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Item 5. Market for Registrant’s Common Equity

2021-02-16 compared with 2020-02-13 · 8 added, 131 removed, 16 unchanged (90% of the section changed)

9 unchanged sentences

In making any such decision, our Board of Directors may take into account, among other things, our results of operations, capital requirements, financial condition, contractual restrictions, and other factors that our Board of Directors may deem relevant.

During the 53 weeks ended January 2, 2021, the Company’s Board of Directors declared dividends on the shares of the Series A Preferred Stock outstanding as of the respective record dates in the form of 23,127 shares of Series A Preferred Stock in the aggregate.

The aggregate value of the dividends-in-kind paid by the Company was $ 28 million.

See Note 16, Convertible Preferred Stock, in our consolidated financial statements for further information.

Stock Performance Graph

1 unchanged sentence

The graph assumes the investment of $100 in our common stock and each of such indices on May 26, 2016 and the reinvestment of dividends, as applicable.

Performance data for the Company, the S&P 500 Index and the S&P 500 Food and Staples Retailing Index is provided as of the last trading day of each of our last four fiscal years.

Performance data for the Company, the S&P 500 Index and the S&P 500 Food and Staples Retailing Index is provided as of the last trading day of each of our last five fiscal years.

5/26/16 12/31/16 12/30/17 12/29/18 12/28/19 01/02/21

US Foods Holding Corp.

$ 100 $ 110 $ 128 $ 127 $ 168 $ 134

S&P 500 100 110 134 128 169 200

S&P Food and Staples Retailing Index 100 107 132 131 167 196

Selected Financial Data

The selected historical consolidated statements of operations data for fiscal years 2019 , 2018 and 2017 , and the related selected balance sheet data as of the end of fiscal years 2019 and 2018 , have been derived from our consolidated financial statements and related notes contained elsewhere in this Annual Report.

The selected historical consolidated statements of operations data for fiscal years 2016 and 2015 , and the related selected balance sheet data as of the end of fiscal years 2017 , 2016 , and 2015 , have been derived from our consolidated financial statements not included in this Annual Report.

The following selected consolidated financial data should be read together with Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes included in Item 8 of Part II.

The following tables set forth our selected financial data for the periods and as of the dates indicated:

(in millions, except per share data)

Consolidated Statements of Operations Data:

Cost of goods sold

Operating expenses:

Distribution, selling and administrative costs

Restructuring costs (benefit)

Total operating expenses

Operating income

Formerly Proposed Sysco Acquisition termination fees—net

Other expense (income)—net

Interest expense—net

Loss on extinguishment of debt

Income before income taxes

Income tax provision (benefit)

Net income per share:

Weighted-average number of shares used in per share amounts:

Cash flows—operating activities

Cash flows—investing activities

Cash flows—financing activities

Capital expenditures

Adjusted EBITDA (1)

Adjusted net income (1)

Free cash flow (2)

As of Fiscal Year

(in millions)

Balance Sheet Data:

Cash, cash equivalents and restricted cash

Total shareholders’ equity

EBITDA is defined as net income, plus interest expense—net, income tax provision (benefit), and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA adjusted for (1) fees paid to Clayton, Dubilier & Rice, LLC (“CD&R”) and Kohlberg Kravis Roberts & Co., L.P.

(“KKR” and, together with CD&R, the “Former Sponsors”);

(2) restructuring costs (benefit);

(3) share-based compensation expense;

(4) the non-cash impact of last-in first-out (“LIFO”) reserve adjustments;

(5) loss on extinguishment of debt;

(6) pension settlements;

(7) business transformation costs;

(8) costs related to the formerly proposed acquisition of US Foods by Sysco Corporation (the “Formerly Proposed Sysco Acquisition”), which was contemplated by the Agreement and Plan of Merger, dated as of December 8, 2013;

(9) Formerly Proposed Sysco Acquisition termination fees—net;

and (10) other gains, losses, or costs as specified in the agreements governing our indebtedness.

Adjusted net income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items.

Effective as of fiscal year 2019, we revised the definition of Adjusted net income to also exclude the effect of intangible asset amortization expense.

Prior year amounts have been revised to conform with the current year presentation.

EBITDA, Adjusted EBITDA, and Adjusted net income as presented in this Annual Report are supplemental measures of our performance that are not required by, or presented in accordance with, accounting principles generally accepted in the U.S.

They are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP.

For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

Free cash flow is defined as cash flows provided by operating activities less capital expenditures.

Free cash flow as presented in this Annual Report is a supplemental measure of our liquidity that is not required by, or presented in accordance with, GAAP.

It is not a measurement of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP.

For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

Non-GAAP Reconciliations

We provide EBITDA, Adjusted EBITDA, Adjusted net income and Free cash flow as supplemental measures to GAAP financial measures regarding our operating performance and liquidity.

These non-GAAP financial measures, as defined above, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP.

We believe EBITDA and Adjusted EBITDA provide meaningful supplemental information about our operating performance because they exclude amounts that we do not consider part of our core operating results when assessing our performance.

We believe that Adjusted net income is a useful measure of operating performance for both management and investors because it excludes items that are not reflective of our core operating performance and provides an additional view of our operating performance including depreciation, interest expense, and income taxes on a consistent basis from period to period.

We believe that Adjusted net income may be used by investors, analysts and other interested parties to facilitate period-over-period comparisons and provides additional clarity as to how factors and trends impact our operating performance.

Management uses these non-GAAP financial measures (1) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors as they assist in highlighting trends, (2) to set internal sales targets and spending budgets, (3) to measure operational profitability and the accuracy of forecasting, (4) to assess financial discipline over operational expenditures, and (5) as an important factor in determining variable compensation for management and employees.

EBITDA and Adjusted EBITDA are also used in connection with certain covenants and activity restrictions under the agreements governing our indebtedness.

We also believe these and similar non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry.

EBITDA, Adjusted EBITDA and Adjusted net income are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP.

We use Free cash flow as a supplemental measure to GAAP financial measures regarding the liquidity of our operations.

We measure Free cash flow as cash flows provided by operating activities less capital expenditures.

We believe that Free cash flow is a useful financial metric to assess our ability to pursue business opportunities and investments.

Free cash flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP.

We caution readers that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, Adjusted net income, and Free cash flow may not be the same as similar measures used by other companies.

Not all companies and analysts calculate EBITDA, Adjusted EBITDA, Adjusted net income or Free cash flow in the same manner.

We compensate for these limitations by using these non-

GAAP financial measures as supplements to GAAP financial measures and by presenting the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

The following table reconciles EBITDA, Adjusted EBITDA, Adjusted net income and Free cash flow to the most directly comparable GAAP financial performance and liquidity measures for the periods indicated:

(in millions)

Interest expense—net

Income tax provision (benefit)

Depreciation expense

Amortization expense

Former Sponsor fees (1)

Restructuring costs (benefit) (2)

Share-based compensation expense (3)

LIFO reserve adjustment (4)

Loss on extinguishment of debt (5)

Pension settlements (6)

Business transformation costs (7)

Formerly Proposed Sysco Acquisition termination fees—net (8)

Formerly Proposed Sysco Acquisition-related costs (9)

Food Group acquisition-related costs and other (10)

Adjusted EBITDA

Depreciation expense

Interest expense—net

Income tax provision, as adjusted (11)(12)

Adjusted net income (11)

Free cash flow

Cash flows from operating activities

Capital expenditures

Free cash flow

Consists of fees paid to the Former Sponsors for consulting and management advisory services.

On June 1, 2016, the consulting agreements with each of the Former Sponsors were terminated for an aggregate termination fee of $31 million.

Consists primarily of facility related closing costs, including severance and related costs, tangible asset impairment charges and subsequent gains on sale, organizational realignment costs and estimated multiemployer pension withdrawal liabilities and settlements.

Share-based compensation expense for stock and option awards and discounts provided under employee stock purchase plan.

Represents the non-cash impact of LIFO reserve adjustments.

Includes fees paid to debt holders, third party costs, the write-off of certain pre-existing unamortized deferred financing costs related to the 2016 debt refinancing transactions;

early redemption premium and the write-off of unamortized issue premium related to the June 2016 debt refinancing;

and the loss related to the September 2016 defeasance of our commercial mortgage backed securities facility.

Consists of settlement charges resulting from payments to settle benefit obligations with former and current participants in our defined benefit pension plan.

See Note 18, Retirement Plans, in our consolidated financial statements for a further description of the pension settlement charges for fiscal years 2019 and 2017.

Consists primarily of costs related to significant process and systems redesign across multiple functions.

Consists of net fees received in connection with the termination of the Agreement and Plan of Merger dated as of December 8, 2013, which contemplated the Formerly Proposed Sysco Acquisition.

Consists of costs related to the Formerly Proposed Sysco Acquisition, including certain employee retention costs.

Includes Food Group acquisition-related costs of $52 million and $29 million for fiscal years 2019 and 2018, respectively.

Also includes gains, losses or costs as specified under the agreements governing our indebtedness.

Effective as of fiscal year 2019, we revised the definition of Adjusted net income to also exclude the effect of intangible asset amortization expense.

Prior year amounts have been revised to conform with the current year presentation.

Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted net income and the removal of applicable discrete tax items.

Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, excess tax benefits associated with share-based compensation, and the tax benefits recognized in continuing operations due to the existence of a gain in other comprehensive income and loss in continuing operations.

The tax effect of pre-tax items excluded from Adjusted net income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

We released a valuation

allowance against federal and certain state net deferred tax assets in fiscal year 2016.

We were required to reflect the portion of the valuation allowance release related to 2016 ordinary income in the estimated annual effective income tax rate and the portion of the valuation allowance release related to future years’ income discretely in fiscal year 2016.

We maintained a valuation allowance against federal and state net deferred tax assets for fiscal year 2015.

The result was an immaterial tax effect related to pre-tax items excluded from Adjusted net income for fiscal years 2015 and 2016.

A reconciliation between the GAAP income tax provision (benefit) and the income tax provision, as adjusted, is as follows:

(in millions)

GAAP income tax provision (benefit)

Tax impact of pre-tax income adjustments (1)

Discrete tax items

Income tax provision, as adjusted

Effective as of the third quarter of fiscal year 2019, we revised the definition of Adjusted net income to also exclude the effect of intangible asset amortization expense.

Prior year amounts have been revised to conform with the current year presentation

Not Applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity