What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-15 compared with 2023-02-17 · 70 added, 73 removed, 281 unchanged (34% of the section changed)

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The following includes a comparison of our consolidated results of operations for fiscal years 2023 and 2022.

For a comparison of our consolidated results of operations for fiscal years 2021 and 2020, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended January 1, 2022, filed with the SEC on February 17, 2022.

Our operations, our industry and the U.S.

economy continue to be impacted by higher than normal inflation, supply chain disruptions, and labor shortages.

These factors also influence the buying patterns of our customers and potentially impact consumer confidence and spending.

During fiscal year 2022, these factors improved significantly from fiscal year 2021 due to the declining effects of the COVID-19 pandemic.

We continue to actively monitor these risks to our business.

Net sales increased, primarily due to continued inflation, and total case volumes increased 1.7% compared to the prior year driven by a 4.3% increase in independent restaurant case volume, a 31.0% increase in hospitality volume and a 2.9% increase in healthcare volume.

We are unable to predict the extent these factors will continue to impact our results of operations.

For a comparison of our consolidated results of operations for fiscal years 2022 and 2021, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023.

We strive to inspire and empower chefs and foodservice operators to bring great food experiences to consumers.

This mission is supported by our strategy of GREAT FOOD.

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

Net sales increased 4.5%, driven by case volume growth.

Total case volumes increased 4.4% compared to the prior year driven by a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and a 8.9% increase in hospitality volume, offset by a 2.1% decrease in chain volume.

Total organic case volume increased 3.9% which includes 6.4% organic independent restaurant case volume growth.

Operating Metrics

Case growth —Case growth, by customer type (e.g., independent restaurants) is reported as of a point in time.

Customers periodically are reclassified, based on changes in size or other characteristics, and when those changes occur, the respective customer’s historical volume follows its new classification.

Customers periodically are reclassified, based on changes in size or other characteristics, and when those changes occur, the respective customer’s historical volume is included within the new classification.

Independent restaurant case volumes exclude the impacts of CHEF’STORE, which is recorded as other case volume.

Organic growth —Organic growth includes growth from operating businesses that have been reflected in our results of operations for at least 12 months.

Fiscal Year 2023 Highlights

Financial Highlights —Total case volume increased 4.4% and independent restaurant case volume increased 6.9% in fiscal year 2023.

Net sales increased $4,570 million, or 15.5%, in fiscal year 2022 primarily due to year-over-year inflation in multiple product categories.

Gross profit increased $837 million, or 18.0%, to $5,492 million in fiscal year 2022, primarily as a result of food cost inflation in multiple product categories, optimized pricing, increased freight income from improved inbound logistics, cost of goods sold optimization and a favorable year-over-year last-in first-out (“LIFO”) adjustment.

Total organic case volume increased 3.9% in fiscal year 2023.

Net sales increased $1,540 million, or 4.5%, in fiscal year 2023 primarily due to case volume growth.

Gross profit increased $656 million, or 11.9%, to $6,148 million in fiscal year 2023, primarily as a result of an increase in total case volume, cost of goods sold optimization, increased freight income from improved inbound logistics and optimized pricing.

As a percentage of net sales, gross profit was 17.3% in fiscal year 2023, compared to 16.1% in fiscal year 2022.

Total operating expenses increased $233 million, or 4.8%, to $5,131 million in fiscal year 2023.

The increase was primarily due to higher distribution costs, largely due to higher labor costs as a result of increased turnover and higher than normal wage inflation.

These increases were partially offset by cost savings initiatives outlined in our long-range plan including:

(1) further routing improvements, (2) completion of new warehouse selection technology implementation, and (3) the rollout of new warehouse process enhancements.

The increase was primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs.

Results of Operations

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Total operating expenses 5,131 4,898 4,231

Operating income (loss) 594 424 (77)

Operating income 1,017 594 424

Other income—net (6) (22) (26)

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Loss on extinguishment of debt

Income (loss) before income taxes 361 214 (294)

Income tax provision (benefit) 96 50 (68)

Net income (loss) 265 164 (226)

Income before income taxes 678 361 214

Income tax provision 172 96 50

Net income 506 265 164

Series A Preferred Stock dividends (7) (37) (43)

Net income (loss) available to common shareholders $ 228 $ 121 $ (254)

Net income (loss) per share:

Net income available to common shareholders $ 499 $ 228 $ 121

Net income per share:

$ 2.09 $ 1.02 $ 0.55

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14.4 % 14.4 % 14.3 %

Operating income (loss)

Operating income

2.9 % 1.7 % 1.4 %

Net income (loss)

1.4 % 0.8 % 0.6 %

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Capital expenditures

1,397 988 805

Adjusted EBITDA (1)

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Free Cash Flow (2)

(1) EBITDA is defined as net income (loss), plus interest expense—net, income tax provision (benefit), and depreciation and amortization.

(1) EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA adjusted for (1) restructuring costs and asset impairment charges;

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EBITDA, Adjusted EBITDA, and Adjusted Net Income as presented in this Annual Report are supplemental measures of our performance that are not required by, or presented in accordance with GAAP.

They are not measurements of our performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.

They are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP.

For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

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(in millions)

Net income (loss) available to common shareholders $ 228 $ 121 $ (254)

Net income available to common shareholders $ 499 $ 228 $ 121

Series A Preferred Stock dividends (see Note 14) (7) (37) (43)

Net income (loss) 265 164 (226)

Net income 506 265 164

Interest expense—net 324 255 213

Income tax provision (benefit) 96 50 (68)

Income tax provision 172 96 50

Depreciation expense 349 327 323

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Business transformation costs (5)

COVID-19 bad debt (benefit) expense (6)

COVID-19 product donations and inventory adjustments (7)

COVID-19 bad debt benefit (6)

COVID-19 other related expenses (7)

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$ 831 $ 500 $ 145

(1) Consists primarily of the write-off of old leases ROU asset and lease liability of $9 million associated with entering into new lease agreements for four distribution facilities in fiscal year 2022, non-CEO severance and related costs, organizational realignment costs and other asset impairment charges.

(1) Consists primarily of non-CEO severance and related costs associated with organizational realignment and other impairment charges.

(2) Share-based compensation expense for expected vesting of stock awards and employee stock purchase plan.

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See Note 11, Debt, in our consolidated financial statements for additional information.

(5) Consists primarily of costs related to significant process and systems redesign across multiple functions.

(5) Transformational costs represent non-recurring expenses prior to formal launch of strategic projects with anticipated long-term benefits to the Company.

These costs generally relate to third party consulting and non-capitalizable construction or technology.

For fiscal year 2023, business transformation costs related to projects associated with information technology infrastructure initiatives.

For fiscal year 2022, business transformation costs consist of new facility openings, supply chain strategy improvements, and information technology infrastructure initiatives.

(6) Includes the changes in the reserve for doubtful accounts expense reflecting the collection risk associated with our customer base as a result of the COVID-19 pandemic.

(7) Includes COVID-19 related expenses related to inventory adjustments and product donations.

(7) Includes COVID-19 related costs that we are permitted to add back under certain agreements governing our indebtedness.

(8) Includes:

(i) aggregate acquisition and integration related costs of $22 million for both fiscal years 2022 and 2021, and $45 million for fiscal year 2020;

(ii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022;

(i) aggregate acquisition and integration related costs of $41 million for fiscal year 2023 and $22 million for both fiscal years 2022 and 2021 (ii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022;

(iii) CEO severance of $5 million for fiscal year 2022;

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and (v) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(10) Represents our income tax provision (benefit) adjusted for the tax effect of pre-tax items excluded from Adjusted net income and the removal of applicable discrete tax items.

(9) Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items.

Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation.

The tax effect of pre-tax items excluded from Adjusted Net Income is computed using a statutory tax rate after taking into account the impact of permanent differences and valuation allowances.

(11) Effective as of the first quarter 2021, we have presented Adjusted net income.

Previously, we presented Adjusted net income (loss) available to common shareholders.

A reconciliation between the GAAP income tax provision (benefit) and the income tax provision, as adjusted, is as follows:

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(in millions)

GAAP income tax provision (benefit) $ 96 $ 50 $ (68)

GAAP income tax provision $ 172 $ 96 $ 50

Tax impact of pre-tax income adjustments

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Comparison of Results

Fiscal Years Ended December 31, 2022 and January 1, 2022

Fiscal Years Ended December 30, 2023 and December 31, 2022

• Net income was $506 million in fiscal year 2023, compared to net income of $265 million in fiscal year 2022.

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• Total case volume increased 4.4% and independent restaurant case volume increased 6.9% in fiscal year 2023.

• Total organic case volume increased 3.9% and organic independent restaurant case volume increased 6.4%.

• Operating income was $1,017 million in fiscal year 2023, compared to operating income of $594 million in fiscal year 2022.

As a percentage of net sales, operating income was 2.9% in fiscal year 2023, as compared to 1.7% in fiscal year 2022.

Total case volume increased 1.7% and independent restaurant case volume increased 4.3% in fiscal year 2022.

Year-over-year total case growth was negatively impacted roughly 2.8% by the mid-2021 exit of the lower margin grocery retail business we temporarily added during the pandemic and the strategic exit of a small number of lower margin chain restaurant and education customers.

Net sales increased $4,570 million, or 15.5%, to $34,057 million in fiscal year 2022, comprised of a $488 million, or 1.7%, increase in total case volume and a $4,082 million, or 13.8%, increase in the overall Net sales rate per case.

The increase in Net sales rate per case primarily reflects a year-over-year average inflation increase of 13.0% in multiple product categories including grocery, dairy and disposables, as well as favorable changes in our product mix.

The year-over-year increase in inflation benefited Net sales since a significant portion of our Net sales is based on a pre-established markup over product cost.

Total case volume increased 4.4% driven by a 6.9% increase in independent restaurant case volume, a 7.2% increase in healthcare volume and a 8.9% increase in hospitality volume, offset by a 2.1% decrease in national chain volume.

Total organic case volume increased 3.9% and organic independent restaurant case volume increased 6.4%.

Net sales increased $1,540 million, or 4.5%, to $35,597 million in fiscal year 2023, comprised of a $1,330 million, or 4.4%, increase in total case volume.

Sales of private brands represented approximately 34% of net sales in both 2023 and 2022.

Our LIFO method of inventory costing resulted in expense of $147 million in fiscal year 2022, compared to expense of $165 million in fiscal year 2021 due to inflation in multiple product categories including grocery, dairy and disposables.

Our LIFO method of inventory costing resulted in a gain of $1 million in fiscal year 2023, compared to an expense of $147 million in fiscal year 2022.

Gross profit as a percentage of net sales was 17.3% in fiscal year 2023, compared to 16.1% in fiscal year 2022, primarily driven by increased case volume and a decrease in LIFO expense in fiscal year 2023 as compared to fiscal year 2022.

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Operating expenses as a percentage of net sales were 14.4% in fiscal year 2023, compared to 14.4% in fiscal year 2022.

The increase in operating expenses was primarily due to higher distribution costs, largely due to higher labor costs as a result of increased turnover and higher than normal wage inflation.

The increase was partially offset by cost savings initiatives outlined in our long-range plan including:

(1) further routing improvements, (2) completion of new warehouse selection technology implementation, and (3) the rollout of new warehouse process enhancements.

The increase in operating expenses was primarily due to increased total case volume and higher seller compensation costs, partially offset by lower distribution cost per case from cost savings initiatives including routing improvements and focused efforts positively impacting labor turnover and productivity as well as lower fuel costs.

Operating Income

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We recognized other income—net of $6 million and $22 million in fiscal years 2023 and 2022, respectively.

The decrease in other income—net in 2022 is primarily due to a decrease in the expected return on assets compared to fiscal year 2021.

The decrease in other income—net in 2023 is primarily due to a decrease in the expected return on assets and the value of pension assets compared to fiscal year 2022.

Interest Expense—Net

Interest expense—net increased $69 million in fiscal year 2023, primarily due to an increase in interest rates, partially offset by lower outstanding debt in fiscal year 2023 compared to fiscal year 2022.

Loss on Extinguishment of Debt

We recognized a loss on extinguishment of debt of $21 million in fiscal year 2023 due to the early redemption of the Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Senior Notes due 2025”).

There was no gain or loss on extinguishment of debt in fiscal year 2022.

Our effective income tax rate for fiscal year 2023 of 25% varied 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 an aggregate tax benefit of $5 million consisting primarily of a tax benefit of $1 million related to a decrease in an unrecognized tax benefit and a tax benefit of $4 million, related to excess tax benefits associated with share-based compensation.

These discrete tax items included an aggregate tax benefit of $11 million consisting of a tax benefit of $5 million related to excess tax benefits associated with share-based compensation, a tax benefit of $3 million related to a decrease in an unrecognized tax benefit, and a tax benefit of $3 million, primarily related to adjustments to prior year tax provision estimates.

Our effective income tax rate for fiscal year 2022 of 27% varied 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 an aggregate tax benefit of $10 million consisting of a tax benefit of $2 million related to a decrease in an unrecognized tax benefit and a tax benefit of $8 million, primarily related to excess tax benefits associated with share-based compensation.

Our net income was $506 million in fiscal year 2023, compared to $265 million in fiscal year 2022.

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The Company’s 4.75% Senior Notes due 2029 (the “Unsecured Senior Notes due 2029”), had an outstanding balance of $894 million, net of $6 million of unamortized deferred financing costs, as of December 30, 2023.

The Company’s 4.630% 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 December 30, 2023.

The Company’s 7.250% Senior Notes due 2032 ( the “Unsecured Senior Notes due 2032”) had an outstanding balance of $495 million, net of $5 million of unamortized deferred financing costs, as of December 30, 2023.

The incremental senior secured term loan borrowed in September 2019 (the “2019 Incremental Term Loan Facility”) had a carrying value of $1,105 million, net of $11 million of unamortized deferred financing costs, as of December 30, 2023.

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The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended, the “Term Loan Credit Agreement”) provides USF with the 2019 Incremental Term Loan Facility and 2021 Incremental Term Loan Facility.

The Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Senior Notes due 2025”) had a carrying value of $993 million, net of $7 million of unamortized deferred financing costs, as of December 31, 2022.

We also had $463 million of obligations under financing leases for transportation equipment and building leases as of December 30, 2023.

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Net cash used by financing activities (587) (447)

Net increase (decrease) in cash, cash equivalents and restricted cash 63 (680)

Net increase in cash, cash equivalents and restricted cash 58 63

Cash, cash equivalents and restricted cash—beginning of year 211 148

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Cash flows provided by operating activities increased $375 million to $1,140 million in fiscal year 2023 driven by higher net income and changes in operating assets and liabilities.

Net cash provided by operating activities in fiscal year 2021 was $419 million as the Company’s working capital requirements increased in line with the recovery of sales volumes.

Net cash provided by operating activities in fiscal year 2022 benefited from a reduction in working capital needs.

Investing Activities

Cash flows used in investing activities in fiscal years 2023 and 2022 included cash expenditures of $309 million and $265 million, respectively, and related to investments in information technology, new construction and expansion of distribution facilities and property and equipment for fleet replacement.

We expect total cash capital expenditures in fiscal year 2023 to be between $290 million and $310 million, exclusive of approximately $120 million of capital expenditures under our fleet financing leases.

Cash flows used in investing activities in fiscal year 2023 also included $140 million cash purchase price for the acquisition of Renzi Food Service and $56 million cash purchase price for the acquisition of Saladino’s.

We expect total cash capital expenditures in fiscal year 2024 to be between $325 million and $375 million.

We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.

Financing Activities

Cash flows used by financing activities in fiscal year 2022 included $108 million of scheduled payments under our Term Loan Facilities and financing leases, $100 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $200 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $37 million of dividends on our Series A Preferred Stock, no net payments under the ABL Facility and $14 million of share repurchases.

Cash flows used in financing activities in fiscal year 2023 included $125 million of scheduled payments under our Term Loan Facilities and financing leases, $1 billion for refinancing of the Secured Senior Notes due 2025, $10 million of financing fees related to the refinancing, $65 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $120 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $3 million associated with interest rate cap purchases and $7 million of dividends on our Series A Preferred Stock.

Financing activities in fiscal year 2023 also included $294 million of common stock repurchased under the Share Repurchase Program, $24 million of proceeds received from stock purchases under our employee stock purchase plan and $26 million of proceeds from the exercise of employee stock options, which were offset by $12 million of employee tax withholdings paid in connection with the vesting of stock awards.

We incurred approximately $26 million of lender fees and third-party costs in connection with our issuance of the Unsecured Senior Notes due 2028 and the Unsecured Senior Notes due 2032, consisting of a $16 million prepayment premium related to the Secured Senior Notes due 2025 and $10 million of costs associated with the issuance of the Unsecured Senior Notes due 2028 and the Unsecured Senior Notes due 2032, which were capitalized as deferred financing costs.

We incurred approximately $1 million total of lender fees and third-party costs in connection with the repricing of the 2021 Incremental Term Loan Facility, which were capitalized as deferred financing costs.

Cash flows used in financing activities in fiscal year 2022 included $108 million of schedule payments under our Term Loan Facilities and financing leases, $100 million of voluntary prepayments of our 2021 Incremental Term Loan Facility, $200 million of voluntary prepayments of our 2019 Incremental Term Loan Facility, $37 million of dividends on our Series A Preferred Stock and $14 million of share repurchases.

We incurred approximately $4 million of lender fees and third-party costs in connection with the ABL Facility refinancing transaction.

Financing activities in fiscal year 2022 also included $22 million of proceeds received from stock purchases under our employee stock purchase plan and $15 million of proceeds from the exercise of employee stock options, which were offset by $16 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used by financing activities in fiscal year 2021 included $122 million of scheduled payments under our term loans pursuant to our Term Loan Credit Agreement (the “Term Loan Facilities”) and financing leases and $2,085 million of voluntary prepayments of the senior secured term loan maturing on June 27, 2023 (the “Initial Term Loan Facility”).

We incurred approximately $18 million of lender fees and third-party costs in connection with our issuance of the Unsecured Notes due 2029, consisting of a $9 million early redemption premium related to the 5.875% Unsecured Senior Notes due 2024 (the “Unsecured Senior Notes due 2024”) and $9 million of costs associated with the issuance of the Unsecured Senior Notes due 2029, which were capitalized as deferred financing costs.

We incurred $12 million of cost associated with the issuance of the Unsecured Senior Notes due 2030 and the 2021 Incremental Term Loan Facility, which were capitalized as deferred financing costs.

Cash flows used by financing activities in fiscal year 2021 also included $28 million of Series A Preferred Stock dividends.

Cash flows provided by financing activities in fiscal year 2021 included aggregate borrowings of $900 million under the Unsecured Senior Notes due 2029, $900 million under the 2021 Incremental Term Loan Facility and $500 million under the Unsecured Senior Notes due 2030.

We used the proceeds from the issuance of the Unsecured Senior Notes due 2029, together with cash on hand, to redeem all of the then outstanding Unsecured Senior Notes due 2024 and repay all of the then outstanding borrowings under the incremental senior secured term loan maturing on April 24, 2025.

We used proceeds from the issuance of the 2021 Incremental Term Loan Facility and Unsecured Senior Notes due 2030, along with cash on hand to repay all of the then outstanding borrowings under the Initial Term Loan Facility.

Cash flows provided by financing activities in fiscal year 2021 also included $20 million of proceeds received from stock purchases under our employee stock purchase plan and $15 million of proceeds from the exercise of employee stock options, which were offset by $14 million of employee tax withholdings paid in connection with the vesting of stock awards.

Other Obligations and Commitments

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• Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement.

In addition, we provide certain postretirement health and welfare benefits to eligible retirees and

their dependents.

In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents.

See Note 18, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

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In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents.

We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2022 and 2021, and we do not expect to make significant contributions in fiscal year 2023.

In the quarter ending July 1, 2023, the Company issued a notice of intent to terminate the majority of the US Foods Consolidated Defined Benefit Retirement Plan.

See Note 18, Retirement Plans, in our consolidated financial statements for further detail on the plan termination.

We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2023 and 2022.

In connection with the plan termination, we expect to make a contribution in 2024.

Certain employees are eligible to participate in our 401(k) savings plan.

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Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition.

Other intangible assets include customer relationships, amortizable trade names, non-compete agreements, the brand names comprising our portfolio of private brands, and trademarks.

Other intangible assets include customer relationships, amortizable trade names, noncompete agreements, the brand names comprising our portfolio of private brands, and trademarks.

We assess goodwill and other intangible assets with indefinite lives for impairment each year, or more frequently if events or changes in circumstances indicate an asset may be impaired.

For goodwill and indefinite-lived intangible assets, our policy is to assess for impairment as of the beginning of

each fiscal third quarter.

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

For other intangible assets with definite lives, we assess for impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable.

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If the carrying value of the asset exceeds its fair value, an impairment loss is recognized in an amount equal to the excess.

Based on our fiscal year 2022 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our trademark indefinite-lived intangible asset and brand name indefinite-lived intangible asset exceeded their respective carrying values by substantial margins.

Based on our fiscal year 2023 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our trademark indefinite-lived intangible asset and brand name indefinite-lived intangible asset exceeded their respective carrying values

by substantial margins.

These margins would not be materially impacted by a 5% increase in the discount rate.

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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.

During 2020, the Company also recognized $9 million of asset impairment charges related to COVID-19’s adverse impacts on the fair value of certain trade names acquired as part of the 2019 Food Group acquisition.

Due to the many variables inherent in estimating fair value and the relative size of the indefinite-lived intangible assets, differences in assumptions could have a material effect on the results of the Company’s impairment analysis in future periods.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis