What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 126 added, 103 removed, 398 unchanged (37% of the section changed)

3 unchanged sentences

(In millions, except par value)

April 2, 2022 January 1, 2022

July 2, 2022 January 1, 2022

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 2, 2022 and January 1, 2022 534 534

0.5 issued and outstanding as of July 2, 2022 and January 1, 2022 534 534

Shareholders’ equity:

1 unchanged sentence

224 and 223 issued and outstanding as of

April 2, 2022 and January 1, 2022, respectively

July 2, 2022 and January 1, 2022, respectively

Additional paid-in capital

9 unchanged sentences

(In millions, except per share data)

13 Weeks Ended

April 2, 2022 April 3, 2021

13 Weeks Ended 26 Weeks Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Net sales $ 8,827 $ 7,663 $ 16,625 $ 13,958

Cost of goods sold 7,444 6,494 14,047 11,786

1,383 1,169 2,578 2,172

Operating expenses:

Distribution, selling and administrative costs

1,233 1,044 2,394 2,016

Restructuring costs and asset impairment charges

Total operating expenses

1,233 1,045 2,394 2,020

Operating income 150 124 184 152

2 unchanged sentences

Loss on extinguishment of debt — — — 23

Loss before income taxes ( 15 ) ( 42 )

Income tax benefit ( 8 ) ( 18 )

Other comprehensive loss—net of tax:

Income before income taxes 95 76 80 34

Income tax provision 25 21 17 3

Other comprehensive income —net of tax:

Changes in retirement benefit obligations

Recognition of interest rate swaps

Comprehensive loss

Comprehensive income

$ 70 $ 57 $ 63 $ 35

Net loss $ ( 7 ) $ ( 24 )

Net income $ 70 $ 55 $ 63 $ 31

Series A convertible preferred stock dividends ( 9 ) ( 9 ) ( 18 ) ( 24 )

Net loss available to common shareholders $ ( 16 ) $ ( 39 )

Net loss per share

Net income available to common shareholders $ 61 $ 46 $ 45 $ 7

Net income per share

Basic (Note 12)

4 unchanged sentences

Basic (Note 12)

224 222 224 221

Diluted (Note 12)

226 225 226 225

See Notes to Consolidated Financial Statements (Unaudited).

16 unchanged sentences

BALANCE—April 2, 2022 224 $ 2 $ 2,973 $ 766 $ ( 19 ) $ 3,722

US FOODS HOLDING CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(In millions)

Share-based compensation expense — — 9 — — 9

Proceeds from employee stock purchase plan — — 7 — — 7

Exercise of stock options — — 5 — — 5

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

Net Income — — — 70 — 70

BALANCE—July 2, 2022 224 $ 2 $ 2,994 $ 827 $ ( 19 ) $ 3,804

Common Stock Additional

13 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

See Notes to Consolidated Financial Statements (Unaudited).

3 unchanged sentences

26 Weeks Ended

April 2, 2022 April 3, 2021

July 2, 2022 July 3, 2021

Cash flows from operating activities:

$ ( 7 ) $ ( 24 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

2 unchanged sentences

Amortization of deferred financing costs

Deferred tax provision (benefit)

Deferred tax provision

Share-based compensation expense

Provision (benefit) for doubtful accounts

Benefit for doubtful accounts

Changes in operating assets and liabilities:

1 unchanged sentence

( 363 ) ( 516 )

Increase in inventories—net

Increase inventories—net

( 107 ) ( 286 )

Increase in prepaid expenses and other assets

( 37 ) ( 25 )

Increase in accounts payable and cash overdraft liability

2 unchanged sentences

Cash flows from investing activities:

Proceeds from sales of divested assets

Proceeds from sales of property and equipment 3 1

15 unchanged sentences

( 70 ) ( 279 )

Net increase in cash, and cash equivalents and restricted cash 42 83

Net increase (decrease) in cash, and cash equivalents and restricted cash 49 ( 130 )

Cash, cash equivalents and restricted cash—beginning of period 148 829

47 unchanged sentences

The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services.

The Company generates substantially all of its revenue from the distribution and sale of food and food-related products and recognizes revenue when title and risk of loss passes and the

customer accepts the goods, which occurs at delivery.

The Company generates substantially all of its revenue from the distribution and sale of food and food-related products and recognizes revenue when title and risk of loss passes to the customer

and the customer accepts the goods, which occurs at delivery.

Customer sales incentives, such as volume-based rebates or discounts, are treated as a reduction of revenue at the time the revenue is recognized.

1 unchanged sentence

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 2, 2022 or January 1, 2022.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.7 billion and $ 1.5 billion as of April 2, 2022 and January 1, 2022, respectively.

The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of July 2, 2022 or January 1, 2022.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.8 billion and $ 1.5 billion as of July 2, 2022 and January 1, 2022, respectively.

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

1 unchanged sentence

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 $ 27 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both April 2, 2022 and January 1, 2022, and $ 28 million and $ 26 million included in other assets in the Company’s Consolidated Balance Sheets as of April 2, 2022 and January 1, 2022 respectively.

The Company’s contract assets for these upfront payments were $ 27 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both July 2, 2022 and January 1, 2022, and $ 29 million and $ 26 million included in other assets in the Company’s Consolidated Balance Sheets as of July 2, 2022 and January 1, 2022, respectively.

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

13 Weeks Ended

April 2, 2022 April 3, 2021

13 Weeks Ended 26 Weeks Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Meats and seafood $ 3,286 $ 2,951 $ 6,236 $ 5,213

12 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 $ 414 million and $ 342 million as of April 2, 2022 and January 1, 2022, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $ 72 million and $ 21 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

LIFO reserves in the Company’s Consolidated Balance Sheets were $ 479 million and $ 342 million as of July 2, 2022 and January 1, 2022, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $ 65 million and $ 97 million for the 13 weeks ended July 2, 2022 and July 3, 2021, respectively, and increased $ 137 million and $ 118 million for the 26 weeks ended July 2, 2022 and July 3, 2021, respectively.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

4 unchanged sentences

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.

Due to the impact that the COVID-19 pandemic was expected to have on our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020.

Since that initial charge in 2020, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts for by $ 12 million the 13 weeks ended April 3, 2021.

Activity in the allowance for doubtful accounts for the 13 weeks ended April 2, 2022 was de minimis.

A summary of the activity in the allowance for doubtful accounts for the 13 weeks ended April 2, 2022 and April 3, 2021 was as follows:

April 2, 2022 April 3, 2021

Activity in the allowance for doubtful accounts for the 13 weeks ended July 2, 2022 was more consistent with pre-pandemic activity than the 13 weeks ended July 3, 2021.

A summary of the activity in the allowance for doubtful accounts for the 26 weeks ended July 2, 2022 and July 3, 2021 was as follows:

July 2, 2022 July 3, 2021

Balance as of beginning of year $ 33 $ 67

2 unchanged sentences

Balance as of end of period

This table excludes the vendor receivable related allowance for doubtful accounts of $ 11 million and $ 7 million as of April 2, 2022 and January 1, 2022, respectively.

This table excludes the vendor receivable related allowance for doubtful accounts of $ 13 million and $ 7 million as of July 2, 2022 and January 1, 2022, 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 2, 2022 and January 1, 2022, property and equipment-net included accumulated depreciation of $ 2,788 million and $ 2,722 million, respectively.

Depreciation expense was $ 78 million and $ 82 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

As of July 2, 2022 and January 1, 2022, property and equipment-net included accumulated depreciation of $ 2,852 million and $ 2,722 million, respectively.

Depreciation expense was $ 81 million for both the 13 weeks ended July 2, 2022 and July 3, 2021, and $ 159 million and $ 163 million for the 26 weeks ended July 2, 2022 and July 3, 2021, respectively .

GOODWILL AND OTHER INTANGIBLES

4 unchanged sentences

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 $ 11 million and $ 19 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

Amortization expense was $ 11 million and $ 13 million for the 13 weeks ended July 2, 2022 and July 3, 2021, respectively, and $ 22 million and $ 32 million for the 26 weeks ended July 2, 2022 and July 3, 2021, respectively.

Goodwill and other intangibles—net consisted of the following:

April 2, 2022 January 1, 2022

July 2, 2022 January 1, 2022

Goodwill $ 5,625 $ 5,625

13 unchanged sentences

The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if events occur that indicate an asset may be impaired.

For goodwill and indefinite-lived intangible assets, the Company’s policy is to assess for impairment as of the beginning of each fiscal third quarter.

No impairments were recognized for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

and indefinite-lived intangible assets, the Company’s policy is to assess for impairment as of the beginning of each fiscal third quarter.

No impairments were recognized for the 26 weeks ended July 2, 2022 and July 3, 2021, respectively.

FAIR VALUE MEASUREMENTS

7 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 2, 2022 and January 1, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

April 2, 2022

The Company’s assets and liabilities measured at fair value on a recurring basis as of July 2, 2022 and January 1, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

Level 1 Level 2 Level 3 Total

12 unchanged sentences

The Company has in the past, and may in the future, use interest rate swaps, designated as cash flow hedges, to manage its exposure to interest rate movements in connection with its variable-rate debt.

T he Company had no outstanding interest rate swap agreements a s of both April 2, 2022 and January 1, 2022.

T he Company had no outstanding interest rate swap agreements a s of either July 2, 2022 or January 1, 2022.

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 $ 4.9 billion and $ 5.1 billion as of April 2, 2022 and January 1, 2022, respectively, as compared to its carrying value of $ 5.0 billion as of both April 2, 2022 and January 1, 2022.

The fair value of the Company’s 6.25 % senior secured notes due April 15, 2025 (the “Senior Secured Notes due 2025”) was $ 1.0 billion as of both April 2, 2022 and January 1, 2022.

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 both April 2, 2022 and January 1, 2022.

The fair value of the Company’s 4.625 % unsecured senior notes due June 1, 2030 (the “Unsecured Senior Notes due 2030”) was $ 0.5 billion as of both April 2, 2022 and January 1, 2022.

Fair value of the Senior Secured Notes due 2025, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2030 is based upon their closing market prices on the respective dates.

The fair value of the Senior Secured Notes due 2025, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2030 is classified under Level 2 of the fair value hierarchy.

The fair value of the Company’s total debt approximated $ 4.7 billion and $ 5.1 billion as of July 2, 2022 and January 1, 2022, respectively, as compared to its carrying value of $ 5.0 billion as of both July 2, 2022 and January 1, 2022.

The fair value of the Company’s 6.25 % senior secured notes due April 15, 2025 (the “Secured Senior Notes due 2025”) was $ 1.0 billion as of both July 2, 2022 and January 1, 2022.

The fair value of the Company’s 4.75 % unsecured senior notes due

February 15, 2029 (the “Unsecured Senior Notes due 2029”) was $ 0.8 billion and $ 0.9 billion as of July 2, 2022 and January 1, 2022, respectively.

The fair value of the Company’s 4.625 % unsecured senior notes due June 1, 2030 (the “Unsecured Senior Notes due 2030”) was $ 0.4 billion and $ 0.5 billion as of July 2, 2022 and January 1, 2022, respectively.

Fair value of the Secured Senior Notes due 2025, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2030 is based upon their closing market prices on the respective dates.

The fair value of the Secured Senior Notes due 2025, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2030 is classified under Level 2 of the fair value hierarchy.

The fair value of the balance of the Company’s debt is primarily classified under Level 3 of the fair value hierarchy, with fair value estimated based upon a combination of the cash outflows expected under these debt facilities, interest rates that are currently available to the Company for debt with similar terms, and estimates of the Company’s overall credit risk.

Total debt consisted of the following:

Debt Description Maturity Interest Rate as of April 2, 2022 Carrying Value as of April 2, 2022 Carrying Value as of January 1, 2022

Debt Description Maturity Interest Rate as of July 2, 2022 Carrying Value as of July 2, 2022 Carrying Value as of January 1, 2022

ABL Facility May 31, 2024 — % $ — $ —

5 unchanged sentences

costs, respectively) November 22, 2028 4.32 % 889 893

Senior Secured Notes due 2025 (net of $9 and $11 of unamortized deferred financing costs,

Secured Senior Notes due 2025 (net of $8 and $11 of unamortized deferred financing costs,

respectively)

9 unchanged sentences

Long-term debt $ 4,912 $ 4,916

As of April 2, 2022, approximately 47 % of the Company’s total debt bears interest at a floating rate.

As of July 2, 2022, approximately 46% of the Company’s total debt bore 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 in 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 2, 2022 was 0.00 % for ABR loans and 1.00 % for LIBOR loans.

USF had no outstanding borrowings, and had outstanding letters of credit totaling $ 263 million, under the ABL Facility as of April 2, 2022.

The margin under the ABL Facility as of July 2, 2022 was 0.00 % for ABR loans and 1.00 % for LIBOR loans.

USF had no outstanding borrowings, and had outstanding letters of credit totaling $ 248 million, under the ABL Facility as of July 2, 2022.

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 $ 1,727 million under the ABL Facility as of April 2, 2022.

There was available capacity of $ 1,742 million under the ABL Facility as of July 2, 2022.

Term Loan Facilities

Under its term loan credit agreement, USF has entered into an incremental senior secured term loan facility borrowed in September 2019 (the “2019 Incremental Term Loan Facility”) and an incremental senior secured term loan borrowed in November 2021 (the “2021 Incremental Term Loan Facility”).

Under its term loan credit agreement, USF has entered into an incremental senior secured term loan facility borrowed in September 2019 (the “2019 Incremental Term Loan Facility”) and an incremental senior secured term loan facility borrowed in November 2021 (the “2021 Incremental Term Loan Facility”).

2019 Incremental Term Loan Facility

The 2019 Incremental Term Loan Facility had an outstanding balance of $ 1,439 million, net of $ 23 million of unamortized deferred financing costs as of April 2, 2022.

The 2019 Incremental Term Loan Facility had an outstanding balance of $ 1,437 million, net of $ 22 million of unamortized deferred financing costs as of July 2, 2022.

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, as described in the 2019 Incremental Term Loan Facility plus a margin of 1.00 % (subject to a LIBOR “floor” of 0.00 %).

1 unchanged sentence

2021 Incremental Term Loan Facility

The 2021 Incremental Term Loan Facility had an outstanding balance of $ 891 million, net of $ 6 million of unamortized deferred financing costs as of April 2, 2022.

Borrowings under the 2021 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 2.75 %, or the sum of an ABR, as described in the 2021 Incremental Term Loan Facility, plus a margin of 1.75 % (subject to a LIBOR “floor” of 0.00 %).

The 2021 Incremental Term Loan Facility had an outstanding balance of $ 889 million, net of $ 6 million of unamortized deferred financing costs as of July 2, 2022.

Borrowings under the 2021 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 2.75 %, or the sum of an ABR, as described in the 2021 Incremental Term Loan Facility, plus a margin of 1.75 % (subject to a LIBOR “floor” of 0.00 %).

The 2021 Incremental Term Loan Facility will mature on November 22, 2028.

Senior Secured Notes due 2025

The Senior Secured Notes due 2025 had an outstanding balance of $ 991 million, net of $ 9 million of unamortized deferred financing costs, as of April 2, 2022.

The Senior Secured Notes due 2025 bear interest at a rate of 6.25 % per annum and will mature on April 15, 2025.

Secured Senior Notes due 2025

The Secured Senior Notes due 2025 had an outstanding balance of $ 992 million, net of $ 8 million of unamortized deferred financing costs, as of July 2, 2022.

The Secured Senior Notes due 2025 bear interest at a rate of 6.25 % per annum and will mature on April 15, 2025.

Unsecured Senior Notes due 2029

The Unsecured Senior Notes due 2029 had an outstanding balance of $ 892 million, net of $ 8 million of unamortized deferred financing costs, as of April 2, 2022.

The Unsecured Senior Notes due 2029 had an outstanding balance of $ 892 million, net of $ 8 million of unamortized deferred financing costs, as of July 2, 2022.

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

Unsecured Senior Notes due 2030

The Unsecured Senior Notes due 2030 had an outstanding balance of $ 495 million, net of $ 5 million of unamortized deferred financing costs, as of April 2, 2022.

The Unsecured Senior Notes due 2030 had an outstanding balance of $ 495 million, net of $ 5 million of unamortized deferred financing costs, as of July 2, 2022.

The Unsecured Senior Notes due 2030 bear interest at a rate of 4.625 % per annum and will mature on June 1, 2030.

2 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 $ 1.4 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 April 2, 2022.

USF had approximately $ 1.5 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 2, 2022.

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 2, 2022, net restructuring costs were de minimis.

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 liabilities were $ 1 million and $ 3 million as of April 2, 2022 and January 1, 2022, respectively.

Net restructuring costs were de minimis for both the 13 weeks and 26 weeks ended July 2, 2022.

During the 13 weeks and 26 weeks ended July 3, 2021, $ 1 million and $ 4 million of net restructuring costs were recognized, respectively, primarily related to initiatives to improve operational effectiveness.

Net restructuring liabilities were $ 1 million and $ 3 million as of July 2, 2022 and January 1, 2022, respectively.

RETIREMENT PLANS

1 unchanged sentence

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

13 Weeks Ended

April 2, 2022 April 3, 2021

13 Weeks Ended 26 Weeks Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Components of net periodic pension benefit credits

$ — $ 1 $ 1 $ 2

Interest cost

3 unchanged sentences

Net periodic pension benefit credits $ ( 5 ) $ ( 5 ) $ ( 10 ) $ ( 11 )

Other postretirement benefit costs were de minimis for both the 13 weeks ended April 2, 2022 and April 3, 2021.

Other postretirement benefit costs were de minimis for both the 13 weeks and 26 weeks ended July 2, 2022 and July 3, 2021.

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 in the Company’s Consolidated Statements of Comprehensive Income.

1 unchanged sentence

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 $ 16 million and $ 13 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

The Company made employer matching contributions to the 401(k) plan of $ 14 million and $ 13 million for the 13 weeks ended July 2, 2022 and July 3, 2021, respectively, and $ 30 million and $ 26 million for the 26 weeks ended July 2, 2022 and July 3, 2021, 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 $ 12 million and $ 10 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

The Company’s contributions to these plans were $ 12 million for both the 13 weeks ended July 2, 2022 and July 3, 2021, and $ 24 million and $ 22 million for the 26 weeks ended July 2, 2022 and July 3, 2021, respectively.

EARNINGS PER SHARE

The Company computes EPS in accordance with ASC 260, Earnings per Share .

Basic EPS is computed by dividing net (loss) income available to common shareholders by the weighted-average number of shares of common stock outstanding.

Basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities.

1 unchanged sentence

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

For the 13 weeks ended April 2, 2022 and April 3, 2021, share-based awards representing 8 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 April 2, 2022 and April 3, 2021, Series A Preferred Stock representing 25 million and 24 million of underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

For the 13 weeks ended July 2, 2022 and July 3, 2021, share-based awards representing 3 million and 1 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 2, 2022 and July 3, 2021, share-based awards representing 3 million and 2 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

Additionally, for both the 13 weeks and 26 weeks ended July 2, 2022 and July 3, 2021, Series A Preferred Stock representing 25 million of underlying common shares was 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 2, 2022 April 3, 2021

13 Weeks Ended 26 Weeks Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

$ 70 $ 55 $ 63 $ 31

Series A Preferred Stock Dividends (1)

Net loss available to common shareholders

( 9 ) ( 9 ) ( 18 ) ( 24 )

Net income available to common shareholders

$ 61 $ 46 $ 45 $ 7

Weighted-average common shares outstanding—basic

224 222 224 221

Effect of dilutive share-based awards

2 unchanged sentences

Weighted-average common shares outstanding—diluted

Net loss per share

226 225 226 225

Net income per share

Basic $ 0.27 $ 0.21 $ 0.20 $ 0.03

1 unchanged sentence

(1) Series A Preferred Stock dividends for the first quarter of 2021 were paid in kind on March 31, 2021 in the form of shares of Series A Preferred Stock.

Series A Preferred Stock dividends for the first quarter of 2022 were paid in cash on March 31, 2022.

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

Preferred Stock dividends for the first and second quarters of 2022 were paid in cash on March 31, 2022, and June 30, 2022, respectively.

(2) Under the if-converted method, outstanding shares of the Series A Preferred Stock are converted to common shares for inclusion in the calculation of the weighted-average common shares outstanding—diluted.

4 unchanged sentences

The Company used the net proceeds from the Issuance for working capital and general corporate purposes.

As of both April 2, 2022 and January 1, 2022, the Company had issued a total of 532,281 shares of Series A Preferred Stock.

The Series A Preferred Stock had a carrying value of $534 million as of both April 2, 2022 and January 1, 2022.

On March 31, 2022, the Company paid cash dividends of $ 9 million on the shares of the Series A Preferred Stock.

As of both July 2, 2022 and January 1, 2022, the Company had issued a total of 532,281 shares of Series A Preferred Stock.

The Series A Preferred Stock had a carrying value of $ 534 million as of both July 2, 2022 and January 1, 2022.

On June 30, 2022, and March 31, 2022, the Company paid cash dividends of $ 9 million each on the shares of the Series A Preferred Stock.

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 2, 2022 April 3, 2021

13 Weeks Ended 26 Weeks Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Accumulated other comprehensive loss components

11 unchanged sentences

Balance as of beginning of period (1)

$ — $ ( 3 ) $ — $ ( 5 )

Change in fair value of interest rate swaps

4 unchanged sentences

Balance as of end of period (1)

$ — $ ( 1 ) $ — $ ( 1 )

Accumulated other comprehensive loss as of end of period (1)

7 unchanged sentences

RELATED PARTY TRANSACTIONS

As of December, 31, 2021, FMR LLC, held approximately 11 % of the Company’s outstanding common stock.

As of both April 2, 2022 and January 1, 2022, as reported by the administrative agent of the 2019 and 2021 Incremental Term Loan Facilities, investment funds managed by an affiliate of FMR LLC held approximately $ 24 million in aggregate principal amount of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility.

As of December 31, 2021, FMR LLC held approximately 11 % of the Company’s outstanding common stock based solely on information provided in its most recent amendment to its Schedule 13G filed with the SEC.

As of both July 2, 2022 and January 1, 2022, as reported by the administrative agent of the 2019 and 2021 Incremental Term Loan Facilities, investment funds managed by an affiliate of FMR LLC held approximately $ 24 million in aggregate principal amount of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility.

Certain FMR LLC affiliates also provide administrative and trustee services for the Company’s 401(k) Plan and provide administrative services for other Company sponsored employee benefit plans.

Fees earned by FMR LLC affiliates are not material to the Company’s consolidated financial statements.

As of April 2, 2022, KKR held 100% of the Company’s outstanding Series A Preferred Stock, representing approximately 10% of the Company’s outstanding stock on a converted basis.

As reported by the administrative agent of the 2019 Incremental Term Loan Facility, investment funds managed by an affiliate of KKR held approximately $ 17 million in aggregate principal amount of the 2019 Incremental Term Loan Facility as of both April 2, 2022 and January 1, 2022.

During the 13 weeks ended April 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.

As of July 2, 2022, KKR held 100% of the Company’s outstanding Series A Preferred Stock, representing approximately 10% of the Company’s outstanding stock on a converted basis.

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.

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 2, 2022 and April 3, 2021, and then recognized the impact of discrete tax items for purposes of determining its year-to-date tax provision.

For the 13 weeks ended April 2, 2022, the Company's effective income tax rate of 51 % 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.

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 2, 2022 and July 3, 2021, and then recognized the impact of discrete tax items for purposes of determining its year-to-date tax provision.

For the 13 weeks ended July 2, 2022, the Company’s effective income tax rate of 26 % 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 $ 1 million primarily related to excess tax benefits associated with share-based compensation.

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.

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 26 weeks ended July 2, 2022, the Company’s effective income tax rate of 21 % was equivalent to 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 $ 5 million primarily related to excess tax benefits associated with share-based compensation.

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.

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 products.

The Company had $ 1,890 million of purchase orders and purchase contract commitments as of April 2, 2022 to be purchased in the remainder of fiscal year 2022 and $ 49 million of information technology commitments through August 2025 that are not recorded in the Company’s Consolidated Balance Sheets.

The Company had $ 1,758 million of purchase orders and purchase contract commitments as of July 2, 2022 to be purchased in the remainder of fiscal year 2022 and $ 58 million of information technology commitments through September 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 $ 33 million through March 2023, as of April 2, 2022.

Additionally, the Company had electricity forward purchase commitments totaling $ 14 million through June 2024, as of April 2, 2022.

The Company had diesel fuel forward purchase commitments totaling $ 34 million through November 2023, as of July 2, 2022.

Additionally, the Company had electricity forward purchase commitments totaling $ 12 million through June 2024, as of July 2, 2022.

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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BUSINESS INFORMATION

The Company’s consolidated results represent the results of its one business segment based on how the Company’s chief operating decision maker, the Chief Executive Officer, views the business for purposes of evaluating performance and making operating decisions.

The Company’s consolidated results represent the results of its one business segment based on how the Company’s chief operating decision maker, our Interim Chief Executive Officer, views the business for purposes of evaluating performance and making operating decisions.

The Company markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S.

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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