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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 29, 2022
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-20221029_g1.jpg
UNITED NATURAL FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
 
05-0376157
(I.R.S. Employer Identification No.)
313 Iron Horse Way, Providence, RI 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 2, 2022 there were 59,831,508 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions, except for par values)
October 29,
2022
July 30,
2022
ASSETS  
Cash and cash equivalents$39 $44 
Accounts receivable, net1,351 1,214 
Inventories, net2,756 2,355 
Prepaid expenses and other current assets214 184 
Total current assets4,360 3,797 
Property and equipment, net1,684 1,690 
Operating lease assets1,187 1,176 
Goodwill20 20 
Intangible assets, net801 819 
Other long-term assets147 126 
Total assets$8,199 $7,628 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Accounts payable$1,924 $1,742 
Accrued expenses and other current liabilities258 260 
Accrued compensation and benefits199 232 
Current portion of operating lease liabilities157 156 
Current portion of long-term debt and finance lease liabilities27 27 
Total current liabilities2,565 2,417 
Long-term debt2,485 2,109 
Long-term operating lease liabilities1,078 1,067 
Long-term finance lease liabilities20 23 
Pension and other postretirement benefit obligations18 18 
Deferred income taxes17 8 
Other long-term liabilities181 194 
Total liabilities6,364 5,836 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding
  
Common stock, $0.01 par value, authorized 100.0 shares; 60.9 shares issued and 59.9 shares outstanding at October 29, 2022; 58.9 shares issued and 58.3 shares outstanding at July 30, 2022
1 1 
Additional paid-in capital583 608 
Treasury stock at cost(36)(24)
Accumulated other comprehensive loss(5)(20)
Retained earnings1,292 1,226 
Total United Natural Foods, Inc. stockholders’ equity1,835 1,791 
Noncontrolling interests 1 
Total stockholders’ equity1,835 1,792 
Total liabilities and stockholders’ equity$8,199 $7,628 

See accompanying Notes to Condensed Consolidated Financial Statements.
3

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except for per share data) 
 13-Week Period Ended
 
October 29,
2022
October 30,
2021
Net sales$7,532 $6,997 
Cost of sales6,436 5,955 
Gross profit1,096 1,042 
Operating expenses1,000 932 
Restructuring, acquisition and integration related expenses2 3 
Gain on sale of assets(5) 
Operating income99 107 
Net periodic benefit income, excluding service cost(7)(10)
Interest expense, net35 40 
Other (income) expense, net(1)1 
Income before income taxes72 76 
Provision (benefit) for income taxes5 (1)
Net income including noncontrolling interests67 77 
Less net income attributable to noncontrolling interests(1)(1)
Net income attributable to United Natural Foods, Inc.$66 $76 
Basic earnings per share
$1.12 $1.34 
Diluted earnings per share
$1.07 $1.25 
Weighted average shares outstanding:
Basic58.8 57.0 
Diluted61.6 61.1 

See accompanying Notes to Condensed Consolidated Financial Statements.
4

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in millions)
13-Week Period Ended
October 29,
2022
October 30,
2021
Net income including noncontrolling interests$67 $77 
Other comprehensive income (loss): 
Recognition of pension and other postretirement benefit obligations, net of tax 1 
Recognition of interest rate swap cash flow hedges, net of tax(1)
18 13 
Foreign currency translation adjustments(3) 
Recognition of other cash flow derivatives, net of tax 1 
Total other comprehensive income15 15 
Less comprehensive income attributable to noncontrolling interests(1)(1)
Total comprehensive income attributable to United Natural Foods, Inc.$81 $91 

(1)Amounts are net of tax expense of $6 million and $4 million for the first quarters of fiscal 2023 and fiscal 2022, respectively.



See accompanying Notes to Condensed Consolidated Financial Statements.

5


UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
For the 13-week periods ended October 29, 2022 and October 30, 2021
(in millions)
 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 July 30, 202258.9 $1 0.6 $(24)$608 $(20)$1,226 $1,791 $1 $1,792 
Restricted stock vestings 2.0 — — — (37)— — (37)— (37)
Share-based compensation— — — — 12 — — 12 — 12 
Repurchases of common stock— — 0.4 (12)— — — (12)— (12)
Other comprehensive income— — — — — 15 — 15 — 15 
Distributions to noncontrolling interests— — — — — — — — (2)(2)
Net income— — — — — — 66 66 1 67 
Balances at October 29, 202260.9 $1 1.0 $(36)$583 $(5)$1,292 $1,835 $ $1,835 
Balances at July 31, 202157.0 $1 0.6 $(24)$599 $(39)$978 $1,515 $(1)$1,514 
Restricted stock vestings 1.7 — — — (33)— — (33)— (33)
Share-based compensation— — — — 11 — — 11 — 11 
Other comprehensive income— — — — — 15 — 15 — 15 
Distributions to noncontrolling interests— — — — — — — — (2)(2)
Proceeds from issuance of common stock, net— — — — 5 — — 5 — 5 
Net income— — — — — — 76 76 1 77 
Balances at October 30, 202158.7 $1 0.6 $(24)$582 $(24)$1,054 $1,589 $(2)$1,587 

See accompanying Notes to Condensed Consolidated Financial Statements.

6

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 13-Week Period Ended
(in millions)October 29,
2022
October 30,
2021
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income including noncontrolling interests$67 $77 
Adjustments to reconcile net income to net cash used in operating activities:
  
Depreciation and amortization74 69 
Share-based compensation12 11 
Gain on sale of assets(5) 
Closed property and other restructuring charges 1 
Net pension and other postretirement benefit income(7)(10)
Deferred income tax expense2  
LIFO charge21 11 
Provision for losses on receivables 1 
Non-cash interest expense and other adjustments3 5 
Changes in operating assets and liabilities(429)(246)
Net cash used in operating activities
(262)(81)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Payments for capital expenditures(67)(56)
Proceeds from dispositions of assets7 1 
Payments for investments(1)(26)
Net cash used in investing activities
(61)(81)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from borrowings under revolving credit line1,206 1,238 
Repayments of borrowings under revolving credit line(829)(1,028)
Repayments of long-term debt and finance leases(6)(13)
Repurchases of common stock(12)— 
Proceeds from the issuance of common stock and exercise of stock options 5 
Payments of employee restricted stock tax withholdings(37)(33)
Distributions to noncontrolling interests(2)(2)
Repayments of other loans(1) 
Net cash provided by financing activities
319 167 
EFFECT OF EXCHANGE RATE ON CASH(1) 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(5)5 
Cash and cash equivalents, at beginning of period44 41 
Cash and cash equivalents, at end of period$39 $46 
Supplemental disclosures of cash flow information:
Cash paid for interest$40 $46 
Cash (refunds) for federal, state, and foreign income taxes, net$(1)$(1)
Leased assets obtained in exchange for new operating lease liabilities$57 $71 
Additions of property and equipment included in Accounts payable$26 $17 

 See accompanying Notes to Condensed Consolidated Financial Statements.
7

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


NOTE 1—SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business

United Natural Foods, Inc. and its subsidiaries (the “Company” or “UNFI”) is a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services to retailers. 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 quarter of fiscal 2023 and 2022 relate to the 13-week fiscal quarters ended October 29, 2022 and October 30, 2021, 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.

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 July 30, 2022 (the “Annual Report”). There were no material changes in significant accounting policies from those described in the Annual Report.

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.

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 29, 2022 and July 30, 2022, the Company had net book overdrafts of $305 million and $266 million, respectively.

Reclassifications

Within the Condensed Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current period presentation. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

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Inventories, Net

Substantially all of the Company’s inventories consist of finished goods. To value discrete inventory items at lower of cost or net realizable value before application of any last-in, first-out (“LIFO”) reserve, the Company utilizes the weighted average cost method, perpetual cost method, the retail inventory method and the replacement cost method. Allowances for vendor funds and cash discounts received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales upon the sale of the related products. Inventory quantities are evaluated throughout each fiscal year based on actual physical counts in the Company’s distribution facilities and stores. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the end of each fiscal year. The LIFO reserve was approximately $246 million and $225 million as of October 29, 2022 and July 30, 2022, respectively, which is recorded within Inventories, net on the Condensed Consolidated Balance Sheets.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update also require additional disclosures for equity securities subject to contractual sale restrictions. The Company is required to adopt this guidance in the first quarter of fiscal 2025. The Company is in the process of reviewing the provisions of the new standard but does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

Disaggregation of Revenues

The Company records revenue to five customer channels within Net sales, which are described below:

Chains, which consists of customer accounts that typically have more than 10 operating stores and excludes stores included within the Supernatural and Other channels defined below;
Independent retailers, which includes smaller size accounts, including single store and multiple store locations, and group purchasing entities that are not classified within Chains above or Other discussed below;
Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of one customer;
Retail, which reflects the Company’s Retail segment, including Cub Foods and Shoppers stores, and
Other, which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.


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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 29, 2022
Customer ChannelWholesaleRetailOther
Eliminations(1)
Consolidated
Chains$3,224 $ $ $— $3,224 
Independent retailers1,947   — 1,947 
Supernatural1,513   — 1,513 
Retail 613  — 613 
Other575  60 — 635 
Eliminations— — — (400)(400)
Total$7,259 $613 $60 $(400)$7,532 
Net Sales for the 13-Week Period Ended
(in millions)
October 30, 2021
Customer ChannelWholesaleRetailOther
Eliminations(1)
Consolidated
Chains$3,082 $ $ $— $3,082 
Independent retailers1,750   — 1,750 
Supernatural1,378   — 1,378 
Retail 602  — 602 
Other524  56 — 580 
Eliminations— — — (395)(395)
Total$6,734 $602 $56 $(395)$6,997 
(1)Eliminations primarily includes the net sales elimination of Wholesale to Retail sales and the elimination of sales from segments included within Other to Wholesale.

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 United States and Canada, and international distribution occurs through freight-forwarders. The Company does not have any performance obligations on international shipments subsequent to delivery to the domestic port.

Accounts and Notes Receivable Balances

Accounts and notes receivable are as follows:
(in millions)October 29, 2022July 30, 2022
Customer accounts receivable$1,340 $1,213 
Allowance for uncollectible receivables (15)(18)
Other receivables, net26 19 
Accounts receivable, net$1,351 $1,214 
Notes receivable, net, included within Prepaid expenses and other current assets
$5 $6 
Long-term notes receivable, net, included within Other long-term assets
$11 $12 

10

Subsequent to the end of the first quarter of fiscal 2023, the Company entered into a purchase agreement with a third-party financial institution for the sale of certain accounts receivable up to $300 million, subject to eligibility criteria established by the financial institution. The Company initially sold $253 million of accounts receivable under this agreement without recourse, in exchange for cash less a discount, as specified in the agreement. After the initial sale, the Company does not retain any interest in the receivables. The Company’s continuing involvement in transferred receivables is limited to servicing the receivables. Pursuant to the terms of the agreement, certain receivables are sold to the third-party financial institution on a revolving basis, subject to certain limitations.


NOTE 4—GOODWILL AND INTANGIBLE ASSETS, NET

Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
(in millions)WholesaleOther Total
Goodwill as of July 30, 2022
$10 
(1)
$10 
(2)
$20 
Change in foreign exchange rates   
Goodwill as of October 29, 2022
$10 
(1)
$10 
(2)
$20 
(1)Wholesale amounts are net of accumulated goodwill impairment charges of $717 million as of July 30, 2022 and October 29, 2022.
(2)Other amounts are net of accumulated goodwill impairment charges of $10 million as of July 30, 2022 and October 29, 2022.

Identifiable intangible assets, net consisted of the following:
October 29, 2022July 30, 2022
(in millions)Gross Carrying
Amount
Accumulated
Amortization
NetGross Carrying
Amount
Accumulated
Amortization
Net
Amortizing intangible assets:
Customer relationships$1,007 $309 $698 $1,007 $294 $713 
Pharmacy prescription files33 19 14 33 18 15 
Operating lease intangibles6 4 2 6 4 2 
Trademarks and tradenames84 53 31 84 51 33 
Total amortizing intangible assets1,130 385 745 1,130 367 763 
Indefinite lived intangible assets:      
Trademarks and tradenames56  56 56  56 
Intangibles assets, net$1,186 $385 $801 $1,186 $367 $819 
Amortization expense was $18 million and $18 million for the first quarters of fiscal 2023 and 2022, respectively. The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of October 29, 2022 is as shown below:
Fiscal Year:(in millions)
Remaining fiscal 2023$54 
202472 
202570 
202666 
202763 
Thereafter420 
$745 



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NOTE 5—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Recurring Fair Value Measurements

The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:
Condensed Consolidated Balance Sheets LocationFair Value at October 29, 2022
(in millions)Level 1Level 2Level 3
Assets:
Fuel derivatives designated as hedging instrumentsPrepaid expenses and other current assets$ $2 $ 
Foreign currency derivatices designated as hedging instrumentsPrepaid expenses and other current assets$ $2 $ 
Interest rate swaps designated as hedging instrumentsPrepaid expenses and other current assets$ $16 $ 
Interest rate swaps designated as hedging instrumentsOther long-term assets$ $11 $ 
Liabilities:
Fuel derivatives designated as hedging instrumentsAccrued expenses and other current liabilities$ $1 $ 

Condensed Consolidated Balance Sheets LocationFair Value at July 30, 2022
(in millions)Level 1Level 2Level 3
Assets:
Fuel derivatives designated as hedging instrumentsPrepaid expenses and other current assets$ $3 $ 
Interest rate swaps designated as hedging instrumentsPrepaid expenses and other current assets$ $3 $ 
Interest rate swaps designated as hedging instrumentsOther long-term assets$ $1 $ 
Liabilities:
Interest rate swaps designated as hedging instrumentsOther long-term liabilities$ $2 $ 

Interest Rate Swap Contracts

The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, SOFR swap rates and credit default swap rates. As of October 29, 2022, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $14 million; a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately $14 million. Refer to Note 6—Derivatives for further information on interest rate swap contracts.

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Fair Value Estimates

For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities. The fair value of notes receivable is estimated by using a discounted cash flow approach prior to consideration for uncollectible amounts and is calculated by applying a market rate for similar instruments using Level 3 inputs. The fair value of debt is estimated based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs. In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs.
 October 29, 2022July 30, 2022
(in millions)Carrying ValueFair ValueCarrying ValueFair Value
Notes receivable, including current portion$21 $14 $23 $17 
Long-term debt, including current portion$2,499 $2,507 $2,123 $2,153 

NOTE 6—DERIVATIVES

Management of Interest Rate Risk

The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap contracts are designated as cash flow hedges as of October 29, 2022. Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets. Refer to Note 5—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

Details of active swap contracts as of October 29, 2022, which are all pay fixed and receive floating, are as follows:
Effective DateSwap MaturityNotional Value (in millions)Pay Fixed RateReceive Floating RateFloating Rate Reset Terms
October 26, 2018October 31, 2022100 2.8170 %One-Month Term SOFRMonthly
January 11, 2019October 31, 202250 2.3770 %One-Month Term SOFRMonthly
January 23, 2019October 31, 202250 2.2740 %One-Month Term SOFRMonthly
November 16, 2018March 31, 2023150 2.7770 %One-Month Term SOFRMonthly
January 23, 2019March 31, 202350 2.4245 %One-Month Term SOFRMonthly
November 30, 2018September 30, 202350 2.6980 %One-Month Term SOFRMonthly
October 26, 2018October 31, 2023100 2.7880 %One-Month Term SOFRMonthly
January 11, 2019March 28, 2024100 2.3600 %One-Month Term SOFRMonthly
January 23, 2019March 28, 2024100 2.4250 %One-Month Term SOFRMonthly
November 30, 2018October 31, 2024100 2.7385 %One-Month Term SOFRMonthly
January 11, 2019October 31, 2024100 2.4025 %One-Month Term SOFRMonthly
January 24, 2019October 31, 202450 2.4090 %One-Month Term SOFRMonthly
October 26, 2018October 22, 202550 2.8725 %One-Month Term SOFRMonthly
November 16, 2018October 22, 202550 2.8750 %One-Month Term SOFRMonthly
November 16, 2018October 22, 202550 2.8380 %One-Month Term SOFRMonthly
January 24, 2019October 22, 202550 2.4750 %One-Month Term SOFRMonthly
$1,200 

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair
13

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

The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pre-tax basis, are as follows:
13-Week Period Ended
October 29, 2022October 30, 2021
(in millions)Interest expense, net
Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded
$35 $40 
Loss on cash flow hedging relationships:
Loss reclassified from comprehensive income into earnings$ $(11)

NOTE 7—LONG-TERM DEBT

The Company’s long-term debt consisted of the following:
(in millions)
Average Interest Rate at
October 29, 2022
Fiscal Maturity YearOctober 29,
2022
July 30,
2022
Term Loan Facility6.40%2026$800 $800 
ABL Credit Facility4.64%20271,217 840 
Senior Notes6.75%2029500 500 
Other secured loans5.06%2024-202520 23 
Debt issuance costs, net(28)(29)
Original issue discount on debt(10)(11)
Long-term debt, including current portion2,499 2,123 
Less: current portion of long-term debt(14)(14)
Long-term debt$2,485 $2,109 

Senior Notes

On October 22, 2020, the Company issued $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”). The Senior Notes, which are presented net of debt issuance costs of $7 million as of October 29, 2022 and July 30, 2022 in the Condensed Consolidated Balance Sheets, are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility (defined below).

ABL Credit Facility

The revolving credit agreement dated as of June 3, 2022 (the “ABL Loan Agreement”), by and among the Company (the “U.S. Borrower”), UNFI Canada (the “Canadian Borrower” and, together with the U.S. Borrower, the “Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Wells Fargo Bank, N.A. as administrative agent for the ABL Lenders, and the other parties thereto, provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”), of which up to $2,600 million is available to the Borrowers, including a U.S. Dollar equivalent of $100 million sublimit for borrowings in Canadian dollars. Under the ABL Loan Agreement, the Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $750 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding. There is no assurance that additional funding would be available.

14

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

Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90% of eligible accounts receivable, plus 90% of eligible credit card receivables, plus 90% to 92.5% of the net orderly liquidation value of eligible inventory, plus 90% of eligible pharmacy receivables, plus certain pharmacy prescription files availability to the Borrowers, after adjusting for customary reserves, but at no time shall exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $2,600 million) or the Borrowing Base.

The assets included in the Condensed Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis, and the unused credit and fees under the ABL Credit Facility, were as follows:
Assets securing the ABL Credit Facility (in millions):October 29,
2022
July 30,
2022
Certain inventory assets included in Inventories, net$2,153 $1,789