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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2020  
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-15723
unfi-20201031_g1.jpg
UNITED NATURAL FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 05-0376157
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  
313 Iron Horse Way,Providence,Rhode Island 02908
(Address of principal executive offices) (Zip Code)
 Registrant’s telephone number, including area code: (401) 528-8634
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $0.01UNFINew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.     
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
As of December 4, 2020 there were 56,135,393 shares of the registrant’s common stock, $0.01 par value per share, outstanding.



TABLE OF CONTENTS
 
Part I.
Financial Information
 
 
 
 
 
 
 
 

2

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands, except for per share data)
October 31,
2020
August 1,
2020
ASSETS  
Cash and cash equivalents$49,046 $46,993 
Accounts receivable, net1,165,946 1,120,199 
Inventories2,446,604 2,280,767 
Prepaid expenses and other current assets273,211 251,891 
Current assets of discontinued operations5,687 5,067 
Total current assets3,940,494 3,704,917 
Property and equipment, net1,662,659 1,701,216 
Operating lease assets1,010,744 982,808 
Goodwill19,671 19,607 
Intangible assets, net946,581 969,600 
Deferred income taxes106,931 107,624 
Other assets94,110 97,285 
Long-term assets of discontinued operations2,407 3,915 
Total assets$7,783,597 $7,586,972 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Accounts payable$1,729,786 $1,633,448 
Accrued expenses and other current liabilities278,790 281,956 
Accrued compensation and benefits184,752 228,832 
Current portion of operating lease liabilities145,295 131,022 
Current portion of long-term debt and finance lease liabilities25,712 83,378 
Current liabilities of discontinued operations9,889 11,438 
Total current liabilities2,374,224 2,370,074 
Long-term debt2,620,587 2,426,994 
Long-term operating lease liabilities888,979 873,990 
Long-term finance lease liabilities137,694 143,303 
Pension and other postretirement benefit obligations274,698 292,128 
Other long-term liabilities339,541 336,487 
Long-term liabilities of discontinued operations15 1,738 
Total liabilities6,635,738 6,444,714 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5,000 shares; none issued or outstanding
  
Common stock, $0.01 par value, authorized 100,000 shares; 56,749 shares issued and 56,135 shares outstanding at October 31, 2020; 55,306 shares issued and 54,691 shares outstanding at August 1, 2020
568 553 
Additional paid-in capital572,170 568,736 
Treasury stock at cost(24,231)(24,231)
Accumulated other comprehensive loss(225,722)(237,946)
Retained earnings827,353 837,633 
Total United Natural Foods, Inc. stockholders’ equity1,150,138 1,144,745 
Noncontrolling interests(2,279)(2,487)
Total stockholders’ equity1,147,859 1,142,258 
Total liabilities and stockholders’ equity$7,783,597 $7,586,972 

See accompanying Notes to Condensed Consolidated Financial Statements.
3

UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In thousands, except for per share data) 
 13-Week Period Ended
 
October 31,
2020
November 2,
2019
Net sales$6,672,607 $6,296,612 
Cost of sales5,706,108 5,389,401 
Gross profit966,499 907,211 
Operating expenses900,962 883,688 
Goodwill and asset impairment charges 425,405 
Restructuring, acquisition and integration related expenses16,428 14,672 
Gain on sale of assets(230)(90)
Operating income (loss)49,339 (416,464)
Other expense (income):  
Net periodic benefit income, excluding service cost(17,033)(11,384)
Interest expense, net69,133 49,709 
Other, net(798)(400)
Total other expense, net51,302 37,925 
Loss from continuing operations before income taxes(1,963)(454,389)
Benefit for income taxes(991)(66,955)
Net loss from continuing operations(972)(387,434)
Income from discontinued operations, net of tax1,296 4,026 
Net income (loss) including noncontrolling interests324 (383,408)
Less net income attributable to noncontrolling interests(1,367)(519)
Net loss attributable to United Natural Foods, Inc.$(1,043)$(383,927)
  
Basic (loss) earnings per share:
Continuing operations$(0.04)$(7.29)
Discontinued operations$0.02 $0.08 
Basic loss per share$(0.02)$(7.21)
Diluted (loss) earnings per share:
Continuing operations$(0.04)$(7.29)
Discontinued operations$0.02 $0.08 
Diluted loss per share$(0.02)$(7.21)
Weighted average shares outstanding:
Basic55,171 53,213 
Diluted55,171 53,213 

See accompanying Notes to Condensed Consolidated Financial Statements.
4

UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
(In thousands)
13-Week Period Ended
October 31,
2020
November 2,
2019
Net income (loss) including noncontrolling interests$324 $(383,408)
Other comprehensive income (loss):  
Recognition of pension and other postretirement benefit obligations, net of tax(1)
(206)572 
Recognition of interest rate swap cash flow hedges, net of tax(2)
12,458 (3,681)
Foreign currency translation adjustments405 371 
Recognition of other cash flow derivatives, net of tax(3)
(433) 
Total other comprehensive income (loss)12,224 (2,738)
Less comprehensive income attributable to noncontrolling interests(1,367)(519)
Total comprehensive income (loss) attributable to United Natural Foods, Inc.
$11,181 $(386,665)

(1)Amounts are net of tax (benefit) expense of $(0.1) million and $0.2 million, respectively.
(2)Amounts are net of tax expense (benefit) of $4.3 million and $(1.3) million, respectively.
(3)Amounts are net of tax (benefit) expense of $(0.1) million and $0.0 million, respectively.


See accompanying Notes to Condensed Consolidated Financial Statements.

5

UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
For the 13-week periods ended October 31, 2020 and November 2, 2019
(In thousands)
 Common StockTreasury StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive Loss
Retained EarningsTotal United Natural Foods, Inc.
Stockholders’ Equity
Noncontrolling InterestsTotal Stockholders’ Equity
SharesAmountSharesAmount
Balances at August 1, 202055,306 $553 615 $(24,231)$568,736 $(237,946)$837,633 $1,144,745 $(2,487)$1,142,258 
Cumulative effect of change in accounting principle— — — — — — (9,237)(9,237)— (9,237)
Restricted stock vestings and stock option exercises1,438 15 — — (8,879)— — (8,864)— (8,864)
Share-based compensation— — — — 12,242 — — 12,242 — 12,242 
Other comprehensive income— — — — — 12,224 — 12,224 — 12,224 
Distributions to noncontrolling interests— — — — — — — — (1,159)(1,159)
Proceeds from issuance of common stock, net5 — — — 71 — — 71 — 71 
Net (loss) income— — — — — — (1,043)(1,043)1,367 324 
Balances at October 31, 202056,749 $568 615 $(24,231)$572,170 $(225,722)$827,353 $1,150,138 $(2,279)$1,147,859 
Balances at August 3, 201953,501 $535 615 $(24,231)$530,801 $(108,953)$1,108,890 $1,507,042 $(2,737)$1,504,305 
Cumulative effect of change in accounting principle — — — — — — (2,613)(2,613)— (2,613)
Restricted stock vestings and stock option exercises424 4 — — (823)— — (819)— (819)
Share-based compensation— — — — 1,247 — — 1,247 — 1,247 
Other comprehensive loss— — — — — (2,738)— (2,738)— (2,738)
Distributions to noncontrolling interests— — — — — — — — (1,098)(1,098)
Proceeds from issuance of common stock, net196 2 — — 1,733 — — 1,735 — 1,735 
Net (loss) income— — — — — — (383,927)(383,927)519 (383,408)
Balances at November 2, 201954,121 $541 615 $(24,231)$532,958 $(111,691)$722,350 $1,119,927 $(3,316)$1,116,611 

See accompanying Notes to Condensed Consolidated Financial Statements

6

UNITED NATURAL FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 13-Week Period Ended
(In thousands)October 31,
2020
November 2,
2019
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income (loss) including noncontrolling interests$324 $(383,408)
Income from discontinued operations, net of tax1,296 4,026 
Net loss from continuing operations(972)(387,434)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:  
Depreciation and amortization77,189 75,141 
Share-based compensation12,242 1,247 
Gain on sale of assets(230)(90)
Closed property and other restructuring charges497 3,108 
Goodwill and asset impairment charges 425,405 
Net pension and other postretirement benefit income(17,021)(11,370)
Deferred income tax benefit2,254 (61,762)
LIFO charge6,670 6,873 
Provision for losses on receivables, net(278)13,098 
Loss on debt extinguishment23,750 73 
Non-cash interest expense and other adjustments3,750 3,833 
Changes in operating assets and liabilities(163,033)(202,503)
Net cash used in operating activities of continuing operations(55,182)(134,381)
Net cash used in operating activities of discontinued operations(2,484)(488)
Net cash used in operating activities(57,666)(134,869)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures(41,380)(45,048)
Proceeds from dispositions of assets4,446 1,669 
Other(58)(1,366)
Net cash used in investing activities of continuing operations(36,992)(44,745)
Net cash provided by investing activities of discontinued operations1,486 20,864 
Net cash used in investing activities(35,506)(23,881)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from borrowings of long-term debt500,000 2,050 
Proceeds from borrowings under revolving credit line1,569,088 1,338,446 
Repayments of borrowings under revolving credit line(1,339,100)(1,100,746)
Repayments of long-term debt and finance leases(614,010)(83,510)
Proceeds from the issuance of common stock and exercise of stock options71 1,735 
Payment of employee restricted stock tax withholdings(8,879)(819)
Payments for debt issuance costs(10,582) 
Distributions to noncontrolling interests(1,159)(1,060)
Repayments of other loans(164) 
Net provided by financing activities95,265 156,096 
EFFECT OF EXCHANGE RATE CHANGES ON CASH56 (10)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS2,149 (2,664)
Cash and cash equivalents, at beginning of period47,070 45,267 
Cash and cash equivalents at end of period49,219 42,603 
Less: cash and cash equivalents of discontinued operations(173)(726)
Cash and cash equivalents$49,046 $41,877 
Supplemental disclosures of cash flow information:
Cash paid for interest$44,120 $49,296 
Cash payments (refunds) for federal and state income taxes, net5,728 (28,874)
Leased assets obtained in exchange for new operating lease liabilities70,833 37,020 
Leased assets obtained in exchange for new finance lease liabilities346  
Capital expenditures included in accounts payable$21,399 $33,605 
 See accompanying Notes to Condensed Consolidated Financial Statements.
7

UNITED NATURAL FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


NOTE 1—SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business

United Natural Foods, Inc. and its subsidiaries (the “Company”, “we”, ”us”, “UNFI”, or “our”) is a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services. The Company sells its products primarily throughout the United States and Canada.

Fiscal Year

The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks. References to the first quarters of fiscal 2021 and 2020 relate to the 13-week fiscal quarters ended October 31, 2020 and November 2, 2019, respectively.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Unless otherwise indicated, references to the Condensed Consolidated Statements of Operations, the Condensed Consolidated Balance Sheets and the Notes to the Condensed Consolidated Financial Statements exclude all amounts related to discontinued operations. Refer to Note 16—Discontinued Operations for additional information about the Company’s discontinued operations.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these Condensed Consolidated Financial Statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. However, the results of operations for interim periods may not be indicative of the results that may be expected for a full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 1, 2020 (the “Annual Report”). There were no material changes in significant accounting policies from those described in the Company’s Annual Report.

Discontinued Operations

In the fourth quarter of fiscal 2020, the Company determined it no longer met the held for sale criterion for a probable sale to be completed within 12 months for the Cub Foods business and the majority of the remaining Shoppers locations excluding five Shoppers locations that are held for sale (collectively “Retail”). As a result, the Company revised its Condensed Consolidated Financial Statements to reclassify Retail from discontinued operations to continuing operations. This change in financial statement presentation resulted in the inclusion of Retail’s results of operations, financial position, cash flows and related disclosures within continuing operations. Prior periods presented in these Condensed Consolidated Financial Statements have been conformed to the current period presentation, resulting in Retail being presented in continuing operations for all periods. Retail was acquired as part of the SUPERVALU INC. (“Supervalu”) acquisition in the first quarter of fiscal 2019 on October 22, 2018.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment. The Company funds all intraday bank balance overdrafts during the same business day. Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows. As of October 31, 2020 and August 1, 2020, the Company had net book overdrafts of $275.8 million and $267.8 million, respectively.

Reclassifications

Within the Condensed Consolidated Statements of Cash Flows certain immaterial amounts have been reclassified to conform with current year presentation: prior year amounts for Proceeds from disposal of investments have been combined into a line titled Proceeds from dispositions of assets; and prior year amounts for Payments for long-term investment and Payment of company owned life insurance premiums have been combined into a line titled Other. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

Inventories, Net

Inventories are valued at the lower of cost or market. Substantially all of the Company’s inventories consist of finished goods and a substantial portion of its inventories have a last-in, first-out (“LIFO”) reserve applied. Interim LIFO calculations are based on the Company’s estimates of expected year end inventory levels and costs, as the actual valuation of inventory under the LIFO method is computed at the end of each fiscal year based on the inventory levels and costs at that time. If the first-in, first-out method had been used, Inventories, net would have been higher by approximately $49.9 million and $43.3 million at October 31, 2020 and August 1, 2020, respectively.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“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 the first quarter of 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 Condensed Consolidated Statement 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 Condensed Consolidated Financial Statements.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. This ASU clarifies the accounting treatment for the measurement of credit losses under ASC 236 and provides further clarification on previously issued updates including ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Since the Company adopted ASU 2017-12 in the fourth quarter of fiscal 2018, the amendments in ASU 2019-04 related to clarifications on Accounting for Hedging Activities were adopted by the Company in the first quarter of fiscal 2020, with no impact to Accumulated other comprehensive loss or Retained earnings for fiscal 2020, as the Company did not have separately measured ineffectiveness related to its cash flow hedges. The remaining amendments within ASU 2019-04 were adopted in the first quarter of fiscal 2021 with the adoption of Topic 326. Adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. ASU 2018-05 requires implementation costs incurred by customers in cloud computing arrangements (i.e. hosting arrangements) to be capitalized under the same premises as authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The Company adopted this standard on a prospective basis in the first quarter of fiscal 2021. The Company expects to incur immaterial implementation costs in fiscal 2021. Under this standard, the Company is required to defer these costs and recognize these costs as a service expense over future periods. Adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14,Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans. The Company adopted this guidance in the first quarter of fiscal 2021. The provisions of the new standard do not have any effect on the Company’s interim financial statements but will require additional disclosures in its annual consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions to Topic 740’s general principles. The amendments also improve consistent application and simplifies its application. The Company is required to adopt this guidance in the first quarter of fiscal 2022. The Company is currently reviewing the provisions of the new standard and evaluating its impact on the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

Disaggregation of Revenues

The Company records revenue to six customer channels, which are described below:

Chains, which consists of customer accounts that typically have more than 10 operating stores and exclude stores included within the Supernatural and Other channels defined below;
Independent retailers, which include smaller size accounts and include single store and multiple store locations, but are not classified within Chains above or Other discussed below;
Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of Whole Foods Market;
Retail, which includes our Retail segment, including the Cub Foods business and the majority of the remaining Shoppers locations, excluding five Shoppers locations that are held for sale; and
Other, which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.
Eliminations, which primarily includes the elimination of Wholesale sales to the Retail segment and the elimination of sales from segments included within Other to Wholesale.

9

The following tables detail the Company’s net sales for the periods presented by customer channel for each of its segments. The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly.
 Net Sales for the 13-Week Period Ended
(in millions)October 31, 2020
Customer ChannelWholesaleRetailOtherEliminationsConsolidated
Chains$3,020 $ $ $— $3,020 
Independent retailers1,672   — 1,672 
Supernatural1,214   — 1,214 
Retail 595  — 595 
Other525  56 — 581 
Eliminations— — — (409)(409)
Total$6,431 $595 $56 $(409)$6,673 
Net Sales for the 13-Week Period Ended
(in millions)
November 2, 2019(1)
Customer ChannelWholesaleRetailOtherEliminationsConsolidated
Chains$2,875 $ $ $— $2,875 
Independent retailers1,557   — 1,557 
Supernatural1,111   — 1,111 
Retail 515  — 515 
Other525  65 — 590 
Eliminations— — — (351)(351)
Total$6,068 $515 $65 $(351)$6,297 
(1)In first quarter of fiscal 2021, the presentation of net sales by customer channel has been recast to present the Chains and Other channel exclusive of the intercompany eliminations and present total eliminations as a separate sales channel. There was no impact to the Condensed Consolidated Statements of Operations. UNFI believes this new basis better reflects its channel presentation, as it further aligns with segment presentation and how sales channel information would appear following disposition of Retail, assuming all banners retain a supply agreement. In addition, during the fourth quarter of fiscal 2020, the presentation of net sales by customer channel was recast to be presented on a basis consistent with customer size. International customers other than Canada, and alternative format sales continue to be classified within Other. The main effect of the change was to re-categorize the former Supermarkets and Independents channels, previously classified by the majority of product carried by those customers between conventional and natural products, respectively, to classify those stores by the number of customer locations we supply. There was no impact to the Condensed Consolidated Statements of Operations as a result of the reclassification of customer types. We believe this new basis better reflects the nature and economic risks of cash flows from customers.

The Company serves customers in the United States and Canada, as well as customers located in other countries. However, all of the Company’s revenue is earned in the U.S. and Canada, and international distribution occurs through freight-forwarders. The Company does not have any performance obligations on international shipments subsequent to delivery to the domestic port.

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 $14.4 million and $56.0 million in the first quarters of fiscal 2021 and 2020, respectively.

10

Contract Balances

Accounts and notes receivable are as follows:
(in thousands)October 31, 2020August 1, 2020
Customer accounts receivable$1,207,609 $1,156,694 
Allowance for uncollectible receivables (57,987)(55,928)
Other receivables, net16,324 19,433 
Accounts receivable, net$1,165,946 $1,120,199 
Customer notes receivable, net, included within Prepaid expenses and other current assets
$45,264 $49,268 
Long-term notes receivable, net, included within Other assets$19,497 $25,800 

NOTE 4—RESTRUCTURING, ACQUISITION AND INTEGRATION RELATED EXPENSES

Restructuring, acquisition and integration related expenses incurred were as follows:
13-Week Period Ended
(in thousands)October 31, 2020November 2, 2019
2019 SUPERVALU INC. restructuring expenses
$ $1,837 
Restructuring and integration costs14,760 9,294 
Closed property charges and costs1,668 3,541 
Total$16,428 $14,672 

NOTE 5—GOODWILL AND INTANGIBLE ASSETS

The Company has 5 goodwill reporting units: two of which represent separate operating segments and are aggregated within the Wholesale reportable segment (U.S. Wholesale and Canada Wholesale); one separate Retail operating and reportable segment and two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments. The Canada Wholesale operating segment, which is aggregated with U.S. Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria.

Fiscal 2020 Goodwill Impairment Review

During the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting, which resulted in the requirement to combine the Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit into one U.S. Wholesale reporting unit, and experienced a further sustained decline in market capitalization and enterprise value. As a result of the change in reporting units and the sustained decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Wholesale reporting unit, which included a determination of the fair value of all reporting units.

11

The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 8.5%, which considered observable data about guideline publicly traded companies, an estimated market participant’s expectations about capital structure and risk premiums, including those reflected in the Company’s market capitalization. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company determined that the carrying value of its U.S. Wholesale reporting unit exceeded its fair value by an amount that exceeded its assigned goodwill. As a result, the Company recorded a goodwill impairment charge of $421.5 million in the first quarter of fiscal 2020. The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Condensed Consolidated Statements of Operations. The goodwill impairment charge reflects the impairment of all of the U.S. Wholesale reporting unit’s goodwill.

Goodwill and Intangible Assets Changes

Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
(in thousands)WholesaleOther Total
Goodwill as of August 1, 2020$9,747 
(1)
$9,860 
(2)
$19,607 
Change in foreign exchange rates64  64 
Goodwill as of October 31, 2020$9,811 
(1)
$9,860 
(2)
$19,671 
(1)Amounts are net of accumulated goodwill impairment charges of $716.5 million as of August 1, 2020 and October 31, 2020.
(2)Amounts are net of accumulated goodwill impairment charges of $9.6 million as of August 1, 2020 and October 31, 2020.

Identifiable intangible assets consisted of the following:
October 31, 2020August 1, 2020
(in thousands)Gross Carrying
Amount
Accumulated
Amortization
NetGross Carrying
Amount
Accumulated
Amortization
Net
Amortizing intangible assets:
Customer relationships$1,007,195 $188,006 $819,189 $1,007,118 $172,832 $834,286 
Pharmacy prescription files32,900 9,422 23,478 32,900 7,964 24,936 
Non-compete agreements12,900 12,786 114 12,900 11,500 1,400 
Operating lease intangibles8,193 4,420 3,773 8,193 4,020 4,173 
Trademarks and tradenames83,700 39,486 44,214 83,700 34,708 48,992 
Total amortizing intangible assets1,144,888 254,120 890,768 1,144,811 231,024 913,787 
Indefinite lived intangible assets:      
Trademarks and tradenames55,813  55,813 55,813  55,813 
Intangible assets, net$1,200,701 $254,120 $946,581 $1,200,624 $231,024 $969,600 
Amortization expense was $23.0 million and $22.1 million for the first quarters of fiscal 2021 and 2020, respectively. The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of October 31, 2020 is shown below:
12

Fiscal Year:(In thousands)
Remaining fiscal 2021$55,173 
202272,170 
202371,950 
202472,412 
202570,305 
2026 and thereafter548,758 
$890,768 

NOTE 6—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Recurring Fair Value Measurements

The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
Condensed Consolidated Balance Sheets LocationFair Value at October 31, 2020
(in thousands)Level 1Level 2Level 3
Assets:
Foreign currency derivatives designated as hedging instrumentsPrepaid expenses and other current assets$ $70 $ 
Mutual fundsOther assets$1,635 $ $ 
Liabilities:
Foreign currency derivatives not designated as hedging instrumentsAccrued expenses and other current liabilities$ $15 $ 
Fuel derivatives designated as hedging instrumentsAccrued expenses and other current liabilities$ $699 $ 
Foreign currency derivatives designated as hedging instrumentsAccrued expenses and other current liabilities$ $311 $ 
Interest rate swaps designated as hedging instrumentsAccrued expenses and other current liabilities$ $37,526 $ 
Interest rate swaps designated as hedging instruments