What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-13 · 88 added, 81 removed, 271 unchanged (38% of the section changed)

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At US Foods, 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 WE HELP YOU MAKE IT ™, which is centered on bringing four key elements to the forefront for our customers;

(1) more quality products, including our large portfolio of exclusive brands, (2) more tools, centering on our MOXē business platform, (3) more support from our sellers and our team of experts and lastly, (4) more deliveries, enabled by our traditional broadline services and Pronto™ program.

This mission is supported by our strategy of WE HELP YOU MAKE IT ® , which is centered on bringing three key elements to the forefront for our customers;

(1) More Quality products, including our large portfolio of Exclusive Brands, (2) More Tools, centering on our MOXē ® business platform, and lastly, (3) More Deliveries, enabled by our traditional broadline services, Pronto ® program and convenient delivery options.

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

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

Net sales increased 6.4%, driven by case volume growth.

Total case volumes increased 4.2% compared to the prior year driven by a 4.4% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 2.1% increase in hospitality volume and a 3.2% increase in chain volume.

Total organic case volume increased 1.4% which includes 2.6% organic independent restaurant case volume growth.

On June 5, 2024, the Company announced it intends to explore the potential sale of its assets and liabilities related to CHEF’STORE wholesale restaurant supply business and, if a sale is completed, then entirely focus on delivered broadline operations.

As of December 28, 2024, the Company is in the process of exploring this sale which has not met held for sale criteria in the current year.

Operating Metrics

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Fiscal Year 2025 Highlights

Financial Highlights —Total case volume increased 4.2% and independent restaurant case volume increased 4.4% in fiscal year 2024.

Total organic case volume increased 1.4% in fiscal year 2024, and organic independent restaurant case volume increased 2.6%.

Financial Highlights —Total case volume increased 1.0% compared to the prior year driven by a 3.3% increase in independent restaurant case volume, a 4.4% increase in healthcare volume and a 2.9% increase in hospitality volume, partially offset by a 3.5% decrease in chain volume.

Total organic case volume increased 0.4% in fiscal year 2025, which includes 2.7% organic independent restaurant case volume growth.

Net sales increased $1,547 million, or 4.1%, in fiscal year 2025 driven primarily by case volume growth and food cost inflation of 2.6%.

Gross profit increased $386 million, or 6.3%, to $6,534 million in fiscal year 2024, primarily a result of an increase in total case volume, improved cost of goods sold and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment.

Gross profit increased $330 million, or 5.1%, to $6,864 million in fiscal year 2025, primarily as a result of an increase in total case volume, improved cost of goods sold and inventory management.

As a percentage of net sales, gross profit was 17.4% in fiscal year 2025 and 17.3% in fiscal year 2024.

Total operating expenses increased $304 million, or 5.9%, to $5,435 million in fiscal year 2024.

The increase was primarily a result of an increase in total case volume, higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

As a percentage of net sales, operating expenses were 14.3% in fiscal year 2024, compared to 14.4% in fiscal year 2023.

Total operating expenses increased $230 million, or 4.2%, to $5,665 million in fiscal year 2025, primarily as a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

As a percentage of net sales, operating expenses were 14.4% in fiscal year 2025 and 14.3% in fiscal year 2024.

Results of Operations

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Operating income 1,199 1,099 1,017

Other expense (income)—net 6 (6) (22)

Other (income) expense—net (4) 6 (6)

Interest expense—net 305 315 324

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(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;

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

(2) share-based compensation expense;

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(5) business transformation costs;

(6) recognition of net actuarial loss;

and (7) other gains, losses, or costs as specified in the agreements governing our indebtedness.

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Share-based compensation expense (2)

LIFO reserve adjustment (3)

LIFO reserve adjustments (3)

Loss on extinguishment of debt (4)

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

For fiscal year 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and related workforce efficiencies.

For both fiscal years 2025 and 2024, business transformation costs related to projects associated with information technology infrastructure initiatives and related workforce efficiencies.

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

(7) Includes:

(i) aggregate acquisition, integration related costs and planned divestiture costs of $22 million for fiscal year 2024, $41 million for fiscal year 2023 and $22 million for fiscal year 2022 (ii) CEO sign on bonus of $3 million for fiscal year 2023 (iii) contested proxy and related legal and consulting costs of $21 million for fiscal year 2022;

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

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.

(i) aggregate acquisition, integration related costs and divestiture costs of $32 million for fiscal year 2025, $22 million for fiscal year 2024 and $41 million for fiscal year 2023 (ii) CEO sign on bonus of $3 million for fiscal year 2023 and (iii) other gains, losses or costs that we are permitted to add back for purposes of calculating Adjusted EBITDA under certain agreements governing our indebtedness.

(8) 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.

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• Operating income increased $100 million to $1,199 million in fiscal year 2025.

• Net income available to common shareholders decreased $5 million to $494 million in fiscal year 2024.

• Net income increased $182 million to $676 million in fiscal year 2025.

• Adjusted EBITDA increased $191 million, or 11.0%, to $1,932 million in fiscal year 2025.

As a percentage of net sales, Adjusted EBITDA was 4.6% in fiscal year 2024, as compared to 4.4% in fiscal year 2023.

• Adjusted EBITDA as a percentage of net sales was 4.9% in fiscal year 2025, as compared to 4.6% in fiscal year 2024.

Net sales increased $1,547 million, or 4.1%, to $39,424 million in fiscal year 2025 driven by case volume growth and food cost inflation of 2.6%.

Total case volume increased 4.2% driven by a 4.4% increase in independent restaurant case volume, a 5.7% increase in healthcare volume, a 2.1% increase in hospitality volume and a 3.2% increase in chain volume.

Organic broadline sales of private brands represented approximately 34% of net sales in both 2024 and 2023.

Gross profit increased $386 million, or 6.3%, to $6,534 million in fiscal year 2024, primarily as a result of an increase in total case volume, improved cost of goods sold and pricing optimization, partially offset by an unfavorable year-over-year LIFO adjustment.

Our LIFO method of inventory costing resulted in an expense of $61 million in fiscal year 2024, compared to a gain of $1 million in fiscal year 2023.

Gross profit as a percentage of net sales was 17.3% in fiscal years 2024 and 2023.

Total case volume increased 1.0% driven by a 3.3% increase in independent restaurant case volume, a 4.4% increase in healthcare volume and a 2.9% increase in hospitality volume, partially offset by a 3.5% decrease in chain volume.

Organic broadline sales of private brands represented approximately 35% and 34% of net sales in fiscal years 2025 and 2024, respectively.

Gross profit increased $330 million, or 5.1%, to $6,864 million in fiscal year 2025, primarily a result of an increase in total case volume, improved cost of goods sold and inventory management.

Our LIFO method of inventory costing resulted in an expense of $65 million in fiscal year 2025, compared to an expense of $61 million in fiscal year 2024.

Gross profit as a percentage of net sales was 17.4% and 17.3% in fiscal years 2025 and 2024, respectively.

Operating Expenses

Operating expenses, comprised of distribution, selling and administrative costs and restructuring activity and asset impairment charges, increased $230 million, or 4.2%, to $5,665 million in fiscal year 2025.

Operating expenses increased primarily as a result of an increase in total case volume, higher distribution costs, reflecting increased labor costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

Operating expenses increased primarily as a result of an increase in total case volume and higher distribution, selling and administrative costs, partially offset by continued distribution productivity improvement as well as actions to streamline administrative processes and costs.

Operating expenses as a percentage of net sales were 14.4% in fiscal year 2025, compared to 14.3% in fiscal year 2024.

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The increase in operating income was due to the factors discussed in the relevant sections above.

Other Expense (Income)—Net

Other expense (income)—net includes components of net periodic benefit costs (credits), exclusive of the service cost component associated with our defined benefit and other postretirement plans.

We recognized other expense—net of $6 million in 2024 and other income—net of $6 million in 2023, respectively.

Other expense—net is due to a increase in the pension benefit interest cost and a decrease in the expected return on assets compared to fiscal year 2023.

Other (Income) Expense—Net

Other (income) expense—net includes components of net periodic benefit costs (credits), exclusive of the service cost component associated with our defined benefit and other postretirement plans.

We recognized other income—net of $4 million in fiscal year 2025 and other expense—net of $6 million in fiscal year 2024.

Interest Expense—Net

Interest expense—net decreased $9 million in fiscal year 2024, primarily due to lower outstanding debt in 2024 compared to 2023.

Interest expense—net decreased $10 million in fiscal year 2025, primarily due to lower rates in fiscal year 2025 compared to fiscal year 2024.

Loss on Extinguishment of Debt

We did not recognize a loss on extinguishment of debt for fiscal year 2025.

We recognized a loss on extinguishment of debt of $10 million in fiscal year 2024 due to the amendment of the Company’s Incremental Term Loan Facility due September 13, 2026 (the “2024 Incremental Term Loan Facility”) and repricing of the Company’s Incremental Term Loan Facility due November 22, 2028 (the “2021 Incremental Term Loan Facility”).

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

Recognition of Net Actuarial Loss for Pension Settlement

We recognized a net actuarial loss for pension settlement of $124 million in fiscal 2024 due to a termination of certain defined benefit plans.

We did not recognize any net actuarial loss for pension settlement in fiscal year 2023.

No activity was recognized in fiscal year 2025.

Our effective income tax rate for fiscal year 2025 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 $24 million consisting of a tax benefit of $17 million primarily related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions, a tax benefit of $9 million primarily related to excess tax benefits associated with share-based compensation, and a tax expense of $2 million, primarily related to adjustments to prior year tax provision estimates.

These discrete tax items included a tax benefit of $10 million primarily related to excess tax benefits associated with share-based compensation.

Our effective income tax rate for fiscal year 2024 of 23% 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 $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 net income available to common shareholders was $494 million in fiscal year 2024, compared to a net income available to common shareholders of $499 million in fiscal year 2023.

The decrease in net income available to common shareholders was due to the relevant factors discussed above.

These discrete tax items included an aggregate tax benefit of $24 million consisting of a tax benefit of $17 million primarily related to a decrease in an unrecognized tax benefit as a result of the expiration of the statute of limitations in several jurisdictions, a tax benefit of $9 million primarily related to excess tax benefits associated with share-based compensation, and a tax benefit of $2 million, primarily related to adjustments to prior year tax provision estimates.

Our net income was $676 million in fiscal year 2025, compared to a net income of $494 million in fiscal year 2024.

The increase in net income was due to the factors discussed above.

Liquidity and Capital Resources

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As of December 27, 2025, the Company had approximately $1.6 billion in cash and available liquidity.

The aggregate carrying value of our indebtedness was $4,928 million, net of $28 million of unamortized deferred financing costs, as of December 28, 2024.

We had $223 million outstanding borrowings and had issued letters of credit totaling $592 million under the ABL Facility as of December 28, 2024.

There was remaining capacity of $1,485 million under the ABL Facility based on our borrowing base as of December 28, 2024.

The Company’s 6.875% Senior Notes due 2028 (the “Unsecured Senior Notes due 2028”) had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of December 28, 2024.

The Company’s 4.750% Senior Notes due 2029 (the “Unsecured Senior Notes due 2029”), had an outstanding balance of $895 million, net of $5 million of unamortized deferred financing costs, as of December 28, 2024.

The Company’s 4.630% Senior Notes due 2030 (the “Unsecured Senior Notes due 2030”) had an outstanding balance of $497 million, net of $3 million of unamortized deferred financing costs, as of December 28, 2024.

The Company’s 7.250% Senior Notes due 2032 (the “Unsecured Senior Notes due 2032”) had an outstanding balance of $496 million, net of $4 million of unamortized deferred financing costs, as of December 28, 2024.

The Company’s 5.75% Senior Notes due 2033 (the “Unsecured Senior Notes due 2033”) had an outstanding balance of $496 million net of $4 million of unamortized deferred financing costs, as of December 28, 2024.

The 2021 Incremental Term Loan Facility had a carrying value of $610 million, with no unamortized deferred financing costs, as of December 28, 2024.

The 2024 Incremental Term Loan Facility borrowed in October 2024 had a carrying value of $717 million, net of $8 million of unamortized deferred financing costs, as of December 28, 2024.

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 2021 Incremental Term Loan Facility and the 2024 Incremental Term Loan Facility.

($ in millions)

Debt Description

Maturity Interest Rate as of December 27, 2025 Carrying Value as of December 27, 2025 Carrying Value as of December 28, 2024

ABL Facility December 7, 2027 5.41% $ 429 $ 223

2021 Incremental Term Loan Facility (net of $1 and $0 of unamortized deferred financing costs, respectively) (1)

November 22, 2028 5.67% 609 610

2024 Incremental Term Loan Facility (net of $7 and $8 of unamortized deferred financing costs, respectively)

October 3, 2031 5.67% 712 717

Unsecured Senior Notes due 2028 (net of $3 and $4 unamortized deferred financing costs, respectively)

September 15, 2028 6.88% 497 496

Unsecured Senior Notes due 2029 (net of $4 and $5 of unamortized deferred financing costs, respectively)

February 15, 2029 4.75% 896 895

Unsecured Senior Notes due 2030 (net of $2 and $3 of unamortized deferred financing costs, respectively)

June 1, 2030 4.63% 498 497

Unsecured Senior Notes due 2032 (net of $4 and $4 of unamortized deferred financing costs, respectively)

January 15, 2032 7.25% 496 496

Unsecured Senior Notes due 2033 (net of $2 and $4 of unamortized deferred financing costs, respectively)

April 15, 2033 5.75% 498 496

Obligations under financing leases (2)

2026–2033 1.26% -8.31% 557 490

Other debt January 1, 2031 5.75% 8 8

Total debt (2)

Current portion of long-term debt

Long-term debt $ 5,063 $ 4,819

(1) The 2021 Incremental Term Loan Facility was refinanced on October 3, 2024 as further discussed below.

(2) For the fiscal year ended 2024, obligations under financing leases excludes financing leases classified as held for sale in relation the Freshway divestiture.

Refer to Note 5, Acquisitions and Divestitures, for additional information.

The Amended and Restated Term Loan Credit Agreement, dated as of June 27, 2016 (as amended and restated, the “Term Loan Credit Agreement”) provides USF with the 2021 Incremental Term Loan Facility and the 2024 Incremental Term Loan Facility.

We also had $557 million of obligations under financing leases for transportation equipment and building leases as of December 27, 2025.

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Any potential debt reduction or refinancing could require significant use of our available liquidity and capital resources.

We believe that the combination of cash generated from operations, together with borrowing capacity under the agreements governing our indebtedness and other financing arrangements, will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs, and capital expenditure requirements for the next 12 months as well as beyond 12 months.

We had outstanding borrowings totaling $429 million and had issued letters of credit totaling $315 million under the ABL Facility as of December 27, 2025.

There was remaining capacity of $1,556 million under the ABL Facility as of December 27, 2025.

During the fiscal year ended December 27, 2025, outstanding letters of credit were reduced by approximately $254 million after surety bonds were issued to secure the Company’s obligations with respect to its insurance program.

The agreements governing our indebtedness contain customary covenants.

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For additional information, see Item 1A of Part I, “Risk Factors-Risks Relating to Our Indebtedness.” The Company had approximately $2.8 billion of restricted payment capacity under these covenants and approximately $1.6 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 December 27, 2025.

Every quarter, we review rating agency changes for all of the lenders that have a continuing obligation to provide us with funding.

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Net cash used in investing activities (497) (552)

Net cash used by financing activities (831) (587)

Net cash used in financing activities

Net increase in cash, cash equivalents and restricted cash (18) (209)

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Operating Activities

Cash flows provided by operating activities increased $34 million to $1,174 million in fiscal year 2024 driven by changes in operating assets and liabilities.

Net cash provided by operating activities in fiscal year 2023 benefited from higher net income and changes in operating assets and liabilities.

Cash flows provided by operating activities increased $195 million to $1,369 million in fiscal year 2025 driven by higher net income and a reduction in tax payments.

Net cash provided by operating activities in fiscal year 2024 driven by changes in operating assets and liabilities.

Investing Activities

Cash flows used in investing activities in fiscal years 2024 and 2023 included cash expenditures of $341 million and $309 million, respectively, and related to investments in information technology, new construction and expansion of distribution facilities and property and equipment for fleet replacement.

Cash flows used in investing activities in fiscal year 2024 also included $214 million cash purchase price for the acquisition of IWC Food Service.

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.

Cash flows used in investing activities in fiscal years 2025 and 2024 included cash expenditures of $410 million and $341 million, respectively, related to investments in information technology, property and equipment and construction of and improvements to distribution facilities.

Cash flows used in investing activities in fiscal year 2025 also included approximately $87 million cash purchase price for the acquisition of Jake’s Finer Foods and $44 million cash purchase price for the acquisition of Shetakis.

Investing activities for the fiscal year ended 2025 also included the cash proceeds from the sale of Freshway of $38 million.

Cash flows used in investing activities in fiscal year 2024 included $214 million cash purchase price for the acquisition of IWC Food Service.

We expect total cash capital expenditures in fiscal year 2026 to be between $400 million and $450 million.

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Financing Activities

Cash flows used in financing activities in fiscal year 2025 included $206 million in net proceeds under the ABL facility and $110 million in scheduled payments under our financing leases.

Financing activities in fiscal year 2025 also included $926 million of common stock repurchased, exclusive of approximately $8 million of fees, commissions and the related 1% of excise tax under the Original Share Repurchase Program and the May 2025 Share Repurchase Program, $50 million of unsettled accelerated share repurchases, $28 million of proceeds received from stock purchases under our employee stock purchase plan and $6 million of proceeds from the exercise of employee stock options, which were offset by $38 million of employee tax withholdings paid in connection with the vesting of stock awards.

Cash flows used in financing activities in fiscal year 2024 included $112 million of scheduled payments under our Term Loan Facilities and financing leases, $1,217 million for repayment of the 2019 Incremental Term Loan Facility and paydown of the 2021 Incremental Term Loan Facility, $14 million in principal payments for the repricing of the 2021 Incremental Term Loan Facility and $13 million of financing fees related to the repayment of the 2019 Incremental Term Loan Facility and the 2021 Incremental Term Loan Facility repricing, $223 million in net proceeds under the ABL Facility, $725 million from the 2024 Incremental Term Loan Facility issuance and $500 million from the 2033 Unsecured Senior Note issuance.

Financing activities in fiscal year 2024 also included $948 million of common stock repurchased, exclusive of approximately $10 million of fees, commissions and the related 1% of excise tax under the Amended Share Repurchase Program, $28 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 $21 million of employee tax withholdings paid in connection with the vesting of stock awards.

Financing activities in fiscal year 2024 also included $948 million of common stock repurchased, exclusive of approximately $8 million of fees, commissions and the related 1% of excise tax under the Original Share Repurchase Program, $28 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 $21 million of employee tax withholdings paid in connection with the vesting of stock awards.

We incurred approximately $5 million of lender fees and third-party costs in connection with our issuance of the 2033 Unsecured Senior Notes, which were capitalized as deferred financing costs.

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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 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 Original 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.

Other Obligations and Commitments

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• Operating and finance lease obligations – See Note 14, Leases, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

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

On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan.

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

See Note 17, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

• Self-insured liabilities – We are self-insured for general liability, fleet liability and workers’ compensation claims.

• Self-insured liabilities – We are primarily self-insured for general liability, fleet liability and workers’ compensation claims.

Claims in excess of certain levels are insured by external parties.

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We sponsor a defined benefit plan that pays benefits to eligible participants at retirement.

Only certain union associates are eligible to participate and continue to accrue benefits under the plan per the collective bargaining agreements.

Only certain union associates are eligible to participate and continue to accrue benefits under the plan per the collective bargaining agreements (“CBAs”).

The plan is closed and frozen to all other employees.

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

On October 31, 2024, the Company terminated and settled the majority of the defined benefit plan.

See Note 17, 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 2024 and 2023.

We do not expect to make any contributions in 2025.

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

See Note 15, Retirement Plans, in our consolidated financial statements for further detail on the plans.

We did not make significant contributions to the Company-sponsored defined benefit and other postretirement plans in fiscal years 2025 and 2024 and do not expect to make any contributions in 2026.

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

We made employer matching contributions to the 401(k) plan of $86 million and $82 million in fiscal years 2025 and 2024, respectively.

We also are required to contribute to various multiemployer pension plans under the terms of certain of our CBAs.

We are required to contribute to various multi employer pension plans under the terms of certain of our CBAs.

Our contributions to these plans were $60 million and $57 million in fiscal years 2025 and 2024, respectively.

Off-Balance Sheet Arrangements

We had entered into $592 million of letters of credit, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs and certain real estate leases, under the ABL Facility as of December 28, 2024.

In the quarter ending December 28, 2024, we entered into approximately $58 million of surety bonds, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs.

We had entered into $315 million of letters of credit, primarily in favor of certain lenders to secure obligations primarily related to certain real estate leases, under the ABL Facility as of December 27, 2025 compared to $592 million as of December 28, 2024.

We held approximately $362 million and $58 million of surety bonds as of December 27, 2025 and December 28, 2024, respectively, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs.

In certain cases, surety bonds may be used as an alternative to letters of credit.

In fiscal year ended December 27, 2025, outstanding letters of credit were reduced by approximately $254 million after surety bonds were issued to secure the Company’s obligations with respect to its insurance program.

Except as disclosed above, we have no off-balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

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Based on our qualitative fiscal year 2025 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value.

Our fair value estimates of the brand name and trademark indefinite-lived intangible assets are based on a relief from royalty method, including key assumptions such as the long-term growth rates of future revenues, the royalty rate for such revenue, and a discount rate.

The fair value of each intangible asset is determined for comparison to the corresponding carrying value.

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 2024 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.

Our fiscal year 2025 assessment for impairment of indefinite-lived intangible assets was performed using a qualitative approach to determine, as of the date of the assessment, whether it was more likely than not that the fair value of indefinite-lived intangible assets was less than its carrying value.

In performing the qualitative assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affect the fair value of indefinite-lived intangible assets.

These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance.

Based on our qualitative fiscal year 2025 annual impairment analysis for indefinite-lived intangible assets, we concluded that it is more likely than not that the fair value of our trademark indefinite-lived intangible assets and brand name indefinite-lived intangible assets exceeded their respective carrying values.

As a part of this assessment, the Company determined that there were no future plans to utilize several acquired indefinite-lived intangible trademarks and brand names.

This resulted in a $13 million impairment during the fiscal year ended December 27, 2025.

The recoverability of our indefinite-lived intangible assets could be impacted if estimated future cash flows are not achieved.

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These differences are reflected as increases or decreases to income tax expense in the period in which they are determined.

The Company estimates it is reasonably possible that the liability for unrecognized tax benefits will decrease by up to $1 million in the next 12 months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions.

Our uncertain tax positions contain uncertainties because management is required to make assumptions and to apply judgment in estimating the exposures associated with our various filing positions.

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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