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Item 9A. Controls and Procedures

2021-02-16 compared with 2020-02-13 · 71 added, 48 removed, 169 unchanged (41% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

As of December 28, 2019 , the end of the period covered by this Annual Report, an evaluation was carried out under the supervision and with the participation of US Foods Holding Corp.'s management, including our Chief Executive Officer and our Chief Financial Officer, of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).

As of January 2, 2021, the end of the period covered by this Annual Report, an evaluation was carried out under the supervision and with the participation of US Foods Holding Corp.'s management, including our Chief Executive Officer and our Chief Financial Officer, of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 28, 2019 .

Management assessed the effectiveness of the Company's internal control over financial reporting as of January 2, 2021.

Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Management reviewed the results of its assessment with the Audit Committee of the Company's Board of Directors.

As permitted by applicable SEC guidance, the scope of our assessment of internal controls over financial reporting for fiscal year 2019 excluded internal controls over financial reporting for the Food Group, which was acquired on September 13, 2019.

The Food Group represented $2,014 million of our total assets as of December 28, 2019 and $843 million of our total net sales for fiscal year 2019 .

Based on this assessment, management determined that, as of December 28, 2019 , the Company maintained effective internal control over financial reporting.

Deloitte & Touche LLP, an independent registered public accounting firm, which audited and reported on the consolidated financial statements of the Company included in this report, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 28, 2019 .

As permitted by applicable SEC guidance, the scope of our assessment of internal controls over financial reporting for fiscal year 2020 excluded internal controls over financial reporting for Smart Foodservice, which was acquired on April 24, 2020.

Smart Foodservice represented $1,206 million of our total assets as of January 2, 2021 and $759 million of our total Net sales for fiscal year 2020.

Based on this assessment, management determined that, as of January 2, 2021, the Company maintained effective internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 28, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the fiscal quarter ended January 2, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the internal control over financial reporting of US Foods Holding Corp.

and subsidiaries (the “Company”) as of December 28, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 28, 2019, of the Company and our report dated February 13, 2020, expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.

As described in the Report of Management on Internal Control over Financial Reporting dated February 13, 2020, management excluded from its assessment the internal control over financial reporting at five foodservice companies (the “Food Group”), which were acquired on September 13, 2019, and whose financial statements constitute $2,014 million of total assets and $843 million of total net sales of the consolidated financial statement amounts as of and for the year ended December 28, 2019.

Accordingly, our audit did not include the internal control over financial reporting at the Food Group.

and subsidiaries (the “Company”) as of January 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 2, 2021, of the Company and our report dated February 16, 2021, expressed an unqualified opinion on those consolidated financial statements.

As described in the Report of Management on Internal Control over Financial Reporting dated February 16, 2021, management excluded from its assessment the internal control over financial reporting at Smart Foodservice, which was acquired on April 24, 2020, and whose financial statements constitute $1,206 million of total assets and $759 million of total net sales of the consolidated financial statement amounts as of and for the year ended January 2, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Smart Foodservice.

Basis for Opinion

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Equity Compensation Plan Information

The following table sets forth certain information regarding the Company’s equity compensation plans as of December 28, 2019 :

Plan Category

Number of shares

underlying outstanding options,

restricted stock units and rights (a)

The following table sets forth certain information regarding the Company’s equity compensation plans as of January 2, 2021:

Plan Category Number of shares

to be issued upon exercise of outstanding options,

restricted warrants and rights (a)

Weighted-average exercise price of shares underlying

outstanding options

outstanding options, warrants

and rights (b)

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11,377,252 (3)

17,059,302 (3)

Equity compensation plans

not approved by stockholders — — —

4,881,477 (1)

Total 8,850,798 (1)

11,377,252 (3)

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Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be included in our 2020 Proxy Statement under the captions “Election of Directors” and “Corporate Governance” and is incorporated herein by reference.

The information required by this item will be included in our 2021 Proxy Statement under the captions “Election of Directors,” “Corporate Governance” and “Related Party Transactions” is incorporated herein by reference.

Principal Accounting Fees and Services

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Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 28, 2019 and December 29, 2018

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended December 28, 2019, December 29, 2018 and December 30, 2017

Consolidated Balance Sheets as of January 2, 2021 and December 28, 2019

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended January 2, 2021, December 28, 2019 and December 29, 2018

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended

December 28, 2019, December 29, 2018 and December 30, 2017

Consolidated Statements of Cash Flows for the Fiscal Years Ended

December 28, 2019, December 29, 2018 and December 30, 2017

January 2, 2021, December 28, 2019 and December 29, 2018

C onsolidated Statements of Cash Flows for the Fiscal Years Ended

January 2, 2021, December 28, 2019 and December 29, 2018

Financial Statement Schedules

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The following exhibits are filed as part of this Annual Report or are incorporated by reference.

2.1 Merger Agreement, dated as of March 5, 2020, by and among US Foods, Inc., CNC Merger Sub, Inc., Smart Stores Holdings Corp.

and Smart & Final Holdings, Inc.

(incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on March 6, 2020) †

3.1 Restated Certificate of Incorporation of US Foods Holding Corp., effective as of May 1, 2019 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on May 2, 2019).

3.2 Amended and Restated Bylaws of US Foods Holding Corp., effective as of May 1, 2019 (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on May 2, 2019).

3.3 Certificate of Designations Designating the Series A Convertible Preferred Stock, Par Value $0.01, of US Foods Holding Corp.

(incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on May 6, 2020).

4.1 Indenture, dated as of June 27, 2016, by and among US Foods, Inc., the Subsidiary Guarantors thereunder and Wilmington Trust, National Association (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 28, 2016).

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4.3 Form of 5.875% Senior Note due 2024 (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K filed with the SEC on June 28, 2016 (included in Exhibit 4.1 thereto)).

4.4 Indenture, dated as of April 28, 2020, by and among US Foods, Inc., the subsidiary guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee and as collateral agent (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 29, 2020).

4.5 Notes Collateral Agreement, dated as of April 28, 2020, by and among US Foods, Inc., the subsidiary grantors party thereto and Wilmington Trust, National Association, as collateral agent (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on April 29, 2020).

4.6 Form of 6.25% Senior Secured Notes due 2025 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 29, 2020 (included in Exhibit 4.1 thereto)).

4.7 Description of Securities of US Foods Holding Corp.

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and its subsidiaries party thereto and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on November 5, 2019).

10.1.3 Additional Revolving Credit Amendment and Agreement, dated as of May 4, 2020, among US Foods, Inc., the other Borrowers party thereto, the Lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 6, 2020).

10.2.1 Credit Agreement, dated as of May 11, 2011, by and among US Foods, Inc.

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and the Lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on November 27, 2019).

10.2.9 Eighth Amendment to the Credit Agreement, dated as of April 21, 2020, by and among US Foods, Inc., the other Loan Parties party thereto, Citicorp North America, Inc.

and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 29, 2020).

10.3 Investment Agreement, dated April 21, 2020, by and between US Foods Holding Corp.

and KKR Fresh Aggregator L.P.

(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 21, 2020) .

10.4 Registration Rights Agreement, dated May 6, 2020, by and between US Foods Holding Corp.

and KKR Fresh Aggregator L.P.

(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 6, 2020) .

10.5* US Foods Holding Corp.

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and its Affiliates (incorporated herein by reference to Exhibit 10.55 to the Quarterly Report on Form 10-Q filed with the SEC on November 8, 2016).

Form of Restricted Stock Unit Agreement under the 2007 Stock Incentive Plan for Key Employees of USF Holding Corp.

and its Affiliates (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K of US Foods, Inc.

filed with the SEC on May 31, 2013).

Form of Restricted Stock Award Agreement under the 2007 Stock Incentive Plan for Key Employees of USF Holding Corp.

and its Affiliates (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K of US Foods, Inc.

filed with the SEC on May 31, 2013).

10.9* 2016 US Foods Holding Corp.

Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on June 1, 2016).

Form of Performance-Based Restricted Stock Grant Notice and Agreement under the 2016 US Foods Holding Corp.

Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on August 9, 2017).

Form of Time-Based Restricted Stock Grant Notice and Agreement under the 2016 US Foods Holding Corp.

Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2019).

Omnibus Incentive Pla n , inclu ding forms of award agreements (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on June 1, 2016).

10.10* US Foods Holding Corp.

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2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2019).

Form of Time-Based Restricted Stock Unit Grant Notice and Agreement under the US Foods Holding Corp.

10.12* Form of Restricted Stock Unit Grant Notice and Agreement (f or Time-Based Restricted Stock Units Awards Granted pre-March 2020) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2019).

Form of Time-Based Option Grant Notice and Agreement under the US Foods Holding Corp.

10.13* Form of Option Grant Notice and Agreement (for Time-Based Non-Qualified S tock Option Awards Granted pre-March 2020) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2019).

10.14* Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (for Time-Based Restricted Stock Unit Awards) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 5, 2020).

10.15* Form of Option Grant Notice and Option Agreement (for Time-Based Non-Qualified Stock Option Awards) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on May 5, 2020).

10.16* Form of Non-Employee Director Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Settlement upon Separation of Service) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed with the SEC on August 4, 2020).

10.17* Form of Non-Employee Director Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Settlement upon Vesting) under the US Foods Holding Corp.

2019 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed with the SEC on August 4, 2020).

10.18* US Foods Holding Corp.

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101 Interactive Data File.

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

† Schedules and exhibits to the Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

We undertake to furnish copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.

* Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ PIETRO SATRIANO

Chairman and Chief Executive Officer

February 13, 2020

Pietro Satriano

(Principal Executive Officer)

Chief Financial Officer

Signature Title Date

/s/ PIETRO SATRIANO Chairman and Chief Executive Officer February 16, 2021

Pietro Satriano (Principal Executive Officer)

LOCASCIO Chief Financial Officer

February 16, 2021

(Principal Financial Officer and Principal

Locascio (Principal Financial Officer and Principal

Accounting Officer)

/s/ CHERYL A.

BACHELDER Director

February 16, 2021

CARRUTHERS Director

February 16, 2021

/s/ ROBERT M.

DUTKOWSKY Director

February 16, 2021

/s/SUNIL GUPTA

/s/SUNIL GUPTA Director

February 16, 2021

LEDERER Director

February 16, 2021

/s/ CARL ANDREW PFORZHEIMER

/s/ CARL ANDREW PFORZHEIMER Director

February 16, 2021

Carl Andrew Pforzheimer

/s/ NATHANIEL H.

TAYLOR Director

February 16, 2021

TEHLE Director

February 16, 2021

ZIEGLER Director

February 16, 2021

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 9A. Controls and Procedures