BENEFIT PLANS

12 Months Ended

Jul. 29, 2023

Retirement Benefits [Abstract]

BENEFIT PLANS

NOTE 13—BENEFIT PLANS

The Company’s employees who participate are covered by various contributory and non-contributory pension, 401(k) plans, and other health and welfare benefits. The Company’s primary defined benefit pension plans are the SUPERVALU INC. Retirement Plans and certain supplemental executive retirement plans. These plans were closed to new participants and service crediting ended for all participants as of December 31, 2007. Pay increases were reflected in the amount of benefits accrued in these plans until December 31, 2012. Approximately 65% of the 10,667 union employees participate in multiemployer defined benefit pension plans under collective bargaining agreements. The remaining either participate in plans sponsored by the Company or are not currently eligible to participate in a retirement plan. In addition to sponsoring both defined benefit and defined contribution pension plans, the Company provides healthcare and life insurance benefits for eligible retired employees under postretirement benefit plans. The Company also provides certain health and welfare benefits, including short-term and long-term disability benefits, to inactive disabled employees prior to retirement. The terms of the postretirement benefit plans vary based on employment history, age and date of retirement. For many retirees, the Company provides a fixed dollar contribution and retirees pay contributions to fund the remaining cost.

Defined Benefit Pension and Other Postretirement Benefit Plans

For the defined benefit pension plans, the accumulated benefit obligation is equal to the projected benefit obligation. The benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans and other postretirement benefit plans consisted of the following:

	2023				2022
(in millions)	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Changes in Benefit Obligation
Benefit obligation at beginning of year	$	1,706	$	12	$	2,093	$	18
Actuarial gain	(121)		(1)		(322)		(4)
Benefits paid	(103)		—		(103)		(1)
Interest cost	63		—		38		—
Settlements paid	—		—		—		(1)
Benefit obligation at end of year	1,545		11		1,706		12
Changes in Plan Assets
Fair value of plan assets at beginning of year	1,716		—		2,118		—
Actual return on plan assets	(55)		—		(300)		—
Benefits paid	(103)		(1)		(103)		(1)
Settlements paid	—		—		—		(1)
Employer contributions	1		1		1		2
Fair value of plan assets at end of year	1,559		—		1,716		—
Funded (unfunded) status at end of year	$	14	$	(11)	$	10	$	(12)

The actuarial gain on projected pension benefit obligations in fiscal 2023 was primarily the result of a 81 basis points increase in the discount rate on the SUPERVALU INC. Retirement Plan. The actuarial gain on projected pension benefit obligations in fiscal 2022 was primarily the result of a 158 basis points increase in the discount rate on the SUPERVALU INC. Retirement Plan, and updated mortality assumptions.

The funded status of our pension benefits contains plans with individually funded and underfunded statuses. Our other postretirement benefits consist of one plan as shown above. The following table provides the funded status of individual projected pension benefit plan obligations and the fair value of plan assets for these plans:

(in millions)	SUPERVALU INC. Retirement Plan		Other Pension Plan		Total Pension Benefits
July 29, 2023:
Fair value of plan assets at end of year	$	1,559	$	—	$	1,559
Benefit obligation at end of year	(1,539)		(6)		(1,545)
Funded (unfunded) status at end of year	$	20	$	(6)	$	14
	SUPERVALU INC. Retirement Plan		Other Pension Plan		Total Pension Benefits
July 30, 2022:
Fair value of plan assets at end of year	$	1,716	$	—	$	1,716
Benefit obligation at end of year	(1,698)		(8)		(1,706)
Funded (unfunded) status at end of year	$	18	$	(8)	$	10

Net periodic benefit (income) cost and other changes in plan assets and benefit obligations recognized consist of the following:

	2023				2022				2021
(in millions)	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Net Periodic Benefit (Income) Cost
Expected return on plan assets	$	(95)	$	—	$	(82)	$	—	$	(104)	$	—
Interest cost	63		—		38		—		37		—
Amortization of prior service cost (credit)	—		3		—		3		—		(1)
Amortization of net actuarial loss (gain)	—		—		1		—		1		(1)
Settlement gain	—		—		—		—		—		(17)
Net periodic benefit (income) cost	(32)		3		(43)		3		(66)		(19)
Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Loss) Income
Net actuarial loss (gain)	29		(1)		59		(3)		(225)		(8)
Prior service cost	—		—		—		—		—		25
Amortization of prior service (cost) benefit	—		(3)		—		(3)		—		3
Amortization of net actuarial (gain) loss	—		—		—		—		(1)		1
Total expense (benefit) recognized in Other comprehensive (loss) income	29		(4)		59		(6)		(226)		21
Total (benefit) expense recognized in net periodic benefit cost (income) and Other comprehensive (loss) income	$	(3)	$	(1)	$	16	$	(3)	$	(292)	$	2

Amounts recognized in the Consolidated Balance Sheets as of July 29, 2023 and July 30, 2022 consist of the following:

	July 29, 2023				July 30, 2022
(in millions)	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Other long-term assets	$	20	$	—	$	18	$	—
Pension and other postretirement benefit obligations	(6)		(10)		(6)		(12)
Accrued compensation and benefits	—		(1)		(2)		—
Total	$	14	$	(11)	$	10	$	(12)

Benefit Plan Assumptions

Weighted average assumptions used to determine benefit obligations and net periodic benefit (income) cost consisted of the following:

	2023		2022		2021
Benefit obligation assumptions:
Discount rate	5.01% - 5.03%		4.20% - 4.26%		2.62% - 2.75%
Net periodic benefit (income) cost assumptions:
Discount rate	4.20% - 4.26%		2.62% - 2.75%		1.17% - 2.27%
Rate of compensation increase	—		—		—
Expected return on plan assets(1)	6.00	%	4.25% - 4.50%		1.00% - 5.50%
Interest credit	5.00	%	5.00	%	5.00	%

(1)    Expected return on plan assets is estimated by utilizing forward-looking, long-term return, risk and correlation assumptions developed and updated annually by the Company. These assumptions are weighted by the actual or target allocation to each underlying asset class represented in the pension plan master trust. The Company also assesses the expected long-term return on plan assets assumption by comparison to long-term historical performance on an asset class basis to ensure the assumption is reasonable. Long-term trends are also evaluated relative to market factors such as inflation, interest rates, and fiscal and monetary policies in order to assess the capital market assumptions.

The Company reviews and selects the discount rate to be used in connection with measuring its pension and other postretirement benefit obligations annually. In determining the discount rate, the Company uses the yield on corporate bonds (rated AA or better) that coincides with the cash flows of the plans’ estimated benefit payouts. The model uses a yield curve approach to discount each cash flow of the liability stream at an interest rate specifically applicable to the timing of each respective cash flow. The model totals the present values of all cash flows and calculates the equivalent weighted average discount rate by imputing the singular interest rate that equates the total present value with the stream of future cash flows. This resulting weighted average discount rate is then used in evaluating the final discount rate to be used.

For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation before age 65 was 7.10% as of July 29, 2023. The assumed healthcare cost trend rate for retirees before age 65 will decrease each year through fiscal 2030, until it reaches the ultimate trend rate of 4.50%. For those retirees whose health plans provide for variable employer contributions, the assumed healthcare cost trend rate used in measuring the accumulated postretirement benefit obligation after age 65 was 6.20% as of July 29, 2023.

Pension Plan Assets

Pension plan assets are held in a master trust and invested in separately managed accounts and other commingled investment vehicles holding fixed income securities, domestic equity securities, private equity securities, international equity securities and real estate securities. The Company employs a liability hedging approach, targeting a level of risk commensurate with keeping pace with the growth of plan liabilities. Risk is managed through diversification across asset classes, multiple investment manager portfolios and both general and portfolio-specific investment guidelines. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and the Company’s financial condition. This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed” strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plan’s active investment strategies employ multiple investment management firms. Managers within each asset class cover a range of investment styles and approaches and are combined in a way that controls for capitalization, and style biases (equities) and interest rate exposures (fixed income) versus benchmark indices. Monitoring activities to evaluate performance against targets and measure investment risk take place on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews.

The asset allocation targets and the actual allocation of pension plan assets are as follows:

Asset Category	Target		2023		2022
Fixed income	85.0	%	85.1	%	85.0	%
Domestic equity	5.5	%	5.3	%	5.4	%
Private equity	4.0	%	4.0	%	5.3	%
International equity	3.5	%	3.5	%	2.3	%
Real estate	2.0	%	2.1	%	2.0	%
Total	100.0	%	100.0	%	100.0	%

The following is a description of the valuation methodologies used for investments measured at fair value:

Common stock - Valued at the closing price reported in the active market in which the individual securities are traded.

Common collective trusts - Investments in common/collective trust funds are stated at net asset value (“NAV”) as determined by the issuer of the common/collective trust funds and is based on the fair value of the underlying investments held by the fund less its liabilities. The majority of the common/collective trust funds have a readily determinable fair value and are classified as Level 2. Other investments in common/collective trust funds determine NAV on a less frequent basis and/or have redemption restrictions. For these investments, NAV is used as a practical expedient to estimate fair value.

Corporate bonds - Valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the fair value is based upon an industry valuation model, which maximizes observable inputs.

Government securities - Certain government securities are valued at the closing price reported in the active market in which the security is traded. Other government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

Mortgage backed securities - Valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar securities, the fair value is based upon an industry valuation model, which maximizes observable inputs.

Private equity and real estate partnerships - Valued based on NAV provided by the investment manager, updated for any subsequent partnership interests’ cash flows or expected changes in fair value. The NAV is used as a practical expedient to estimate fair value.

Other - Consists primarily of options, futures, and money market investments priced at $1 per unit.

The valuation methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement.

The fair value of assets held in the master trust for defined benefit pension plans as of July 29, 2023, by asset category, consisted of the following (in millions):

	Level 1		Level 2		Level 3		Measured at NAV as a Practical Expedient		Total
Common stock	$	46	$	—	$	—	$	—	$	46
Common collective trusts	—		541		—		—		541
Corporate bonds	—		582		—		—		582
Government securities	—		161		—		—		161
Mortgage-backed securities	—		30		—		—		30
Other	100		3		—		—		103
Private equity and real estate partnerships	—		—		—		96		96
Total plan assets at fair value	$	146	$	1,317	$	—	$	96	$	1,559

The fair value of assets held in the master trust for defined benefit pension plans as of July 30, 2022, by asset category, consisted of the following (in millions):

	Level 1		Level 2		Level 3		Measured at NAV as a Practical Expedient		Total
Common stock	$	42	$	—	$	—	$	—	$	42
Common collective trusts	—		949		—		3		952
Corporate bonds	—		390		—		—		390
Government securities	—		175		—		—		175
Mortgage-backed securities	—		28		—		—		28
Other	12		2		—		—		14
Private equity and real estate partnerships	—		—		—		115		115
Total plan assets at fair value	$	54	$	1,544	$	—	$	118	$	1,716

Contributions

No minimum pension contributions were required to be made under the SUPERVALU INC. Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal 2023. The Company expects to contribute approximately $1 million to its other defined benefit pension plans and $1 million to its postretirement benefit plans in fiscal 2024.

The Company funds its defined benefit pension plans based on the minimum contribution required under the Internal Revenue Code, ERISA, the Pension Protection Act of 2006 and other applicable laws, as determined by our external actuarial consultant, and additional contributions made at its discretion. The Company may accelerate contributions or undertake contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing needs or other factors as may be applicable. The Company assesses the relative attractiveness of the use of cash including such factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required Pension Benefit Guaranty Corporation variable rate premiums or the ability to achieve exemption from participant notices of underfunding.

Estimated Future Benefit Payments

The estimated future benefit payments to be made from our defined benefit pension and other postretirement benefit plans, which reflect expected future service, are as follows (in millions):

Fiscal Year	Pension Benefits		Other Postretirement Benefits
2024	$	124	$	1
2025	117		1
2026	117		1
2027	116		1
2028	114		1
Years 2029-2033	565		4

Defined Contribution Plan

The Company sponsors a defined contribution and profit sharing plan pursuant to Section 401(k) of the Internal Revenue Code. Employees may contribute a portion of their eligible compensation to the plan on a pre-tax or after-tax Roth basis. The Company matches a portion of certain employee contributions by contributing cash into the investment options selected by the employees. The total amount contributed by the Company to the plan is determined by plan provisions or at the Company’s discretion. Total employer contribution expenses for this plan were $30 million, $29 million and $27 million for fiscal 2023, 2022 and 2021, respectively.

Post-Employment Benefits

The Company recognizes an obligation for benefits provided to former or inactive employees. The Company is self-insured for certain disability plan programs, which comprise the primary benefits paid to inactive employees prior to retirement.

As of July 29, 2023 there was $4 million of Accrued compensation and benefits and $4 million of Other long-term liabilities recognized in the Consolidated Balance Sheets. As of July 30, 2022 there was $4 million of Accrued compensation and benefits and $5 million of Other long-term liabilities.

Multiemployer Pension Plans

The Company contributes to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees typically are responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration. Trustees are appointed in equal number by employers and the unions that are parties to the relevant collective bargaining agreements.

Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP. The risks of participating in these multiemployer plans are different from the risks associated with single-employer plans in the following respects:

•Assets contributed to the multiemployer plan by one employer are held in trust and may be used to provide benefits to employees of other participating employers.

•If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

•If the Company chose to stop participating in some multiemployer plans, or make market exits or closures or otherwise have participation in the plan drop below certain levels, it may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans is outlined in the table below. The EIN-Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act (“PPA”) zone status available in 2022 relates to the plans’ most recent fiscal year-end. The zone status is based on information that we received from the plan and is annually certified by each plan’s actuary. Among other factors, deep red zone status or critical and declining plans are generally less than 65% funded and are projected to become insolvent within 15 to 20 years, red zone status plans are generally less than 65% funded and are considered in critical status, yellow zone status plans are less than 80% funded and are considered in endangered or seriously endangered status, and green zone plans are at least 80% funded. The FIP/RP Status Pending/Implemented column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented by the trustees of each plan. The American Rescue Plan Act of 2021 (“ARPA”) created the Special Financial Assistance (“SFA”) Program to permit financially troubled multiemployer plans to apply for a cash payment intended to keep plans solvent and able to pay benefits through 2051. As July 29, 2023, certain plans in which the Company participates have applied for or received SFA, and other plans in which the Company participates are expected to apply.

Certain plans have been aggregated in the All Other Multiemployer Pension Plans line in the following table, as the contributions to each of these plans are not individually material. None of our collective bargaining agreements require that a minimum contribution be made to these plans.

At the date the financial statements were issued, Form 5500 for these plans were generally not available for the plan years ending in 2022.

The following table contains information about the Company’s significant multiemployer plans from which the Company has not withdrawn (in millions):

			Pension Protection Act Zone Status		Contributions
Pension Fund	EIN-Pension Plan Number	Plan Month/Day End Date	2022	FIP/RP Status Pending/Implemented	2023		2022		2021		Surcharges Imposed(1)
Minneapolis Food Distributing Industry Pension Plan	416047047-001	12/31	Green	No	$	12	$	11	$	12	No
Minneapolis Retail Meat Cutters and Food Handlers Pension Fund	410905139-001	2/28	Red	Implemented	13		10		10		No
Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Plan	832598425-001	12/31	NA	NA	3		4		4		NA
Central States, Southeast & Southwest Areas Pension Plan	366044243-001	12/31	Deep Red	Implemented	5		5		6		No
UFCW Unions and Participating Employers Pension Plan	526117495-002	12/31	Red	Implemented	3		3		3		No
Western Conference of Teamsters Pension Plan	916145047-001	12/31	Green	No	10		10		10		No
UFCW Unions and Employers Pension Plan(2)	396069053-001	NA	NA	NA	—		—		1		NA
All Other Multiemployer Pension Plans(3)					2		2		2
Total					$	48	$	45	$	48

(1)    PPA surcharges are 5% or 10% of eligible contributions and may not apply to all collective bargaining agreements or total contributions to each plan.

(2)    The Company withdrew from this plan in fiscal 2021 and made no contributions in fiscal 2022 or fiscal 2023. The plan was included in the table above for contributions made in fiscal 2021.

(3)    All Other Multiemployer Pension Plans includes 3 plans, none of which are individually significant when considering contributions to the plan, severity of the underfunded status or other factors.

The following table describes the expiration of the Company’s collective bargaining agreements associated with the significant multiemployer plans in which we participate:

			Most Significant Collective Bargaining Agreement
Pension Fund	Range of Collective Bargaining Agreement Expiration Dates	Total Collective Bargaining Agreements	Expiration Date	% of Associates under Collective Bargaining Agreement (1)		Over 5% Contributions 2022
Minneapolis Food Distributing Industry Pension Plan	5/31/2026	1	5/31/2026	100.0	%	☒
Minneapolis Retail Meat Cutters and Food Handlers Pension Fund	3/4/2025	1	3/4/2025	100.0	%	☒
Minneapolis Retail Meat Cutters and Food Handlers Variable Annuity Pension Fund	3/4/2025	1	3/4/2025	100.0	%	☒
Central States, Southeast and Southwest Areas Pension Fund	6/03/2024 - 5/31/2025	4	8/3/2024	37.9	%	☐
UFCW Unions and Participating Employers Pension Fund	07/12/2024	2	7/12/2024	75.0	%	☒
Western Conference of Teamsters Pension Plan Trust	4/30/2024 - 9/20/2026	13	9/20/2026	24.9	%	☐

(1)    Company participating employees in the most significant collective bargaining agreement as a percent of all Company employees represented under the applicable collective bargaining agreements.

In fiscal 2021, the Company withdrew from participating in three Retail multiemployer pension plans, resulting in a $63 million withdrawal charge, which is recorded within Operating expenses within our Consolidated Statements of Operations, Other long-term liabilities on the Consolidated Balance Sheets and within changes in operating assets and liabilities within Accrued expenses and other liabilities in the Consolidated Statements of Cash Flows. In fiscal 2022, the Company updated its estimated withdrawal liability, which resulted in an $8 million benefit recorded within Operating expenses.

As of July 29, 2023, accrued multiemployer pension plan withdrawal liabilities included in Other long-term liabilities and Accrued compensation and benefits were $73 million and $7 million, respectively, for 13 multiemployer plans. As of July 30, 2022 amounts included in Other long-term liabilities and Accrued compensation and benefits were $94 million and $7 million, respectively. Payments associated with these liabilities are required to be made over varying time periods, but principally over the next 20 years.

Multiemployer Benefit Plans Other than Pensions

The Company also makes contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining agreements. These plans provide medical, dental, pharmacy, vision and other ancillary benefits to active employees and retirees as determined by the trustees of each plan. The vast majority of the Company’s contributions benefit active employees and as such, may not constitute contributions to a postretirement benefit plan. However, the Company is unable to separate contribution amounts to postretirement benefit plans from contribution amounts paid to benefit active employees.

The Company contributed $85 million, $81 million and $78 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively, to multiemployer health and welfare plans. If healthcare provisions within these plans cannot be renegotiated in a manner that reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.

Collective Bargaining Agreements

As of July 29, 2023, we had approximately 29,455 employees. Approximately 10,667 employees are covered by 49 collective bargaining agreements. During fiscal 2023, 9 collective bargaining agreements covering approximately 4,730 employees were renegotiated and 2 collective bargaining agreements covering approximately 90 employees expired without their terms being renegotiated. Negotiations are expected to continue with the bargaining units representing the employees subject to those agreements. During fiscal 2024, 14 collective bargaining agreements covering approximately 4,210 employees are scheduled to expire.