What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 111 added, 84 removed, 440 unchanged (31% of the section changed)

3 unchanged sentences

(In millions, except par value)

July 2, 2022 January 1, 2022

October 1, 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 July 2, 2022 and January 1, 2022 534 534

0.5 issued and outstanding as of October 1, 2022 and January 1, 2022 534 534

Shareholders’ equity:

1 unchanged sentence

225 and 223 issued and outstanding as of

July 2, 2022 and January 1, 2022, respectively

October 1, 2022 and January 1, 2022, respectively

Additional paid-in capital

10 unchanged sentences

13 Weeks Ended 39 Weeks Ended

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Net sales $ 8,917 $ 7,890 $ 25,542 $ 21,848

13 unchanged sentences

Income tax provision 45 27 62 30

109 64 172 95

Other comprehensive income —net of tax:

40 unchanged sentences

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

Share-based compensation expense — — 13 — — 13

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

Exercise of stock options 1 — 5 — — 5

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

Net Income — — — 109 — 109

BALANCE—October 1, 2022 225 $ 2 $ 3,017 $ 927 $ ( 19 ) $ 3,927

Common Stock Additional

21 unchanged sentences

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

Share-based compensation expense — — 13 — — 13

Proceeds from employee stock purchase plan 1 — 6 — — 6

Exercise of stock options — — 1 — — 1

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

Unrecognized gain on interest rate swaps, net of income tax — — — — 1 1

Net income — — — 64 — 64

BALANCE—October 2, 2021 223 $ 2 $ 2,952 $ 723 $ ( 29 ) $ 3,648

See Notes to Consolidated Financial Statements (Unaudited).

3 unchanged sentences

39 Weeks Ended

July 2, 2022 July 3, 2021

October 1, 2022 October 2, 2021

Cash flows from operating activities:

2 unchanged sentences

Gain on disposal of property and equipment—net

Intangible asset impairment charges — 7

Loss on extinguishment of debt — 23

2 unchanged sentences

Share-based compensation expense

Benefit for doubtful accounts

Provision (benefit) for doubtful accounts

Changes in operating assets and liabilities:

1 unchanged sentence

( 435 ) ( 530 )

Increase inventories—net

Increase in inventories—net

( 74 ) ( 292 )

Increase in prepaid expenses and other assets

Decrease in prepaid expenses and other assets

Increase in accounts payable and cash overdraft liability

41 unchanged sentences

All of the Company’s indebtedness, as further described in Note 9, 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 United States (“U.S.”).

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

31 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 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 did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of October 1, 2022 or January 1, 2022.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.9 billion and $ 1.5 billion as of October 1, 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 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 Company’s contract assets for these upfront payments were $ 26 million and $ 27 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of October 1, 2022 and January 1, 2022, respectively, and $ 30 million and $ 26 million included in other assets in the Company’s Consolidated Balance Sheets as of October 1, 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 39 Weeks Ended

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Meats and seafood $ 3,207 $ 3,067 $ 9,443 $ 8,280

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 $ 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.

LIFO reserves in the Company’s Consolidated Balance Sheets were $ 485 million and $ 342 million as of October 1, 2022 and January 1, 2022, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $ 6 million and $ 32 million for the 13 weeks ended October 1, 2022 and October 2, 2021, respectively, and increased $ 143 million and $ 150 million for the 39 weeks ended October 1, 2022 and October 2, 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.

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

Activity in the allowance for doubtful accounts for both the 13 weeks ended October 1, 2022 and October 2, 2021 was de minimis.

A summary of the activity in the allowance for doubtful accounts for the 39 weeks ended October 1, 2022 and October 2, 2021 was as follows:

October 1, 2022 October 2, 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 $ 13 million and $ 7 million as of July 2, 2022 and January 1, 2022, respectively.

This table excludes the vendor receivable related allowance for doubtful accounts of $ 10 million and $ 7 million as of October 1, 2022 and January 1, 2022, respectively and $ 6 million and $ 5 million as of October 2, 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 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 .

As of October 1, 2022 and January 1, 2022, property and equipment-net included accumulated depreciation of $ 2,917 million and $ 2,722 million, respectively.

Depreciation expense was $ 81 million and $ 79 million for the 13 weeks ended October 1, 2022 and October 2, 2021, respectively, and $ 240 million and $ 242 million for the 39 weeks ended October 1, 2022 and October 2, 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 $ 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.

Amortization expense was $ 11 million and $ 12 million for the 13 weeks ended October 1, 2022 and October 2, 2021, respectively, and $ 33 million and $ 44 million for the 39 weeks ended October 1, 2022 and October 2, 2021, respectively.

Goodwill and other intangibles—net consisted of the following:

July 2, 2022 January 1, 2022

October 1, 2022 January 1, 2022

Goodwill $ 5,625 $ 5,625

12 unchanged sentences

The Company assesses for impairment of intangible assets with definite lives only if events occur that indicate that the carrying amount of an intangible asset may not be recoverable.

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.

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.

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.

The Company completed its most recent annual impairment assessment for goodwill and indefinite-lived intangible assets as of July 3, 2022, the first day of the third quarter of fiscal year 2022, with no impairments noted.

During the third quarter of fiscal year 2021, the Company implemented rebranding initiatives related to the integration of a trade name acquired as part of the 2019 Food Group acquisition.

As a result of the rebranding initiatives, the Company recognized an impairment charge of $ 7 million, which was included in restructuring costs and asset impairment charges in the Company’s Consolidated Statements of Comprehensive Income.

The remaining carrying value of the acquired trade name of $ 3 million was reclassified to trade names—amortizable and is being amortized with an estimated remaining useful life of 10 years.

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

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

October 1, 2022

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 either July 2, 2022 or January 1, 2022.

T he Company had no outstanding interest rate swap agreements a s of either October 1, 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 $ 4.7 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.

The fair value of the Company’s total debt approximated $ 4.6 billion and $ 5.1 billion as of October 1, 2022 and January 1, 2022, respectively, as compared to its carrying value of $ 4.9 billion and $ 5.0 billion as of October 1, 2022 and January 1, 2022, respectively.

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 October 1, 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 October 1, 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 October 1, 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.

2 unchanged sentences

Total debt consisted of the following:

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

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

ABL Facility May 31, 2024 — % $ — $ —

2019 Incremental Term Loan Facility (net of $22

and $25 of unamortized deferred financing

costs, respectively) September 13, 2026 3.57 % 1,437 1,442

2021 Incremental Term Loan Facility (net of $6

and $7 of unamortized deferred financing

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

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

respectively)

2019 Incremental Term Loan Facility (net of $21 and $25 of unamortized deferred financing costs, respectively) September 13, 2026 5.12 % 1,434 1,442

2021 Incremental Term Loan Facility (net of $5 and $7 of unamortized deferred financing costs, respectively) November 22, 2028 5.87 % 788 893

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

April 15, 2025 6.25 % 992 989

8 unchanged sentences

Long-term debt $ 4,837 $ 4,916

As of July 2, 2022, approximately 46% of the Company’s total debt bore interest at a floating rate.

As of October 1, 2022, approximately 45 % 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 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 margin under the ABL Facility as of October 1, 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 $ 247 million, under the ABL Facility as of October 1, 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 $ 1,742 million under the ABL Facility as of July 2, 2022.

There was available capacity of $ 1,743 million under the ABL Facility as of October 1, 2022.

Term Loan Facilities

1 unchanged sentence

2019 Incremental Term Loan Facility

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.

The 2019 Incremental Term Loan Facility had an outstanding balance of $ 1,434 million, net of $ 21 million of unamortized deferred financing costs as of October 1, 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 $ 889 million, net of $ 6 million of unamortized deferred financing costs as of July 2, 2022.

The 2021 Incremental Term Loan Facility had an outstanding balance of $ 788 million, net of $ 5 million of unamortized deferred financing costs as of October 1, 2022.

During the 13 and 39 weeks ended October 1, 2022 we voluntarily prepaid $ 100 million of the 2021 Incremental Term Loan Facility.

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 %).

1 unchanged sentence

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 had an outstanding balance of $ 992 million, net of $ 8 million of unamortized deferred financing costs, as of October 1, 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 July 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 October 1, 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 July 2, 2022.

The Unsecured Senior Notes due 2030 had an outstanding balance of $ 496 million, net of $ 4 million of unamortized deferred financing costs, as of October 1, 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 $ 1.5 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.

USF had approximately $ 1.6 billion of restricted payment capacity under these covenants, and approximately $ 2.9 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 October 1, 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.

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.

Net restructuring costs were de minimis for both the 13 weeks and 39 weeks ended October 1, 2022.

During the 13 weeks ended October 2, 2021, net restructuring costs were de minimis.

During the 39 weeks ended October 2, 2021, the Company incurred net restructuring costs of $ 3 million primarily related to initiatives to improve operational effectiveness.

Net restructuring liabilities were $ 0 million and $ 3 million as of October 1, 2022 and January 1, 2022, respectively.

RETIREMENT PLANS

2 unchanged sentences

13 Weeks Ended 39 Weeks Ended

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Components of net periodic pension benefit credits

5 unchanged sentences

Net periodic pension benefit credits $ ( 4 ) $ ( 6 ) $ ( 14 ) $ ( 17 )

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

Other postretirement benefit costs were de minimis for both the 13 weeks and 39 weeks ended October 1, 2022 and October 2, 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 $ 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 made employer matching contributions to the 401(k) plan of $ 14 million and $ 13 million for the 13 weeks ended October 1, 2022 and October 2, 2021, respectively, and $ 44 million and $ 39 million for the 39 weeks ended October 1, 2022 and October 2, 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 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.

The Company’s contributions to these plans were $ 12 million and $ 11 million for the 13 weeks ended October 1, 2022 and October 2, 2021, respectively, and $ 36 million and $ 33 million for the 39 weeks ended October 1, 2022 and October 2, 2021, respectively.

EARNINGS PER SHARE

4 unchanged sentences

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 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.

For the 13 weeks and 39 weeks ended October 1, 2022 and October 2, 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 the 13 weeks ended October 2, 2021 and for both the 39 weeks ended October 1, 2022 and October 2, 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 Series A Preferred Stock shares were dilutive for the 13 weeks ended October 1, 2022.

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

13 Weeks Ended 39 Weeks Ended

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

$ 109 $ 64 $ 172 $ 95

14 unchanged sentences

(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 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.

Series A Preferred Stock dividends for the second and third quarter of 2021 were paid in cash on June 30, 2021 and September 28, 2021, respectively.

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

As of both October 1, 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 October 1, 2022 and January 1, 2022.

On September 30, 2022, 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

1 unchanged sentence

13 Weeks Ended 39 Weeks Ended

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Accumulated other comprehensive loss components

28 unchanged sentences

RELATED PARTY TRANSACTIONS

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.

As of January 1, 2022, 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 October 1, 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 $ 22 million and $ 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 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.

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 July 2, 2022 and January 1, 2022.

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.

As of October 1, 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 39 weeks ended October 2, 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.

1 unchanged sentence

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 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 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.

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 39 weeks ended October 1, 2022 and October 2, 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 October 1, 2022, the Company’s effective income tax rate of 29 % 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 a tax benefit shortfall associated with share-based compensation.

For the 13 weeks ended October 2, 2021, the Company’s effective income tax rate of 30 % 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 discrete tax items were not material individually or in the aggregate;

however, when compared to the pre-tax income of $ 91 million for the period on a percentage basis, these tax items had a significant impact on the effective tax rate.

For the 39 weeks ended October 1, 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 $ 3 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.

For the 39 weeks ended October 2, 2021, the Company’s effective income tax rate of 24 % 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 $ 5 million primarily related to excess tax benefits associated with share-based compensation.

1 unchanged sentence

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 $ 1,758 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.

The Company had $ 1,147 million of purchase orders and purchase contract commitments as of October 1, 2022 to be purchased in the remainder of fiscal year 2022 and $ 85 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 $ 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 had diesel fuel forward purchase commitments totaling $ 43 million through December 2023, as of October 1, 2022.

Additionally, the Company had electricity forward purchase commitments totaling $ 10 million through June 2024, as of October 1, 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.

6 unchanged sentences

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.

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

The Company uses a centralized management structure, and its strategies and initiatives are implemented and executed consistently across the organization to maximize value to the organization as a whole.

3 unchanged sentences

Capital projects, whether for cost savings or generating incremental revenue, are evaluated based on estimated economic returns to the organization as a whole.

SUBSEQUENT EVENTS

2019 Incremental Term Loan Facility - Following the fiscal third quarter principal prepayment discussed within Note 9.

Debt, on October 31, 2022 the Company voluntarily prepaid $ 100 million of the 2019 Incremental Term Loan Facility principal.

The outstanding balance as of November 10, 2022 was $ 1,334 million, net of $ 21 million of unamortized deferred financing costs.

Share Repurchase Program - On November 2, 2022, our Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $ 500 million of its outstanding common stock.

The size and timing of any repurchases will depend on a number of factors, including share price, general business and market conditions and other factors.

Under the share repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases, privately negotiated transactions, accelerated share repurchases and Rule 10b5-1 trading plans.

The share repurchase program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

The repurchase authorization does not have an expiration date.

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