XML 105 R22.htm IDEA: XBRL DOCUMENT
v3.19.3

INCOME TAXES | 12 Months Ended
--- | ---
Aug. 03, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 15—INCOME TAXES Income Tax (Benefit) Expense For the fiscal year ended August 3, 2019, (loss) income before income taxes consists of ($442.3) million from U.S. operations and $7.0 million from foreign operations. For the fiscal year ended July 28, 2018, income before income taxes consists of $205.3 million from U.S. operations and $7.4 million from foreign operations. For the fiscal year ended July 29, 2017, income before income taxes consists of $211.5 million from U.S. operations and $2.9 million from foreign operations. The total (benefit) provision for income taxes included in the Consolidated Statements of Operations consisted of the following:
(in thousands) | 2019 |  | 2018 |  | 2017
Continuing operations | $ | (84,609 | ) |  | $ | 47,075 |  |  | $ | 84,268 |
Discontinued operations | 21,840 |  |  | — |  |  | — |
Total | $ | (62,769 | ) |  | $ | 47,075 |  |  | $ | 84,268 |
The income tax expense (benefit) in continuing operations for fiscal 2019, 2018 and 2017 was allocated as follows:
(in thousands) | 2019 |  | 2018 |  | 2017
Income tax expense | $ | (84,609 | ) |  | $ | 47,075 |  |  | $ | 84,268 |
Stockholders’ equity, difference between compensation expense for tax purposes and amounts recognized for financial statement purposes | — |  |  | — |  |  | 1,320 |
Other comprehensive income | (33,854 | ) |  | 1,561 |  |  | 3,222 |
Total | $ | (118,463 | ) |  | $ | 48,636 |  |  | $ | 88,810 |
Total federal and state income tax (benefit) expense in continuing operations consists of the following:
(in thousands) | Current |  | Deferred |  | Total
Fiscal 2019 |  |  |  |  |  |  |  |
U.S. Federal | $ | (7,652 | ) |  | $ | (59,528 | ) |  | $ | (67,180 | )
State and Local | 1,351 |  |  | (20,786 | ) |  | (19,435 | )
Foreign | 1,919 |  |  | 87 |  |  | 2,006 |
| $ | (4,382 | ) |  | $ | (80,227 | ) |  | $ | (84,609 | )
Fiscal 2018 |  |  |  |  |  |  |  |
U.S. Federal | $ | 46,210 |  |  | $ | (16,648 | ) |  | $ | 29,562 |
State and Local | 13,310 |  |  | 1,878 |  |  | 15,188 |
Foreign | 2,374 |  |  | (49 | ) |  | 2,325 |
| $ | 61,894 |  |  | $ | (14,819 | ) |  | $ | 47,075 |
Fiscal 2017 |  |  |  |  |  |  |  |
U.S. Federal | $ | 70,669 |  |  | $ | (1,874 | ) |  | $ | 68,795 |
State and Local | 14,653 |  |  | (82 | ) |  | 14,571 |
Foreign | 837 |  |  | 65 |  |  | 902 |
| $ | 86,159 |  |  | $ | (1,891 | ) |  | $ | 84,268 |
Total income tax expense (benefit) in continuing operations was different than the amounts computed by applying the statutory federal income tax rate to income before income taxes because of the following:
(in thousands) | 2019 |  | 2018 |  | 2017
Computed “expected” tax expense | $ | (91,411 | ) |  | $ | 57,359 |  |  | $ | 75,048 |
State and local income tax, net of Federal income tax benefit | (24,124 | ) |  | 10,501 |  |  | 9,694 |
Non-deductible expenses | 5,433 |  |  | 955 |  |  | 1,951 |
Tax effect of share-based compensation | 125 |  |  | 149 |  |  | 29 |
General business credits | (629 | ) |  | (552 | ) |  | (915 | )
Unrecognized tax benefits | (8,146 | ) |  | 618 |  |  | 118 |
Nondeductible goodwill impairment | 32,619 |  |  | — |  |  | — |
Impacts related to the TCJA | — |  |  | (21,719 | ) |  | — |
Other, net | 1,524 |  |  | (236 | ) |  | (1,657 | )
Total income tax expense | $ | (84,609 | ) |  | $ | 47,075 |  |  | $ | 84,268 |
Uncertain Tax Positions A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
(in thousands) | 2019 |  | 2018 |  | 2017
Unrecognized tax benefits at beginning of period | $ | 1,104 |  |  | $ | 478 |  |  | $ | 360 |
Unrecognized tax benefits added during the period | — |  |  | 626 |  |  | 583 |
Unrecognized tax benefits assumed in a business combination | 49,566 |  |  | — |  |  | — |
Decreases in unrecognized tax benefits due to statute expiration and payments | (10,528 | ) |  | — |  |  | (465 | )
Unrecognized tax benefits at end of period | $ | 40,141 |  |  | $ | 1,104 |  |  | $ | 478 |
In addition, the Company has $14 million paid on deposit to various governmental agencies to cover the above liability. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For fiscal 2019, 2018 and 2017, total accrued interest and penalties was $15.6 million, $0.1 million, and $0.1 million, respectively. The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company. As of August 3, 2019, the Company is no longer subject to federal income tax examinations for fiscal years before 2015 and in most states is no longer subject to state income tax examinations for fiscal years before 2008 and 2014 for Supervalu and United Natural Foods, Inc., respectively. Based on the possibility of the closing of pending audits and appeals, or expiration of the statute of limitations, it is reasonably possible that the amount of unrecognized tax benefits will decrease by up to $1 million during the next 12 months. Deferred Tax Assets and Liabilities The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at August 3, 2019 and July 28, 2018 are presented below:
(in thousands) | August 3, 2019 |  | July 28, 2018
Deferred tax assets: |  |  |
Inventories, principally due to additional costs inventoried for tax purposes | $ | 2 |  |  | $ | 7,265 |
Compensation and benefits related | 100,942 |  |  | 25,740 |
Accounts receivable, principally due to allowances for uncollectible accounts | 3,355 |  |  | 4,269 |
Accrued expenses | 12,659 |  |  | 119 |
Net operating loss carryforwards | 44,396 |  |  | 482 |
Non-loss tax carryforwards | 10,143 |  |  | — |
Foreign tax credits | 445 |  |  | 445 |
Intangible assets | 5,869 |  |  | — |
Interest rate swap agreements | 20,518 |  |  | — |
Other deferred tax assets | 2,134 |  |  | 117 |
Total gross deferred tax assets | 200,463 |  |  | 38,437 |
Less valuation allowance | (445 | ) |  | (445 | )
Net deferred tax assets | $ | 200,018 |  |  | $ | 37,992 |
Deferred tax liabilities: |  |  |
Plant and equipment, principally due to differences in depreciation | $ | 117,195 |  |  | $ | 39,978 |
Inventories, principally due to additional costs inventoried for tax purposes | 51,392 |  |  | — |
Intangible assets | 1,016 |  |  | 36,544 |
Interest rate swap agreements |  |  |  | 2,000 |
Accrued expenses |  |  |  | 3,854 |
Other | 370 |  |  | — |
Total deferred tax liabilities | 169,973 |  |  | 82,376 |
Net deferred tax assets (liabilities) | $ | 30,045 |  |  | $ | (44,384 | )
Effects of the Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017. Given the significance of the legislation, the Securities and Exchange Commission (“SEC”) staff issued SAB 118, which allowed registrants to record provisional or estimated amounts concerning TCJA impacts during a one year “measurement period” similar to that used when accounting for business combinations. The measurement period was deemed to end when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. As of August 3, 2019, the Company has closed the measurement period relating to the effects of TCJA. The final amounts the Company has reported may change further only in the event of return to provision adjustments. Tax Credits and Valuation Allowances At August 3, 2019, the Company had net operating loss carryforwards of approximately $213.8 million for federal income tax purposes. Of this amount, approximately $2.3 million of the federal carryforwards are subject to an annual limitation of approximately $0.3 million under Internal Revenue Code Section 382. These Section 382-limited carryforwards expire at various times between fiscal years 2019 and 2027. As of August 3, 2019, the Company has sufficient taxable income in the federal carryback period and anticipates sufficient future taxable income over the periods in which the net operating losses can be utilized. The Company also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the future. Therefore, the ultimate realization of net operating losses federal and state tax purposes appears more likely than not at August 3, 2019 and correspondingly no valuation allowance has been established. The remaining $211.5 million of net operating losses for federal purposes are available for unlimited carryforward (but no carryback) pursuant to provisions of the TCJA permitting taxpayers to carryforward net operating losses indefinitely. As of August 3, 2019, the Company anticipates sufficient taxable income, including the impacts to the Company of limitations on interest deductibility under TCJA provisions, to make utilization of these unlimited net operating losses more likely than not during the indefinite carryforward period, and correspondingly, no valuation allowance has been established. At August 3, 2019, the Company had disallowed interest expense carryforwards of approximately $37.8 million. Internal Revenue Code Section 163(j) as revised under the TCJA, which creates the deduction limitation, permits taxpayers to carryforward any interest disallowed thereunder indefinitely for use in a period in which the interest deductibility limit exceeds the then-current deductible interest. As of August 3, 2019, the Company anticipates sufficient future interest deductibility capacity to make utilization of the disallowed interest expense carryforwards more likely than not during the indefinite carryforward period, and correspondingly, no valuation allowance has been established. The retained earnings of the Company’s non-U.S. subsidiary were subject to deemed U.S. repatriation and taxation during fiscal 2017 pursuant to the TCJA, and existing foreign tax credits were utilized to offset the resulting liability. We have established a deferred tax asset for the remaining U.S. foreign tax credits of $0.4 million. Such credits are offset by a valuation allowance. The Company considers these unremitted earnings to be indefinitely reinvested; therefore, we have not provided a deferred tax liability for any residual tax that may be due upon repatriation of these earnings. Effective Tax Rate Our effective income tax rate for continuing operations was 19.44%, 22.13%, and 39.3% on pre-tax income for fiscal 2019, 2018 and 2017, respectively. The decrease in the rate for fiscal 2019 was primarily driven by purchase accounting adjustments that impacted the goodwill impairment charge adjustment that was recorded in the year. The Company also realized the full benefit of the reduced federal income tax rate due to tax reform during fiscal 2019. Other Under ASU 2016-09, the Company accounts for excess tax benefits or tax deficiencies related to share-based payments in its provision for income taxes as opposed to additional paid-in capital. The Company recognized income tax expense of $1.6 million of income tax expense related to tax deficiencies for share-based payments for fiscal 2019 and $1.1 million of income tax expense related to tax deficiencies for share-based payments for fiscal 2018.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration