What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 185 added, 120 removed, 449 unchanged (40% of the section changed)

3 unchanged sentences

(In millions, except par value)

April 3, 2021 January 2, 2021

July 3, 2021 January 2, 2021

Current assets:

27 unchanged sentences

Series A convertible preferred stock, $0.01 par value—25 shares authorized;

0.5 issued and outstanding as of April 3, 2021 and

0.5 issued and outstanding as of July 3, 2021 and

January 2, 2021 534 519

2 unchanged sentences

222 and 221 issued and outstanding as of

April 3, 2021 and January 2, 2021, respectively

July 3, 2021 and January 2, 2021, respectively

Additional paid-in capital

9 unchanged sentences

(In millions, except per share data)

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Net sales $ 7,663 $ 4,560 $ 13,958 $ 10,899

Cost of goods sold 6,494 3,889 11,786 9,162

1,169 671 2,172 1,737

Operating expenses:

Distribution, selling and administrative costs

1,044 714 2,016 1,906

Restructuring costs and asset impairment charges

Total operating expenses

1,045 730 2,020 1,922

Operating income (loss) 124 ( 59 ) 152 ( 185 )

2 unchanged sentences

Loss on extinguishment of debt — — 23 —

Loss before income taxes ( 42 ) ( 172 )

Income tax benefit ( 18 ) ( 40 )

Income (loss) before income taxes 76 ( 118 ) 34 ( 290 )

Income tax provision (benefit) 21 ( 26 ) 3 ( 66 )

Net income (loss)

55 ( 92 ) 31 ( 224 )

Other comprehensive loss—net of tax:

Other comprehensive income (loss)—net of tax:

Changes in retirement benefit obligations

Unrecognized gain (loss) on interest rate swaps

Comprehensive loss

Comprehensive income (loss)

$ 57 $ ( 91 ) $ 35 $ ( 229 )

Net loss $ ( 24 ) $ ( 132 )

Net income (loss) $ 55 $ ( 92 ) $ 31 $ ( 224 )

Series A convertible preferred stock dividends ( 9 ) ( 5 ) ( 24 ) ( 5 )

Net loss available to common shareholders $ ( 39 ) $ ( 132 )

Net loss per share

Net income (loss) available to common shareholders $ 46 $ ( 97 ) $ 7 $ ( 229 )

Net income (loss) per share

Basic (Note 13)

$ 0.21 $ ( 0.44 ) $ 0.03 $ ( 1.05 )

Diluted (Note 13)

$ 0.20 $ ( 0.44 ) $ 0.03 $ ( 1.05 )

Weighted-average common shares outstanding

Basic (Note 13)

222 220 221 219

Diluted (Note 13)

225 220 225 219

See Notes to Consolidated Financial Statements (Unaudited).

17 unchanged sentences

BALANCE—April 3, 2021 222 2 2,908 622 ( 32 ) 3,500

Share-based compensation expense — — 13 — — 13

Proceeds from employee stock purchase plan — — 5 — — 5

Exercise of stock options — — 8 — — 8

Tax withholding payments for net share-settled equity awards — — ( 1 ) — — ( 1 )

Series A convertible preferred stock dividends — — — ( 9 ) — ( 9 )

Unrecognized gain on interest rate swaps, net of income tax — — — — 2 2

Net income — — — 55 — 55

BALANCE—July 3, 2021 222 $ 2 $ 2,933 $ 668 $ ( 30 ) $ 3,573

Common Stock Additional

12 unchanged sentences

BALANCE—March 28, 2020 220 $ 2 $ 2,857 $ 783 $ ( 60 ) $ 3,582

Share-based compensation expense — — 12 — — 12

Proceeds from employee stock purchase plan 1 — 5 — — 5

Tax withholding payments for net share-settled equity awards — — ( 3 ) — — ( 3 )

Series A convertible preferred stock dividends — — — ( 5 ) — ( 5 )

Changes in retirement benefit obligations, net of income tax — — — — 1 1

Net loss — — — ( 92 ) — ( 92 )

BALANCE—June 27, 2020 221 $ 2 $ 2,871 $ 686 $ ( 59 ) $ 3,500

See Notes to Consolidated Financial Statements (Unaudited).

3 unchanged sentences

26 Weeks Ended

April 3, 2021 March 28, 2020

July 3, 2021 June 27, 2020

Cash flows from operating activities:

Net income (loss)

$ 31 $ ( 224 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

2 unchanged sentences

Amortization of deferred financing costs

Deferred tax benefit

Deferred tax provision (benefit)

Share-based compensation expense

5 unchanged sentences

( 24 ) ( 12 )

Increase (decrease) in accounts payable and cash overdraft liability

Increase in accounts payable and cash overdraft liability

Increase (decrease) in accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sales of assets

Acquisition of businesses—net of cash — ( 973 )

Proceeds from sales of divested assets

Proceeds from sales of property and equipment 1 1

Purchases of property and equipment

6 unchanged sentences

( 1,161 ) ( 2,206 )

Net proceeds from issuance of Series A convertible preferred stock — 491

Dividends paid on Series A convertible preferred stock ( 9 ) —

Debt financing costs and fees

( 18 ) ( 33 )

Proceeds from employee stock purchase plan

2 unchanged sentences

Net cash (used in) provided by financing activities

Net increase in cash, cash equivalents and restricted cash 83 987

( 279 ) 1,904

Net (decrease) increase in cash, cash equivalents and restricted cash ( 130 ) 1,578

Cash, cash equivalents and restricted cash—beginning of period 829 98

7 unchanged sentences

Leased assets obtained in exchange for operating lease liabilities

Cashless exercise of stock options

Paid-in-kind Series A convertible preferred stock dividends 15 5

8 unchanged sentences

All of the Company’s indebtedness, as further described in Note 10, Debt, is a direct obligation of USF and its subsidiaries.

Business Description —The Company, through USF, operates in one business segment in which it markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S.

These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities and retail locations.

9 unchanged sentences

The consolidated interim financial statements reflect all adjustments (consisting of normal recurring items) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented.

The results of operations for interim periods are not necessarily indicative of the results that might be achieved for the full fiscal year.

The results of operations for interim periods are not necessarily indicative of the results that might be achieved for any other interim period or the full fiscal year.

RECENT ACCOUNTING PRONOUNCEMENTS

13 unchanged sentences

Shipping and handling costs are treated as fulfillment costs and included in distribution, selling and administrative costs.

The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of April 3, 2021 and January 2, 2021.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.4 billion and $ 1.1 billion as of April 3, 2021 and January 2, 2021, respectively.

The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of July 3, 2021 and January 2, 2021.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.5 billion and $ 1.1 billion as of July 3, 2021 and January 2, 2021, respectively.

The Company has certain customer contracts under which incentives are paid upfront to its customers.

These payments have become industry practice and are not related to financing any customer’s business, nor are these payments associated with any

distinct good or service to be received from any customer.

These payments have become industry practice and are not related to financing any customer’s business, nor are these payments associated with any distinct good or service to be received from any customer.

These incentive payments are capitalized in prepaid expenses and other assets and amortized as a reduction of revenue over the life of the contract or as goods or services are transferred to the customer.

The Company’s contract assets for these upfront payments were $ 30 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both April 3, 2021 and January 2, 2021, and $ 29 million and $ 27 million included in other assets in the Company’s Consolidated Balance Sheets as of April 3, 2021 and January 2, 2021, respectively.

The Company’s contract assets for these upfront payments were $ 28 million and $ 30 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of July 3, 2021 and January 2, 2021, respectively, and $ 29 million and $ 27 million included in other assets in the Company’s Consolidated Balance Sheets as of July 3, 2021 and January 2, 2021, respectively.

The following table presents the disaggregation of revenue for each of the Company’s principal product categories:

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Meats and seafood $ 2,951 $ 1,694 $ 5,213 $ 3,920

14 unchanged sentences

The following table summarizes the final purchase price allocation recognized for the Smart Foodservice acquisition as of April 24, 2020.

The decrease in goodwill during the 13 weeks ended April 3, 2021 was due to the finalization of deferred income taxes associated with the acquisition.

The decrease in goodwill from January 2, 2021 to July 3, 2021 was due to the finalization of deferred income taxes associated with the acquisition in the first quarter of 2021.

Purchase Price Allocation

14 unchanged sentences

(2) Other intangibles consist of a trade name of $ 14 million with an estimated useful life of approximately 1 year.

Smart Foodservice acquisition and integration related costs included in distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income were $ 4 million and $ 10 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

Pro Forma Financial Information — The following table presents the Company’s unaudited pro forma consolidated net sales, net income and earnings per share (“EPS”) for the 13 weeks ended April 3, 2021 and March 28, 2020.

Smart Foodservice acquisition and integration related costs included in distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income were $ 5 million and $ 10 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and $ 9 million and $ 20 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

The unaudited pro forma financial information presents the combined results of operations as if the acquisition and related financing of Smart Foodservice had occurred as of December 30, 2018, which date represents the first day of the Company’s fiscal year prior to the Smart Foodservice acquisition date.

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Pro forma net sales $ 7,663 $ 4,647 $ 13,958 $ 11,272

Pro forma net loss available to common shareholders $ ( 39 ) $ ( 106 )

Pro forma net loss per share:

Pro forma net income (loss) available to common shareholders $ 46 $ ( 95 ) $ 7 $ ( 202 )

Pro forma net income (loss) per share:

Basic $ 0.21 $ ( 0.43 ) $ 0.03 $ ( 0.92 )

11 unchanged sentences

This "links" current costs to original costs in the base year when the Company adopted LIFO.

LIFO reserves in the Company’s Consolidated Balance Sheets were $ 198 million and $ 177 million as of April 3, 2021 and January 2, 2021, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $ 21 million for the 13 weeks ended April 3, 2021, and decreased $ 13 million for the 13 weeks ended March 28, 2020.

LIFO reserves in the Company’s Consolidated Balance Sheets were $ 295 million and $ 177 million as of July 3, 2021 and January 2, 2021, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $ 97 million and $ 19 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and increased $ 118 million and $ 6 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

2 unchanged sentences

The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for doubtful accounts based on a combination of factors.

The Company maintains an allowance for doubtful accounts, which is based upon historical experience, future expected losses, as well as specific customer collection issues that have been identified.

The Company uses specific criteria to determine uncollectible receivables to be

written off, including bankruptcy, accounts referred to outside parties for collection, and accounts past due over specified periods.

The Company maintains an

allowance for doubtful accounts, which is based upon historical experience, future expected losses, as well as specific customer collection issues that have been identified.

The Company uses specific criteria to determine uncollectible receivables to be written off, including bankruptcy, accounts referred to outside parties for collection, and accounts past due over specified periods.

Since mid-March 2020, our business has been significantly impacted by the COVID-19 pandemic.

In March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues.

Since December 2020, three vaccines for COVID-19 have been authorized by the United States Food and Drug Administration ("FDA") for emergency use and beginning in April 2021, all individuals 16 years old and older in the United States are eligible to receive a vaccine.

New cases of COVID-19 and its variants continue to be reported and it remains uncertain when restrictions will be fully lifted and enhanced safety measures, including physical distancing and face mask protocols, will no longer be needed.

As a result, it remains uncertain when and to what extent the COVID-19 pandemic will fully abate.

Starting in March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues.

Since December 2020, three vaccines for COVID-19 have been authorized by the United States Food and Drug Administration ("FDA") for emergency use and beginning in May 2021, all individuals 12 years old and older in the United States became eligible to receive a vaccine.

During the 13 weeks ended July 3, 2021, the Center for Disease Control and Prevention ("CDC") and most states have significantly relaxed restrictions and safety measures, such as capacity limits, physical distancing and face mask protocols, as a result of significant progress made in vaccinating the U.S.

public and the resulting decline in COVID-19 cases.

Due to the impact that the COVID-19 pandemic was expected to have on our customers, particularly our restaurant and hospitality customers, and to reflect the increased collection risk associated with our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020.

In each subsequent quarter of fiscal year 2020 and during the 13 weeks ended April 3, 2021, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts.

The remaining pre-COVID-19 accounts receivable are fully reserved as of April 3, 2021.

A summary of the activity in the allowance for doubtful accounts for the 13 weeks ended April 3, 2021 was as follows:

During the 13 weeks ended July 3, 2021, amounts expensed for the period were more consistent with pre-pandemic activity.

A summary of the activity in the allowance for doubtful accounts for the 26 weeks ended July 3, 2021 was as follows:

Balance as of January 2, 2021 $ 67

1 unchanged sentence

Customer accounts written off—net of recoveries ( 9 )

Balance as of April 3, 2021 $ 51

This table excludes the vendor receivable related allowance for doubtful accounts of $ 7 million and $ 5 million as of April 3, 2021 and January 2, 2021, respectively.

Balance as of July 3, 2021 $ 45

This table excludes the vendor receivable related allowance for doubtful accounts of $ 6 million and $ 5 million as of July 3, 2021 and January 2, 2021, respectively.

PROPERTY AND EQUIPMENT

2 unchanged sentences

Property and equipment under financing leases and leasehold improvements are amortized on a straight-line basis over the shorter of the remaining terms of the related leases or the estimated useful lives of the assets, if reasonably assured the Company will purchase the assets at the end of the lease terms.

As of April 3, 2021 and January 2, 2021, property and equipment-net included accumulated depreciation of $ 2,649 million and $ 2,566 million, respectively.

Depreciation expense was $ 82 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

As of July 3, 2021 and January 2, 2021, property and equipment-net included accumulated depreciation of $ 2,717 million and $ 2,566 million, respectively.

Depreciation expense was $ 81 million and $ 87 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and $ 163 million and $ 169 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

GOODWILL AND OTHER INTANGIBLES

3 unchanged sentences

Customer relationships, amortizable trade names and noncompete agreements are intangible assets with definite lives, and are carried at the acquired fair value less accumulated amortization.

Customer relationships, amortizable trade names and noncompete agreements are amortized over the estimated useful lives (which range from approximately 1 to 15 years).

Amortization expense was $ 19 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

Customer relationships, amortizable trade names and noncompete agreements are amortized over their estimated useful lives (which range from approximately 3 to 15 years).

Amortization expense was $ 13 million and $ 19 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and $ 32 million and $ 38 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

Goodwill and other intangibles—net consisted of the following:

April 3, 2021 January 2, 2021

July 3, 2021 January 2, 2021

Goodwill $ 5,625 $ 5,637

15 unchanged sentences

Total other intangibles—net $ 860 $ 892

The net decrease in the gross carrying amount of customer relationships as of April 3, 2021 is attributable to the write-off of fully amortized intangible assets related to certain 2017 business acquisitions.

The net decrease in the gross carrying amount of customer relationships as of July 3, 2021 is attributable to the write-off of fully amortized intangible assets related to certain 2016 and 2017 business acquisitions.

The net decrease in the gross carrying amount of amortizable trade names is attributable to the write-off of the fully amortized trade name related to the Smart Foodservice acquisition, when Smart Foodservice® warehouse stores were rebranded to CHEF'STORE® in March 2021.

13 unchanged sentences

There were no transfers between fair value levels in any of the periods presented below.

The Company’s assets and liabilities measured at fair value on a recurring basis as of April 3, 2021 and January 2, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

April 3, 2021

The Company’s assets and liabilities measured at fair value on a recurring basis as of July 3, 2021 and January 2, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

Level 1 Level 2 Level 3 Total

16 unchanged sentences

The Company uses interest rate swaps, designated as cash flow hedges, to manage its exposure to interest rate movements in connection with its variable-rate Initial Term Loan Facility (as defined in Note 10, Debt).

USF has entered into four-year interest rate swap agreements expiring July 31, 2021, which collectively have a notional value of $ 550 million, which was reduced from $ 733 million on July 31, 2020.

The Company pays an aggregate effective rate of 3.45 % on the notional amount of the Initial Term Loan Facility covered by the interest rate swap agreements, comprised of a rate of 1.70 % plus a spread of 1.75 % (see Note 10, Debt).

USF previously entered into four-year interest rate swap agreements, which collectively had a notional value of $ 550 million, which was reduced from $ 733 million on July 31, 2020.

The interest rate swap agreements expired on July 31, 2021.

Through the term of the swap agreements, the Company paid an aggregate effective rate of 3.45 % on the notional amount of the Initial Term Loan Facility covered by the interest rate swap agreements, comprised of a rate of 1.70 % plus a spread of 1.75 % (see Note 10, Debt).

The Company records its interest rate swaps in its Consolidated Balance Sheets at fair value, based on projections of cash flows and future interest rates.

The determination of fair value includes the consideration of any credit valuation adjustments necessary, giving consideration to the creditworthiness of the respective counterparties and the Company.

The following table presents the balance sheet location and fair value of the interest rate swaps as of April 3, 2021 and January 2, 2021:

Balance Sheet Location April 3, 2021 January 2, 2021

The following table presents the balance sheet location and fair value of the interest rate swaps as of July 3, 2021 and January 2, 2021:

Balance Sheet Location July 3, 2021 January 2, 2021

Derivatives designated as hedging instruments

4 unchanged sentences

Gains and losses on the interest rate swaps are initially recorded in accumulated o ther comprehensive loss and reclassified to interest expense during the period in which the hedged transaction affects income.

The following table presents the effect of the Company’s interest rate swaps in its Consolidated Statements of Comprehensive Income f or the 13 weeks ended April 3, 2021 and March 28, 2020:

The following table presents the effect of the Company’s interest rate swaps in its Consolidated Statements of Comprehensive Income f or the 13 weeks and 26 weeks ended July 3, 2021 and June 27, 2020:

Derivatives in Cash Flow Hedging Relationships Amount of Loss Recognized in Accumulated Other Comprehensive Loss, net of tax Location of Amounts Reclassified from Accumulated Other Comprehensive Loss Amount of Loss Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax

For the 13 weeks ended April 3, 2021

For the 13 weeks ended July 3, 2021

Interest rate swaps

$ — Interest expense—net $ 2

For the 13 weeks ended March 28, 2020

For the 13 weeks ended June 27, 2020

Interest rate swaps

$ ( 2 ) Interest expense—net $ 2

During the next twelve months, the Company estimates that $ 3 million will be reclassified from accumulated other comprehensive loss to income.

For the 26 weeks ended July 3, 2021

Interest rate swaps

$ — Interest expense—net $ 4

For the 26 weeks ended June 27, 2020

Interest rate swaps

$ ( 8 ) Interest expense—net $ 2

During the next twelve months, $ 1 million will be reclassified from accumulated other comprehensive loss to income.

Other Fair Value Measurements

The carrying value of cash, accounts receivable, vendor receivables, cash overdraft liability and accounts payable approximate their fair values due to their short-term maturities.

The fair value of the Company’s total debt approximated $ 5.8 billion, compared to its carrying value of $ 5.7 billion as of both April 3, 2021 and January 2, 2021.

The fair value of the Company's 4.75 % unsecured senior notes due February 15, 2029 (the "Unsecured Senior Notes due 2029") was $ 0.9 billion as of April 3, 2021.

As discussed in Note 10, Debt, the proceeds from the Unsecured Senior Notes due 2029 were used to redeem the Company's 5.875 % unsecured senior notes due 2024 (the "Unsecured Senior Notes due 2024") and other debt.

The fair value of the Company’s total debt approximated $ 5.6 billion, compared to its carrying value of $ 5.5 billion as of July 3, 2021.

The fair value of the Company’s total debt approximated $ 5.8 billion, compared to its carrying value of $ 5.7 billion as of January 2, 2021.

The fair value of the Company's 4.75 % unsecured senior notes due February 15, 2029 (the "Unsecured Senior Notes due 2029") was $ 0.9 billion as of July 3, 2021.

The fair value of the Unsecured Senior Notes due 2024 was $ 0.6 billion as of January 2, 2021.

The fair value of the Company’s 6.25 % senior secured notes due April 15, 2025 (the “Secured Notes”) was $ 1.1 billion as of both April 3, 2021 and January 2, 2021.

Fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is based upon the closing market prices of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 on the respective dates.

The fair value of the Company’s 6.25 % senior secured notes due April 15, 2025 (the “Secured Notes”) was $ 1.1 billion as of both July 3, 2021 and January 2, 2021.

Fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is based upon their closing market prices on the respective dates.

The fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is classified under Level 2 of the fair value hierarchy.

1 unchanged sentence

Total debt consisted of the following:

Debt Description Maturity Interest Rate as of April 3, 2021 Carrying Value as of April 3, 2021 Carrying Value as of January 2, 2021

Debt Description Maturity Interest Rate as of July 3, 2021 Carrying Value as of July 3, 2021 Carrying Value as of January 2, 2021

ABL Facility May 31, 2024 — % $ — $ —

9 unchanged sentences

April 24, 2025 — % — 284

Senior Secured Notes (net of $12 and $13 of

Secured Notes (net of $11 and $13 of

unamortized deferred financing costs)

14 unchanged sentences

The related unamortized deferred financing costs were written off in connection with the terminations.

As of April 3, 2021, after considering interest rate swaps that fixed the interest rate on $ 550 million of principal of the Initial Term Loan Facility described below, approximately 52 % of the Company’s total debt bears interest at a floating rate.

As of July 3, 2021, after considering interest rate swaps that fixed the interest rate on $ 550 million of principal of the Initial Term Loan Facility described below, approximately 51 % of the Company’s total debt bears interest at a floating rate.

USF's asset based senior secured revolving credit facility (the “ABL Facility”) provides USF with loan commitments having a maximum aggregate principal amount of $ 1,990 million.

1 unchanged sentence

Borrowings under the ABL Facility bear interest, at USF's periodic election, at a rate equal to the sum of an alternative base rate (“ABR”), as described under the ABL Facility, plus a margin ranging from 0.00 % to 0.50 %, or the sum of LIBOR plus a margin ranging from 1.00 % to 1.50 %, in each case based on USF’s excess availability under the ABL Facility.

The margin under the ABL Facility as of April 3, 2021 was 0.00 % for ABR loans and 1.00 % for LIBOR loans.

USF had no outstanding borrowings, and had issued letters of credit totaling $ 279 million, under the ABL Facility as of April 3, 2021.

The margin under the ABL Facility as of July 3, 2021 was 0.00 % for ABR loans and 1.00 % for LIBOR loans.

USF had no outstanding borrowings, and had issued letters of credit totaling $ 253 million, under the ABL Facility as of July 3, 2021.

The outstanding letters of credit primarily relate to securing USF's obligations with respect to its insurance program and certain real estate leases.

There was available capacity of $ 1,711 million under the ABL Facility as of April 3, 2021.

There was available capacity of $ 1,737 million under the ABL Facility as of July 3, 2021.

Term Loan Facilities

Under its term loan credit agreement, USF has entered into an initial senior secured term loan facility (the "Initial Term Loan Facility") and an incremental senior secured term loan facility (the "2019 Incremental Term Loan Facility").

The Initial Term Loan Facility had a carrying value of $ 2.1 billion, net of $ 2 million of unamortized deferred financing costs as of April 3, 2021.

The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of April 3, 2021.

The effective interest rate of the portion of the Initial Term Loan Facility subject to interest rate hedging agreements was 3.45 % as of April 3, 2021.

The Initial Term Loan Facility had a carrying value of $ 1.9 billion, net of $ 2 million of unamortized deferred financing costs as of July 3, 2021.

During the 13 weeks ended July 3, 2021, the Company made voluntary prepayments of the Initial Term Loan Facility totaling $ 200 million.

The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of July 3, 2021.

The effective interest rate of the portion of the Initial Term Loan Facility subject to interest rate hedging agreements was 3.45 % as of July 3, 2021.

The Initial Term Loan Facility is scheduled to mature on June 27, 2023.

The 2019 Incremental Term Loan Facility had a carrying value of $ 1,449 million, net of $ 29 million of unamortized deferred financing costs as of April 3, 2021.

The 2019 Incremental Term Loan Facility had a carrying value of $ 1,447 million, net of $ 27 million of unamortized deferred financing costs as of July 3, 2021.

Borrowings under the 2019 Incremental Term Loan Facility bear interest at a rate per annum equal to, at USF’s option, either the sum of LIBOR plus a margin of 2.00 %, or the sum of an ABR, determined in accordance with the term loan credit agreement, plus a margin of 1.00 %.

1 unchanged sentence

Secured Notes

The Secured Notes had a carrying value of $ 988 million, net of $ 12 million of unamortized deferred financing costs, as of April 3, 2021.

The Secured Notes had a carrying value of $ 989 million, net of $ 11 million of unamortized deferred financing costs, as of July 3, 2021.

The Secured Notes are scheduled to mature on April 15, 2025.

4 unchanged sentences

Lender fees and third-party costs of $ 9 million associated with the issuance of the Unsecured Senior Notes due 2029 were capitalized as deferred financing costs.

The Unsecured Senior Notes due 2029 had an outstanding balance of $ 891 million, net of $ 9 million of unamortized deferred financing costs, as of April 3, 2021.

The Unsecured Senior Notes due 2029 had an outstanding balance of $ 891 million, net of $ 9 million of unamortized deferred financing costs, as of July 3, 2021.

The Unsecured Senior Notes due 2029 bear interest at a rate of 4.75 % per annum and will mature on February 15, 2029.

4 unchanged sentences

These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends, or engage in mergers or consolidations.

USF had approximately $ 1.3 billion of restricted payment capacity under these covenants, and approximately $ 2.7 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of April 3, 2021.

USF had approximately $ 1.3 billion of restricted payment capacity under these covenants, and approximately $ 2.8 billion of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation as of July 3, 2021.

RESTRUCTURING LIABILITIES

1 unchanged sentence

In connection with these activities, the Company may incur various costs including severance and other employee-related separation costs.

During the 13 weeks ended April 3, 2021, $ 3 million of net restructuring costs were recognized primarily related to initiatives to improve operational effectiveness.

Net restructuring costs were de minimis during the 13 weeks ended March 28, 2020.

Net restructuring liabilities were $ 4 million and $ 2 million as of April 3, 2021 and January 2, 2021, respectively.

During the 26 weeks ended July 3, 2021, the Company incurred net restructuring costs of $ 4 million for severance and related costs associated with the announced closure of an excess facility and initiatives to improve operational effectiveness.

During the 26 weeks ended June 27, 2020, in order to reduce operating expenses in line with the decrease in sales volume caused by the COVID-19 pandemic, the Company reduced its sales force and incurred net restructuring costs of $ 16 million for severance and related costs.

Net restructuring liabilities were $ 5 million and $ 2 million as of July 3, 2021 and January 2, 2021, respectively.

The following table summarizes the changes in the restructuring liabilities for the 26 weeks ended July 3, 2021:

Severance and Related Costs Facility Closing Costs Total

Balance at January 2, 2021 $ 1 $ 1 $ 2

Current period charges 4 — 4

Payments, net ( 1 ) — ( 1 )

Balance as of July 3, 2021 $ 4 $ 1 $ 5

RETIREMENT PLANS

3 unchanged sentences

The components of net periodic pension benefit credits for Company sponsored defined benefit plans were as follows:

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Components of net periodic pension benefit credits

$ 1 $ — $ 2 $ 1

Interest cost

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( 13 ) ( 13 ) ( 27 ) ( 26 )

Amortization of net loss — 1 — 1

Net periodic pension benefit credits $ ( 5 ) $ ( 4 ) $ ( 11 ) $ ( 9 )

Other postretirement benefit costs were de minimis for both the 13 weeks ended April 3, 2021 and March 28, 2020.

The service cost component of net periodic benefit credits is included in distribution, selling and administrative costs, while the other components of net periodic benefit credits are included in other (income) expense—net, respectively, in the Company's Consolidated Statements of Comprehensive Income.

Other postretirement benefit costs were de minimis for both the 13 weeks and 26 weeks ended July 3, 2021 and June 27, 2020.

The service cost component of net periodic benefit credits is included in distribution, selling and administrative costs, while the other components of net periodic benefit credits are included in other income—net, respectively, in the Company's Consolidated Statements of Comprehensive Income.

The Company does not expect to make significant contributions to its defined benefit pension plan in fiscal year 2021.

Certain employees are eligible to participate in the Company's 401(k) plan.

The Company made employer matching contributions to the 401(k) plan of $ 13 million and $ 14 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

The Company made employer matching contributions to the 401(k) plan of $ 13 million and $ 9 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and $ 26 million and $ 23 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

The Company is also required to contribute to various multiemployer pension plans under the terms of collective bargaining agreements that cover certain of its union-represented employees.

The Company’s contributions to these plans were $ 10 million and $ 12 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

The Company’s contributions to these plans were $ 12 million and $ 10 million for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively, and $ 22 million for the 26 weeks ended July 3, 2021 and June 27, 2020, respectively.

EARNINGS PER SHARE

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The Company applies the treasury method to calculate the dilution impact of share-based awards—stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals.

The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock.

For the 13 weeks ended April 3, 2021 and March 28, 2020, share-based awards representing 9 million and 10 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

For the 13 weeks ended April 3, 2021, convertible preferred stock representing 24 million of underlying common shares were not included in the computation because the effect would have been anti-dilutive.

The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock, if dilutive in the period.

For the 13 weeks ended July 3, 2021 and June 27, 2020, share-based awards representing 1 million and 9 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

For the 26 weeks ended July 3, 2021 and June 27, 2020, share-based awards representing 2 million and 9 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

For the 13 weeks ended July 3, 2021 and June 27, 2020, convertible preferred stock representing 25 million and 14 million of underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

For the 26 weeks ended July 3, 2021 and June 27, 2020, convertible preferred stock representing 25 million and 7 million of underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

The following table sets forth the computation of basic and diluted EPS:

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Net income (loss)

$ 55 $ ( 92 ) $ 31 $ ( 224 )

Series A convertible preferred stock dividends (1)

Net loss available to common shareholders

( 9 ) ( 5 ) ( 24 ) ( 5 )

Weighted-average common shares outstanding

Effect of dilutive securities

Net income (loss) available to common shareholders

$ 46 $ ( 97 ) $ 7 $ ( 229 )

Weighted-average common shares outstanding—basic

222 220 221 219

Effect of dilutive share-based awards

Effect of dilutive underlying shares of the Series A convertible preferred stock (2)

Weighted-average dilutive shares outstanding

Net loss per share

Weighted-average common shares outstanding—diluted

225 220 225 219

Net income (loss) per share

Basic $ 0.21 $ ( 0.44 ) $ 0.03 $ ( 1.05 )

$ 0.20 $ ( 0.44 ) $ 0.03 $ ( 1.05 )

(1) Preferred stock dividends for the first quarter of 2021 were declared on March 23, 2021 and were paid in kind on March 31, 2021.

(1) Preferred stock dividends for the first quarter of 2021 were paid in kind on March 31, 2021.

Preferred stock dividends for the second quarter of 2021 were paid in cash on June 30, 2021.

(2) The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock, if dilutive in the period.

Under the if-converted method, the Series A convertible preferred stock are converted to common shares for inclusion in the calculation of the weighted-average common shares outstanding—diluted.

Once converted, there would be no preferred stock outstanding and therefore no preferred stock dividend.

For the 13 weeks and 26 weeks ended July 3, 2021 and June 27, 2020, the effect of the Series A convertible preferred stock was excluded, as the inclusion of the incremental shares would be anti-dilutive.

CONVERTIBLE PREFERRED STOCK

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On March 31, 2021, the Company paid a dividend on the shares of the Series A convertible preferred stock in the form of 9,154 shares of Series A convertible preferred stock, plus a de minimis amount in cash in lieu of fractional shares in accordance with the terms of the Certificate of Designations for the Series A convertible preferred stock.

The following table summarizes the activity for the outstanding Series A convertible preferred stock and associated carrying value for the 13 weeks ended April 3, 2021 was as follows:

On June 30, 2021, the Company paid a cash dividend of $ 9 million on the shares of the Series A convertible preferred stock.

The following table summarizes the activity for the outstanding Series A convertible preferred stock and associated carrying value for the 26 weeks ended July 3, 2021 was as follows:

Series A Convertible Preferred Stock

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Shares issued as paid in kind dividend 9,154 15

Balance April 3, 2021 532,281 $ 534

Balance July 3, 2021 532,281 $ 534

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents changes in accumulated other comprehensive loss by component for the periods presented:

13 Weeks Ended

April 3, 2021 March 28, 2020

13 Weeks Ended 26 Weeks Ended

July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020

Accumulated other comprehensive loss components

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Change in fair value of interest rate swaps

— ( 2 ) — ( 10 )

Amounts reclassified to interest expense—net

Total before income tax

Income tax benefit

Income tax provision (benefit)

Current period comprehensive income (loss), net of tax

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See Note 12, Retirement Plans, for additional information.

(3) Included in other income (expense)—net in the Company's Consolidated Statements of Comprehensive Income.

(3) Included in other income—net in the Company's Consolidated Statements of Comprehensive Income.

RELATED PARTY TRANSACTIONS

KKR Capital Markets LLC, an affiliate of KKR, received $ 1 million for debt advisory services rendered in connection with the Unsecured Senior Notes due 2029 financing during the 13 weeks ended April 3, 2021.

As of April 3, 2021, investment funds managed by an affiliate of KKR held approximately $ 60 million in aggregate principal amount of the Initial Term Loan Facility and the 2019 Incremental Term Loan Facility, as reported by the administrative agent.

As of July 3, 2021, investment funds managed by an affiliate of KKR held approximately $ 56 million in aggregate principal amount of the Initial Term Loan Facility and the 2019 Incremental Term Loan Facility, as reported by the administrative agent.

During the 26 weeks ended July 3, 2021, KKR Capital Markets LLC, an affiliate of KKR, received $ 1 million for debt advisory services rendered in connection with the Unsecured Senior Notes due 2029 financing.

During the 26 weeks ended June 27, 2020, KKR Capital Markets LLC received aggregate fees of $ 6 million for debt advisory services rendered in connection with the 2020 Incremental Term Loan Facility, the Secured Notes and the ABL Facility amendment financings.

The determination of the Company’s overall effective income tax rate requires the use of estimates.

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federal and various state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction.

The Company estimated its annual effective income tax rate for the full fiscal year and applied the annual effective income tax rate to the results of the 13 weeks ended April 3, 2021 and March 28, 2020 for purposes of determining its year-to-date tax provision.

For the 13 weeks ended April 3, 2021, the Company's effective income tax rate of 43 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items included a tax benefit of $ 6 million, primarily related to excess tax benefits associated with share-based compensation.

For the 13 weeks ended March 28, 2020, the Company's effective income tax rate of 23 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items included a tax expense of $ 3 million, primarily related to an increase in the state valuation allowance.

The Company estimated its annual effective income tax rate for the full fiscal year and applied the annual effective income tax rate to the results of the 26 weeks ended July 3, 2021 and June 27, 2020 for purposes of determining its year-to-date tax provision.

For the 13 weeks ended July 3, 2021, the Company's effective income tax rate of 28 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes.

For the 13 weeks ended June 27, 2020, the Company's effective income tax rate of 22 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items included a tax expense of $ 2 million, primarily related to an increase in an unrecognized tax benefit.

For the 26 weeks ended July 3, 2021, the Company's effective income tax rate of 9 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items include a tax benefit of $ 6 million, primarily related to excess tax benefits associated with share-based compensation.

the 26 weeks ended June 27, 2020, the Company's effective income tax rate of 23 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

These discrete tax items included a tax expense of $ 2 million primarily related to an increase in an unrecognized tax benefit and a tax expense of $ 2 million primarily related to a tax benefit shortfall associated with share-based compensation.

COMMITMENTS AND CONTINGENCIES

Purchase Commitments —The Company enters into purchase orders with vendors and other parties in the ordinary course of business and has a limited number of purchase contracts with certain vendors that require it to buy a predetermined volume of

The Company had $ 1,523 million of purchase orders and purchase contract commitments as of April 3, 2021 to be purchased in the remainder of fiscal year 2021 and $ 67 million of information technology commitments through August 2025 that are not recorded in the Company's Consolidated Balance Sheets.

The Company had $ 1,481 million of purchase orders and purchase contract commitments as of July 3, 2021 to be purchased in the remainder of fiscal year 2021 and $ 55 million of information technology commitments through August 2025 that are not recorded in the Company's Consolidated Balance Sheets.

To minimize fuel price risk, the Company enters into forward purchase commitments for a portion of its projected diesel fuel requirements.

The Company had diesel fuel forward purchase commitments totaling $ 38 million through December 2021, as of April 3, 2021.

Additionally, the Company had electricity forward purchase commitments totaling $ 5 million through June 2024, as of April 3, 2021.

The Company had diesel fuel forward purchase commitments totaling $ 28 million through June 2022, as of July 3, 2021.

Additionally, the Company had electricity forward purchase commitments totaling $ 5 million through June 2024, as of July 3, 2021.

The Company does not measure its forward purchase commitments for fuel and electricity at fair value, as the amounts under contract meet the physical delivery criteria in the normal purchase exception.

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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-Q

Item 1. Financial Statements