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ACQUISITIONS ACQUISITIONS | 3 Months Ended
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Oct. 27, 2018
Business Combinations [Abstract] |
ACQUISITIONS [Text Block] | ACQUISITIONS Supervalu Acquisition On July 25, 2018, the Company entered into an agreement and plan of merger (the “Merger Agreement”) to acquire all of the outstanding equity securities of Supervalu, which was then the largest publicly traded food wholesaler in the United States. The acquisition of Supervalu diversifies the Company’s customer base, enables cross-selling opportunities, expands market reach and scale, enhances technology, capacity and systems, and is expected to deliver significant synergies and accelerate potential growth. The merger was completed on October 22, 2018. At the effective time of the acquisition, each share of Supervalu common stock, par value $0.01 per share, issued and outstanding, was canceled and converted into the right to receive a cash payment equal to $32.50 per share, without interest. Total consideration related to this acquisition was approximately $2.3 billion, $1.3 billion of which was paid in cash to Supervalu shareholders and $1.0 billion of which was used to satisfy Supervalu’s outstanding debt obligations. The assets and liabilities of Supervalu were recorded in the Company’s consolidated financial statements on a provisional basis at their estimated fair values as of the acquisition date. In conjunction with the Supervalu acquisition, the Company announced its plan to sell the remaining acquired retail operations of Supervalu. Refer to Note 17. “Discontinued Operations” for more information. The following table summarizes the consideration paid, preliminary fair values of the Supervalu assets acquired and liabilities assumed, and the resulting preliminary goodwill. Due to the recent closing of the transaction, as of October 27, 2018, the purchase price allocation was preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.
(in thousands) | As of October 22, 2018
Cash and cash equivalents | $ | 25,102 |
Accounts receivable | 557,680 |
Inventories | 1,162,360 |
Prepaid expenses and other current assets | 66,440 |
Current assets of discontinued operations(1) | 196,615 |
Property, plant and equipment | 1,148,001 |
Goodwill | 347,485 |
Intangible assets | 1,077,541 |
Other assets | 109,445 |
Long-term assets of discontinued operations(1) | 404,301 |
Accounts payable | (967,429 | )
Other current liabilities | (282,692 | )
Current portion of long term debt and capital lease obligations | (579,677 | )
Current liabilities of discontinued operations(1) | (150,611 | )
Long-term debt and capital lease obligations | (179,262 | )
Pension and other postretirement benefit obligations | (234,324 | )
Deferred income taxes | (177,231 | )
Other long-term liabilities assumed | (200,913 | )
Long-term liabilities of discontinued operations(1) | (1,401 | )
Noncontrolling interests | 1,633 |
Total fair value of net assets acquired | 2,323,063 |
Less: cash and cash equivalents acquired(2) | (30,596 | )
Less: unpaid consideration(3) | (18,638 | )
Total consideration for acquisition, less cash acquired and unpaid consideration | $ | 2,273,829 |
(1) | Refer to Note 17. “Discontinued Operations” for additional Condensed Consolidated Balance Sheet information regarding the carrying value of discontinued operations at the end of the first quarter of fiscal 2019, subsequent to the acquisition date.
(2) | Includes cash and cash equivalents acquired attributable to discontinued operations.
(3) | Includes equity consideration for share-based awards that have not yet been paid, which reflects non-cash consideration for the first quarter of fiscal 2019 that will become cash consideration in subsequent periods.
Preliminary goodwill represents the future economic benefits arising largely from the synergies expected from combining the operations of the Company and Supervalu that could not be individually identified and separately recognized. The Company is currently evaluating the tax deductibility of the provisional goodwill amount, however it currently expects a substantial portion of its goodwill to be deductible for income tax purposes. Based on the preliminary valuation, goodwill resulting from the acquisition was primarily attributed to the Company’s wholesale segment, which is presented in Goodwill in the table above. In addition, $45 million preliminary goodwill was attributed to the retail reporting unit within discontinued operations, which the Company attributed to assembled workforce. The following table summarizes the identifiable intangible assets recorded based on provisional valuations. The identifiable intangible assets are expected to be amortized on a straight-line basis over the estimated useful lives indicated. The preliminary fair value of identifiable intangible assets acquired was determined using income approaches. Significant assumptions utilized in the income approach were based on Company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.
(in thousands) | Estimated Useful Life |  | As of October 22, 2018
Customer relationship assets(1) | 11–19 years |  | $ | 985,000 |
Favorable operating leases(1) | 3–25 years |  | 24,455 |
Trade names(2) | 2-9 years |  | 98,000 |
Pharmacy prescription files(3) | 5–7 years |  | 59,700 |
Non-compete agreement(1) | 2 years |  | 13,000 |
Unfavorable operating leases(1) | 2 years |  | (13,623 | )
Total Supervalu finite-lived intangibles acquired |  |  | $ | 1,166,532 |
(1) | Includes continuing operations intangible assets.
(2) | Includes continuing and discontinued operations intangible assets
(3) | Includes discontinued operations intangible assets.
In addition to the acquisition of assets and assumption of liabilities above, the Company also began a restructuring plan which resulted in additional costs and expenses recorded in its Condensed Consolidated Statements of Income for the 13-week period ended October 27, 2018. Refer to Note 5. “Restructuring, Acquisition, and Integration Related Expenses” and Note 11. “Share-Based Awards” for further information. The Company recorded $25.6 million and $6.3 million in pre-tax acquisition and integration costs, respectively, for the 13-week period ended October 27, 2018, which are discussed in Restructuring, acquisition, and integration related expenses in the Company’s Condensed Consolidated Statements of Income. The accompanying Condensed Consolidated Statements of Income include the results of operations of Supervalu since the October 22, 2018 acquisition date through October 27, 2018. Supervalu’s net sales for this time period are reported in Note 3. “Revenue Recognition” for continuing operations and in Note 17. “Discontinued Operations” for discontinued operations. The following table presents unaudited supplemental pro forma consolidated Net sales and Net income from continuing operations based on Supervalu’s historical reporting periods as if the acquisition had occurred as of July 30, 2017:
| 13-Week Period Ended
(in thousands, except per share data) | October 27, 2018(1) |  | October 28, 2017(2)
Net sales | $ | 5,983,208 |  |  | $ | 5,910,484 |
Net loss from continuing operations | $ | (54,716 | ) |  | $ | (53,367 | )
Basic net loss from continuing operations per share | $ | (1.08 | ) |  | $ | (1.05 | )
Diluted net loss from continuing operations per share | $ | (1.08 | ) |  | $ | (1.05 | )
(1) | These pro forma results reflect an additional 12 weeks from Supervalu for the period ended, September 8, 2018.
(2) | These pro forma results reflect Supervalu’s and Associated Grocers of Florida, Inc.’s, which was acquired by Supervalu on December 8, 2017, 13-week periods ended September 16, 2017 and August 5, 2017, respectively.
These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined companies would have been had the acquisitions occurred at the beginning of the periods being presented, nor are they indicative of future results of operations.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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