UNITED NATURAL FOODS INC Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (kind 10-Q)


CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT


This Quarterly Report comprises forward-looking statements inside the which means of
Part 27A of the Securities Act, and Part 21E of the Alternate Act, that
contain substantial dangers and uncertainties. In some instances you possibly can determine
these statements by forward-looking phrases similar to "anticipate," "imagine,"
"might," "estimate," "count on," "intend," "might," "plan," "search," "ought to," "will"
and "would," or comparable phrases. Statements that comprise these phrases and different
statements which can be forward-looking in nature needs to be learn fastidiously as a result of
they talk about future expectations, comprise projections of future outcomes of
operations or of monetary positions or state different "forward-looking"
info.

Ahead-looking statements contain inherent uncertainty and should in the end show
to be incorrect or false. These statements are primarily based on our administration's beliefs
and assumptions, that are primarily based on at present accessible info. These
assumptions might show inaccurate. You might be cautioned to not place undue
reliance on forward-looking statements. Besides as in any other case could also be required by
regulation, we undertake no obligation to replace or revise forward-looking statements
to mirror modified assumptions, the incidence of unanticipated occasions or precise
working outcomes. Our precise outcomes might differ materially from these
anticipated in these forward-looking statements because of varied elements,
together with, however not restricted to:

•the affect and length of the COVID-19 pandemic;
•labor and different workforce shortages and challenges;
•our dependence on principal prospects;
•the addition or lack of vital prospects or materials modifications to our
relationships with these prospects;
•our sensitivity to common financial situations together with modifications in disposable
revenue ranges and client spending traits;
•the comparatively low margins of our enterprise, that are delicate to inflationary
and deflationary pressures;
•our capability to comprehend anticipated advantages of our acquisitions and strategic
initiatives, together with, our acquisition of Supervalu;
•our capability to well timed and efficiently deploy our warehouse administration system
all through our distribution facilities and our transportation administration system
throughout the Firm and to realize efficiencies and price financial savings from these
efforts;
•our capability to proceed to develop gross sales, together with of our increased margin pure
and natural meals and non-food merchandise, and to handle that progress;
•elevated competitors in our trade because of elevated distribution of
pure, natural and specialty merchandise, and direct distribution of these
merchandise by massive retailers and on-line distributors;
•elevated competitors in our trade, together with because of persevering with
consolidation of outlets and the expansion of chains;
•union-organizing actions that might trigger labor relations difficulties and
elevated prices;
•our capability to function, and depend on third-parties to function, dependable and
safe expertise techniques;
•moderated provider promotional exercise, together with decreased ahead shopping for
alternatives;
•the potential for disruptions in our provide chain or our distribution
capabilities by circumstances past our management, together with a well being epidemic;
•the potential for extra asset impairment costs;
•the chance of interruption of provides as a consequence of lack of long-term contracts, extreme
climate, work stoppages or in any other case;
•our capability to keep up meals high quality and security;
•volatility in gasoline prices;
•volatility in international change charges; and
•our capability to determine and efficiently full asset or enterprise
acquisitions.

You need to fastidiously assessment the dangers described below "Half I. Merchandise 1A Threat
Components" of our Annual Report on Kind 10-Ok for the 12 months ended July 31, 2021 (the
"Annual Report") in addition to some other cautionary language on this Quarterly
Report, because the incidence of any of those occasions might have an hostile impact,
which can be materials, on our enterprise, outcomes of operations, monetary
situation or money flows.

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EXECUTIVE OVERVIEW


This Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations needs to be learn together with the unaudited Condensed
Consolidated Monetary Statements and notes thereto contained on this Quarterly
Report on Kind 10-Q, the data contained below the caption
"Ahead-Wanting Statements," and the data within the Annual Report.

Enterprise Overview


As a number one distributor of pure, natural, specialty, produce and
typical grocery and non-food merchandise, and supplier of help companies to
retailers in the USA and Canada, we imagine we're uniquely positioned
to offer the broadest array of services and products to prospects all through
North America. We provide practically 300,000 merchandise consisting of nationwide, regional
and personal label manufacturers grouped into six product classes: grocery and
common merchandise; produce; perishables and frozen meals; dietary
dietary supplements and sports activities vitamin; bulk and meals service merchandise; and private
care gadgets. We imagine we're North America's premier wholesaler with
56 distribution facilities and warehouses representing roughly 30 million
sq. ft of warehouse house. We're a coast-to-coast distributor with
prospects in all 50 states, in addition to all ten provinces in Canada, making us a
fascinating companion for retailers and client product producers. We imagine
our whole product assortment and repair choices are unmatched by our
wholesale rivals. We plan to aggressively pursue new enterprise alternatives
with unbiased retailers who function numerous codecs, regional and nationwide
chains, in addition to worldwide prospects with wide-ranging wants. Our enterprise
is assessed into two reportable segments: Wholesale and Retail; and in addition
features a manufacturing division and a branded product line division.

We launched our Gasoline the Future technique with the mission of serving to to make
our prospects stronger, our provide chain higher and our meals options extra
impressed. Gasoline the Future consists of six strategic pillars, that are
detailed in "Half I. Merchandise 1. Enterprise" of our Annual Report. Collectively, the
actions and plans behind every pillar are supposed to capitalize on our distinctive
place within the meals distribution trade, together with the quantity and site of
distribution facilities we function, the array of companies and the information pushed
insights that we're in a position to customise for every of our prospects, our innovation
platforms and the expansion potential we see in every, our dedication to our folks
and the planet, the positioning of our retail operations and our deal with
delivering returns for our shareholders.

We additionally launched our ValuePath initiative early in fiscal 2021, pursuant to
which we plan to enhance working efficiency by varied initiatives to be
applied by the tip of fiscal 2023. We intend to re-invest a portion of
these working financial savings within the enterprise to drive market share positive factors, speed up
innovation, spend money on automation and preserve aggressive wage scales for our
frontline employees.

We are going to proceed to make use of free money move to cut back excellent debt and are
dedicated to enhancing our monetary leverage.


We imagine our Gasoline the Future technique will additional speed up our progress
by rising gross sales of services and products, offering tailor-made,
data-driven options to assist our present prospects run their enterprise extra
effectively and contributing to new buyer acquisitions. We imagine the important thing
drivers for progress by new prospects will come from the advantages of our
vital scale, product and repair choices, and nationwide footprint,
which we imagine have been demonstrated by current developments in {our relationships}
with sure massive prospects.

Developments and Different Components Affecting our Enterprise


Our outcomes are impacted by macroeconomic and demographic traits, modifications within the
meals distribution market construction and modifications in traits in client habits.
We count on that food-at-home expenditures as a proportion of whole meals
expenditures will stay elevated within the close to time period in comparison with ranges previous to
the COVID-19 pandemic, which we discuss with because the pandemic. We imagine that
modifications in work being carried out outdoors of the standard workplace setting will
proceed to contribute to extra meals being consumed at house. The pandemic additionally
drove vital progress in eCommerce utilization by grocery customers, and we
count on that development to proceed. We count on to learn from this development by the
progress of our conventional eCommerce prospects, our Group Market, an
on-line market connecting suppliers and retailers, and EasyOptions, which
straight companies non-traditional prospects.

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Appreciable uncertainty stays relating to the long run affect of the pandemic on
our enterprise. The pandemic continues to evolve and have an effect on world economies,
markets and provide chains. The continued affect on our outcomes is unsure and
dependent upon future developments, together with any resurgence of an infection charges
and new variants with increased transmissibility, any financial downturn, the
availability and efficacy of vaccines and coverings, actions taken by
governmental authorities and different third events in response to the pandemic
similar to social distancing orders, vaccine mandates or corporations' distant work
insurance policies, the affect on capital and monetary markets, food-at-home buying
ranges and different client traits, every of which is unsure. Any of those
disruptions might adversely affect our enterprise and outcomes of operations. We
proceed to implement mitigation measures to guard our associates and
workplaces, together with security protocols and strongly encouraging
vaccinations/boosters.

We're experiencing a tighter working labor marketplace for our warehouse and
driver associates in fiscal 2022 than now we have in recent times, which has brought about
extra reliance on and better prices from third-party sources, and
incremental hiring and wage prices. We imagine this working atmosphere has
been impacted by labor pressure availability and the pandemic. We proceed to take
actions to fill open roles and preserve present and future employment ranges.

We're additionally impacted by modifications in meals distribution traits affecting our
Wholesale prospects, similar to direct retailer deliveries and different strategies of
distribution. Our Wholesale prospects handle their companies independently and
function in a aggressive atmosphere. We search to acquire safety pursuits and
different credit score help in reference to the monetary lodging we prolong
these prospects; nonetheless, we might incur extra credit score or stock costs
associated to our prospects, as we count on the aggressive atmosphere to proceed
to result in monetary stress on some prospects. The magnitude of those dangers
will increase as the scale of our Wholesale prospects will increase.

Distribution Heart Community

Community Optimization and Building


Within the first quarter of fiscal 2022, we began transport from our Allentown,
Pennsylvania distribution middle, which has a capability of 1.3 million sq.
ft and is being utilized to service prospects in that geographical space. We
incurred start-up prices and working losses, and count on to proceed to incur
working losses for fiscal 2022 as the quantity on this facility ramps as much as its
anticipated full working capability.

We consider our distribution middle community to optimize its efficiency and
count on to incur incremental bills associated to any future community realignment,
enlargement or enhancements and are working to each reduce these prices and
receive new enterprise to additional enhance the effectivity of our remodeling
distribution community.

Retail Operations


We at present function 76 persevering with operations Retail grocery shops, together with
56 Cub Meals company shops and 20 Consumers Meals Warehouse shops. In
addition, we provide one other 27 Cub Meals shops operated by our Wholesale
prospects by franchise and fairness possession preparations. We function 81
pharmacies primarily inside the shops we function and the shops of our
franchisees. As well as, we function 23 "Cub Wine and Spirit" and "Cub Liquor"
shops.

Within the fourth quarter of fiscal 2021, we decided that the Firm now not
met the held on the market criterion for a possible sale to be accomplished inside 12
months for 2 of the 4 shops that have been beforehand included inside
discontinued operations. In consequence, we revised the Condensed Consolidated
Monetary Statements to reclassify two Consumers shops from discontinued
operations to persevering with operations. The prior interval offered within the Condensed
Consolidated Monetary Statements have been conformed to the present interval
presentation. The remaining two shops in discontinued operations have been offered in
the second quarter of fiscal 2022.

Impression of Inflation


We skilled a mixture of inflation throughout product classes throughout the third
quarter of fiscal 2022. Within the mixture throughout our companies, together with the
mixture of merchandise, administration estimates our enterprise skilled value inflation of
roughly seven p.c within the third quarter of fiscal 2022. Value inflation
estimates are primarily based on particular person like gadgets offered throughout the durations being
in contrast. Modifications in merchandising, buyer shopping for habits and aggressive
pressures create inherent difficulties in measuring the affect of inflation on
Internet gross sales and Gross revenue. Absent any modifications in models offered or the combo of models
offered, inflation usually has the impact of accelerating gross sales. Underneath the last-in,
first out ("LIFO") methodology of stock accounting, product value will increase are
acknowledged inside Value of gross sales primarily based on anticipated year-end stock portions
and prices, which has the impact of lowering Gross revenue and the carrying
worth of stock in periods of inflation.
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Our pricing to our prospects is decided on the time of sale based totally
on the then prevailing vendor listed base value, and embody reductions we provide
to our prospects. Typically in an inflationary atmosphere as a wholesaler,
rising vendor prices lead to increased Internet gross sales pushed by increased vendor costs
when different variables similar to portions offered and vendor promotions are fixed.

Composition of Condensed Consolidated Statements of Operations and Enterprise
Efficiency Evaluation

Internet gross sales


Our internet gross sales consist primarily of product gross sales of pure, natural, specialty,
produce and traditional grocery and non-food merchandise, and help companies
income from retailers, adjusted for buyer quantity reductions, vendor
incentives when relevant, returns and allowances, {and professional} companies
income. Internet gross sales additionally embody quantities charged by us to prospects for transport
and dealing with and gasoline surcharges.

Value of gross sales and Gross revenue


The principal elements of our value of gross sales embody the quantities paid to
suppliers for product offered, plus transportation prices essential to convey the
product to, or transfer product between, our distribution facilities and retail shops,
partially offset by consideration obtained from suppliers in reference to the
buy or promotion of the suppliers' merchandise. Our gross margin might not be
corresponding to different comparable corporations inside our trade which will embody all
prices associated to their distribution community of their prices of gross sales relatively than
as working bills.

Working bills

Working bills embody distribution bills of warehousing, supply,
buying, receiving, choosing, and outbound transportation bills, and
promoting and administrative bills. These bills embody salaries and wages,
worker advantages, occupancy, insurance coverage, depreciation and amortization expense
and share-based compensation expense.

Restructuring, acquisition and integration bills


Restructuring, acquisition and integration bills mirror bills ensuing
from restructuring actions, together with severance prices, facility closure asset
impairment costs and prices, share-based compensation acceleration costs and
acquisition and integration bills. Integration bills embody sure
skilled consulting bills associated to enterprise transformation and
incremental bills associated to combining services required to optimize our
distribution community because of acquisitions.

Curiosity expense, internet


Curiosity expense, internet consists of primarily curiosity expense on long-term debt, internet
of capitalized curiosity, loss on debt extinguishment, curiosity expense on
finance lease obligations, amortization of financing prices and reductions and
curiosity revenue.

Internet periodic profit revenue, excluding service value

Internet periodic profit revenue, excluding service value displays the popularity of
anticipated returns on profit plan belongings and curiosity prices on plan liabilities.

Adjusted EBITDA


Our Condensed Consolidated Monetary Statements are ready and offered in
accordance with usually accepted accounting ideas in the USA
("GAAP"). Along with the GAAP outcomes, we take into account sure non-GAAP
monetary measures to evaluate the efficiency of our enterprise and perceive
underlying working efficiency and core enterprise traits, which we use to
facilitate working efficiency comparisons of our enterprise on a constant
foundation over time. Adjusted EBITDA is supplied as a complement to our outcomes of
operations and associated evaluation, and shouldn't be thought-about superior to, a
substitute for or an alternative choice to, any monetary measure of efficiency
ready and offered in accordance with GAAP. Adjusted EBITDA excludes sure
gadgets as a result of they're non-cash gadgets or gadgets that don't mirror administration's
evaluation of ongoing enterprise efficiency.

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We imagine Adjusted EBITDA is beneficial to buyers and monetary establishments
as a result of it gives extra info relating to elements and traits
affecting our enterprise, that are used within the enterprise planning course of to
perceive anticipated working efficiency, to judge outcomes towards these
expectations, and due to its significance as a measure of underlying working
efficiency, as the first compensation efficiency measure below sure
compensation applications and plans. We imagine Adjusted EBITDA is reflective of
elements that have an effect on our underlying working efficiency and facilitate
working efficiency comparisons of our enterprise on a constant foundation over
time. Traders are cautioned that there are materials limitations related
with the usage of non-GAAP monetary measures as an analytical software. Sure
changes to our GAAP monetary measures mirrored beneath exclude gadgets that
could also be thought-about recurring in nature and could also be mirrored in our monetary
outcomes for the foreseeable future. These measurements and gadgets could also be
completely different from non-GAAP monetary measures utilized by different corporations. Adjusted
EBITDA needs to be reviewed together with our outcomes reported in accordance
with GAAP on this Quarterly Report.

There are vital limitations to utilizing Adjusted EBITDA as a monetary
measure together with, however not restricted to, it not reflecting the price of money
expenditures for capital belongings or sure different contractual commitments,
finance lease obligation and debt service bills, revenue taxes, and any
impacts from modifications in working capital.


We outline Adjusted EBITDA as a consolidated measure inclusive of constant and
discontinued operations outcomes, which we reconcile by including Internet revenue (loss)
from persevering with operations, much less internet revenue attributable to noncontrolling
pursuits, plus non-operating revenue and bills, together with Internet periodic
profit revenue, excluding service value, Curiosity expense, internet and Different, internet,
plus Provision (profit) for revenue taxes and Depreciation and amortization
all calculated in accordance with GAAP, plus changes for Share-based
compensation, non-cash LIFO cost or profit, Restructuring, acquisition and
integration associated bills, Goodwill impairment costs, (Acquire) loss on sale
of belongings, sure authorized costs and positive factors, sure different non-cash costs or
different gadgets, as decided by administration, plus Adjusted EBITDA of discontinued
operations calculated in a fashion in keeping with the outcomes of constant
operations, outlined above.

In the course of the third quarter of fiscal 2022, the Firm revised its definition of
Adjusted EBITDA to exclude the affect of the non-cash LIFO cost or profit.
The Firm believes that this modification gives a greater indicator of its
underlying working efficiency and permits higher comparability between
durations. Seek advice from footnote one within the desk beneath and Notice 14-Enterprise Segments
in Half I, Merchandise 1 of this Quarterly Report on Kind 10-Q for extra
info relating to the affect of the change in definition of Adjusted EBITDA.
Within the fourth quarter of fiscal 2021, we made modifications to line merchandise references in
our Condensed Consolidated Monetary Statements, for which the definition and
reconciliation of Adjusted EBITDA has been recast for consistency, such that each one
durations offered mirror the identical reconciliation. This transformation within the fourth
quarter of fiscal 2021 didn't affect the calculation of Adjusted EBITDA.

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Evaluation of Our Enterprise Outcomes


The next desk units forth a abstract of our outcomes of operations and
Adjusted EBITDA for the durations indicated. Now we have revised the next tables
for the prior-period presentation of two discontinued operations shops moved to
persevering with operations as mentioned in Notice 1-Vital Accounting Insurance policies
inside Half II, Merchandise 8 of the Annual Report and with respect to Adjusted EBITDA
for prior interval presentation of the change in section revenue measurement
mentioned in Notice 14-Enterprise Segments inside Half I, Merchandise 1 of this Quarterly
Report on Kind 10-Q.

                                              13-Week Interval Ended                                             39-Week Interval Ended
(in tens of millions)                         April 30, 2022            Could 1, 2021           Change           April 30, 2022           Could 1, 2021           Change
Internet gross sales                           $     7,242               $      6,631          $    611          $    21,655             $     20,215          $ 1,440
Value of gross sales                             6,230                      5,661               569               18,526                   17,280            1,246
Gross revenue                              1,012                        970                42                3,129                    2,935              194
Working bills                          969                        868               101                2,845                    2,642              203
Restructuring, acquisition and
integration associated bills                  8                         10                (2)                  16                       44              (28)
Acquire on sale of belongings                      (88)                         -               (88)                 (87)                       -              (87)
Working revenue                            123                         92                31                  355                      249              106
Internet periodic profit revenue,
excluding service value                      (10)                       (17)                7                  (30)                     (51)              21
Curiosity expense, internet                        37                         44                (7)                 121                      164              (43)
Different, internet                                   (1)                        (1)                -                   (2)                      (4)               2
Earnings from persevering with operations
earlier than revenue taxes                          97                         66                31                  266                      140              126
Provision for revenue taxes                   29                         16                13                   53                       32               21
Internet revenue from persevering with
operations                                   68                         50                18                  213                      108              105
Earnings from discontinued
operations, internet of tax                        -                          -                 -                    -                        3               (3)
Internet revenue together with noncontrolling
pursuits                                    68                         50                18                  213                      111              

102

Much less internet revenue attributable to
noncontrolling pursuits                     (1)                        (2)                1                   (4)                      (5)             

1

Internet revenue attributable to United
Pure Meals, Inc.                 $        67               $         48          $     19          $       209             $        106          $   103

Adjusted EBITDA                     $       196               $        185          $     11          $       616             $        564          $    52



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The next desk reconciles Adjusted EBITDA to Internet revenue from persevering with
operations and to Earnings from discontinued operations, internet of tax.


                                                    13-Week Interval Ended                      39-Week Interval Ended
                                               April 30,                                 April 30,
(in tens of millions)                                    2022              Could 1, 2021             2022              Could 1, 2021
Internet revenue from persevering with operations        $       68          $         50          $      213          $        108
Changes to persevering with operations internet
revenue:
Much less internet revenue attributable to
noncontrolling pursuits                             (1)                   (2)                 (4)                   (5)
Internet periodic profit revenue, excluding
service value                                        (10)                  (17)                (30)                  (51)
Curiosity expense, internet                                37                    44                 121                   164
Different, internet                                           (1)                   (1)                 (2)                   (4)
Provision for revenue taxes                           29                    16                  53                    32
Depreciation and amortization                        72                    66                 210                   210
Share-based compensation                             10                    11                  33                    38
LIFO cost(1)                                       72                     5                 102                    19
Restructuring, acquisition and integration
associated bills(2)                                   8                    10                  16                    44
Acquire on sale of belongings(3)                           (88)                    -                 (87)                    -
Multi-employer pension plan withdrawal
profit(4)                                            -                     -                  (8)                    -
Different retail expense(5)                               -                     2                  (1)                    5
Adjusted EBITDA of constant operations            196                   184                 616                   560
Adjusted EBITDA of discontinued
operations(6)                                         -                     1                   -                     4
Adjusted EBITDA                              $      196          $        185          $      616          $        564

Earnings from discontinued operations, internet of
tax                                          $        -          $          -          $        -          $          3
Changes to discontinued operations internet
revenue:
Provision for revenue taxes                            -                     1                   -                     -
Restructuring, retailer closure and different
costs, internet                                          -                     -                   -                     1

Adjusted EBITDA of discontinued operations $ – $ 1 $ – $ 4



(1)In the course of the third quarter of fiscal 2022, the Firm revised its definition
of Adjusted EBITDA to exclude the affect of the non-cash LIFO cost or profit.
The next illustrates the affect of the revised definition on beforehand
reported durations to indicate the impact of this modification:
                                                                13-Week Interval          39-Week Interval
                                                                     Ended                   Ended
(in tens of millions)                                                     Could 1, 2021             Could 1, 2021

Adjusted EBITDA of constant operations (beforehand reported
definition)

                                                    $          179          $          541
LIFO Cost                                                                 5                      19
Adjusted EBITDA of constant operations (revised definition)             184                     560
Adjusted EBITDA of discontinued operations                                  1                       4
Adjusted EBITDA (revised definition)                           $          

185 $ 564

(2)Fiscal 2021 primarily displays prices related to advisory and
transformational actions as we place our enterprise for additional
value-creation following the Supervalu acquisition. Seek advice from Notice
4-Restructuring, Acquisition and Integration Associated Bills in Half I, Merchandise 1
of this Quarterly Report on Kind 10-Q for extra info.


(3)Fiscal 2022 primarily displays the acquire on sale of our Riverside, California
distribution middle within the third quarter of fiscal 2022. Seek advice from the acquire on
sale of belongings dialogue beneath for extra info.

(4)Displays an adjustment to multi-employer withdrawal cost estimates.

(5)Displays bills related to event-specific damages to sure retail
shops and retailer closure prices.

(6)The 2 remaining retail shops in discontinued operations have been offered within the
second quarter of fiscal 2022.

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RESULTS OF OPERATIONS

Internet Gross sales

Our internet gross sales by buyer channel have been as follows (in tens of millions besides
percentages):

                                                  13-Week Interval Ended                     Improve (Lower)                    39-Week Interval Ended                     Improve (Lower)
                                               April 30,              Could 1,                                                   April 30,             Could 1,
Buyer Channel(1)                              2022                  2021                $                  %                  2022                 2021                 $                  %
Chains                                    $     3,111               $ 2,957          $       154              5.2  %       $     9,436             $  9,090          $       346              3.8  %
Impartial retailers                           1,833                 1,599                  234             14.6  %             5,488                4,972                  516             10.4  %
Supernatural                                    1,468                 1,287                  181             14.1  %             4,299                3,799                  500             13.2  %
Retail                                            602                   590                   12              2.0  %             1,847                1,829                   18              1.0  %
Different                                             625                   579                   46              7.9  %             1,786                1,728                   58              3.4  %
Eliminations                                     (397)                 (381)                 (16)             4.2  %            (1,201)              (1,203)                   2             (0.2) %
Complete internet gross sales                           $     7,242               $ 6,631          $       611              9.2  %       $    21,655             $ 20,215          $     1,440              7.1  %

(1)Seek advice from Notice 3-Income Recognition in Half 1, Merchandise 1 of this Quarterly
Report on Kind 10-Q for our channel definitions and extra info.

Third Quarter


Our internet gross sales for the third quarter of fiscal 2022 elevated roughly 9.2%
from the third quarter of fiscal 2021. The rise in internet gross sales was primarily
pushed by inflation and new enterprise from each present and new prospects,
together with the good thing about cross promoting, partially offset by provide chain
challenges and modest market contraction.

Chains internet gross sales elevated primarily as a consequence of progress in gross sales to present
prospects, together with a rise from increased product prices, which drove increased
wholesale promoting costs to our prospects.


Impartial retailers internet gross sales elevated primarily as a consequence of gross sales below a brand new
provide settlement with a brand new buyer for East Coast areas commencing within the
first quarter of fiscal 2022 and progress in gross sales to present prospects,
together with a rise from increased product prices, which drove increased wholesale
promoting costs to our prospects.

Supernatural internet gross sales elevated primarily as a consequence of progress in present retailer
gross sales, together with the availability of recent product classes beforehand impacted by the
pandemic, similar to bulk and elements used for ready meals, and elevated
gross sales to new shops. Internet gross sales inside our Supernatural channel don't embody
internet gross sales to Amazon.com, Inc. in both the present interval or the prior interval,
as these internet gross sales are reported in our different channel.

Retail internet gross sales elevated primarily as a consequence of a 2.4% enhance in equivalent retailer
gross sales from increased common basket sizes. Retail equivalent retailer gross sales are outlined
as internet product gross sales from shops working for the reason that starting of the prior-year
interval, together with retailer expansions and excluding gasoline prices and introduced
deliberate retailer inclinations. Equivalent retailer gross sales is a standard metric used to
perceive the gross sales efficiency of retail shops because it removes the affect of
new and closed shops.

Yr-to-Date

Our internet gross sales for fiscal 2022 year-to-date elevated roughly 7.1% from
fiscal 2021 year-to-date. The rise in internet gross sales was primarily pushed by
inflation and new enterprise from each present and new prospects, together with the
good thing about cross promoting, partially offset by provide chain challenges and modest
market contraction.

Chains internet gross sales elevated primarily as a consequence of progress in gross sales to present
prospects, together with a rise from increased product prices, which drove increased
wholesale promoting costs to our prospects.


Impartial retailers internet gross sales elevated primarily as a consequence of gross sales below a brand new
provide settlement with a brand new buyer for East Coast areas commencing within the
first quarter of fiscal 2022 and progress in gross sales to present prospects,
together with a rise from increased product prices, which drove increased wholesale
promoting costs to our prospects.

Supernatural internet gross sales elevated primarily as a consequence of progress in present retailer
gross sales, together with the availability of recent product classes beforehand impacted by the
pandemic, similar to bulk and elements used for ready meals, and elevated
gross sales to new shops.

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Retail internet gross sales elevated primarily as a consequence of a 1.1% enhance in equivalent retailer
gross sales from increased common basket sizes.

Value of Gross sales and Gross Revenue


Our gross revenue elevated $42 million, or 4.3%, to $1,012 million for the third
quarter of fiscal 2022, from $970 million for the third quarter of fiscal 2021.
Our gross revenue as a proportion of internet gross sales decreased to 14.0% for the third
quarter of fiscal 2022 in comparison with 14.6% for the third quarter of fiscal 2021.
The LIFO cost was $72 million and $5 million within the third quarter of fiscal
2022 and 2021, respectively. Excluding the non-cash LIFO cost, gross margin
price was 15.0% of internet gross sales and 14.7% of internet gross sales for the third quarter of
fiscal 2022 and 2021, respectively. The rise in gross margin price, excluding
the LIFO cost, was pushed by enhancements within the Wholesale section margin
price, together with the affect of inflation and the Firm's ValuePath initiative,
partially offset by modifications in buyer combine.

Our gross revenue elevated $194 million, or 6.6%, to $3,129 million for fiscal
2022 year-to-date, from $2,935 million for fiscal 2021 year-to-date. Our gross
revenue as a proportion of internet gross sales decreased to 14.4% for fiscal 2022
year-to-date in comparison with 14.5% for fiscal 2021 year-to-date. The LIFO cost was
$102 million and $19 million for fiscal 2022 year-to-date and for fiscal 2021
year-to-date, respectively. Excluding the non-cash LIFO cost, gross margin
price was 14.9% of internet gross sales and 14.6% of internet gross sales for fiscal 2022 year-to-date
and financial 2021 year-to-date, respectively. The rise in gross margin price,
excluding the LIFO cost, was pushed by enhancements within the Wholesale section
margin price, together with the affect of inflation and the Firm's ValuePath
initiative, partially offset by modifications in buyer combine.

Working Bills


Working bills elevated $101 million, or 11.6%, to $969 million, or 13.4%
of internet gross sales, for the third quarter of fiscal 2022 in comparison with $868 million, or
13.1% of internet gross sales, for the third quarter of fiscal 2021. The rise in
working bills as a p.c of internet gross sales resulted from continued investments
in servicing our prospects, which led to roughly 50 foundation factors of upper
transportation and distribution middle labor prices within the third quarter of
fiscal 2022, and occupancy-related inflation, which have been partially offset by
leveraging fastened prices and advantages of the Firm's ValuePath initiative.

Working bills elevated $203 million, or 7.7%, to $2,845 million, or 13.1%
of internet gross sales, for fiscal 2022 year-to-date in comparison with $2,642 million, or 13.1%
of internet gross sales, for fiscal 2021 year-to-date. Working bills have been
roughly flat as a p.c of internet gross sales. Modifications in working bills as a
proportion of internet gross sales included continued investments in servicing our
prospects, which led to roughly 50 foundation factors of upper transportation
bills and distribution labor prices in fiscal 2022 year-to-date,
occupancy-related inflation, and the short-term, voluntary closure of a
distribution middle within the first quarter of fiscal 2022. These will increase have been
partially offset by leveraging fastened bills and decrease year-over-year
distribution middle start-up and consolidation prices.

Restructuring, Acquisition and Integration Associated Bills


Restructuring, acquisition and integration associated bills have been $8 million for
the third quarter of fiscal 2022 and $10 million for the third quarter of fiscal
2021.

Restructuring, acquisition and integration associated bills have been $16 million for
fiscal 2022 year-to-date. Bills for fiscal 2021 year-to-date have been $44
million, which included $41 million of restructuring and integration prices
primarily reflecting prices related to advisory and transformational
actions as we place our enterprise for additional worth creation following the
Supervalu acquisition and $3 million of closed property costs and prices.

Acquire on Sale of Property


In the course of the third quarter of fiscal 2022, we acquired the actual property of our
Riverside, California distribution middle for about $153 million.
Instantly following this acquisition, we monetized this property by a
sale-leaseback transaction, pursuant to which we obtained $225 million in
mixture proceeds for the sale of the property, which represented the truthful
worth of the property. Underneath the phrases of the sale-leaseback settlement, we
entered right into a lease for the distribution middle for a time period of 15 years. We
recorded a pre-tax acquire on sale of roughly $87 million within the third
quarter of fiscal 2022 because of the transactions, which primarily displays
the pre-tax internet proceeds.
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Working Earnings

Reflecting the elements described above, working revenue elevated $31 million
to $123 million for the third quarter of fiscal 2022, in comparison with $92 million
for the third quarter of fiscal 2021. The rise in working revenue was
primarily pushed by a rise in acquire on sale of belongings and gross revenue,
partially offset by a rise in working bills, all of that are
described above.

Reflecting the elements described above, working revenue elevated $106 million
to $355 million for fiscal 2022 year-to-date, from working revenue of $249
million for fiscal 2021 year-to-date. The rise in working revenue was
primarily pushed by a rise in gross revenue and acquire on sale of belongings, and
decrease restructuring, acquisition and integration bills, partially offset by
a rise in working bills, all of that are described above.

Internet Periodic Profit Earnings, Excluding Service Value


Internet periodic profit revenue, excluding service value decreased $7 million to $10
million for the third quarter of fiscal 2022, from $17 million for the third
quarter of fiscal 2021. Internet periodic profit revenue, excluding service value
decreased $21 million to $30 million for fiscal 2022 year-to-date, from $51
million for fiscal 2021 year-to-date. The lower in Internet periodic profit
revenue, excluding service value for the third quarter and financial 2022
year-to-date as in comparison with the respective comparative durations was primarily
pushed by decrease anticipated charges of return on plan belongings pushed by a better
goal funding allocation to fastened revenue belongings.

Curiosity Expense, Internet

                                                            13-Week Interval Ended                         39-Week Interval Ended
                                                                                                    April 30,
(in tens of millions)                                       April 30, 2022         Could 1, 2021                2022              Could 1, 2021
Curiosity expense on long-term debt, internet of
capitalized curiosity                                $        32          $         35             $       95          $        110
Curiosity expense on finance lease obligations                 1                     4                     10                    14
Amortization of financing prices and reductions                 3                     3                      9                    10
Loss on debt extinguishment                                   1                     2                      7                    31
Curiosity revenue                                               -                     -                      -                    (1)
Curiosity expense, internet                               $        37          $         44             $      121          $        164



The lower in curiosity expense on long-term debt, internet of capitalized curiosity,
within the third quarter of fiscal 2022 in comparison with the third quarter of fiscal 2021
and in fiscal 2022 year-to-date in comparison with fiscal 2021 year-to-date was
primarily pushed by decrease excellent debt balances and decrease common curiosity
charges.

The lower in loss on debt extinguishment prices in fiscal 2022 year-to-date
in comparison with fiscal 2021 year-to-date primarily displays the acceleration of
unamortized debt issuance prices and authentic concern reductions associated to increased
necessary and voluntary prepayments on the Time period Mortgage Facility made in fiscal
2021 year-to-date. Seek advice from Notice 8-Lengthy-Time period Debt for additional info.

Provision for Earnings Taxes


The efficient tax price for the third quarter of fiscal 2022 was 29.9% in contrast
to 24.2% for the third quarter of fiscal 2021. The change within the efficient tax
price was primarily pushed by limitations on the deductibility of sure
share-based compensation bills within the third quarter of fiscal 2022 and a
discrete profit for the vesting of worker inventory awards within the third quarter
of fiscal 2021 that was not materials to the efficient tax price within the third
quarter of fiscal 2022.

The efficient tax price for fiscal 2022 year-to-date was 19.9% in comparison with 22.9%
for fiscal 2021 year-to-date. The change within the efficient tax price was primarily
pushed by discrete tax advantages from worker inventory award vestings that occurred
in fiscal 2022 year-to-date. The impacts from the discharge of unrecognized tax
positions in fiscal 2022 year-to-date have been corresponding to fiscal 2021
year-to-date.

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Internet Earnings Attributable to United Pure Meals, Inc.


Reflecting the elements described in additional element above, Internet revenue attributable
to United Pure Meals, Inc. was $67 million, or $1.10 per diluted frequent
share, for the third quarter of fiscal 2022, in comparison with $48 million, or $0.80
per diluted frequent share, for the third quarter of fiscal 2021.

Reflecting the elements described in additional element above, Internet revenue attributable
to United Pure Meals, Inc. was $209 million, or $3.44 per diluted frequent
share, for fiscal 2022 year-to-date, in comparison with $106 million, or $1.78 per
diluted frequent share, for fiscal 2021 year-to-date.

Phase Outcomes of Operations


In evaluating monetary efficiency in every enterprise section, administration
primarily makes use of Internet gross sales and Adjusted EBITDA of its enterprise segments as
mentioned and reconciled inside Notice 14-Enterprise Segments inside Half I, Merchandise 1
of this Quarterly Report on Kind 10-Q and the above desk inside the Government
Overview part. The next tables set forth Internet gross sales and Adjusted EBITDA
by section for the durations indicated.
                                              13-Week Interval Ended                                            39-Week Interval Ended
(in tens of millions)                         April 30, 2022            Could 1, 2021           Change          April 30, 2022           Could 1, 2021           Change
Internet gross sales:
Wholesale                           $     6,977               $      6,367          $   610          $    20,843             $     19,423          $ 1,420
Retail                                      602                        590               12                1,847                    1,829               18
Different                                        60                         55                5                  166                      166                -
Eliminations                               (397)                      (381)             (16)              (1,201)                  (1,203)               2
Complete Internet gross sales                     $     7,242               $      6,631          $   611          $    21,655             $     20,215          $ 1,440
Persevering with operations
Adjusted EBITDA:
Wholesale(1)                        $       171               $        166          $     5          $       522             $        490          $    32
Retail(1)                                    14                         23               (9)                  68                       75               (7)
Different                                        11                          -               11                   27                       (4)              31
Eliminations                                  -                         (5)               5                   (1)                      (1)               -
Complete persevering with operations
Adjusted EBITDA                     $       196               $        184          $    12          $       616             $        560          $    56


(1)Adjusted EBITDA quantities as beforehand reported by section have been recast to
conform with the revised section revenue measure of Adjusted EBITDA, which
excludes the non-cash LIFO cost or profit recorded by section. The impact of
the revision elevated Adjusted EBITDA for Wholesale and Retail by $4 million
and $1 million for the third quarter of fiscal 2021, respectively, and elevated
Adjusted EBITDA for Wholesale and Retail by $18 million and $1 million for
fiscal 2021 year-to-date, respectively.

Internet Gross sales

Third Quarter

Wholesale’s internet gross sales elevated primarily as a consequence of progress within the Impartial
retailers, Supernatural and Chains channels, as mentioned within the Internet Gross sales
part above.

Retail’s internet gross sales elevated primarily as a consequence of a 2.4% enhance in equivalent retailer
gross sales from increased common basket sizes.

The rise in eliminations internet gross sales was pushed by increased gross sales from Different to
Wholesale.


Yr-to-Date

Wholesale's internet gross sales elevated primarily as a consequence of progress in gross sales to present
prospects within the Impartial retailers, Supernatural and Chains, as mentioned in
the Internet Gross sales part above.

Retail’s internet gross sales elevated primarily as a consequence of a 1.1% enhance in equivalent retailer
gross sales from increased common basket sizes.

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Adjusted EBITDA

Third Quarter

Wholesale's Adjusted EBITDA elevated 3.0% for the third quarter of fiscal 2022
as in comparison with the third quarter of fiscal 2021. The rise was pushed by
gross revenue enlargement excluding the LIFO cost, in extra of upper working
prices. Wholesale's gross revenue enhance excluding the LIFO cost for the third
quarter of fiscal 2022 was $105 million with a gross revenue price enhance of
roughly 41 foundation factors primarily pushed by margin price enlargement from the
advantages of inflation and the Firm's ValuePath initiative, which was
partially offset by modifications in buyer combine. Wholesale's working expense
elevated $101 million, which excludes depreciation and amortization,
share-based compensation and different changes as outlined in Notice 14-Enterprise
Segments. Wholesale's working expense price elevated 58 foundation factors pushed by
the choice to spend money on increased transportation bills and distribution middle
labor to higher help our prospects on this 12 months's third quarter, partially
offset by leveraging fastened bills. Wholesale's depreciation expense elevated
$6 million in comparison with final 12 months.

Retail's Adjusted EBITDA decreased 39.1% for the third quarter of fiscal 2022 as
in comparison with the third quarter of fiscal 2021. The lower was pushed by increased
Retail working bills from increased worker and occupancy prices, which
excludes depreciation and amortization, share-based compensation and different
changes as outlined in Notice 14-Enterprise Segments. Retail's depreciation and
amortization expense was roughly flat in comparison with final 12 months.

Yr-To-Date


Wholesale's Adjusted EBITDA elevated 6.5% for fiscal 2022 year-to-date as
in comparison with fiscal 2021 year-to-date. The rise was pushed by gross revenue
enlargement excluding the LIFO cost, in extra of upper working prices.
Wholesale's gross revenue enhance excluding the LIFO cost for fiscal 2022
year-to-date was $284 million and gross revenue price elevated roughly 52
foundation factors pushed by margin price enlargement from the advantages of inflation and
the Firm's ValuePath initiative, which was partially offset by modifications in
buyer combine. Wholesale's working expense elevated $252 million, which
excludes depreciation and amortization, share-based compensation and different
changes as outlined in Notice 14-Enterprise Segments. Wholesale's working
expense price elevated 54 foundation factors primarily pushed by the choice to
spend money on increased transportation bills and distribution labor to higher
help our prospects in fiscal 2022 year-to-date, and the short-term, voluntary
closure of a distribution middle, partially offset by leveraging fastened bills
and decrease year-over-year distribution middle start-up and consolidation prices.
Wholesale's depreciation expense elevated $1 million.

Retail's Adjusted EBITDA decreased 9.3% for fiscal 2022 year-to-date as in contrast
to fiscal 2021 year-to-date, pushed by increased Retail working bills from
increased worker and occupancy prices, which excludes depreciation and
amortization, share-based compensation and different changes as outlined in Notice
14-Enterprise Segments.

LIQUIDITY AND CAPITAL RESOURCES

Highlights


•Complete liquidity as of April 30, 2022 was $909 million and consisted of the
following:
•Unused credit score below our $2,100 million secured asset-based revolving credit score
facility (the "ABL Credit score Facility") was $861 million, which decreased $419
million from $1,280 million as of July 31, 2021, primarily as a consequence of elevated money
utilized to fund working capital will increase and a voluntary prepayment on the
Time period Mortgage Facility described beneath.
•Money and money equivalents was $48 million, which elevated $7 million from $41
million as of July 31, 2021.
•Our whole debt elevated $203 million to $2,391 million as of April 30, 2022
from $2,188 million as of July 31, 2021, primarily associated to extra
borrowings below the ABL Credit score Facility, to fund working capital will increase.
•Working capital elevated $528 million to $1,591 million as of April 30, 2022
from $1,063 million as of July 31, 2021, primarily as a consequence of will increase in stock
and accounts receivable ranges associated to new prospects and gross sales progress of
present prospects, partially offset by a rise in accounts payable associated
to inventories. Within the the rest of fiscal 2022, scheduled debt maturities are
anticipated to be $4 million.
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•Within the second quarter of fiscal 2022, we made a voluntary prepayment of
$150 million on the time period mortgage settlement (the "Time period Mortgage Settlement") associated to
our $1,950 million time period mortgage facility (the "Time period Mortgage Facility") funded with
incremental borrowings below the ABL Credit score Facility that diminished our curiosity
prices. This prepayment will depend in the direction of satisfying any requirement to make a
necessary prepayment with Extra Money Move (as outlined within the Time period Mortgage
Settlement) generated throughout fiscal 2022, if any, which might be due in fiscal
2023. Additionally within the second quarter of fiscal 2022, we amended our Time period Mortgage
Settlement to cut back the relevant margin for LIBOR and base price loans below
the Time period Mortgage Facility by 25 foundation factors.
•Within the third quarter fiscal 2022, we paid $153 million to amass the
Riverside, California distribution middle, which diminished our Present portion of
long-term debt and finance lease liabilities by $96 million with the rest
primarily lowering our Accrued bills and different present liabilities.
Instantly following this acquisition, we monetized this property by a
sale-leaseback transaction, pursuant to which we obtained $225 million in
mixture proceeds for the sale of the property. In March 2022, we made a
$44 million voluntary prepayment on the Time period Mortgage Facility from the vast majority of
the after-tax internet proceeds from the transactions. This prepayment may also
depend in the direction of satisfying any requirement to make a compulsory prepayment with
Extra Money Move (as outlined within the Time period Mortgage Settlement) generated throughout fiscal
2022, if any, which might be due in fiscal 2023.
•Subsequent to the tip of the third quarter of fiscal 2022, we entered right into a
new mortgage settlement (the "2022 ABL Mortgage Settlement"), which gives for a $2,600
million secured asset-based revolving credit score facility ("2022 ABL Credit score
Facility"), and we used borrowings thereunder to repay all quantities excellent
below the ABL Credit score Facility and terminated the ABL Credit score Facility. Our whole
accessible liquidity elevated by $500 million in reference to this
refinancing, which displays borrowing base ranges at closing. The 2022 ABL Mortgage
Settlement makes use of Time period Secured In a single day Financing Price ("SOFR") and Prime
charges because the benchmark rates of interest. Borrowings below the 2022 ABL Mortgage
Settlement bear curiosity at charges that, on the relevant debtors' choice, can
be both: (i) a base price plus a 0.00% - 0.25% margin or (ii) a Time period SOFR price
plus a 1.00% - 1.25% margin. Seek advice from Notice 8-Lengthy-Time period Debt in Half I, Merchandise 1 of
this Quarterly Report on Kind 10-Q for extra info.

Sources and Makes use of of Money


We count on to proceed to replenish working belongings and pay down debt
obligations with internally generated funds. A major discount in
working earnings or the incurrence of working losses might have a detrimental
affect on our working money move, which can restrict our capability to pay down our
excellent indebtedness as deliberate. Our credit score services are secured by a
substantial portion of our whole belongings. We count on to have the ability to fund debt
maturities and finance lease liabilities by fiscal 2022 with internally
generated funds, proceeds from asset gross sales and borrowings below the 2022 ABL
Credit score Facility.

Our main sources of liquidity are from internally generated funds and from
borrowing capability below the 2022 ABL Credit score Facility. We imagine our short-term
and long-term financing skills are enough as a complement to internally
generated money flows to fulfill debt obligations and fund capital expenditures
as alternatives come up. Our continued entry to short-term and long-term
financing by credit score markets depends upon quite a few elements, together with the
situation of the credit score markets and our outcomes of operations, money flows,
monetary place and credit score rankings.

Main makes use of of money embody debt service, capital expenditures, working capital
upkeep and revenue tax funds. We sometimes finance working capital wants
with money supplied from working actions and short-term borrowings.
Inventories are managed primarily by demand forecasting and replenishing
depleted inventories.

We at present don't pay a dividend on our frequent inventory, and don't have any plans to do
so. As well as, we're restricted within the mixture quantity of dividends that we might
pay below the phrases of our Time period Mortgage Facility, 2022 ABL Credit score Facility and
Senior Notes. Topic to sure limitations contained in our debt agreements
and as market situations warrant, we might occasionally refinance
indebtedness that now we have incurred, together with by the incurrence or
reimbursement of loans below present or new credit score services or the issuance or
reimbursement of debt securities. Proceeds from the sale of any properties mortgaged
and encumbered below our Time period Mortgage Facility are required for use to make
extra Time period Mortgage Facility funds or to be reinvested within the enterprise.

Lengthy-Time period Debt


Throughout fiscal 2022 year-to-date, we borrowed a internet $400 million below the ABL
Credit score Facility and repaid $202 million on the Time period Mortgage Facility associated to
voluntary prepayments. We entered right into a second modification to the Time period Mortgage
Facility to, amongst different issues, scale back the relevant margin by 0.25%. Refer
to Notice 8-Lengthy-Time period Debt in Half I, Merchandise 1 of this Quarterly Report on Kind 10-Q
for extra info, together with an in depth dialogue of the provisions of
our credit score services and sure long-term debt agreements.

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Our Time period Mortgage Settlement and the indenture governing our unsecured 6.75% Senior
Notes due October 15, 2028 (the "Senior Notes") don't embody any monetary
upkeep covenants. Our 2022 ABL Mortgage Settlement topics us to a hard and fast cost
protection ratio of a minimum of 1.0 to 1.0, calculated on the finish of every of our
fiscal quarters on a rolling 4 quarter foundation, if the adjusted mixture
availability is ever lower than the better of (i) $210 million and (ii) 10% of
the combination borrowing base. Now we have not been topic to the fastened cost
protection ratio covenant below the ABL Mortgage Settlement or 2022 ABL Mortgage Settlement,
together with by the submitting date of this Quarterly Report on Kind 10-Q. The
Time period Mortgage Settlement, Senior Notes and 2022 ABL Mortgage Settlement comprise sure
operational and informational covenants customary for debt securities of those
sorts that restrict our and our restricted subsidiaries' capability to, amongst different
issues, incur debt, declare or pay dividends or make different distributions to our
stockholders, switch or promote belongings, create liens on our belongings, have interaction in
transactions with associates, and merge, consolidate or promote all or
considerably all of our and our subsidiaries' belongings on a consolidated foundation.
We have been in compliance with all such covenants for all durations offered. If we
fail to adjust to any of those covenants, we could also be in default below the
relevant debt settlement, and all quantities due thereunder might change into instantly
due and payable.

Subsequent to the tip of the third quarter of fiscal 2022, on June 3, 2022, we
entered into an modification ( the "Third Time period Mortgage Modification") to the Time period Mortgage
Settlement to amend the reference price thereunder from LIBOR to Time period SOFR. There
have been no different modifications to the Time period Mortgage Settlement because of the Third Mortgage
Modification. We don't count on to document any positive factors or losses on the conversion of
these rate of interest swap contracts from LIBOR to SOFR.

Derivatives and Hedging Exercise


We enter into rate of interest swap contracts occasionally to mitigate our
publicity to modifications in market rates of interest as a part of our technique to handle
our debt portfolio to realize an general desired place of notional debt
quantities topic to fastened and floating rates of interest. Rate of interest swap
contracts are entered into for durations in keeping with associated underlying
exposures and don't represent positions unbiased of these exposures.

As of April 30, 2022, we had an mixture of $1,230 million of floating price
notional debt topic to energetic rate of interest swap contracts, which successfully
hedge the LIBOR element of our rate of interest funds by pay fastened and
obtain floating rate of interest swap agreements. These fastened charges vary from
1.795% to 2.959%, with maturities between August 2022 and October 2025. The truthful
worth of those rate of interest derivatives characterize a long-term asset of $5
million and a present legal responsibility of $5 million as of April 30, 2022, and are
topic to volatility primarily based on modifications in market rates of interest. In fiscal 2021
year-to-date, we paid $17 million to terminate or novate $1,204 million of
rate of interest swap contracts over our floating price notional debt. The
termination funds mirror the quantity of amassed different complete loss
that may proceed to be amortized into curiosity expense over the unique
rate of interest swap contract phrases so long as the hedged rate of interest
transactions are nonetheless possible of occurring. See Notice 7-Derivatives in Half I,
Merchandise 1 of this Quarterly Report on Kind 10-Q for extra info.

As mentioned above, subsequent to the tip of the third quarter of fiscal 2022,
we (i) entered into the 2022 ABL Mortgage Settlement, (ii) amended the Time period Mortgage
Settlement to alter the Time period Mortgage Facility reference price from LIBOR to Time period
SOFR and (iii) amended our excellent rate of interest swap contracts to switch
One-Month LIBOR with One-Month Time period SOFR. We don't count on to document any positive factors
or losses upon the conversion of the reference charges in these rate of interest swap
contracts, and we imagine these amendments won't have a fabric affect on
our Condensed Consolidated Monetary Statements. The cumulative impact of those
modifications consists of the substitute of LIBOR with Time period SOFR because the benchmark
rate of interest from all remaining credit score services. As such, we count on to undertake
ASU 2020-04, as mentioned in Notice 2-Lately Adopted and Issued Accounting
Pronouncements in Half I, Merchandise 1 of this Quarterly Report on Kind 10-Q, which
will enable us to proceed to use hedge accounting to our excellent curiosity
price swap contracts and terminated or novated rate of interest swap contracts for
which the hedged rate of interest transactions are nonetheless possible of occurring.

Every now and then, we enter into fastened value gasoline provide agreements and international
forex hedges. As of April 30, 2022, we had fastened value gasoline contracts
excellent and international forex ahead agreements excellent. Beneficial properties and
losses and the excellent belongings and liabilities from these preparations are
insignificant.

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Funds for Capital Expenditures


Our capital expenditures for fiscal 2022 year-to-date have been $158 million in contrast
to $165 million for fiscal 2021 year-to-date, a lower of $7 million. Our
capital spending for fiscal 2022 and 2021 year-to-date principally included
info expertise and provide chain expenditures, together with continued
funding within the new Allentown, Pennsylvania distribution middle. Fiscal 2022
capital spending is predicted to be roughly $250 million and consists of
initiatives that optimize and increase our distribution community, expertise platform
investments and the remaining investments within the Allentown, Pennsylvania
distribution middle. We count on to finance fiscal 2022 capital expenditures
necessities with money generated from operations and borrowings below our 2022
ABL Credit score Facility. Long term, capital spending is predicted to be at or beneath
1.0% of internet gross sales. Future investments could also be financed by long-term debt or
borrowings below our 2022 ABL Credit score Facility.

Money Move Info


The next summarizes our Condensed Consolidated Statements of Money Flows:

                                                             39-Week Interval Ended
                                                        April 30,
(in tens of millions)                                             2022              Could 1, 2021            Change

Internet money (utilized in) supplied by working actions
of constant operations

                              $      (31)         $ 

338 $ (369)
Internet money supplied by (utilized in) investing actions
of constant operations

                                      45                  (112)               157
Internet money utilized in financing actions                         (7)                 (232)               225
Internet money utilized in discontinued operations                       -                    (1)                 1
Impact of change price on money                                -                     -                  -
Internet enhance (lower) in money and money equivalents           7                    (7)                14
Money and money equivalents, at starting of interval             41                    47                 (6)
Money and money equivalents, at finish of interval           $       48          $ 

40 $ 8




The rise in internet money utilized in working actions of constant operations
in fiscal 2022 year-to-date in comparison with fiscal 2021 year-to-date was primarily
as a consequence of will increase in stock pushed by increased buying ranges supposed to
offset provide chain limitations and accounts receivable ranges associated to new
prospects and gross sales progress of present prospects, partially offset by an
enhance in accounts payable associated to inventories.

The rise in internet money supplied by investing actions of constant
operations in fiscal 2022 year-to-date in comparison with fiscal 2021 year-to-date was
primarily as a consequence of proceeds obtained from the sale of the Riverside, California
distribution middle mentioned above, partially offset by increased money funds
for investments.

The lower in internet money utilized in financing actions in fiscal 2022
year-to-date in comparison with fiscal 2021 year-to-date was as a consequence of a rise in internet
borrowings ensuing from will increase in internet money utilized in working actions,
partially offset by a rise in internet money supplied by investing actions, as
described above.

Different Obligations and Commitments

Besides as in any other case disclosed in Notice 8-Lengthy-Time period Debt and in Notice
15-Commitments, Contingencies and Off-Stability Sheet Preparations for the
sale-leaseback transaction in Half I, Merchandise 1 of this Quarterly Report on Kind
10-Q, there have been no materials modifications within the Firm’s contractual
obligations for the reason that finish of fiscal 2021. Seek advice from Merchandise 7 of the Annual
Report for extra info relating to the Firm’s contractual
obligations.

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Pension and Different Postretirement Profit Obligations


As described in additional element in Notice 11-Profit Plans, within the second quarter
of fiscal 2022, we merged the Unified Grocers, Inc. Money Stability Plan into the
SUPERVALU INC. Retirement Plan. In fiscal 2022, no minimal pension contributions
have been required to be made below the earlier Unified Grocers, Inc. Money Stability
Plan or are required below the SUPERVALU INC. Retirement Plan below Worker
Retirement Earnings Safety Act of 1974, as amended ("ERISA"). An insignificant
quantity of contributions are anticipated to be made to outlined profit pension plans
and postretirement profit plans in fiscal 2022. We fund our outlined profit
pension plans primarily based on the minimal contribution quantity required below ERISA, the
Pension Safety Act of 2006 and different relevant legal guidelines, as decided by us,
together with our exterior actuarial guide, and extra contributions made
at our discretion. We might speed up contributions or undertake contributions in
extra of the minimal necessities occasionally topic to the provision
of money in extra of working and financing wants or different elements as could also be
relevant. We assess the relative attractiveness of the usage of money to
speed up contributions contemplating such elements as anticipated return on belongings,
low cost charges, value of debt, lowering or eliminating required Pension Profit
Warranty Company variable price premiums, or so as to obtain exemption
from participant notices of underfunding.

Off-Stability Sheet Multiemployer Pension Preparations


We contribute to varied multiemployer pension plans below collective bargaining
agreements, primarily outlined profit pension plans. These multiemployer plans
usually present retirement advantages to individuals primarily based on their service to
contributing employers. The advantages are paid from belongings held in belief for that
objective. Plan trustees sometimes are answerable for figuring out the extent of
advantages to be supplied to individuals in addition to the funding of the belongings
and plan administration. Trustees are appointed in equal quantity by employers and
unions which can be events to the collective bargaining settlement. Based mostly on the
evaluation of the newest info accessible from the multiemployer
plans, we imagine that many of the plans to which we contribute are underfunded.
We're solely one among various employers contributing to those plans and the
underfunding shouldn't be a direct obligation or legal responsibility to us.

Our contributions can fluctuate from 12 months to 12 months as a consequence of retailer closures,
employer participation inside the respective plans and reductions in headcount.
Our contributions to those plans might enhance within the close to time period. Nevertheless, the
quantity of any enhance or lower in contributions will depend upon a wide range of
elements, together with the outcomes of our collective bargaining efforts, funding
returns on the belongings held within the plans, actions taken by the trustees who
handle the plans and necessities below the Pension Safety Act of 2006, the
Multiemployer Pension Reform Act and Part 412(e) of the Inside Income
Code. Moreover, if we have been to considerably scale back contributions, exit
sure markets or in any other case stop making contributions to those plans, we might
set off a partial or full withdrawal that might require us to document a
withdrawal legal responsibility obligation and make withdrawal legal responsibility funds to the
fund. Expense is acknowledged in reference to these plans as contributions are
funded, in accordance with GAAP. We made contributions to those plans, and
acknowledged persevering with and discontinued operations expense of $48 million
in fiscal 2021. In fiscal 2022, we count on to contribute roughly $46
million to multiemployer plans associated to persevering with operations, topic to the
final result of collective bargaining and capital market situations. We count on
required money funds to fund multiemployer pension plans from which now we have
withdrawn to be immaterial in anybody fiscal 12 months, which might exclude any
funds that could be agreed to on a lump sum foundation to fulfill present
withdrawal liabilities. Any future withdrawal legal responsibility could be recorded when
it's possible {that a} legal responsibility exists and will be moderately estimated, in
accordance with GAAP. Any triggered withdrawal obligation might lead to a
materials cost and fee obligations that may be required to be remodeled
an prolonged time period.

We additionally contribute to multiemployer well being and welfare plans in quantities
set forth within the associated collective bargaining agreements. A small minority of
collective bargaining agreements comprise reserve necessities which will set off
unanticipated contributions leading to elevated healthcare bills. If these
healthcare provisions can't be renegotiated in a fashion that reduces the
potential healthcare value as we intend, our Working bills might enhance
sooner or later.

Seek advice from Notice 13-Profit Plans in Half II, Merchandise 8 of the Annual Report for
extra info relating to the plans by which we take part.

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Desk of Contents

Share Repurchases


On October 6, 2017, we introduced that our Board of Administrators approved a share
repurchase program for as much as $200 million of our excellent frequent inventory. The
repurchase program is scheduled to run out upon our repurchase of shares of our
frequent inventory having an mixture buy value of $200 million. We didn't
repurchase any shares of our frequent inventory in fiscal 2022 year-to-date or fiscal
2021 year-to-date pursuant to the share repurchase program. As of April 30,
2022, now we have $176 million remaining approved below the share repurchase
program. We don't count on to buy shares below the share repurchase program
throughout fiscal 2022. Moreover, the 2022 ABL Credit score Facility, Time period Mortgage
Facility and Senior Notes comprise phrases that restrict our capability to repurchase
frequent inventory above sure ranges until sure situations and monetary checks
are met.

Crucial Accounting Insurance policies and Estimates


There have been no materials modifications to our essential accounting insurance policies throughout the
interval coated by this Quarterly Report on Kind 10-Q. Seek advice from the outline
of essential accounting insurance policies included in Merchandise 7 of our Annual Report. Within the
third quarter of fiscal 2022, we skilled a rise in product value
inflation and in addition raised our expectation of the 12 months finish inflation price in
ending LIFO-based stock. When holding stock ranges and blend fixed, we
estimate a 50 foundation level enhance within the inflation price in our ending
LIFO-based stock leads to a rise within the non-cash LIFO cost of
roughly $10 million on an annual foundation.

Seasonality


Typically, we don't expertise materials seasonality. Nevertheless, our gross sales and
working outcomes might range considerably from quarter to quarter as a consequence of elements
similar to modifications in our working bills, administration's capability to execute our
working and progress methods, demand for our merchandise, provide shortages and
common financial situations. Our working capital wants are usually better
throughout the months main as much as excessive gross sales durations, such because the construct up in
stock throughout the time interval resulting in the calendar year-end holidays. Our
stock, accounts payable and accounts receivable ranges could also be impacted by
macroeconomic impacts and modifications in food-at-home buying charges. These
results can lead to regular working fluctuations in working capital balances,
which in flip can lead to modifications to money move from operations that aren't
essentially indicative of long-term working traits.

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