What changed in this filing

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Item 1. Business

2022-02-17 compared with 2021-02-16 · 63 added, 69 removed, 226 unchanged (37% of the section changed)

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MADE EASY.™ , which is centered on providing customers with the innovative products business support and technology solutions they need to operate their businesses profitably.

We operate as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing us to manage the business as a single operating segment.

We have centralized activities where scale matters and our local field structure focuses on customer facing activities.

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Our sales associates are supported by sophisticated marketing and category management capabilities, as well as a sales support team that includes world-class chefs and restaurant operations consultants, new business development managers and others that help us provide more comprehensive service to our customers.

Our extensive network of approximately 70 distribution facilities and fleet of approximately 6,500 trucks, along with nearly 80 cash and carry locations, allow us to operate efficiently and provide high levels of customer service.

Our extensive network of 69 distribution facilities and fleet of approximately 6,500 trucks, along with 80 cash and carry locations, allow us to operate efficiently and provide high levels of customer service.

This operating model allows us to leverage our nationwide scale and footprint while executing locally.

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GPO members are primarily comprised of customers in the healthcare, hospitality, education, and government/military industries.

In March 2020, the World Health Organization characterized a novel strain of coronavirus, COVID-19, as a pandemic amidst a rising number of confirmed cases and thousands of deaths worldwide.

In addition to the factors surrounding the COVID-19 pandemic as further discussed in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, there are several important dynamics affecting the industry, including:

There are several important dynamics affecting the industry, including:

• Evolving consumer tastes and preferences.

Consumers demand healthy and authentic food alternatives with fewer artificial ingredients, and they value locally-harvested and sustainably-manufactured food and packaging products.

Consumers demand healthy and authentic food choices with fewer artificial ingredients, and they value locally-harvested and sustainably-manufactured food and packaging products.

In addition, many ethnic food offerings are becoming more mainstream as consumers show a greater willingness to try new flavors and cuisines.

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• Growing importance of technology.

We see significant future growth being driven by the increased utilization of, and reliance on technology by foodservice distributors, customers (in particular, independent restaurants) and diners.

We see significant future growth being driven by the increased utilization of, and reliance on technology by foodservice distributors, customers and diners.

E-commerce solutions streamline the purchasing process and increase customer retention.

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We believe that we have the scale, foresight and agility required to proactively address these trends and, in turn, benefit from higher sales growth, greater customer retention, increased private label penetration, and improved profitability.

Since the World Health Organization characterized a novel strain of coronavirus, COVID-19, as a pandemic in March 2020, the pandemic has impacted our industry as further discussed in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Our Business Strategy

Our GREAT FOOD.

strategy is built on a differentiation focus in product, customer experience and innovation.

MADE EASY.™ strategy is built on a differentiation focus in product assortment, customer experience and innovation.

Through this strategy, we also serve our customers as consultants and business partners, bringing our customers personalized solutions and tailoring a suite of innovative products and services to fit each customer’s needs.

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By delivering our products and services through a differentiated team-based selling approach, we provide customers access to a diverse team of experts including chefs, center of the plate and produce specialists and restaurant operations consultants.

Approximately 80% of our customers utilize our e-commerce solutions.

Customers utilizing these solutions tend to purchase more and have stronger commercial relationships with us.

As noted above, our strategy of making it easier for our customers including servicing our customers through multiple channels.

We have nearly 80 cash and carry locations to provide more customers with a retail option in between deliveries and to cost effectively serve more price-conscious and smaller customers.

The cash and carry offering was significantly enhanced by our acquisition in 2020 of Smart Foodservice, a company that operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah and Washington that serve small and mid-sized restaurants and other food business customers with a broad assortment of products.

As noted above, our strategy of making it easier for our customers includes servicing our customers through multiple channels.

We have 80 cash and carry locations to provide more customers with a retail option in between deliveries and to cost effectively serve more price-conscious and smaller customers.

The cash and carry offering was significantly enhanced by our acquisition in 2020 of Smart Foodservice (as described below).

In addition, US Foods Direct™, an online ordering platform, more than doubles our product assortment and provides customers with access to thousands of specialty products which ship directly to them from the supplier.

More recently, we expanded our US Foods Pronto™ service in select markets to let restaurant operators receive smaller orders more frequently.

Truly giving our customers options to shop their way.

All of these channels provide our customers options to shop their way.

We believe our GREAT FOOD.

differentiation strategy will enable us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products.

MADE EASY.™ strategy will enable us to reach more customers and create deeper relationships with existing ones, particularly within our target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of our private brand products.

Further, we believe this strategy positions us to make the most of the continued growth in food away from home consumption and consumer preferences for innovative, on-trend flavors.

We have also invested in embedding continuous improvement in our operations to increase consistency and efficiency and to engage employees in improving our day-to-day processes.

As an enabler of this strategy, we have invested in embedding continuous improvement in our operations to increase consistency and efficiency and to engage employees in improving our day-to-day processes.

Acquisitions have also historically played an important role in supporting the execution of our growth strategy.

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for $1.8 billion.

The acquisition of the Food Group expands the Company’s network in the West and Northwest parts of the U.S.

On April 24, 2020, as noted above, USF completed the acquisition of Smart Stores Holding Corp., a Delaware corporation (“Smart Foodservice”), from funds managed by affiliates of Apollo Global Management, Inc.

The acquisition of the Food Group expanded the Company’s network in the West and Northwest parts of the U.S.

On April 24, 2020, USF completed the acquisition of Smart Stores Holding Corp., a Delaware corporation (“Smart Foodservice”), from funds managed by affiliates of Apollo Global Management, Inc.

for $972 million.

The acquisition of Smart Foodservice expands the Company's cash and carry business in the West and Northwest parts of the U.S.

Smart Foodservice, a company that operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah and Washington that serve small and mid-sized restaurants and other food business customers with a broad assortment of products.

Integrating the Food Group and Smart Foodservice and realizing synergies from the acquisitions are key priorities for the Company.

We are prioritizing deleveraging following the completion of these acquisitions, however we may selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities.

Following the completion of these acquisitions, we have prioritized deleveraging our balance sheet, however we may selectively pursue acquisition opportunities in the future if they are aligned with and enhance our strategic priorities.

Products and Brands

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Total Net sales $ 29,487 $ 22,885 $ 25,939

We have registered the trademarks US Foods ® , Food Fanatics ® , Chef’Store ® and Smart Foodservice ® as part of our overall brand strategy and our retail outlets.

We have registered the trademarks US Foods ® , Food Fanatics ® , and CHEF’STORE ® as part of our overall brand strategy and our retail outlets.

We have also registered or applied for trademark protection in the U.S.

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federal government contractor, we are subject to audit by the Office of Federal Contract Compliance Programs.

Department of Labor and its agencies, the Employee Benefits Security Administration, the Occupational Safety and Health Administration, and the Office of Federal Contract Compliance Programs, regulate our employment practices and standards for workers.

Department of Labor and its agencies, the Employee Benefits Security Administration, the Occupational Safety and Health Administration (“OSHA”), and the Office of Federal Contract Compliance Programs, regulate our employment practices and standards for workers.

We are also subject to laws that prohibit discrimination in employment based on non-merit categories, including Title VII of the Civil Rights Act and the Americans with Disabilities Act, and other laws relating to accessibility.

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• approximately 5,900 of our associates were members of local unions associated with the International Brotherhood of Teamsters and other labor organizations;

• approximately 88% of our associates were working in the “field” supporting our sales function, supply chain organization and retail operations and specialty production facilities, with the remaining 12% working in shared service or corporate roles.

• approximately 86% of our associates were working in “field” based roles within our broadline distribution, retail operations and broadline support business production facilities, with the remaining 14% working in shared service or corporate roles.

Collective Bargaining Agreements

As of January 2, 2021, we were party to 48 collective bargaining agreements (“CBAs”) covering certain associates at 27 (or 39%) of our distribution facilities, 4 of our specialty processing facilities and 22 of our cash and carry locations.

As of January 1, 2022, we were party to 51 collective bargaining agreements (“CBAs”) covering 5,900, or 21%, of our associates working at 29 (or 41%) of our distribution facilities, 4 of our broadline support business production facilities and 23 of our cash and carry locations.

During fiscal year 2021, 14 CBAs covering approximately 1,800 union associates were renegotiated.

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We are committed to compensation and benefits that respect and reward our associates for their dedication and hard work.

All of our exempt associates participate in our annual incentive plan, which provides eligible associates with annual cash bonus opportunities based upon the Company’s achievement of financial and other key performance metrics.

All of our exempt associates participate in our incentive plans, which provides eligible associates with cash bonus opportunities based upon the Company’s achievement of financial and other key performance metrics.

Under our long-term incentive plan, we grant equity compensation awards, such as stock options, restricted stock units and performance awards, which vest over a period of time, to eligible associates in order to attract and retain key personnel, strengthen their commitment to the welfare of the Company and align their interests with those of our stockholders.

Additionally, our comprehensive health and welfare benefits program provides our associates with a variety of medical and dental plans, plus voluntary benefits like vision or critical illness protection.

In addition, we offer innovative, no-cost wellness programs, paid time off programs including a paid parental leave policy, an employee assistance program, an employee stock purchase plan, a 401(k) savings plan, and a tuition reimbursement program.

Training and Development

Through training, mentoring, e-learning and on-the-job development, we help associates at all levels learn and grow, while building a pipeline of diverse talent.

Our signature leadership development programs include Gateway to Leadership for new people managers, Aspire to Grow for high-potential leaders, and Aspire to Lead, which is focused on developing a diverse cohort of future leaders.

We also offer innovative, no-cost wellness programs, paid time off programs including a paid parental leave policy, an employee assistance program, an employee stock purchase plan, a 401(k) savings plan, and a tuition reimbursement program.

Recruiting, Training and Development

Our ability to attract, develop and retain high-performing associates is crucial to our success, from building trusting relationships with our customers to timely and accurately preparing and delivering orders.

In 2021, in response to the challenging job market, we initiated a program to train interested warehouse associates to become commercial driver’s license (“CDL”) Class A delivery drivers.

Additionally, through training, mentoring, e-learning and on-the-job development, we help associates at all levels learn and grow, while building a pipeline of diverse talent.

Our signature leadership development programs include Gateway to Leadership, Aspire to Grow and Aspire to Lead, which are focused on developing a diverse cohort of leaders in our Company.

Our Leadership Foundations program provides training to sales managers, and supervisors and managers in our supply chain organization, and is designed to strengthen leadership capabilities and provide networking opportunities with other leaders across our organization.

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Sales Readiness, which gives new selling associates tools, resources and peer networking opportunities to help them succeed, and Selector Onboarding, which trains our warehouse selectors on safety, accuracy and performance standards.

Lastly, through our e-Cademy program, we offer all associates online learning resources to develop a variety of skills that align with our business strategy.

Diversity and Inclusion

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We believe our success relies upon a diverse and dynamic workplace built upon our Cultural Beliefs, which define how we live and create an equitable environment where all our associates can grow and thrive.

In fiscal year 2018, we introduced a Respectful Workplace training as part of our effort to promote respectful communication and foster greater inclusion.

Through the end of fiscal year 2020, more than 2,900 of our associates, including our executive and senior leadership teams and sales managers, had participated in a live, interactive Respectful Workplace training workshop.

During fiscal year 2020, we embedded Respectful Workplace modules into our orientation programs for new frontline and sales associates, and our annual Code of Conduct training which is assigned to all associates.

We also launched a new Disrupting Bias training program to provide a common framework for recognizing and addressing bias in the workplace, with a focus on reaching associates across all levels and functions of our business, as well as our executive and senior leadership teams.

We sponsor eight Employee Resource Groups (ERGs):

Black Resource Utilization Hub, Collective Asian Network, Hispanic and Latino ERG, LINK-UP – Linking Information, Networks and Knowledge, Pride Alliance, Those Who Serve – Military ERG, Women in Network, and Young Professionals.

The ERGs are associate-led groups that strengthen networking among colleagues, further personal and professional development, and promote diversity and inclusion.

Our diversity and inclusion strategy consists of three strategic focuses:

• Creating a more inclusive work environment where everyone feels safe and valued and their voices matter;

• Increasing the diversity of our workforce and leaders by investing in programs to build a diverse talent pipeline and accelerate the development of diverse associates;

• Supporting diverse communities and businesses by enhancing our outreach and sharing who we are and what we stand for.

We continue to cultivate a culture of inclusion through training programs for our leaders and associates and by sponsoring nine Employee Resource Groups (“ERGs”):

ADAPT - Ability and Disability Allies Partnering Together;

BRIDGE - Black Resource for Inclusion, Diversity, Growth and Empowerment;

Collective Asian Network;

HOLA - Hispanic Organization for Leadership and Advancement;

LINK-UP – Linking Information, Networks and Knowledge;

Multigenerational Empowerment Resource Group for Employees;

Pride Alliance;

Those Who Serve - Military ERG;

and Women in Network.

These associate-led groups strengthen networking among colleagues and further personal and professional development.

Ongoing listening sessions between the ERGs and our executive leadership team allow for open dialogue and the identification of new opportunities to bolster our diversity and inclusion strategy and strengthen associate engagement.

As a result of the efforts of our ERG program, we also recently trained 200 leaders to facilitate Allyship and Anti-Racism workshops for corporate and frontline associates, including drivers and selectors.

Impact of the COVID-19 Pandemic on our Employees

During fiscal year 2020, in response to the COVID-19 pandemic, we acted quickly to protect the health and safety of our associates by directing associates whose functions could be performed remotely to work off site and implementing new protocols and enhanced safety measures to protect the health and safety of our associates and customers, many of whom are classified as “essential” under local and/or state ordinances.

We continue to proactively monitor guidance and requirements from the Centers for Disease Control, the Occupational Safety and Health Administration and various other federal, state and local authorities and public health agencies and adjust our protocols and safety measures as appropriate to help mitigate the impact of the pandemic on our associates and customers.

In response to the immediate and severe impact of the COVID-19 pandemic on our business, results of operations and financial position, predominately from March through August 2020, we implemented multiple cost savings measures including:

temporary furloughs or hours reductions;

reducing compensation for our board, executives and other senior leaders;

making adjustments to our sales-based compensation program;

freezing non-business critical hiring;

suspending non-essential business travel;

reducing the use of third-party consultants;

and deferring annual corporate salary and wage increases.

In addition, during fiscal year 2020, to bring costs in line with decreased demand caused by the pandemic, we reduced the size of our workforce by eliminating open positions and laying off approximately 5% of our associates.

In order to ease the impact of these actions on our associates, and to support our associates during the pandemic, at various times during fiscal year 2020, we:

• contracted some of our distribution associates to customers and other retailers such as grocery retailers, which were experiencing a significant increase in demand during the onset of the COVID-19 pandemic;

• expanded short-term disability benefit eligibility to provide benefits to asymptomatic associates who were required to quarantine or unable to work due to school or other dependent-care center closures;

• enhanced our health and welfare benefits by temporarily waiving cost-sharing (deductibles, coinsurance and copayments) for COVID-19 testing and non-COVID-19 telehealth visits with in-network providers;

• offered participants in our 401(k) savings plan who may have suffered adverse financial consequences as a result of the COVID-19 pandemic the ability to take penalty-free distributions and suspend loan repayments;

• waived employee health insurance premiums for associates placed on unpaid, temporary furlough;

• provided associates who were asked to work remotely with a one-time $200 equipment stipend;

• encouraged the use of existing free wellness and mental health services through our employee assistance program;

• when and where available, packaged excess inventory and distributed free, drive-thru food packages to our associates, including those on temporary furlough.

Health and Safety

We are committed to continuously driving an enhanced safety culture built on education, awareness and associate engagement.

Our Get Home Safe campaign, directed at drivers and operations personnel, outlines actions aimed at reducing risks and improving safety routines.

In our facilities, our safety performance teams receive annual training and are focused on improving safety engagement and performance throughout our operations.

Our Driver Safety Program has been implemented across all markets to train our drivers on transportation safety.

We utilize technology to improve driver safety from distracted driver alerts to collision mitigation technology.

During fiscal years 2020 and 2021, in response to the COVID-19 pandemic, we implemented, and continue to maintain, protocols and enhanced safety measures to protect the health and safety of our associates and customers.

During 2021, we partnered with third-party providers to host more than 90 on-site COVID-19 vaccination clinics for associates and their family members, supporting thousands of associates in becoming vaccinated.

We continue to proactively monitor guidance and requirements from the Centers for Disease Control (“CDC”), OSHA and various other federal, state and local authorities and public health agencies and adjust our protocols and safety measures as appropriate to help mitigate the impact of the pandemic on our associates and customers.

Information about our Executive Officers

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Pietro Satriano

58 Chairman and Chief Executive Officer

59 Chief Executive Officer

49 Chief Financial Officer

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51 Executive Vice President, Strategy, Insights and Financial Planning

53 Chief Information Officer

Tonnison 53 Executive Vice President, Chief Information and Digital Officer

54 Executive Vice President, Chief Human Resources Officer

Satriano has served as Chief Executive Officer and a director of US Foods since July 2015.

In December 2017, Mr.

Satriano was elected Chairman of the Board of Directors.

Satriano has served as Chief Executive Officer and a director of US Foods since July 2015 and served as Chairman of the Board from December 2017 through February 2022.

From February 2011 to July 2015, Mr.

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Prior to joining Ahold, he served from February 2012 to November 2015 in several senior roles at Loblaw Companies Limited, a Canadian grocery retailer and wholesale food distributor, including President, Discount Division.

Kvasnicka has served as Executive Vice President, Field Operations since February 2021 and Interim Chief Supply Chain Officer since October 2019.

He served the Company as Executive Vice President, Locally Managed Business and Field Operations from September 2016 to February 2021, Executive Vice President, Locally Managed Sales from August 2015 to September 2016, Region President from April 2013 to July 2015 and Division President from October 2011 to March 2013.

Kvasnicka served the

Company as Vice President of Sales for the Stock Yards division, President of the Stock Yards division and in various other roles between 2005 and 2011.

Kvasnicka has served as Executive Vice President, Field Operations since February 2021.

He served the Company as Interim Chief Supply Chain Officer from October 2019 through March 2021, Executive Vice President, Locally Managed Business and Field Operations from September 2016 to February 2021, Executive Vice President, Locally Managed Sales from August 2015 to September 2016, Region President from April 2013 to July 2015 and Division President from October 2011 to March 2013.

Kvasnicka served the Company as Vice President of Sales for the Stock Yards division, President of the Stock Yards division and in various other roles between 2005 and 2011.

He was Vice President of Sales for the Minneapolis Division from 2003 to 2005.

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Rickard began his career with Charles River Associates, an economic consulting firm.

Rohland has served as Chief Information Officer since April 2011.

Tonnison has served as Executive Vice President, Chief Information and Digital Officer since July 2021.

Prior to joining US Foods, Mr.

Rohland served in several leadership positions at Citigroup, Inc., an investment bank and financial services provider, from March 2007 to April 2011, including Managing Director of Risk and Program Management.

Prior to joining Citigroup, Mr.

Rohland was Chief Information Officer of Volvo Car Corporation of Sweden, an automaker, from November 2005 to March 2007 and held a number of leadership positions at Ford Motor Company, also an automaker, from July 1990 to November 2005.

Tonnison served as Executive Vice President and Chief Information Officer at Tech Data Corporation, a Fortune 100 global distributor of business and consumer technologies, where he was responsible for the company’s global innovation strategy, information digital capabilities and operations.

Before his nearly 20-year tenure with Tech Data, Mr.

Tonnison held executive management positions with Computer 2000, Technology Solutions Network and Mancos Computers.

Works has served as Executive Vice President, Chief Human Resources Officer since February 2018.

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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-K

Item 1. Business