What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 170 added, 92 removed, 387 unchanged (40% of the section changed)

3 unchanged sentences

(In millions, except par value)

April 1, 2023 December 31, 2022

July 1, 2023 December 31, 2022

Current assets:

26 unchanged sentences

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

0.4 and 0.5 issued and outstanding as of April 1, 2023 and December 31, 2022, respectively 373 534

0.0 and 0.5 issued and outstanding as of July 1, 2023 and December 31, 2022, respectively

Shareholders’ equity:

Common stock, $0.01 par value—600 shares authorized;

233.9 issued and 232.6 outstanding as of April 1, 2023, and 225.2 issued and 224.8 outstanding as of December 31, 2022

252.3 issued and 246.8 outstanding as of July 1, 2023, and 225.2 issued and 224.8 outstanding as of December 31, 2022

Additional paid-in capital

3 unchanged sentences

Treasury Stock, 5.5 and 0.4 shares, respectively

( 216 ) ( 14 )

Total shareholders’ equity

5 unchanged sentences

(In millions, except per share data)

13 Weeks Ended

April 1, 2023 April 2, 2022

13 Weeks Ended 26 Weeks Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net sales $ 9,013 $ 8,827 $ 17,555 $ 16,625

Cost of goods sold 7,422 7,444 14,539 14,047

1,591 1,383 3,016 2,578

Operating expenses:

Distribution, selling and administrative costs

1,269 1,233 2,507 2,394

Total operating expenses

1,269 1,233 2,507 2,394

Operating income 322 150 509 184

1 unchanged sentence

Interest expense—net 82 60 163 115

Income (loss) before income taxes 107 ( 15 )

Income tax provision (benefit) 25 ( 8 )

Net income (loss)

Other comprehensive income (loss) —net of tax:

Income before income taxes 242 95 349 80

Income tax provision 60 25 85 17

182 70 264 63

Other comprehensive income —net of tax:

Changes in retirement benefit obligations

Comprehensive income (loss)

Net income (loss) $ 82 $ ( 7 )

Unrecognized gain on interest rate caps 1 — 1 —

Comprehensive income

$ 183 $ 70 $ 266 $ 63

Net income $ 182 $ 70 $ 264 $ 63

Series A convertible preferred stock dividends — ( 9 ) ( 7 ) ( 18 )

Net income (loss) available to common shareholders $ 75 $ ( 16 )

Net income (loss) per share

Net income available to common shareholders $ 182 $ 61 $ 257 $ 45

Net income per share

Basic (Note 11)

4 unchanged sentences

Basic (Note 11)

238 224 232 224

Diluted (Note 11)

251 226 251 226

See Notes to Consolidated Financial Statements (Unaudited).

16 unchanged sentences

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

Stock repurchased — — — — 0.9 ( 34 ) — ( 34 )

Common stock repurchased — — — — 0.9 ( 34 ) — ( 34 )

Net Income — — — 82 — — — 82

BALANCE—April 1, 2023 233.9 $ 2 $ 3,212 $ 1,085 1.3 $ ( 48 ) $ ( 72 ) $ 4,179

Share-based compensation expense — $ — $ 14 $ — — $ — $ — $ 14

Proceeds from employee share purchase plan 0.2 — 8 — — — — 8

Exercise of stock options 0.7 — 15 — — — — 15

Vested restricted stock units—net 0.1 — — — — — — —

Tax withholding payments for net share-settled equity awards — — — — — — — —

Series A convertible preferred stock conversion to common stock 17.4 1 372 — — — — 373

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

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

Common stock repurchased — — — — 4.2 ( 166 ) — ( 166 )

Excise tax on common stock repurchases — — — — — ( 2 ) — ( 2 )

Net income — — — 182 — — — 182

BALANCE—July 1, 2023 252.3 $ 3 $ 3,621 $ 1,267 5.5 $ ( 216 ) $ ( 71 ) $ 4,604

US FOODS HOLDING CORP.

10 unchanged sentences

Vested restricted stock units, net 0.7 — — — — — — —

Restricted Shares, net ( 0.2 ) — — — — — — —

Exercise of stock options 0.1 — 2 — — — — 2

3 unchanged sentences

BALANCE—April 2, 2022 223.8 $ 2 $ 2,973 $ 766 — $ — $ ( 19 ) $ 3,722

Share-based compensation expense — — 9 — — — — 9

Proceeds from employee stock purchase plan 0.2 — 7 — — — — 7

Exercise of stock options 0.3 — 5 — — — — 5

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

Net Income — — — 70 — — — 70

BALANCE—July 2, 2022 224.3 $ 2 $ 2,994 $ 827 — $ — $ ( 19 ) $ 3,804

See Notes to Consolidated Financial Statements (Unaudited).

3 unchanged sentences

26 Weeks Ended

April 1, 2023 April 2, 2022

July 1, 2023 July 2, 2022

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

7 unchanged sentences

( 199 ) ( 363 )

Increase in inventories—net

( 9 ) ( 140 )

Decrease (increase) in prepaid expenses and other assets

Decrease (increase) in inventories—net

(Increase) in prepaid expenses and other assets

Increase in accounts payable and cash overdraft liability

13 unchanged sentences

Repurchase of common stock ( 200 ) —

Excise tax on common stock repurchases ( 2 ) —

Proceeds from employee stock purchase plan

Proceeds from exercise of stock options

Purchase of interest rate caps ( 3 ) —

Tax withholding payments for net share-settled equity awards

6 unchanged sentences

Supplemental disclosures of cash flow information:

Conversion of Series A Convertible Preferred Stock $ 534 $ —

Interest paid—net of amounts capitalized

38 unchanged sentences

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

The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of April 1, 2023 or December 31, 2022.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.8 billion and $ 1.7 billion as of April 1, 2023 and December 31, 2022, respectively.

The Company did not have any material outstanding performance obligations, contract liabilities or capitalized contract acquisition costs as of July 1, 2023 or December 31, 2022.

Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $ 1.8 billion and $ 1.7 billion as of July 1, 2023 and December 31, 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 $ 31 million and $ 29 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of April 1, 2023 and December 31, 2022, respectively, and $ 32 million and $ 31 million included in other assets in the Company’s Consolidated Balance Sheets as of April 1, 2023 and December 31, 2022, respectively.

The Company’s contract assets for these upfront payments were $ 30 million and $ 29 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022, respectively, and $ 35 million and $ 31 million included in other assets in the Company’s Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022, respectively.

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

13 Weeks Ended

April 1, 2023 April 2, 2022

13 Weeks Ended 26 Weeks Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Meats and seafood $ 3,024 $ 3,286 $ 5,850 $ 6,236

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 $ 509 million and $ 489 million as of April 1, 2023 and December 31, 2022, respectively.

As a result of changes in LIFO reserves, cost of goods sold increased $20 million and $ 72 million for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively .

LIFO reserves in the Company’s Consolidated Balance Sheets were $ 494 million and $ 489 million as of July 1, 2023 and December 31, 2022, respectively.

As a result of changes in LIFO reserves, cost of goods sold decreased $ 15 million and increased $ 65 million for the 13 weeks ended July 1, 2023 and July 2, 2022, respectively, and increased $ 5 million and $ 137 million for the 26 weeks ended July 1, 2023 and July 2, 2022, 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.

A summary of the activity in the allowance for doubtful accounts for the 13 weeks ended April 1, 2023 and April 2, 2022 was as follows:

April 1, 2023 April 2, 2022

Activity in the allowance for doubtful accounts for the 13 weeks ended July 1, 2023 includes $ 6 million charged to costs and expenses, as well as $ 6 million of customer accounts written off-net of recoveries.

Activity for the 13 weeks ended July 2, 2022

was de minimis.

A summary of the activity in the allowance for doubtful accounts for the 26 weeks ended July 1, 2023 and July 2, 2022 was as follows:

July 1, 2023 July 2, 2022

Balance as of beginning of year $ 30 $ 33

2 unchanged sentences

Balance as of end of period

This table excludes the vendor receivable related allowance for doubtful accounts of $ 8 million as of both April 1, 2023 and December 31, 2022, and $ 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 $ 7 million as of July 1, 2023, $ 8 million as of December 31, 2022, $ 13 million as of July 2, 2022 and $ 7 million as of 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 1, 2023 and December 31, 2022, property and equipment-net included accumulated depreciation of $ 3,058 million and $ 2,981 million, respectively.

Depreciation expense was $ 87 million and $ 78 million for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively .

As of July 1, 2023 and December 31, 2022, property and equipment-net included accumulated depreciation of $ 3,126 million and $ 2,981 million, respectively.

Depreciation expense was $ 84 million and $ 81 million for the 13 weeks ended July 1, 2023 and July 2, 2022 and $ 171 million and $ 159 million for the 26 weeks ended July 1, 2023 and July 2, 2022, respectively.

GOODWILL AND OTHER INTANGIBLES

4 unchanged sentences

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

Amortization expense was $11 million for both the 13 weeks ended April 1, 2023 and April 2, 2022.

Amortization expense was $ 11 million and $ 11 million for the 13 weeks ended July 1, 2023 and July 2, 2022, respectively, and $ 22 million and $ 22 million for the 26 weeks ended July 1, 2023 and July 2, 2022, respectively.

Goodwill and other intangibles—net consisted of the following:

April 1, 2023 December 31, 2022

July 1, 2023 December 31, 2022

Goodwill $ 5,625 $ 5,625

14 unchanged sentences

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 1, 2023 and April 2, 2022, respectively.

No impairments were recognized for the 26 weeks ended July 1, 2023 and July 2, 2022, 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 1, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

April 1, 2023

The Company’s assets and liabilities measured at fair value on a recurring basis as of July 1, 2023 and December 31, 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

1 unchanged sentence

$ 307 $ — $ — $ 307

Interest Rate Caps

$ — $ 1 $ — $ 1

December 31, 2022

8 unchanged sentences

Derivative Financial Instruments

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

The Company had no outstanding interest rate hedge agreements as of either April 1, 2023 or December 31, 2022.

See Note 18, Subsequent Events, for a description of the interest rate cap agreements entered into subsequent to April 1, 2023.

In April 2023, USF entered into two two-year rate cap agreements, which will mature on April 30, 2025, with a total notional amount of $ 450 million, which will effectively cap the interest rate on approximately 24 % of the current principal amount of the Term Loan Facilities.

The Company’s maximum exposure to the variable component of interest on the Term Loan Facilities will be 5 % on the notional amount covered by the interest rate cap.

The Company had no outstanding interest rate hedge agreements as of December 31, 2022.

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

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

The following table presents the balance sheet location and fair value of the interest rate caps at July 1, 2023:

Balance at July 1, 2023 Balance Sheet Location Fair Value

Derivatives designed as hedging instruments

Interest Rate Caps Other current assets $ 1

The effective portion of gains and losses on the interest rate caps are initially recorded in other comprehensive loss and reclassified to interest expense during the period in which the hedged transaction affects income.

There was no ineffectiveness attributable to the Company’s interest rate caps during the 13-weeks and 26-weeks ended July 1, 2023.

The following table presents the effect of the Company’s interest rate caps in the Consolidated Statement of Comprehensive Income for the 13-weeks and 26-weeks ended July 1, 2023 (in millions):

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

For the 13 weeks ended July 1, 2023

Interest Rate Caps $ 1 Interest expense ─ net $ —

For the 26 Weeks ended July 1, 2023

Interest Rate Caps $ 1 Interest expense ─ net $ —

During the next twelve months, the Company estimates that an immaterial amount will be reclassified from accumulated other comprehensive income to income.

Other Fair Value Measurements

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

The fair value of the Company’s total debt approximated $ 4.7 billion and $ 4.6 billion as of April 1, 2023 and December 31, 2022, respectively, as compared to its carrying value of $ 4.8 billion and $ 4.9 billion as of April 1, 2023 and December 31, 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 April 1, 2023 and December 31, 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 as of both April 1, 2023 and December 31,

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 as of both April 1, 2023 and December 31, 2022, respectively.

The fair value of the Company’s total debt approximated $ 4.6 billion for both periods, as compared to its carrying value of $ 4.8 billion and $ 4.9 billion as of July 1, 2023 and December 31, 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 July 1, 2023 and December 31, 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 as of both July 1, 2023 and December 31, 2022.

The fair value of the Company’s 4.625 % unsecured senior notes due June 1, 2030 (the “Unsecured Senior Notes due 2030”) was $ 0.4 billion as of both July 1, 2023 and December 31, 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 April 1, 2023 Carrying Value as of April 1, 2023 Carrying Value as of December 31, 2022

Debt Description Maturity Interest Rate as of July 1, 2023 Carrying Value as of July 1, 2023 Carrying Value as of December 31, 2022

ABL Facility December 7, 2027 8.25 % $ — $ —

12 unchanged sentences

Long-term debt $ 4,631 $ 4,738

As of April 1, 2023, approximately 41 % of the Company’s total debt bore interest at a floating rate.

As of July 1, 2023, after considering interest rate caps that fixed the interest rate on a total notional amount of $450 million of the current principal amount of the Term Loan Facilities described below, approximately 31 % 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 $ 2,300 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 the Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 1.00 % to 1.50 %, based on USF’s excess availability under the ABL Facility, and a credit spread adjustment of 0.10 %.

The margin under the ABL Facility as of April 1, 2023 was 0.00 % for ABR loans and 1.00 % for SOFR loans.

USF had no outstanding borrowings, and had outstanding letters of credit totaling $ 458 million, under the ABL Facility as of April 1, 2023.

The margin under the ABL Facility as of July 1, 2023 was 0.00 % for ABR loans and 1.00 % for SOFR loans.

USF had no outstanding borrowings, and had outstanding letters of credit totaling $ 471 million, under the ABL Facility as of July 1, 2023.

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 $ 1,842 million under the ABL Facility as of April 1, 2023.

There was available capacity of $ 1,829 million under the ABL Facility as of July 1, 2023.

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 facility borrowed in November 2021 (the “2021 Incremental Term Loan Facility”).

On June 1, 2023, USF entered into an amendment to its term loan credit agreement to replace the LIBOR-based interest rate option included in the term loan credit agreement with an interest rate option based upon SOFR.

The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of July 1, 2023.

The Company’s maximum exposure to the variable component of interest on the Term Loan Facilities will be 5 % on the notional amount covered by the interest rate cap described above.

2019 Incremental Term Loan Facility

The 2019 Incremental Term Loan Facility had an outstanding balance of $ 1,232 million, net of $ 16 million of unamortized deferred financing costs as of April 1, 2023.

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 %).

The 2019 Incremental Term Loan Facility had an outstanding balance of $ 1,170 million, net of $ 14 million of unamortized deferred financing costs as of July 1, 2023.

During the 13 weeks and 26 weeks ended July 1, 2023 we voluntarily prepaid $ 60

million of the 2019 Incremental Term Loan Facility.

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 (i) SOFR plus (ii) a credit spread adjustment of (a) 0.11448 % for a one-month term, (b) 0.26161 % for a three-month term, or (c) 0.42826 % for a six month term, (with the sum of SOFR and the foregoing credit spread adjustment subject to a SOFR “floor” of 0.00 %) plus (iii) a margin of 2.00 %, or the sum of (i) an ABR, as described in the 2019 Incremental Term Loan Facility plus a margin of 1.00 %.

The 2019 Incremental Term Loan Facility will mature on September 13, 2026.

See Note 18, Subsequent Events, for a description of the interest rate cap agreements entered into subsequent to April 1, 2023.

2021 Incremental Term Loan Facility

The 2021 Incremental Term Loan Facility had an outstanding balance of $ 719 million, net of $ 4 million of unamortized deferred financing costs as of April 1, 2023.

During the 13 weeks ended April 1, 2023 we voluntarily prepaid $ 65 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 %).

The 2021 Incremental Term Loan Facility had an outstanding balance of $ 717 million, net of $ 4 million of unamortized deferred financing costs as of July 1, 2023.

During the 26 weeks ended July 1, 2023 we voluntarily prepaid $ 65 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 (i) SOFR plus (ii) a credit spread adjustment of (a) 0.11448 % for a one-month term, (b) 0.26161 % for a three-month term, or (c) 0.42826 % for a six month term, (with the sum of SOFR and the foregoing credit spread adjustment subject to a SOFR “floor” of 0.00 %) plus (iii) a margin of 2.75 %, or the sum of (i) an ABR, as described in the 2021 Incremental Term Loan Facility, plus a margin of 1.75 %.

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

See Note 18, Subsequent Events, for a description of the interest rate cap agreements entered into subsequent to April 1, 2023.

Secured Senior Notes due 2025

The Secured Senior Notes due 2025 had an outstanding balance of $ 994 million, net of $ 6 million of unamortized deferred financing costs, as of April 1, 2023.

The Secured Senior Notes due 2025 had an outstanding balance of $ 995 million, net of $ 5 million of unamortized deferred financing costs, as of July 1, 2023.

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 $ 893 million, net of $ 7 million of unamortized deferred financing costs, as of April 1, 2023.

The Unsecured Senior Notes due 2029 had an outstanding balance of $ 893 million, net of $ 7 million of unamortized deferred financing costs, as of July 1, 2023.

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 $ 496 million, net of $ 4 million of unamortized deferred financing costs, as of April 1, 2023.

The Unsecured Senior Notes due 2030 had an outstanding balance of $ 496 million, net of $ 4 million of unamortized deferred financing costs, as of July 1, 2023.

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 $ 1.7 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 1, 2023.

USF had approximately $ 1.8 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 1, 2023.

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 1, 2023 April 2, 2022

13 Weeks Ended 26 Weeks Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Components of net periodic pension benefit credits

$ 1 $ — $ 1 $ 1

Interest cost

3 unchanged sentences

Net periodic pension benefit credits $ ( 1 ) $ ( 5 ) $ ( 2 ) $ ( 10 )

Other postretirement benefit costs were de minimis for both the 13 weeks ended April 1, 2023 and April 2, 2022.

Other postretirement benefit costs were de minimis for both the 13 weeks and 26 weeks ended July 1, 2023 and July 2, 2022.

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 $ 17 million and $ 16 million for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively.

The Company made employer matching contributions to the 401(k) plan of $ 16 million and $ 14 million for the 13 weeks ended July 1, 2023 and July 2, 2022, respectively, and $ 33 million and $ 30 million for the 26 weeks ended July 1, 2023 and July 2, 2022, 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 $ 13 million and $ 12 million for the 13 weeks ended April 1, 2023 and April 2, 2022, respectively .

The Company’s contributions to these plans were $ 15 million and $ 12 million for the 13 weeks ended July 1, 2023 and July 2, 2022, respectively, and $ 28 million and $ 24 million for the 26 weeks ended July 1, 2023 and July 2, 2022, respectively.

STOCKHOLDERS’ EQUITY

5 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 April 1, 2023 and April 2, 2022, share-based awards representing 1 million and 8 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 April 2, 2022, 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 April 1, 2023.

For the 13 weeks ended July 1, 2023 and July 2, 2022, share-based awards representing less than 1 million and 3 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 1, 2023 and July 2, 2022, share-based awards representing 1 million and 3 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive.

Additionally, for the 13 weeks and 26 weeks ended July 2, 2022, Series A Preferred Stock representing 25 million of underlying common shares were 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 and 26 weeks ended July 1, 2023.

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

13 Weeks Ended

April 1, 2023 April 2, 2022

Net income (loss)

13 Weeks Ended 26 Weeks Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

$ 182 $ 70 $ 264 $ 63

Series A Preferred Stock Dividends

Net income (loss) available to common shareholders

— ( 9 ) ( 7 ) ( 18 )

Net income available to common shareholders

$ 182 $ 61 $ 257 $ 45

Weighted-average common shares outstanding—basic

238 224 232 224

Effect of dilutive share-based awards

1 unchanged sentence

Weighted-average common shares outstanding—diluted

251 226 251 226

Net income per share

3 unchanged sentences

Once converted, there would be no preferred stock outstanding and therefore no Series A Preferred Stock dividend.

As of April 1, 2023, the 23 million shares represent the weighted average impact on these shares during the 13 weeks ended April 1, 2023.

As of July 1, 2023, the 11 million and 17 million shares represent the weighted average impact of these shares during the 13 weeks and 26 weeks ended July 1, 2023, respectively.

See Note 12, Convertible Preferred Stock, for details on the Series A Preferred Stock.

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.

During the 13 weeks ended April 1, 2023 the Company repurchased 917,704 shares at an aggregate purchase price of approximately $34 million under the program.

At April 1, 2023, there was approximately $452 million in remaining funds authorized under this program.

During the 13 weeks ended July 1, 2023 the Company repurchased 4,179,757 shares at an aggregate purchase price of approximately $ 166 million under the program, including $ 150 million as part of the Series A Preferred Stock conversion on May 26, 2023 as discussed in Note 12, Convertible Preferred Stock.

During the 26 weeks ended July 1, 2023, the Company repurchased 5,097,461 shares at an aggregate purchase price of approximately $ 200 million under the program.

Additionally, during the 26 weeks ended July 1, 2023, the Company recorded $ 2 million of excise tax associated with common stock repurchases.

At July 1, 2023, there was approximately $ 286 million in remaining funds authorized under this program.

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.

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

As of April 1, 2023 and December 31, 2022, the Company had outstanding a total of 371,044 and 532,281 shares of Series A Preferred Stock, respectively.

The Series A Preferred Stock had a carrying value of $373 million and $ 534 million as of April 1, 2023 and December 31, 2022, respectively.

As of December 31, 2022, the Company had outstanding 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 December 31, 2022.

On March 10, 2023, KKR converted 161,237 shares of Series A Preferred Stock into 7,600,037 shares of the Company’s common stock.

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On March 31, 2023, the Company paid cash dividends of $ 7 million on the remaining outstanding shares of the Series A Preferred Stock.

On May 26, 2023 KKR converted the remaining 371,044 shares of Series A Preferred Stock and completed a secondary offering of 17,425,053 shares of the Company’s common stock.

Upon completion of this transaction, KKR has relinquished their seat on the Company’s Board of Directors and is no longer considered a related party.

See Note 14, Related Party Transactions, for information regarding KKR’s holdings.

In connection with the May 26, 2023 conversion, the Company repurchased $ 150 million of common stock.

See Note 11, Stockholder’s Equity, for information on the Company’s share repurchase program.

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 1, 2023 April 2, 2022

13 Weeks Ended 26 Weeks Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Accumulated other comprehensive loss components

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$ ( 72 ) $ ( 19 ) $ ( 72 ) $ ( 19 )

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

Interest rate Caps:

Balance at beginning of period (1)

$ — $ — $ — $ —

Change in fair value of interest rate caps 1 — 1 —

Amounts reclassified to interest expense − net — — — —

Total before income tax 1 — 1 —

Income tax (benefit) provision — — — —

Current period comprehensive income, net of tax 1 — 1 —

Balance at end of period (1)

$ 1 $ — $ 1 $ —

Accumulated other comprehensive loss at end of period (1)

$ ( 71 ) $ ( 19 ) $ ( 71 ) $ ( 19 )

(1) Amounts are presented net of tax.

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As of December 31, 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 April 1, 2023 and December 31, 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 $ 19 million and $ 24 million in aggregate principal amount of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility.

As of July 1, 2023 and December 31, 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 $ 2 million and $ 19 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 1, 2023, KKR held 100% of the Company’s outstanding Series A Preferred Stock, representing approximately 7 % 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 $ 15 million in aggregate principal amount of the 2019 Incremental Term Loan Facility as of both April 1, 2023 and December 31, 2022.

As of May 26, 2023, KKR has converted all outstanding Series A Preferred Stock holdings, has relinquished their seat on the Company’s Board of Directors and is no longer considered a related party.

See Note 12, Convertible Preferred Stock, for details on the Series A Preferred Stock.

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 1, 2023 and April 2, 2022, 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 1, 2023, the Company’s effective income tax rate of 23 % differed from the 21 % federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items.

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 1, 2023 and July 2, 2022, 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 1, 2023, the Company’s effective income tax rate of 25 % 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 $ 2 million, primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $ 3 million, primarily related to adjustments to prior year tax provision estimates.

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 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.

For the 26 weeks ended July 1, 2023, 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 included a tax benefit of $ 6 million, primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $ 3 million, primarily related to adjustments to prior year tax provision estimates.

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.

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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 $ 1,845 million of purchase orders and purchase contract commitments as of April 1, 2023 to be

purchased in the remainder of fiscal year 2023 and $ 50 million of information technology commitments through September 2025 that are not recorded in the Company’s Consolidated Balance Sheets.

The Company had $ 1,712 million of purchase orders and purchase contract commitments as of July 1, 2023 to be purchased in the remainder of fiscal year 2023 and $ 55 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 December 2023, as of April 1, 2023.

Additionally, the Company had electricity forward purchase commitments totaling $ 6 million through June 2024, as of April 1, 2023.

The Company had diesel fuel forward purchase commitments totaling $ 22 million through December 2023, as of July 1, 2023.

Additionally, the Company had electricity forward purchase commitments totaling $ 4 million through June 2024, as of July 1, 2023.

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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SUBSEQUENT EVENTS

Interest Rate Cap - In April 2023, USF entered into two two-year interest rate cap agreements, which will mature on April 30, 2025, with a total notional amount of $ 450 million, which will effectively cap the interest rate on approximately 23 % of the principal amount of the Term Loan Facilities.

The Company’s maximum exposure to the variable component of interest on the Term Loan Facilities will be 5 % on the notional amount covered by the interest rate cap.

Renzi Foodservice Acquisition - On July 7, 2023, the Company completed the asset acquisition of Renzi Foodservice for $ 143 million .

The acquisition will allow US Foods to further expand its reach into central upstate New York.

The Company funded the acquisition with cash on hand.

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