.

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See Note 13—Benefit Plans for additional information on participation in multiemployer plans.

Earnings Per Share

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.

(Loss) Earnings Per Share

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

Diluted (loss) 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.

For purposes of the diluted earnings per share calculation, outstanding stock options, restricted stock units and performance-based awards, if applicable, are considered common stock equivalents, using the treasury stock method.

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

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”).

On September 21, 2022, our Board of Directors authorized a 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.

The Company did no t repurchase any shares of its common stock in fiscal 2024 or 2022.

As of August 3, 2024, 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 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.

Comprehensive (Loss) Income

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

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

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

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All derivatives are recognized on the Company’s Consolidated Balance Sheets at fair value based on quoted market prices or estimates, and are recorded in either current or noncurrent assets or liabilities based on their maturity.

Changes in the fair value of derivatives are recorded in comprehensive income or net earnings, based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction.

Changes in the fair value of derivatives are recorded in comprehensive (loss) income or net earnings, based on whether the instrument is designated and effective as a hedge transaction and, if so, the type of hedge transaction.

Gains or losses on derivative instruments are recorded in Accumulated other comprehensive loss and are reclassified to earnings in the period the hedged item affects earnings.

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It is the Company’s policy to record the self-insured portion of workers’ compensation, general and automobile liabilities based upon actuarial methods to estimate the future cost of claims and related expenses that have been reported but not settled, and that have been incurred but not yet reported, discounted at a risk-free interest rate.

The present value of such claims was calculated using a discount rate of 3.5 % and 3 % as of July 29, 2023 and July 30, 2022, respectively.

The present value of such claims was calculated using a discount rate of 4.8 % and 3.5 % as of August 3, 2024 and July 29, 2023, respectively.

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

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Ending balance $ 89 $ 97 $ 98

The current portion of the self-insurance liability was $ 34 million and $ 34 million as of July 29, 2023 and July 30, 2022, respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The long-term portions were $ 63 million and $ 64 million as of July 29, 2023 and July 30, 2022, respectively, and are included in Other long-term liabilities in the Consolidated Balance Sheets.

The self-insurance liabilities as of the end of the fiscal year are net of discounts of $ 8 million and $ 11 million as of July 29, 2023 and July 30, 2022, respectively.

Amounts due from insurance companies were $ 26 million and $ 12 million as of July 29, 2023 and July 30, 2022, respectively, and are recorded in Prepaid expenses and other current assets and Other long-term assets .

The current portion of the self-insurance liability was $ 33 million and $ 34 million as of August 3, 2024 and July 29, 2023, respectively, and is included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The long-term portions were $ 56 million and $ 63 million as of August 3, 2024 and July 29, 2023, respectively, and are included in Other long-term liabilities in the Consolidated Balance Sheets.

The self-insurance liabilities as of the end of the fiscal year are net of discounts of $ 12 million and $ 8 million as of August 3, 2024 and July 29, 2023, respectively.

Amounts due from insurance companies were $ 33 million and $ 26 million as of August 3, 2024 and July 29, 2023, respectively, and are recorded in Prepaid expenses and other current assets and Other long-term assets.

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

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These assets and obligations are recognized at the lease commencement date based on the present value of lease payments, net of incentives, over the lease term.

Incremental borrowing rates are estimated based on the Company’s borrowing rate as of the lease commencement date to determine the present value of lease payments, when lease contracts do not provide a readily determinable implicit rate.

Incremental borrowing rates are estimated based on the Company’s borrowing rate as of the lease commencement date to determine the present value of lease payments, when the rate implicit in the lease is not readily determinable.

Incremental borrowing rates are determined by using the yield curve based on the Company’s credit rating adjusted for the Company’s specific debt profile and secured debt risk.

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The Company calculates operating and finance lease impairments using a discount rate to calculate the present value of estimated subtenant rentals that could be reasonably obtained for the property.

Lease impairment charges for properties no longer used in operations are recorded as a component of Restructuring, acquisition and integration related expenses in the Consolidated Statements of Operations.

Lease impairment charges for properties no longer used in operations are recorded as a component of Loss (gain) on sale of assets and other asset charges in the Consolidated Statements of Operations.

The calculation of lease impairment charges requires significant judgments and estimates, including estimated subtenant rentals, discount rates and future cash flows based on the Company’s experience and knowledge of the market in which the property is located, previous efforts to dispose of similar assets and the assessment of existing market conditions.

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NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

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

Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance:

ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-11 (collectively, “Topic 326”).

Topic 326 changed the impairment model for most financial assets and certain other instruments.

For trade and other receivables, guarantees and other instruments, entities are required to use a new forward-looking expected loss model that replaces the previous incurred loss model and generally results in earlier recognition of credit losses.

The Company adopted this standard in fiscal 2021, on August 2, 2020, the effective and initial application date, using a modified-retrospective basis as required by the standard by means of a cumulative-effect adjustment to the opening balance of Retained earnings in the Company’s Consolidated Statements of Stockholders' Equity.

The difference between reserves and allowances recorded under the former incurred loss model and the amount determined under the current expected loss model, net of the deferred tax impact, was recorded as an adjustment to Retained earnings.

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

Recently Issued Accounting Pronouncements

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

In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820):

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

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

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

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

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

The Company has evaluated equity securities within the scope of the provisions of the new standard and does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

The amendments in this update also expand the interim segment disclosure requirements.

The Company is required to adopt the amendments in this update in fiscal 2025, and the interim disclosure requirements will be effective for the Company in the first quarter of fiscal 2026.

Early adoption is permitted.

The amendments in this update are required to be applied on a retrospective basis.

The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold.

The amendments also require disclosure on an annual basis of income taxes paid disaggregated by federal, state and foreign taxes as well as the amount of income taxes paid by individual jurisdiction.

In addition, the amendments require disclosures of disaggregated pretax income and income tax expense and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant.

The Company is required to adopt the amendments in this update in fiscal 2026.

Early adoption is permitted.

The amendments in this update should be applied on a prospective basis, but can also be applied retrospectively.

The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

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Revenues from professional services are less than 1 % of total Net sales.

Wholesale equipment sales are recorded as direct sales to customers when shipped or delivered, consistent with the recognition of product sales.

Wholesale equipment sales are recorded as direct sales to customers when control is transferred, which is typically upon delivery, consistent with the recognition of product sales.

Disaggregation of Revenues

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• 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;

• Retail , which reflects the Company's Retail segment, including Cub® Foods and Shoppers® stores;

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

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(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.

was the Company’s largest customer in each fiscal year presented.

Whole Foods Market, Inc.

accounted for approximately 21 %, 20 % and 19 % of the Company’s net sales for fiscal 2023, 2022 and 2021, respectively.

Sales to one customer in the Wholesale segment, which includes customers under common control, accounted for approximately 23 %, 22 % and 20 % of the Company’s net sales for fiscal 2024, 2023 and 2022, respectively.

There were no other customers that individually generated 10% or more of the Company’s net sales during those periods.

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Accounts and notes receivable are as follows:

(in millions) July 29, 2023 July 30, 2022

(in millions) August 3, 2024 July 29, 2023

Customer accounts receivable $ 936 $ 887

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Balance at beginning of year $ 17 $ 18 $ 28

Impact of adoption of new credit loss standard — — 4

Provision for losses in Operating expenses 9 2 2

Reductions of Net sales 6 1 3

(Increases) reductions to Net sales ( 2 ) 6 1

Write-offs charged against the allowance ( 3 ) ( 9 ) ( 13 )

Balance at end of year $ 21 $ 17 $ 18

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.

In fiscal 2023, the Company entered into an agreement to sell, on a revolving basis, certain customer accounts receivable up to a maximum amount outstanding of $ 350 million to a third-party financial institution.

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.

Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of August 3, 2024 and July 29, 2023, was approximately $ 322 million and $ 310 million, respectively.

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

The loss on sale of receivables was $ 21 million and $ 14 million for fiscal 2024 and fiscal 2023, respectively, 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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Restructuring and Integration Costs

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

Restructuring and integration costs for fiscal 2024 and 2023 primarily relate to costs associated with certain employee severance and other employee separation costs.

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.

Restructuring liabilities related to severance and other employee separation costs were $ 16 million and $ 5 million as of August 3, 2024 and July 29, 2023, respectively, and are included in Accrued expenses and other current liabilities and Accrued compensation and benefits in the Consolidated Balance Sheets.

Changes in the liability included $ 27 million and $ 5 million attributable to restructuring and severance-related charges for fiscal 2024 and fiscal 2023, respectively, and $ 16 million and $ 1 million attributable to cash settlements for fiscal 2024 and fiscal 2023, respectively.

Closed Property Charges and Costs

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.

In fiscal 2024, closed property charges relate to lease terminations of non-operating distribution centers and stores.

NOTE 5—PROPERTY AND EQUIPMENT, NET

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Depreciation and amortization expense on property and equipment was $ 247 million, $ 232 million and $ 213 million for fiscal 2024, 2023 and 2022, respectively.

In fiscal 2024, the Company determined that it was more likely than not that it would dispose of one of its corporate-owned office locations before the end of its previously estimated useful life.

As a result, the Company conducted an impairment review and recorded a $ 21 million non-cash asset impairment charge in fiscal 2024.

The fair value utilized in the Company’s impairment review was determined based on the market approach.

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

In the fourth quarter of fiscal 2024, the Company sold certain long-lived assets related to this corporate-owned office location for an amount that approximated its net book value at the time of the sale.

During the fourth quarter of fiscal 2024, the Company recorded a $ 15 million non-cash impairment charge related to the decision to close certain leased and owned distribution center locations.

During the third quarter of fiscal 2024, the Company recorded a $ 7 million non-cash asset impairment charge related to the decision to close certain retail store locations.

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

There were no property and equipment impairment charges recorded for fiscal 2023 or 2022.

NOTE 6—GOODWILL AND INTANGIBLE ASSETS, NET

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Change in foreign exchange rates ( 1 ) — ( 1 )

Goodwill as of July 29, 2023 (1)(2)

Goodwill as of August 3, 2024 (1)(2)

$ 9 $ 10 $ 19

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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.

These changes were 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.

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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 amortizing intangible assets existing as of July 29, 2023 is as shown below:

Amortization expense was $ 72 million for fiscal 2024, 2023 and 2022, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of August 3, 2024 is as shown below:

(in millions)

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

Fair Value at July 29, 2023

Fair Value at August 3, 2024

(in millions) Consolidated Balance Sheets Location

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Prepaid expenses and other current assets $ — $ 5 $ —

Interest rate swaps designated as hedging instruments

Other long-term assets $ — $ 5 $ —

Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1 $ —

Fuel derivatives designated as hedging instruments

Accrued expenses and other current liabilities $ — $ 2 $ —

Interest rate swaps designated as hedging instruments

Other long-term liabilities $ — $ 5 $ —

Fair Value at July 29, 2023

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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 Prepaid expenses and other current assets $ — $ 17 $ —

Interest rate swaps designated as hedging instruments 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 $ —

Interest Rate Swap Contracts

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 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;

a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately $ 8 million.

The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, Secured Overnight Financing Rate (“SOFR”) swap rates and credit default swap rates.

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

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

July 29, 2023 July 30, 2022

August 3, 2024 July 29, 2023

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

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Refer to Note 7—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

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

Details of active swap contracts as of August 3, 2024, which are all pay fixed and receive floating, are as follows:

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

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

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

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

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

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

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

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.

In addition, in fiscal 2021, in conjunction with the $ 500 million fixed rate senior unsecured notes offering described below in Note 9—Long-Term Debt, the Company paid $ 11 million to terminate or novate certain outstanding interest rate swaps with a notional amount of $ 504 million and certain forward starting interest rate swaps with a notional amount of $ 450 million.

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

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

Since the hedged interest payments remain probable of occurring, the unrecognized gains and losses that existed as of the early termination or novation of these interest rate swap agreements will be amortized out of Accumulated other comprehensive loss and into Interest expense, net over the remaining period of the original terminated or novated interest rate swap agreements.

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

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

December 29, 2023 June 3, 2027 100 3.7525 % One-Month Term SOFR Monthly

December 29, 2023 June 3, 2027 100 3.7770 % One-Month Term SOFR Monthly

June 25, 2024 June 30, 2028 50 4.1175 % One-Month Term SOFR Monthly

June 25, 2024 June 30, 2028 50 4.1300 % One-Month Term SOFR Monthly

Subsequent to August 3, 2024, the Company entered into three forward starting interest rate swap agreements for an aggregate notional amount of $ 250 million.

These interest rate swaps will become effective on October 31, 2024 with a maturity date of October 30, 2026.

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

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The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions.

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

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

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

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$ 162 $ 144 $ 155

Loss on cash flow hedging relationships:

Gain (loss) on cash flow hedging relationships:

Gain (loss) reclassified from comprehensive income into earnings $ 19 $ 12 $ ( 36 )

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(in millions) Average Interest Rate at

July 29, 2023

Fiscal Maturity Year July 29, 2023 July 30, 2022

August 3, 2024

Fiscal Maturity Year August 3, 2024 July 29, 2023

Term Loan Facility (1)

10.09 % 2031 $ 499 $ 670

ABL Credit Facility (2)

6.66 % 2027 1,113 812

Senior Notes (3)

6.75 % 2029 500 500

Other secured loans 4.43 % 2025 1 9

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Long-term debt $ 2,081 $ 1,956

Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on debt, and contractual interest payments based on the face value and applicable interest rate as of July 29, 2023, consist of the following (in millions):

(1) Debt issuance costs of $ 6 million and $ 7 million, respectively and an original issue discount on debt of $ 10 million and $ 6 million, respectively.

(2) Debt issuance costs of $ 7 million and $ 8 million, respectively.

(3) Debt issuance costs of $ 5 million and $ 7 million, respectively.

Future maturities of long-term debt, excluding debt issuance costs and original issue and purchase accounting discounts on debt, and contractual interest payments based on the face value and applicable interest rate as of August 3, 2024, consist of the following (in millions):

Fiscal Year Long-term debt maturity Interest on long-term debt

2025 $ 6 $ 159

2027 1,118 147

2030 and thereafter 474 85

$ 2,113 $ 698

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, 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).

Term Loan Facility

On May 1, 2024, the Company entered into an amendment (the “Fourth Term Loan Amendment”) to its term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) with a group of lenders for which JPMorgan Chase Bank, N.A.

acts as administrative agent.

The Term Loan Agreement provides for a $ 500 million senior secured first lien term loan (the “Term Loan Facility”) which is scheduled to mature on May 1, 2031.

The Fourth Term Loan Amendment, among other things, (i) reduced the principal amount of Term Loan Facility to $ 500 million, (ii) extended the maturity to May 1, 2031, but with a springing maturity of 91 days prior to the maturity of the Senior Notes, in the event that at least $ 100 million in principal amount outstanding of such Senior Notes remains outstanding on such date and (iii) changed the applicable margin over (a) a base rate from 2.25 % to 3.75 % per annum, or (b) a SOFR rate from 3.25 % to 4.75 % per annum.

Under the Term Loan Agreement, the Company may, at its option, increase the amount of the Term Loan Facility or add one or more additional tranches of term loans or revolving credit commitments, without the consent of any lenders not participating in such additional borrowings, up to an aggregate amount of $ 520 million plus additional amounts based on satisfaction of certain leverage ratio tests, subject to certain customary conditions and applicable lenders committing to provide the additional funding.

There can be no assurance that additional funding would be available.

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

The Term Loan Facility is secured by (i) a first-priority lien on substantially all assets other than the ABL Assets (defined below) and (ii) a second-priority lien on substantially all of the ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property (other than distribution centers) with net book values of less than or equal to $ 10 million.

As of August 3, 2024 and July 29, 2023, there was $ 686 million and $ 617 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Consolidated Balance Sheets.

The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year.

Based on the Company’s Excess Cash Flow for the fiscal year ended August 3, 2024, no such prepayment will be required under the Term Loan Facility in fiscal 2025.

As of August 3, 2024, 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 3.75 % or (ii) a SOFR rate plus a margin of 4.75 %, provided that the SOFR rate shall never be less than 0.0 %.

On May 1, 2024, in conjunction with the Fourth Term Loan Amendment, the Company made a voluntary prepayment of $ 145 million on the Term Loan Facility with $ 130 million of proceeds from the ABL FILO Loan (described below) and incremental borrowings under the ABL Credit Facility.

In connection with the Fourth Term Loan Amendment and prepayment, the Company incurred a loss on debt extinguishment of $ 10 million primarily related to unamortized debt issuance costs and unamortized original issue discount, which was recorded within Interest expense, net in the Consolidated Statements of Operations in the fourth quarter of fiscal 2024.

ABL Credit Facility

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 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.

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.

On May 1, 2024, the Company entered into an amendment (the “First ABL Amendment”) to its revolving credit agreement dated as of June 3, 2022, (as amended, the “ABL Loan Agreement”) with a group of lenders for which Wells Fargo Bank, N.A.

acts as administrative agent.

Pursuant to the First ABL Amendment, the ABL Loan Agreement provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”) with an aggregate principal amount available of up to $ 2,730 million, including Revolver Loans (as defined in the ABL Loan Agreement) of up to $ 2,600 million and a First In, Last Out (“FILO”) tranche of incremental ABL loans of $ 130 million (the “ABL FILO Loan”).

The ABL Credit Facility is scheduled to mature on June 3, 2027.

Under the ABL Loan Agreement, the aggregate amount of the ABL Credit Facility may be increased in an amount of up to $ 620 million without the consent of any lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding.

There can be no assurance that additional funding would be available.

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

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

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

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

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

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

The ABL Loan Agreement contains certain operational and informational covenants customary for this type of secured revolving credit facility, which limit the Company’s and its restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to its stockholders, transfer or sell assets, create liens on our assets, engage in transactions with affiliates and merge, consolidate or sell all or substantially all of the Company’s and its subsidiaries’ assets on a consolidated basis.

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

The 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 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:

Assets securing the ABL Credit Facility (in millions):

July 29, 2023 July 30, 2022

Revolver Loans and ABL FILO Loans under the ABL Credit Facility bear interest at rates that, at the Company’s option, can be either at a base rate or Term SOFR plus an applicable margin.

The applicable interest rates 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:

Range of Facility Rates and Fees (per annum) August 3, 2024

Applicable margin for revolver base rate loans 0.00 % - 0.25 %

Applicable margin for revolver SOFR and BA loans (1)

1.00 % - 1.25 %

Applicable margin for FILO base rate loans 1.50 %

Applicable margin for FILO SOFR loans 2.50 %

Unutilized commitment fees 0.20 %

Letter of credit fees 1.125 % - 1.375 %

(1) The Company utilizes SOFR-based loans and UNFI Canada utilizes bankers’ acceptance rate-based loans.

The ABL Credit Facility is guaranteed by the Guarantors, subject to customary exceptions and limitations.

The ABL Credit Facility is secured by (i) a first-priority lien on certain accounts receivable, inventory and certain other assets (collectively, the “ABL Assets”) and (ii) a second-priority lien on all other 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 consisting of specified percentages of the value of eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files, after adjusting for customary reserves, but at no time shall exceed the aggregate commitments plus the outstanding ABL FILO Loans under the ABL Credit Facility (currently $ 2,730 million).

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

(in millions) August 3, 2024 July 29, 2023

Certain inventory assets included in Inventories, net $ 1,915 $ 1,861

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Total $ 2,532 $ 2,443

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.

Availability under the ABL Credit Facility (in millions):

July 29, 2023

As of August 3, 2024, the borrowing base was $ 2,524 million, reflecting the advance rates described above and $ 101 million of reserves, which is below the $ 2,730 million limit of availability.

This resulted in total availability of $ 2,524 million for loans and letters of credit under the ABL Credit Facility.

The Company’s unused credit under the ABL Credit Facility was as follows:

(in millions) August 3, 2024

Total availability for ABL loans and letters of credit $ 2,524

ABL loans $ 812

Letters of credit $ 150

ABL loans outstanding 1,113

Letters of credit outstanding 176

Unused credit $ 1,235

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:

Range of Facility Rates and Fees (per annum) July 29, 2023

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

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

1.00 % - 1.25 %

Unutilized commitment fees 0.20 % 0.20 %

Letter of credit fees 1.125 % - 1.375 %

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

Term Loan Facility

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.

There can be no assurance that additional funding would be available.

The obligations under the Term Loan Facility are guaranteed by the Guarantors, subject to customary exceptions and limitations.

The Term Borrowers’ obligations under the Term Loan Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property with net book values of less than $ 10 million.

As of July 29, 2023 and July 30, 2022, there was $ 617 million and $ 629 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Consolidated Balance Sheets.

The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year.

Based on the Company’s Consolidated First Lien Net Leverage Ratio at the end of fiscal 2023, no prepayment from Excess Cash Flow in fiscal 2023 is required to be made in fiscal 2024.

As of July 29, 2023, the Company had borrowings of $ 670 million outstanding under the Term Loan Facility, which are presented in the Consolidated Balance Sheets net of debt issuance costs of $ 7 million and an original issue discount on debt of $ 6 million.

As of July 29, 2023, no amount of the Term Loan Facility was classified as current.

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 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 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

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 above).

Debt Covenants

Our debt agreements contain certain customary operational and informational covenants.

These include, among other things, restrictions on our ability to incur additional indebtedness, create liens on assets, make loans or investments, or return capital to stockholders through share repurchases or paying dividends.

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

The ABL Loan Agreement also subjects the Company to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of the Company’s fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $ 220 million, or $ 210 million if no ABL FILO Loans are then outstanding at such time, and (ii) 10 % of the borrowing base.

The Term Loan Agreement and Senior Notes do not include any financial maintenance covenants.

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

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2024, 2023 and 2022 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 income before reclassifications 1 167 5 8 181

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

Amortization of cash flow hedges ( 1 ) — — 34 33

Settlement gain — ( 12 ) — — ( 12 )

Net current period Other comprehensive income — 153 5 42 200

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

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

Other comprehensive (loss) income before reclassifications ( 2 ) ( 3 ) ( 3 ) ( 1 ) ( 9 )

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

Amortization of cash flow hedges 2 — — ( 14 ) ( 12 )

Net current period Other comprehensive (loss) income — ( 1 ) ( 3 ) ( 15 ) ( 19 )

Accumulated other comprehensive loss at August 3, 2024 $ — $ ( 22 ) $ ( 24 ) $ ( 1 ) $ ( 47 )

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

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$ 2 $ 3 $ 4 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 ( 1 ) ( 2 ) 4 Provision for income taxes

Income tax benefit — ( 1 ) ( 2 ) (Benefit) provision for income taxes

Total reclassifications, net of tax $ 2 $ 2 $ 2

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Reclassification of cash flow hedge $ ( 19 ) $ ( 12 ) $ 36 Interest expense, net

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

Income tax expense (benefit) 5 3 ( 10 ) (Benefit) provision for income taxes

Total reclassifications, net of tax $ ( 14 ) $ ( 9 ) $ 26

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

Income tax expense 1 — — Provision for income taxes

Income tax expense — 1 — (Benefit) provision for income taxes

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

(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.

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

As of August 3, 2024, the Company expects to reclassify $ 6 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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Lease Type Consolidated Balance Sheets Location

July 29, 2023 July 30, 2022

August 3, 2024 July 29, 2023

Operating lease assets Operating lease assets $ 1,370 $ 1,228

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Total lease liabilities $ 1,463 $ 1,302

Lease assets and liabilities presented in the table above include lease contracts related to our discontinued operations, as the Company expects to remain primarily obligated under these leases.

The Company’s lease cost under ASC 842 is as follows (in millions):

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Total net lease cost $ 388 $ 338 $ 327

(1) Rent expense as presented here includes $ 0 million , $ 0 million and $ 2 million in fiscal 2023, 2022 and 2021, respectively, of operating lease rent expense related to stores within discontinued operations, but for which GAAP requires the expense to be included within continuing operations, as the Company expects to remain primarily obligated under these leases.

Rent expense as presented here also includes immaterial amounts of variable lease expense of discontinued operations.

(1) Includes $ 28 million, $ 27 million and $ 29 million of lease expense in fiscal 2024, 2023 and 2022, respectively, and $( 28 ) million, $( 28 ) million, and $( 31 ) million of lease income in fiscal 2024, 2023 and 2022, respectively, that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center, which was classified as a finance lease, for approximately $ 153 million.

During fiscal 2023, the Company entered into a lease agreement for a new distribution facility in Manchester, Pennsylvania, which commenced in the second quarter of fiscal 2024 resulting in the recognition of a $ 205 million right-of-use asset and operating lease liability in the Consolidated Balance Sheets.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center in Riverside, California, which was classified as a finance lease, for approximately $ 153 million.

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

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Future minimum lease and subtenant rentals (“Lease Receipts”) include expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to third parties, which they operate.

As of July 29, 2023, these Lease Liabilities and Lease Receipts consisted of the following (in millions):

As of August 3, 2024, these Lease Liabilities and Lease Receipts consisted of the following (in millions):

Lease Liabilities Lease Receipts Net Lease Obligations

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Long-term lease liabilities $ 1,263 $ 12

(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.

(1) Excludes $ 340 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced.

There were no operating leases for which the extension options are reasonably certain of being exercised.

(2) There were no finance leases for which the extension options are reasonably certain of being exercised, nor were there any excluded legally binding minimum lease payments for leases signed but not yet commenced.

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

The following tables provide other information required by ASC 842:

Lease Term and Discount Rate July 29, 2023 July 30, 2022

Lease Term and Discount Rate August 3, 2024 July 29, 2023

Weighted-average remaining lease term (years)

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NOTE 12—SHARE-BASED AWARDS

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”).

As of August 3, 2024, 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 2020 Equity Incentive Plan, as amended and restated from time to time (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.

As of August 3, 2024, the Company has 2.1 million shares authorized and available for grant under the 2020 Equity Incentive Plan.

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

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Restricted stock awards $ 33 $ 35 $ 36

Supervalu replacement awards (1)

Performance-based share awards 4 3 7

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Share-based compensation expense recorded in Restructuring, acquisition and integration related expenses, net of tax $ 1 $ — $ 1

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

(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.

Time-based vesting awards for employees typically vest in three or four equal installments.

Time-based vesting awards for employees typically vest in three equal installments.

The Board of Directors has adopted a policy in connection with the 2020 Equity Incentive Plan that sets forth grant, vesting and settlement dates for equity awards, a one-year vesting period for awards issued to non-employee directors, and a three-year equal installment vesting period for designated employee restricted stock awards.

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

As of July 29, 2023, there was $ 45 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including restricted stock units and performance-based restricted stock units).

As of August 3, 2024, there was $ 51 million of total unrecognized compensation cost related to outstanding share-based compensation arrangements (including restricted stock units and performance-based restricted stock units).

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

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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 share units:

The following summary presents information regarding restricted stock units and performance share units:

(in millions) Weighted Average

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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Forfeited/Canceled ( 0.8 ) 10.42

Outstanding at July 29, 2023 3.2 $ 32.11

Outstanding at August 3, 2024 4.6 $ 22.66

(in millions) 2024 2023 2022

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An insignificant amount of performance share units granted in fiscal 2024 were forfeited during fiscal 2024.

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 .

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 EPS growth and adjusted ROIC.

An insignificant amount of performance share units granted in fiscal 2023 were forfeited during fiscal 2024.

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 2021, 2022 and 2023 performance metrics, including adjusted EPS growth, adjusted ROIC and adjusted EBITDA leverage.

During fiscal 2022, the Company granted 0.3 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 0.3 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 were 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 2024.

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.

Stock Options

The Company did no t grant options in fiscal 2024, 2023 or 2022.

The following summary presents information regarding outstanding stock options as of July 29, 2023 and changes during the fiscal year then ended:

The following summary presents information regarding outstanding stock options as of August 3, 2024 and changes during the fiscal year then ended:

(in millions) Weighted

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The aggregate intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $ 0 million, $ 0 million and $ 2 million, respectively.

Supervalu Replacement Awards

Pursuant to the Agreement and Plan of Merger, dated July 25, 2018, by and among Supervalu, SUPERVALU Enterprises, Inc., the company and Jedi Merger Sub, Inc., dated as of July 25, 2018, as amended on October 10, 2018 (the “Merger Agreement”), each outstanding Supervalu stock option, whether vested or unvested, that was unexercised immediately prior to the effective time of the merger (“SVU Option”) was converted, effective as of the effective time of the merger, into a stock option exercisable for shares of common stock of the Company (“Supervalu Replacement Options”) in accordance with the adjustment provisions of the Supervalu stock.

In addition, each outstanding Supervalu restricted share award, restricted stock unit award, deferred share unit award and performance share unit award (“SVU Equity Award”) was converted, effective as of the effective time of the merger, into time-vesting awards (“Supervalu Replacement Award”) with a settlement value equal to the merger consideration of $ 32.50 per share multiplied by the number of shares of Supervalu common stock subject to such SVU Equity Award.

The 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 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 Plans and certain supplemental executive retirement plans.

Retirement Plan and certain supplemental executive retirement plans.

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

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Interest cost 74 1 63 —

Settlements paid — — — ( 1 )

Benefit obligation at end of year 1,505 11 1,545 11

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Benefits paid ( 100 ) ( 1 ) ( 103 ) ( 1 )

Settlements paid — — — ( 1 )

Employer contributions 1 1 1 1

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Funded (unfunded) status at end of year $ 29 $ ( 11 ) $ 14 $ ( 11 )

The actuarial gain on projected pension benefit obligations in fiscal 2023 was primarily the result of a 81 basis points increase in the discount rate on the SUPERVALU INC.

The actuarial gain on projected pension benefit obligations in fiscal 2024 was primarily the result of an 8 basis point increase in the discount rate on the SUPERVALU INC.

Retirement Plan.

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

Retirement Plan, and updated mortality assumptions.

The actuarial gain on projected pension benefit obligations in fiscal 2023 was primarily the result of an 81 basis point increase in the discount rate on the SUPERVALU INC.

Retirement Plan .

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

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Total Pension Benefits

July 29, 2023:

August 3, 2024:

Fair value of plan assets at end of year $ 1,534 $ — $ 1,534

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Interest cost 74 1 63 — 38 —

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

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

Settlement gain — — — — — ( 17 )

Amortization of prior service cost — 3 — 3 — 3

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

Net periodic benefit (income) cost ( 18 ) 3 ( 32 ) 3 ( 43 ) 3

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Net actuarial loss (gain) 3 — 29 ( 1 ) 59 ( 3 )

Prior service cost — — — — — 25

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

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

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

Amortization of net actuarial loss — 1 — — — —

Total expense (benefit) recognized in Other comprehensive (loss) income 3 ( 2 ) 29 ( 4 ) 59 ( 6 )

Total (benefit) expense recognized in net periodic benefit cost (income) and Other comprehensive (loss) income $ ( 15 ) $ 1 $ ( 3 ) $ ( 1 ) $ 16 $ ( 3 )

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

July 29, 2023 July 30, 2022

Amounts recognized in the Consolidated Balance Sheets as of August 3, 2024 and July 29, 2023 consist of the following:

August 3, 2024 July 29, 2023

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

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

For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation before age 65 was 7.10 % as of July 29, 2023.

The assumed healthcare cost trend rate for retirees before age 65 will decrease each year through fiscal 2034, until it reaches the ultimate trend rate of 4.50 %.

Pension Plan Assets

Pension plan assets are held in a master trust and invested in separately managed accounts and other commingled investment vehicles holding fixed income securities, domestic equity securities, private equity securities, international equity securities and real estate securities.

The Company employs a liability hedging approach, targeting a level of risk commensurate with keeping pace with the growth of plan liabilities.

The Company employs a liability hedging approach, targeting a level of risk commensurate with keeping pace with the long-term cost of funding plan liabilities.

Risk is managed through diversification across asset classes, multiple investment manager portfolios and both general and portfolio-specific investment guidelines.

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Furthermore, while the Company believes our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement.

The fair value of assets held in the master trust for defined benefit pension plans as of July 29, 2023, by asset category, consisted of the following (in millions):

The fair value of assets held in the master trust for defined benefit pension plans as of August 3, 2024, by asset category, consisted of the following (in millions):

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

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

As of July 29, 2023 there was $ 4 million of Accrued compensation and benefits and $ 4 million of Other long-term liabilities recognized in the Consolidated Balance Sheets.

As of August 3, 2024 there was $ 3 million of Accrued compensation and benefits and $ 2 million of Other long-term liabilities recognized in the Consolidated Balance Sheets.

As of July 29, 2023 there was $ 4 million of Accrued compensation and benefits and $ 4 million of Other long-term liabilities.

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The benefits are paid from assets held in trust for that purpose.

Plan trustees typically are responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration.

Plan trustees are typically responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration.

Trustees are appointed in equal number by employers and the unions that are parties to the relevant collective bargaining agreements.

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The EIN-Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit plan number, if applicable.

Unless otherwise noted, the most recent Pension Protection Act (“PPA”) zone status available in 2022 relates to the plans’ most recent fiscal year-end.

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

Unless otherwise noted, the most recent Pension Protection Act (“PPA”) zone status relates to the plans’ most recent fiscal year-end for which information is available.

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

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.

The American Rescue Plan Act of 2021 (“ARPA”) established 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 of August 3, 2024, one plan in which the Company participates has applied for and received SFA, and two other plans in which the Company participates are on the waiting list to apply for SFA funding.

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.

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Plan Number Plan

End Date 2022 FIP/RP Status Pending/Implemented 2023 2022 2021 Surcharges Imposed (1)

End Date Most Recent Available FIP/RP Status Pending/Implemented 2024 2023 2022 Surcharges Imposed (1)

Minneapolis Food Distributing Industry Pension Plan

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

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

Central States, Southeast & Southwest Areas Pension Plan 366044243-001 12/31 Red Implemented 5 5 5 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 12 10 10 No

UFCW Unions and Employers Pension Plan (2)

396069053-001 NA NA NA — — 1 NA

All Other Multiemployer Pension Plans (2)

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(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 or fiscal 2023.

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

(2) All Other Multiemployer Pension Plans includes 5 plans, no ne of which are individually significant when considering contributions to the plan, severity of the underfunded status or other factors.

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(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.

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.

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.

As of August 3, 2024, accrued multiemployer pension plan withdrawal liabilities included in Other long-term liabilities and Accrued compensation and benefits were $ 66 million and $ 6 million, respectively, for 13 multiemployer plans.

As of July 29, 2023 amounts included in Other long-term liabilities and Accrued compensation and benefits were $ 73 million and $ 7 million, respectively.

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Collective Bargaining Agreements

As of July 29, 2023, we had approximately 29,455 employees.

Approximately 10,667 employees are covered by 49 collective bargaining agreements.

During fiscal 2023, 9 collective bargaining agreements covering approximately 4,730 employees were renegotiated and 2 collective bargaining agreements covering approximately 90 employees expired without their terms being renegotiated.

Negotiations are expected to continue with the bargaining units representing the employees subject to those agreements.

As of August 3, 2024, we had approximately 28,333 employees.

Approximately 10,704 employees are covered by 48 collective bargaining agreements, including existing agreements under negotiation.

During fiscal 2024, 15 collective bargaining agreements covering approximately 4,191 employees were renegotiated, including 2 collective bargaining agreements that had expired in fiscal 2023 but were negotiated in fiscal 2024.

Additionally, 2 new collective bargaining agreements covering approximately 410 employees were negotiated, and 1 collective bargaining agreement covering approximately 130 employees expired with a tentative agreement in place, pending ratification.

During fiscal 2025, 10 collective bargaining agreements covering approximately 3,804 employees are scheduled to expire.

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For fiscal 2024, (loss) income before income taxes consists of $( 145 ) million from U.S.

continuing operations and $ 8 million from foreign continuing operations.

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

continuing operations and $ 8 million from foreign continuing operations.

operations and $ 8 million from foreign operations.

(Loss) income before income taxes for fiscal 2023 consists of $( 1 ) million from U.S.

operations and $ 8 million from foreign operations.

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

continuing operations and $ 8 million from foreign continuing operations.

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

(in millions) 2023 2022 2021

Continuing operations $ ( 23 ) $ 56 $ 34

Discontinued operations — — ( 1 )

Total $ ( 23 ) $ 56 $ 33

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

operations and $ 8 million from foreign operations.

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

(in millions) 2024 2023 2022

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Total $ ( 33 ) $ ( 25 ) $ 67

Total federal, state and foreign income tax (benefit) expense in continuing operations consists of the following:

Total federal, state and foreign income tax (benefit) expense consists of the following:

(in millions) Current Deferred Total

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$ 1 $ 55 $ 56

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:

Total income tax (benefit) expense 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) 2024 2023 2022

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Total income tax (benefit) expense $ ( 27 ) $ ( 23 ) $ 56

(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

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Unrecognized tax benefits at end of period $ 7 $ 11 $ 19

In addition, the Company has $ 1 million paid on deposit to various governmental agencies to cover the above liability.

In addition, the Company has no thing paid on deposit to various governmental agencies to cover the above liability.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

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The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company.

As of July 29, 2023, the Company is no longer subject to federal income tax examinations for fiscal years before 2016 and in most states is no longer subject to state income tax examinations for fiscal years before 2011 and 2016 for Supervalu and the Company, respectively.

As of August 3, 2024, the Company is no longer subject to federal income tax examinations for fiscal years before 2016 and in most states is no longer subject to state income tax examinations for fiscal years before 2016 for Supervalu and the Company.

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.

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Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at July 29, 2023 and July 30, 2022 are presented below:

(in millions) July 29,

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at August 3, 2024 and July 29, 2023 are presented below:

(in millions) August 3,

2024 July 29,

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Accrued expenses 27 27

Capitalized research and development 49 25

Net operating loss carryforwards 13 10

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Total deferred tax liabilities 519 478

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

Net deferred tax assets $ 87 $ 32

Tax Credits and Valuation Allowances

At July 29, 2023, the Company had gross deferred tax assets of approximately $ 517 million.

At August 3, 2024, the Company had gross deferred tax assets of approximately $ 615 million.

The Company regularly reviews its deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized.

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

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.

As of August 3, 2024, 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.

At August 3, 2024, the Company had net operating loss carryforwards of approximately $ 0.3 million for federal income tax purposes that are subject to an annual limitation of approximately $ 0.3 million under Internal Revenue Code Section 382.

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

As of July 29, 2023, the Company anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized.

As of August 3, 2024, the Company anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized.

The Company also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the future.

Therefore, the ultimate realization of net operating losses for federal purposes appears more likely than not at July 29, 2023 and correspondingly no valuation allowance has been established.

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 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.

Therefore, the ultimate realization of net operating losses for federal purposes appears more likely than not at August 3, 2024 and correspondingly no valuation allowance has been established.

At August 3, 2024, the Company had disallowed charitable contribution carryforwards of approximately $ 57 million that are available for carryforward over five years.

As of August 3, 2024, the Company anticipates sufficient future taxable income to utilize $ 45 million of these charitable contribution carryovers within the applicable five-year carryforward periods.

The Company has established a valuation allowance against the $ 12 million of charitable contribution carryovers that, in the Company’s judgement, are not likely to be realized within the applicable recovery period.

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Effective Tax Rate

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.

The Company’s effective tax rate was a benefit rate of 19.7 % on pre-tax loss for fiscal 2024 as compared to benefit rate of 328.6 % and an expense rate of 18.6 % on pre-tax income for fiscal 2023 and 2022, respectively.

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.

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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

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

For fiscal 2024, the effective tax rate was impacted by non-deductible share-based compensation and the establishment of valuation allowances against deferred tax assets with limited lives.

NOTE 15—(LOSS) EARNINGS PER SHARE

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

(in millions, except per share data) 2024 2023 2022

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Diluted weighted average shares outstanding 59.3 60.7 61.0

Basic earnings per share (1) :

Continuing operations $ 0.41 $ 4.28 $ 2.55

Discontinued operations $ — $ — $ 0.10

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 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.

Basic (loss) earnings per share (1)

$ ( 1.89 ) $ 0.41 $ 4.28

Diluted (loss) earnings per share (1)

$ ( 1.89 ) $ 0.40 $ 4.07

Anti-dilutive share-based awards excluded from the calculation of diluted (loss) earnings per share 2.1 0.8 0.5

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

NOTE 16—BUSINESS SEGMENTS

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

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:

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

(in millions) 2024 2023 2022

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Total Net sales $ 30,980 $ 30,272 $ 28,928

Continuing operations Adjusted EBITDA:

Adjusted EBITDA:

$ 476 $ 540 $ 696

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Share-based compensation ( 37 ) ( 38 ) ( 43 )

( 38 ) ( 43 ) ( 49 )

LIFO charge ( 7 ) ( 119 ) ( 158 )

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Business transformation costs ( 52 ) ( 25 ) —

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

Other adjustments ( 4 ) — —

(Loss) income before income taxes $ ( 137 ) $ 7 $ 310

Depreciation and amortization:

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(1) For fiscal 2024, 2023 and 2022, as presented in Note 3—Revenue Recognition, the Company recorded $ 1,272 million, $ 1,331 million and $ 1,358 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,

(in millions) August 3,

2024 July 29,

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Guarantees and Contingent Liabilities

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of July 29, 2023.

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of August 3, 2024.

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

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

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

As of July 29, 2023, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 15 million ($ 12 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of July 29, 2023, a total estimated loss of $ 1 million is recorded in the Consolidated Balance Sheets.

As of August 3, 2024, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 9 million ($ 8 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of August 3, 2024, a total estimated loss of less than $ 1 million is recorded in the Consolidated Balance Sheets.

The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise.

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While the Company’s aggregate indemnification obligations could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability.

No amount has been recorded in the Consolidated Balance Sheets for these contingent obligations as the fair value has been determined to be de minimis.

In connection with Supervalu’s sale of New Albertson’s, Inc.

(“NAI”) on March 21, 2013, the Company remains contingently liable with respect to certain self-insurance commitments and other guarantees as a result of parental guarantees issued by Supervalu with respect to the obligations of NAI that were incurred while NAI was Supervalu’s subsidiary.

Based on the expected settlement of the self-insurance claims that underlie the Company’s commitments, the Company believes that such contingent liabilities will continue to decline.

Subsequent to the sale of NAI, NAI collateralized most of these obligations with letters of credit and surety bonds to numerous state governmental authorities.

Because NAI remains a primary obligor on these self-insurance and other obligations and has collateralized most of the self-insurance obligations for which the Company remains contingently liable, the Company believes that the likelihood that it will be required to assume a material amount of these obligations is remote.

Accordingly, no amount has been recorded in the Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis.

Agreements with Save-A-Lot and Onex

The Agreement and Plan of Merger pursuant to which Supervalu sold the Save-A-Lot business in 2016 (the “SAL Merger Agreement”) contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties and covenants, and certain other specified matters, on the terms and subject to the limitations set forth in the SAL Merger Agreement.

Similarly, Supervalu entered into a Separation Agreement (the “Separation Agreement”) with Moran Foods, LLC d/b/a Save-A-Lot (“Moran Foods”), which contains indemnification obligations and covenants related to the separation of the assets and liabilities of the Save-A-Lot business from the Company.

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

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

The Services Agreement generally requires each party to indemnify the other party against third-party claims arising out of the performance of or the provision or receipt of services under the Services Agreement.

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 de minimis 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 these guarantees and contingent obligations, when applicable, in the Consolidated Balance Sheets.

Other Contractual Commitments

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

As of July 29, 2023, the Company had approximately $ 685 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

As of August 3, 2024, the Company had approximately $ 365 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

Legal Proceedings

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

(“New Albertson’s”) and the Company (the “Stock Purchase Agreement”), New Albertson’s is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies.

(“New Albertson’s”) and the Company (the “Stock Purchase Agreement”), the Company believes that New Albertson’s has an obligation to defend and indemnify UNFI in a majority of the cases.

New Albertson’s originally agreed to do so under a reservation of rights, however, New Albertson’s is disputing its obligation to do so.

In one of the MDL cases, MDL No.

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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 May 19, 2023, the Company provided an initial production in response to the subpoena and is waiting for further direction from the Maryland Attorney General on additional documents requested.

At an April 24, 2024 status conference, the MDL Court directed that the plaintiffs and non-litigating defendants, which includes the Company, determine whether the cases will be dismissed, litigated or mediated.

At the status conference on June 10, 2024, the Company indicated it is open to exploring mediation.

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

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

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

On November 27, 2023, the court held a scheduling conference and thereafter entered a scheduling order setting various discovery and expert deadlines.

The trial date is set for July 21, 2025.

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

UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”).

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Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim.

Relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s in excess of $ 100 million, not including trebling and statutory penalties.

The relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s in excess of $ 100 million, not including trebling and statutory penalties.

For the majority of the relevant period Supervalu and New Albertson’s operated as a combined company.

In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant to the Stock Purchase Agreement.

Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a potential award (at the currently claimed value by relators) would be approximately $ 24 million, not including trebling and statutory penalties.

Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a potential award (at the currently claimed value by the relators) would be approximately $ 24 million, not including trebling and statutory penalties.

Both sides moved for summary judgment.

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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 Seventh Circuit Court of Appeal.

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

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.

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

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

On August 22, 2023, the District Court set the trial date for April 29, 2024.

On October 11, 2023, each of the Company and the relators filed a motion for summary judgment.

On February 16, 2024, the defendants filed a motion to reconsider the Court’s August 5, 2019 partial grant of summary judgment to the relators and to continue the trial date.

On February 27, 2024, the Court granted the defendants’ motion for a trial date continuance and vacated the April 29, 2024 trial date.

On April 26, 2024, the Court denied the defendants’ motion to reconsider the partial grant of summary judgment.

On May 20, 2024, the District Court heard oral argument on the pending motions for summary judgment and on September 30, 2024, the Court denied both parties’ motions for summary judgment on scienter and granted relators’ motion for summary judgment on materiality.

The trial is now scheduled to begin February 3, 2025.

The Company, J.

Alexander Miller Douglas, John Howard and Chris Testa are named in a putative securities class action that was originally filed on March 29, 2023.

In Dan Sills, et al.

United Natural Foods, Inc., et al., pending in the U.S.

District Court for the Southern District of New York, the plaintiffs allege that defendants violated federal securities laws by making materially false and/or misleading statements and failing to disclose material facts about UNFI’s business, operations and prospects.

The defendants filed a Motion to Dismiss on December 21, 2023, and on September 13, 2024, the court issued an opinion granting in part and denying in part the motion.

The Company intends to vigorously defend this matter.

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);

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

As of July 29, 2023, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

As of August 3, 2024, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

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

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

NOTE 18—DISCONTINUED OPERATIONS

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

(in millions) 2021

Net sales $ 42

Cost of sales 28

Gross profit 14

Operating expenses 9

Income from discontinued operations before income taxes 5

Benefit for income taxes ( 1 )

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 in fiscal 2021.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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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