10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-37786

US FOODS HOLDING CORP.

(Exact name of registrant as specified in its charter)

Delaware	26-0347906
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

9399 W. Higgins Road, Suite 100

Rosemont, IL 60018

(847) 720-8000

(Address, including Zip Code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	USFD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

221,911,590 shares of the registrant's common stock were outstanding as of May 5, 2021.

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) which are not historical in nature are “forward-looking statements” within the meaning of the federal securities laws. These statements often include words such as “believe,” “expect,” “project,” “anticipate,” “intend,” “plan,” “outlook,” “estimate,” “target,” “seek,” “will,” “may,” “would,” “should,” “could,” “forecast,” “mission,” “strive,” “more,” “goal,” or similar expressions (although not all forward-looking statements may contain such words) and are based upon various assumptions and our experience in the industry, as well as historical trends, current conditions, and expected future developments. However, you should understand that these statements are not guarantees of performance or results, and there are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed in the forward-looking statements, including, among others:

•    economic factors affecting consumer confidence and discretionary spending and reducing the consumption of food prepared away from home;

•    the extent and duration of the negative impact of the coronavirus ("COVID-19") pandemic on us;

•    cost inflation/deflation and commodity volatility;

•    competition;

•    reliance on third-party suppliers and interruption of product supply or increases in product costs;

•    changes in our relationships with customers and group purchasing organizations;

•    our ability to increase or maintain the highest margin portions of our business;

•    achievement of expected benefits from cost savings initiatives;

•    increases in fuel costs;

•    changes in consumer eating habits;

•    cost and pricing structures;

•    impairment charges for goodwill, indefinite-lived intangible assets or other long-lived assets;

•    environmental, health and safety and other governmental regulation, including actions taken by national, state and local governments to contain the COVID-19 pandemic, such as travel restrictions or bans, social distancing requirements, and required closures of non-essential businesses;

•    product recalls and product liability claims;

•    reputation in the industry;

•    indebtedness and restrictions under agreements governing indebtedness;

•    interest rate increases;

•    changes in the method of determining London Interbank Offered Rate ("LIBOR") or the replacement of LIBOR with an alternative reference rate;

•    labor relations and costs and continued access to qualified and diverse labor;

•    risks associated with intellectual property, including potential infringement;

•    disruption of existing technologies and implementation of new technologies;

•    cybersecurity incidents and other technology disruptions;

•    effective integration of acquired businesses;

•    changes in tax laws and regulations and resolution of tax disputes;

•

•    extreme weather conditions, natural disasters and other catastrophic events, including pandemics and the rapid spread of contagious illnesses;

•    costs and risks associated with current and changing government laws and regulations, and potential changes as a result of a new administration in the United States; and

•    management of retirement benefits and pension obligations.

For a detailed discussion of these and other risks, uncertainties and factors, see Part I, Item 1A— “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 (the “2020 Annual Report”).

In light of these risks, uncertainties and other important factors, the forward-looking statements in this Quarterly Report might not prove to be accurate, and you should not place undue reliance on them. All forward-looking statements attributable to us, or others acting on our behalf, are expressly qualified in their entirety by the cautionary statements above. All of these statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

Comparisons of results between current and prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should be viewed only as historical data.

	TABLE OF CONTENTS
		Page No.
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of April 3, 2021 and January 2, 2021	1
	Consolidated Statements of Comprehensive Income for the 13 weeks ended April 3, 2021 and March 28, 2020	2
	Consolidated Statements of Shareholders' Equity for the 13 weeks ended April 3, 2021 and March 28, 2020	3
	Consolidated Statements of Cash Flows for the 13 weeks ended April 3, 2021 and March 28, 2020	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
Part II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
Signatures		29

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

US FOODS HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
	April 3, 2021		January 2, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	912	$	828
Accounts receivable, less allowances of $51 and $67	1,354		1,084
Vendor receivables, less allowances of $7 and $5	177		121
Inventories—net	1,451		1,273
Prepaid expenses	160		132
Assets held for sale	10		1
Other current assets	20		26
Total current assets	4,084		3,465
Property and equipment—net	1,987		2,021
Goodwill	5,625		5,637
Other intangibles—net	874		892
Deferred tax assets	21		1
Other assets	409		407
Total assets	$	13,000	$	12,423
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft liability	$	178	$	136
Accounts payable	1,733		1,218
Accrued expenses and other current liabilities	538		497
Current portion of long-term debt	122		131
Total current liabilities	2,571		1,982
Long-term debt	5,616		5,617
Deferred tax liabilities	275		270
Other long-term liabilities	504		505
Total liabilities	8,966		8,374
Commitments and contingencies (Note 18)
Mezzanine equity:
Series A convertible preferred stock, $0.01 par value—25 shares authorized;    0.5 issued and outstanding as of April 3, 2021 and    January 2, 2021	534		519
Shareholders’ equity:
Common stock, $0.01 par value—600 shares authorized; 222 and 221 issued and outstanding as of April 3, 2021 and January 2, 2021, respectively	2		2
Additional paid-in capital	2,908		2,901
Retained earnings	622		661
Accumulated other comprehensive loss	(32)		(34)
Total shareholders’ equity	3,500		3,530
Total liabilities, mezzanine equity and shareholders' equity	$	13,000	$	12,423

See Notes to Consolidated Financial Statements (Unaudited).

1

US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per share data)
	13 Weeks Ended
	April 3, 2021		March 28, 2020
Net sales	$	6,295	$	6,339
Cost of goods sold	5,292		5,273
Gross profit	1,003		1,066
Operating expenses:
Distribution, selling and administrative costs	972		1,192
Restructuring costs and asset impairment charges	3		—
Total operating expenses	975		1,192
Operating income (loss)	28		(126)
Other income—net	(7)		(6)
Interest expense—net	54		52
Loss on extinguishment of debt	23		—
Loss before income taxes	(42)		(172)
Income tax benefit	(18)		(40)
Net loss	(24)		(132)
Other comprehensive loss—net of tax:
Changes in retirement benefit obligations	—		—
Unrecognized gain (loss) on interest rate swaps	2		(6)
Comprehensive loss	$	(22)	$	(138)
Net loss	$	(24)	$	(132)
Series A convertible preferred stock dividends	15		—
Net loss available to common shareholders	$	(39)	$	(132)
Net loss per share
Basic	$	(0.18)	$	(0.60)
Diluted	$	(0.18)	$	(0.60)
Weighted-average common shares outstanding
Basic	221		219
Diluted	221		219

See Notes to Consolidated Financial Statements (Unaudited).

2

US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions)
	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
	Shares	Amount
BALANCE—January 2, 2021	221	$	2	$	2,901	$	661	$	(34)	$	3,530
Share-based compensation expense	—	—		10		—		—		10
Proceeds from employee stock purchase plan	—	—		5		—		—		5
Vested restricted stock units, net	1	—		—		—		—		—
Exercise of stock options	—	—		4		—		—		4
Tax withholding payments for net share-settled equity awards	—	—		(12)		—		—		(12)
Series A convertible preferred stock dividends	—	—		—		(15)		—		(15)
Unrecognized gain on interest rate swaps, net of income tax	—	—		—		—		2		2
Net loss	—	—		—		(24)		—		(24)
BALANCE—April 3, 2021	222	$	2	$	2,908	$	622	$	(32)	$	3,500

	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity
	Shares	Amount
BALANCE—December 28, 2019	220	$	2	$	2,845	$	916	$	(54)	$	3,709
Share-based compensation expense	—	—		7		—		—		7
Proceeds from employee stock purchase plan	—	—		6		—		—		6
Exercise of stock options	—	—		1		—		—		1
Tax withholding payments for net share-settled equity awards	—	—		(2)		—		—		(2)
Unrecognized loss on interest rate swaps, net of income tax	—	—		—		—		(6)		(6)
Adoption of ASU 2016-13	—	—		—		(1)		—		(1)
Net loss	—	—		—		(132)		—		(132)
BALANCE—March 28, 2020	220	$	2	$	2,857	$	783	$	(60)	$	3,582

See Notes to Consolidated Financial Statements (Unaudited).

3

US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
	13 Weeks Ended
	April 3, 2021		March 28, 2020
Cash flows from operating activities:
Net loss	$	(24)	$	(132)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	101		101
Loss on disposal of property and equipment—net	—		1
Loss on extinguishment of debt	23		—
Amortization of deferred financing costs	3		2
Deferred tax benefit	(4)		(17)
Share-based compensation expense	10		7
(Benefit) provision for doubtful accounts	(12)		180
Changes in operating assets and liabilities:
(Increase) decrease in receivables	(315)		157
(Increase) decrease in inventories—net	(178)		6
Increase in prepaid expenses and other assets	(25)		(26)
Increase (decrease) in accounts payable and cash overdraft liability	555		(215)
Increase (decrease) in accrued expenses and other liabilities	42		(126)
Net cash provided by (used in) operating activities	176		(62)
Cash flows from investing activities:
Proceeds from sales of assets	—		5
Purchases of property and equipment	(46)		(79)
Net cash used in investing activities	(46)		(74)
Cash flows from financing activities:
Proceeds from debt borrowings	900		1,945
Principal payments on debt and financing leases	(926)		(827)
Debt financing costs and fees	(18)		—
Proceeds from employee stock purchase plan	5		6
Proceeds from exercise of stock options	4		1
Tax withholding payments for net share-settled equity awards	(12)		(2)
Net cash (used in) provided by financing activities	(47)		1,123
Net increase in cash, cash equivalents and restricted cash	83		987
Cash, cash equivalents and restricted cash—beginning of period	829		98
Cash, cash equivalents and restricted cash—end of period	$	912	$	1,085
Supplemental disclosures of cash flow information:
Interest paid—net of amounts capitalized	$	33	$	41
Income taxes paid—net	—		2
Property and equipment purchases included in accounts payable	23		38
Property and equipment transferred to assets held for sale	9		14
Leased assets obtained in exchange for financing lease liabilities	7		59
Leased assets obtained in exchange for operating lease liabilities	8		2
Paid-in-kind Series A convertible preferred stock dividends	15		—

See Notes to Consolidated Financial Statements (Unaudited).

4

US FOODS HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Amounts in tables in millions, except per share data, unless otherwise noted)

1.     OVERVIEW AND BASIS OF PRESENTATION

US Foods Holding Corp., a Delaware corporation, and its consolidated subsidiaries are referred to in these consolidated financial statements and notes as “we,” “our,” “us,” the “Company,” or “US Foods.” US Foods Holding Corp. conducts all of its operations through its wholly owned subsidiary US Foods, Inc. (“USF”) and its subsidiaries. All of the Company’s indebtedness, as further described in Note 10, Debt, is a direct obligation of USF and its subsidiaries.

Business Description—The Company, through USF, operates in one business segment in which it markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations.

Basis of Presentation—The Company operates on a 52 or 53-week fiscal year, with all periods ending on a Saturday. When a 53-week fiscal year occurs, the Company reports the additional week in the fiscal fourth quarter. Fiscal year 2021 is a 52-week fiscal year. Fiscal year 2020 was a 53-week fiscal year.

The consolidated financial statements included in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures included in this Quarterly Report are adequate to make the information presented not misleading. These interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes included in the 2020 Annual Report.

The consolidated interim financial statements reflect all adjustments (consisting of normal recurring items) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results that might be achieved for the full fiscal year.

2.    RECENT ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, convertible debt will be accounted for as a single liability measured at its amortized cost. Additionally, the new guidance requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. This guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impacts of the provision of the new standard on our financial position, results of operation and cash flows.

3.    REVENUE RECOGNITION

The Company recognizes revenue when the performance obligation is satisfied, which occurs when a customer obtains control of the promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services. The Company generates substantially all of its revenue from the distribution and sale of food and food-related products and recognizes revenue when title and risk of loss passes and the customer accepts the goods, which occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of revenue at the time the revenue is recognized. Sales taxes invoiced to customers and remitted to governmental authorities are excluded from net sales. 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 3, 2021 and January 2, 2021. Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $1.4 billion and $1.1 billion as of April 3, 2021 and January 2, 2021, respectively.

The Company has certain customer contracts under which incentives are paid upfront to its customers. These payments have become industry practice and are not related to financing any customer’s business, nor are these payments associated with any

5

distinct good or service to be received from any customer. 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 $30 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both April 3, 2021 and January 2, 2021, and $29 million and $27 million included in other assets in the Company’s Consolidated Balance Sheets as of April 3, 2021 and January 2, 2021, respectively.

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Meats and seafood	$	2,262	$	2,226
Dry grocery products	1,093		1,092
Refrigerated and frozen grocery products	994		1,047
Dairy	622		648
Equipment, disposables and supplies	693		629
Beverage products	324		344
Produce	307		353
Net sales	$	6,295	$	6,339

4.    BUSINESS ACQUISITIONS

Smart Foodservice Acquisition—On April 24, 2020, USF completed the acquisition of Smart Stores Holding Corp., a Delaware corporation (“Smart Foodservice”), from funds managed by affiliates of Apollo Global Management, Inc. Total consideration paid at the closing of the acquisition (net of cash acquired) was $972 million. At the time of the acquisition, Smart Foodservice operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah, and Washington serving small and mid-sized restaurants and other food business customers. The acquisition of Smart Foodservice expanded the Company’s cash and carry business in the West and Northwest parts of the U.S.

USF financed the Smart Foodservice acquisition with a new $700 million incremental senior secured term loan facility under its existing term loan credit agreement, as further described in Note 10, Debt, and with cash on hand. The assets, liabilities and results of operations of Smart Foodservice have been included in the Company’s consolidated financial statements since the date the acquisition was completed.

The following table summarizes the final purchase price allocation recognized for the Smart Foodservice acquisition as of April 24, 2020. The decrease in goodwill during the 13 weeks ended April 3, 2021 was due to the finalization of deferred income taxes associated with the acquisition.

	Purchase Price Allocation
Accounts receivable	$	5
Inventories	43
Other current assets	24
Property and equipment	84
Goodwill(1)	895
Other intangibles(2)	14
Other assets	145
Accounts payable	(38)
Accrued expenses and other current liabilities	(32)
Deferred income taxes	(8)
Other long-term liabilities, including financing leases	(160)
Cash paid for acquisition	$	972

6

(1)    Goodwill recognized is primarily attributable to intangible assets that do not qualify for separate recognition, as well as expected synergies from the combined company. The acquired goodwill is not deductible for U.S. federal income tax purposes.

(2)    Other intangibles consist of a trade name of $14 million with an estimated useful life of approximately 1 year.

Smart Foodservice acquisition and integration related costs included in distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income were $4 million and $10 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

Pro Forma Financial Information—The following table presents the Company’s unaudited pro forma consolidated net sales, net income and earnings per share (“EPS”) for the 13 weeks ended April 3, 2021 and March 28, 2020. The unaudited pro forma financial information presents the combined results of operations as if the acquisition and related financing of Smart Foodservice had occurred as of December 30, 2018, which date represents the first day of the Company’s fiscal year prior to the Smart Foodservice acquisition date.

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Pro forma net sales	$	6,295	$	6,625
Pro forma net loss available to common shareholders	$	(39)	$	(106)
Pro forma net loss per share:
Basic	$	(0.18)	$	(0.48)
Diluted	$	(0.18)	$	(0.48)

The unaudited pro forma financial information above includes adjustments for: (1) incremental depreciation expense related to fair value increases of certain acquired property and equipment, (2) amortization expense related to the fair value of amortizable intangible assets acquired, (3) interest expense related to the incremental senior secured term loan facility used to finance the acquisition, (4) the elimination of acquisition-related costs that were included in the Company’s historical results, and (5) adjustments to the income tax provision based on pro forma results of operations. No effect has been given to potential synergies, operating efficiencies or costs arising from the integration of Smart Foodservice with our previously existing operations or the standalone cost estimates and estimated costs that were incurred by the former parent company. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the date indicated. Further, the pro forma financial information does not purport to project the Company’s future consolidated results of operations following the acquisition.

5.    INVENTORIES

The Company’s inventories, consisting mainly of food and other food-related products, are primarily considered finished goods. Inventory costs include the purchase price of the product, freight costs to deliver it to the Company’s distribution and retail facilities, and depreciation and labor related to processing facilities and equipment, and are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions.

The Company records inventories at the lower of cost or market primarily using the last-in, first-out (“LIFO”) method, except for Smart Foodservice, as further described in Note 4, Business Acquisitions, which uses the retail method of inventory accounting. For our LIFO based inventories, the base year values of beginning and ending inventories are determined using the inventory price index computation method. 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 $198 million and $177 million as of April 3, 2021 and January 2, 2021, respectively. As a result of changes in LIFO reserves, cost of goods sold increased $21 million for the 13 weeks ended April 3, 2021, and decreased $13 million for the 13 weeks ended March 28, 2020.

6.    ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for doubtful accounts based on a combination of factors. The Company maintains an allowance for doubtful accounts, which is based upon historical experience, future expected losses, as well as specific customer collection issues that have been identified. The Company uses specific criteria to determine uncollectible receivables to be

7

written off, including bankruptcy, accounts referred to outside parties for collection, and accounts past due over specified periods.

Since mid-March 2020, our business has been significantly impacted by the COVID-19 pandemic. In March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues. Since December 2020, three vaccines for COVID-19 have been authorized by the United States Food and Drug Administration ("FDA") for emergency use and beginning in April 2021, all individuals 16 years old and older in the United States are eligible to receive a vaccine. New cases of COVID-19 and its variants continue to be reported and it remains uncertain when restrictions will be fully lifted and enhanced safety measures, including physical distancing and face mask protocols, will no longer be needed. As a result, it remains uncertain when and to what extent the COVID-19 pandemic will fully abate. Due to the impact that the COVID-19 pandemic was expected to have on our customers, particularly our restaurant and hospitality customers, and to reflect the increased collection risk associated with our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020. In each subsequent quarter of fiscal year 2020 and during the 13 weeks ended April 3, 2021, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts. The remaining pre-COVID-19 accounts receivable are fully reserved as of April 3, 2021.

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

Balance as of January 2, 2021	$	67
Reversed from costs and expenses	(12)
Customer accounts written off—net of recoveries	(4)
Balance as of April 3, 2021	$	51

This table excludes the vendor receivable related allowance for doubtful accounts of $7 million and $5 million as of April 3, 2021 and January 2, 2021, respectively.

7.    PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 40 years. 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 3, 2021 and January 2, 2021, property and equipment-net included accumulated depreciation of $2,649 million and $2,566 million, respectively. Depreciation expense was $82 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

8.    GOODWILL AND OTHER INTANGIBLES

Goodwill includes the cost of acquired businesses in excess of the fair value of the tangible and other intangible net assets acquired. Other intangible assets include customer relationships, amortizable trade names, noncompete agreements, the brand names comprising the Company’s portfolio of exclusive brands, and trademarks. Brand names and trademarks are indefinite-lived intangible assets and, accordingly, are not subject to amortization, but are subject to impairment assessments as described below.

Customer relationships, amortizable trade names and noncompete agreements are intangible assets with definite lives, and are carried at the acquired fair value less accumulated amortization. Customer relationships, amortizable trade names and noncompete agreements are amortized over the estimated useful lives (which range from approximately 1 to 15 years). Amortization expense was $19 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

8

Goodwill and other intangibles—net consisted of the following:  

	April 3, 2021		January 2, 2021
Goodwill	$	5,625	$	5,637
Other intangibles—net
Customer relationships—amortizable:
Gross carrying amount	$	704	$	725
Accumulated amortization	(113)		(119)
Net carrying value	591		606
Trade names—amortizable:
Gross carrying amount	1		15
Accumulated amortization	—		(11)
Net carrying value	1		4
Noncompete agreements—amortizable:
Gross carrying amount	3		3
Accumulated amortization	(2)		(2)
Net carrying value	1		1
Brand names and trademarks—not amortizing	281		281
Total other intangibles—net	$	874	$	892

The net decrease in the gross carrying amount of customer relationships as of April 3, 2021 is attributable to the write-off of fully amortized intangible assets related to certain 2017 business acquisitions. The net decrease in the gross carrying amount of amortizable trade names is attributable to the write-off of the fully amortized trade name related to the Smart Foodservice acquisition, when Smart Foodservice® warehouse stores were rebranded to CHEF'STORE® in March 2021.

The Company assesses for impairment of intangible assets with definite lives only if events occur that indicate that the carrying amount of an intangible asset may not be recoverable. The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if events occur that indicate an asset may be impaired. 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. In the third quarter of fiscal year 2020, the Company performed a quantitative assessment in testing goodwill and indefinite-lived intangible assets for impairment, which resulted in the carrying value of two trade names acquired as part of the Food Group acquisition exceeding their fair value by $9 million, and impairment charges of this amount were recognized. No other impairments were noted as part of the annual impairment assessment.

9.    FAIR VALUE MEASUREMENTS

The Company follows the accounting standards for fair value, under which fair value is a market-based measurement, not an entity-specific measurement. The Company’s fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

•Level 1—observable inputs, such as quoted prices in active markets

•Level 2—observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active or inactive markets that are observable either directly or indirectly, or other inputs that are observable or can be corroborated by observable market data

•Level 3—unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions

Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized as of the end of the reporting period in which the transfer occurs. There were no transfers between fair value levels in any of the periods presented below.

9

The Company’s assets and liabilities measured at fair value on a recurring basis as of April 3, 2021 and January 2, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

	April 3, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	690	$	—	$	—	$	690
Liabilities
Interest rate swaps	$	—	$	3	$	—	$	3
	January 2, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	696	$	—	$	—	$	696
Liabilities
Interest rate swaps	$	—	$	5	$	—	$	5

There were no significant assets or liabilities on the Company's Consolidated Balance Sheets measured at fair value on a nonrecurring basis for the periods presented above, except as further disclosed in Note 8, Goodwill and Other Intangibles.

Recurring Fair Value Measurements

Money Market Funds

Money market funds include highly liquid investments with an original maturity of three or fewer months. These funds are valued using quoted market prices in active markets and are classified under Level 1 within the fair value hierarchy.

Derivative Financial Instruments

The Company uses interest rate swaps, designated as cash flow hedges, to manage its exposure to interest rate movements in connection with its variable-rate Initial Term Loan Facility (as defined in Note 10, Debt).

USF has entered into four-year interest rate swap agreements expiring July 31, 2021, which collectively have a notional value of $550 million, which was reduced from $733 million on July 31, 2020. The Company pays an aggregate effective rate of 3.45% on the notional amount of the Initial Term Loan Facility covered by the interest rate swap agreements, comprised of a rate of 1.70% plus a spread of 1.75% (see Note 10, Debt).

The Company records its interest rate swaps in its Consolidated Balance Sheets 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 and the Company. The following table presents the balance sheet location and fair value of the interest rate swaps as of April 3, 2021 and January 2, 2021:

		Fair Value
	Balance Sheet Location	April 3, 2021		January 2, 2021
Derivatives designated as hedging instruments
Interest rate swaps	Accrued expenses and    other current liabilities	$	3	$	5
	Total liabilities	$	3	$	5

Gains and losses on the interest rate swaps are initially recorded in accumulated other comprehensive loss and reclassified to interest expense during the period in which the hedged transaction affects income. The following table presents the effect of the Company’s interest rate swaps in its Consolidated Statements of Comprehensive Income for the 13 weeks ended April 3, 2021 and March 28, 2020:

10

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Accumulated Other Comprehensive Loss, net of tax		Location of Amounts Reclassified from Accumulated Other Comprehensive Loss	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax
For the 13 weeks ended April 3, 2021
Interest rate swaps	$	—	Interest expense—net	$	2
For the 13 weeks ended March 28, 2020
Interest rate swaps	$	(6)	Interest expense—net	$	—

During the next twelve months, the Company estimates that $3 million will be reclassified from accumulated other comprehensive loss 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 $5.8 billion, compared to its carrying value of $5.7 billion as of both April 3, 2021 and January 2, 2021.

The fair value of the Company's 4.75% unsecured senior notes due February 15, 2029 (the "Unsecured Senior Notes due 2029") was $0.9 billion as of April 3, 2021. As discussed in Note 10, Debt, the proceeds from the Unsecured Senior Notes due 2029 were used to redeem the Company's 5.875% unsecured senior notes due 2024 (the "Unsecured Senior Notes due 2024") and other debt. The fair value of the Unsecured Senior Notes due 2024 was $0.6 billion as of January 2, 2021. The fair value of the Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Notes”) was $1.1 billion as of both April 3, 2021 and January 2, 2021. Fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is based upon the closing market prices of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 on the respective dates. The fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is classified under Level 2 of the fair value hierarchy. The fair value of the balance of the Company’s debt is primarily classified under Level 3 of the fair value hierarchy, with fair value estimated based upon a combination of the cash outflows expected under these debt facilities, interest rates that are currently available to the Company for debt with similar terms, and estimates of the Company’s overall credit risk.

11

10.    DEBT

Total debt consisted of the following:

Debt Description	Maturity	Interest Rate as of April 3, 2021	Carrying Value as of April 3, 2021		Carrying Value as of January 2, 2021
ABL Facility	May 31, 2024	—%	$	—	$	—
Initial Term Loan Facility (net of $2 and $3 of unamortized deferred financing costs, respectively)	June 27, 2023	1.86%	2,093		2,098
2019 Incremental Term Loan Facility (net of $29       and $30 of unamortized deferred financing       costs, respectively)	September 13, 2026	2.11%	1,449		1,451
2020 Incremental Term Loan Facility (net of $11       of unamortized deferred financing costs)(1)	April 24, 2025	—%	—		284
Senior Secured Notes (net of $12 and $13 of       unamortized deferred financing costs)	April 15, 2025	6.25%	988		987
Unsecured Senior Notes due 2024 (net of $3 of       unamortized deferred financing costs)(1)	June 15, 2024	—%	—		597
Unsecured Senior Notes due 2029 (net of $9 of       unamortized deferred financing costs)	February 15, 2029	4.75%	891		—
Obligations under financing leases	2021–2031	1.63% - 6.10%	309		323
Other debt	2021–2031	5.75% - 9.00%	8		8
Total debt			5,738		5,748
Current portion of long-term debt			(122)		(131)
Long-term debt			$	5,616	$	5,617

(1)    The 2020 Incremental Term Loan Facility and Unsecured Senior Notes due 2024 were paid in full on February 4, 2021 with the issuance of the Unsecured Senior Notes due 2029 and subsequently terminated as further discussed below. The related unamortized deferred financing costs were written off in connection with the terminations.

As of April 3, 2021, after considering interest rate swaps that fixed the interest rate on $550 million of principal of the Initial Term Loan Facility described below, approximately 52% of the Company’s total debt bears interest at a floating rate.

ABL Facility

USF's asset based senior secured revolving credit facility (the “ABL Facility”) provides USF with loan commitments having a maximum aggregate principal amount of $1,990 million. The ABL Facility is scheduled to mature on May 31, 2024.

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 under the ABL Facility, plus a margin ranging from 0.00% to 0.50%, or the sum of LIBOR plus a margin ranging from 1.00% to 1.50%, in each case based on USF’s excess availability under the ABL Facility. The margin under the ABL Facility as of April 3, 2021 was 0.00% for ABR loans and 1.00% for LIBOR loans.

USF had no outstanding borrowings, and had issued letters of credit totaling $279 million, under the ABL Facility as of April 3, 2021. 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 $1,711 million under the ABL Facility as of April 3, 2021.

Term Loan Facilities

Under its term loan credit agreement, USF has entered into an initial senior secured term loan facility (the "Initial Term Loan Facility") and an incremental senior secured term loan facility (the "2019 Incremental Term Loan Facility"). The Initial Term Loan Facility had a carrying value of $2.1 billion, net of $2 million of unamortized deferred financing costs as of April 3, 2021. The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of April 3, 2021. The effective interest rate of the portion of the Initial Term Loan Facility subject to interest rate hedging agreements was 3.45% as of April 3, 2021. The Initial Term Loan Facility is scheduled to mature on June 27, 2023.

12

The 2019 Incremental Term Loan Facility had a carrying value of $1,449 million, net of $29 million of unamortized deferred financing costs as of April 3, 2021. 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, determined in accordance with the term loan credit agreement, plus a margin of 1.00%. The 2019 Incremental Term Loan Facility is scheduled to mature on September 13, 2026.

Secured Notes

The Secured Notes had a carrying value of $988 million, net of $12 million of unamortized deferred financing costs, as of April 3, 2021. The Secured Notes are scheduled to mature on April 15, 2025.

Unsecured Senior Notes due 2029

On February 4, 2021, USF completed a private offering of $900 million aggregate principal amount of Unsecured Senior Notes due 2029. USF used the proceeds of the Unsecured Senior Notes due 2029, together with cash on hand, to redeem all of the Company's then outstanding Unsecured Senior Notes due 2024, repay all of the then outstanding borrowings under the incremental senior secured term loan facility borrowed in April 2020 (the "2020 Incremental Term Loan Facility") and to pay related fees and expenses. In connection with the repayment of the Unsecured Senior Notes due 2024 and 2020 Incremental Term Loan Facility, the Company applied debt extinguishment accounting and recorded $23 million in loss on extinguishment of debt in the Company's Consolidated Statements of Comprehensive Income, consisting of a $14 million write-off of pre-existing unamortized deferred financing costs related to the redeemed facilities and a $9 million early redemption premium related to the Unsecured Senior Notes due 2024. Lender fees and third-party costs of $9 million associated with the issuance of the Unsecured Senior Notes due 2029 were capitalized as deferred financing costs. The Unsecured Senior Notes due 2029 had an outstanding balance of $891 million, net of $9 million of unamortized deferred financing costs, as of April 3, 2021. The Unsecured Senior Notes due 2029 bear interest at a rate of 4.75% per annum and will mature on February 15, 2029. On or after February 15, 2024, the Unsecured Senior Notes due 2029 are redeemable, at USF's option, in whole or in part at a price of 102.375% of the remaining principal, plus accrued and unpaid interest, if any, to the redemption date. On or after February 15, 2025 and February 15, 2026, the optional redemption price for the Unsecured Senior Notes due 2029 declines to 101.188% and 100.000%, respectively, of the remaining principal amount, plus accrued and unpaid interest, if any, to the redemption date.

Debt Covenants

The agreements governing our indebtedness contain customary covenants. 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 $1.3 billion of restricted payment capacity under these covenants, and approximately $2.7 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 3, 2021.

11.    RESTRUCTURING LIABILITIES

From time to time, the Company may implement initiatives or close or consolidate facilities in an effort to reduce costs and improve operating effectiveness. In connection with these activities, the Company may incur various costs including severance and other employee-related separation costs.

During the 13 weeks ended April 3, 2021, $3 million of net restructuring costs were recognized primarily related to initiatives to improve operational effectiveness. Net restructuring costs were de minimis during the 13 weeks ended March 28, 2020. Net restructuring liabilities were $4 million and $2 million as of April 3, 2021 and January 2, 2021, respectively.

13

12.    RETIREMENT PLANS

The Company sponsors a defined benefit pension plan and a 401(k) plan for eligible employees, and provides certain postretirement health and welfare benefits to eligible retirees and their dependents. During fiscal year 2020, in connection with the Smart Foodservice acquisition, the Company assumed a defined benefit pension plan with net liabilities of approximately $19 million. This defined benefit plan was merged into the US Foods Consolidated Defined Benefit Retirement Plan as of December 31, 2020.

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Components of net periodic pension benefit credits
Service cost	$	1	$	1
Interest cost	7		7
Expected return on plan assets	(14)		(13)
Net periodic pension benefit credits	$	(6)	$	(5)

Other postretirement benefit costs were de minimis for both the 13 weeks ended April 3, 2021 and March 28, 2020.

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) expense—net, respectively, in the Company's Consolidated Statements of Comprehensive Income.

The Company does not expect to make significant contributions to its defined benefit pension plan in fiscal year 2021.

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 $13 million and $14 million for the 13 weeks ended April 3, 2021 and March 28, 2020, 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 $10 million and $12 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

13.    EARNINGS PER SHARE

The Company computes EPS in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of share-based awards—stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals. The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock. For the 13 weeks ended April 3, 2021 and March 28, 2020, share-based awards representing 9 million and 10 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive. For the 13 weeks ended April 3, 2021, convertible preferred stock representing 24 million of underlying common shares were not included in the computation because the effect would have been anti-dilutive.

14

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Numerator:
Net loss	$	(24)	$	(132)
Series A convertible preferred stock dividends (1)	15		—
Net loss available to common shareholders	$	(39)	$	(132)
Denominator:
Weighted-average common shares outstanding	221		219
Effect of dilutive securities	—		—
Effect of dilutive underlying shares of the Series A convertible preferred stock	—		—
Weighted-average dilutive shares outstanding	221		219
Net loss per share
Basic	$	(0.18)	$	(0.60)
Diluted	$	(0.18)	$	(0.60)

(1)    Preferred stock dividends for the first quarter of 2021 were declared on March 23, 2021 and were paid in kind on March 31, 2021.

14.    CONVERTIBLE PREFERRED STOCK

On May 6, 2020 (the “Issuance Date”), pursuant to the terms of an Investment Agreement (the "Investment Agreement") with KKR Fresh Aggregator L.P., a Delaware limited partnership, which agreement was joined on February 25, 2021 by permitted transferee KKR Fresh Holdings L.P., a Delaware limited partnership (“KKR”), the Company issued and sold 500,000 shares of the Company’s Series A convertible preferred stock, par value $0.01 per share to KKR Fresh Aggregator L.P. for an aggregate purchase price of $500 million, or $1,000 per share (the “Issuance”). The Company used the net proceeds from the Issuance for working capital and general corporate purposes. As of January 2, 2021, the Company had issued a total of 523,127 shares of Series A convertible preferred stock. On March 31, 2021, the Company paid a dividend on the shares of the Series A convertible preferred stock in the form of 9,154 shares of Series A convertible preferred stock, plus a de minimis amount in cash in lieu of fractional shares in accordance with the terms of the Certificate of Designations for the Series A convertible preferred stock.

The following table summarizes the activity for the outstanding Series A convertible preferred stock and associated carrying value for the 13 weeks ended April 3, 2021 was as follows:

	Series A Convertible Preferred Stock
	Shares	Carrying Value
Balance, January 2, 2021	523,127	$	519
Shares issued as paid in kind dividend	9,154	15
Balance April 3, 2021	532,281	$	534

15

15.    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 3, 2021		March 28, 2020
Accumulated other comprehensive loss components
Retirement benefit obligations:
Balance as of beginning of period (1)	$	(29)	$	(52)
Reclassification adjustments:
Amortization of net loss(2) (3)	—		—
Total before income tax	—		—
Income tax provision	—		—
Current period comprehensive income, net of tax	—		—
Balance as of end of period(1)	$	(29)	$	(52)
Interest rate swaps:
Balance as of beginning of period (1)	$	(5)	$	(2)
Change in fair value of interest rate swaps	—		(8)
Amounts reclassified to interest expense—net	2		—
Total before income tax	2		(8)
Income tax benefit	—		(2)
Current period comprehensive income (loss), net of tax	2		(6)
Balance as of end of period(1)	$	(3)	$	(8)
Accumulated other comprehensive loss as of end of period(1)	$	(32)	$	(60)

(1)    Amounts are presented net of tax.

(2)    Included in the computation of net periodic benefit costs. See Note 12, Retirement Plans, for additional information.

(3)    Included in other income (expense)—net in the Company's Consolidated Statements of Comprehensive Income.

16.    RELATED PARTY TRANSACTIONS

    KKR Capital Markets LLC, an affiliate of KKR, received $1 million for debt advisory services rendered in connection with the Unsecured Senior Notes due 2029 financing during the 13 weeks ended April 3, 2021. As of April 3, 2021, investment funds managed by an affiliate of KKR held approximately $60 million in aggregate principal amount of the Initial Term Loan Facility and the 2019 Incremental Term Loan Facility, as reported by the administrative agent.

17.    INCOME TAXES

The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. 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 3, 2021 and March 28, 2020 for purposes of determining its year-to-date tax provision.

For the 13 weeks ended April 3, 2021, the Company's effective income tax rate of 43% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation. For the 13 weeks ended March 28, 2020, 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. These discrete tax items included a tax expense of $3 million, primarily related to an increase in the state valuation allowance.

18. COMMITMENTS AND CONTINGENCIES

Purchase Commitments—The Company enters into purchase orders with vendors and other parties in the ordinary course of business and has a limited number of purchase contracts with certain vendors that require it to buy a predetermined volume of

16

products. The Company had $1,523 million of purchase orders and purchase contract commitments as of April 3, 2021 to be purchased in the remainder of fiscal year 2021 and $67 million of information technology commitments through August 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 $38 million through December 2021, as of April 3, 2021. Additionally, the Company had electricity forward purchase commitments totaling $5 million through June 2024, as of April 3, 2021. 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.

Legal Proceedings—The Company is subject to a number of legal proceedings arising in the normal course of business. These legal proceedings, whether pending, threatened or unasserted, if decided adversely to or settled by the Company, may result in liabilities material to its financial position, results of operations, or cash flows. The Company has recognized provisions with respect to the proceedings, where appropriate, in its Consolidated Balance Sheets. It is possible that the Company could settle one or more of these proceedings or could be required to make expenditures, in excess of the established provisions, in amounts that cannot be reasonably estimated. However, the Company, at present, believes that the ultimate outcome of these proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

19.    BUSINESS INFORMATION

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

The Company markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. The Company uses a centralized management structure, and its strategies and initiatives are implemented and executed consistently across the organization to maximize value to the organization as a whole. The Company uses shared resources for sales, procurement, and general and administrative activities across each of its distribution facilities and operations. The Company’s distribution facilities form a single network to reach its customers; it is common for a single customer to make purchases from several different distribution facilities. Capital projects, whether for cost savings or generating incremental revenue, are evaluated based on estimated economic returns to the organization as a whole.

17

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollar amounts presented in millions, unless otherwise noted)

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the 2020 Annual Report. The following discussion and analysis contain certain financial measures that are not required by, or presented in accordance with GAAP. We believe these non-GAAP measures provide meaningful supplemental information about our operating performance and liquidity. Information regarding reconciliations of and the rationale for these measures is discussed under “Non-GAAP Reconciliations” below. Results of operations for the 13 weeks ended April 3, 2021 are compared to the 13 weeks ended March 28, 2020 unless specifically noted otherwise.

Overview

At US Foods, our promise is to help customers Make It by providing the innovative products and easy-to-use technology solutions they need to operate their businesses profitably. This promise is supported by our GREAT FOOD. MADE EASY.™ strategy. 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 the business as a single operating segment. We have centralized activities where scale matters and our local field structure focuses on customer facing activities.

We supply approximately 300,000 customer locations nationwide. These customer locations include independently owned single and multi-unit restaurants, regional restaurant chains, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. We provide more than 400,000 fresh, frozen, and dry food stock-keeping units, or SKUs, as well as non-food items, sourced from approximately 6,000 suppliers. Approximately 3,500 sales associates manage customer relationships at local, regional, and national levels. Our sales associates are supported by sophisticated marketing and category management capabilities, as well as a sales support team that includes world-class chefs and restaurant operations consultants, new business development managers and others that help us provide more comprehensive service to our customers. Our extensive network of approximately 70 distribution facilities and fleet of approximately 6,500 trucks, along with 80 cash and carry locations, allow us to operate efficiently and provide high levels of customer service. This operating model allows us to leverage our nationwide scale and footprint while executing locally.

COVID-19 Update

In March 2020, the World Health Organization characterized COVID-19 as a pandemic amidst a rising number of confirmed cases and thousands of deaths worldwide. Since March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces including restaurants and recreational, sporting and other similar venues. Since December 2020, three vaccines for COVID-19 have been authorized by the FDA for emergency use and beginning in April 2021, all individuals 16 years old and older in the United States are eligible to receive a vaccine. New cases of COVID-19 and its variants continue to be reported and it remains uncertain when restrictions will be fully lifted and enhanced safety measures, including physical distancing and face mask protocols, will no longer be needed. As a result, it remains uncertain when and to what extent the COVID-19 pandemic will fully abate.

Impact of COVID-19 on Our Business

The COVID-19 pandemic has and continues to adversely impact many of our customers, especially our restaurant, hospitality and education customers. As a result, we experienced decreased demand for our products, resulting in lower Net sales and total case volumes beginning in mid-March 2020. We saw improvement in Net sales and total case volumes during the first quarter of 2021 as compared to the fourth quarter of 2020, with additional loosening of indoor dining restrictions. However, overall demand remained lower than pre-COVID-19 levels. Total case volume decreased 0.9% for the 13 weeks ended April 3, 2021, compared to the 13 weeks ended March 28, 2020.

While economic and operating conditions for our business have improved in the first quarter of 2021 as compared to the fourth quarter of 2020, we do not expect to see pre-COVID-19 levels of operations until all government restrictions are lifted and consumers are once again willing and able to resume consumption of food away from home, travel and attend sporting and other events on a regular basis. We and the industry may face challenges as the industry recovers, such as changes in our customer mix, availability of product supply, increased product and logistics costs and access to labor supply.

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.

18

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

Highlights

Financial Highlights—Total case volume for the 13 weeks ended April 3, 2021 decreased 0.9%, which was driven by the negative impact of COVID-19, particularly on hospitality and education customers. Net sales decreased $44 million, or 0.7%, for the 13 weeks ended April 3, 2021. The negative impact of COVID-19 on case volumes was partially offset by an increase in independent restaurant case volume of 8.1%, primarily driven by contributions from the Smart Foodservice acquisition. Smart Foodservice contributed Net sales of $261 million for the 13 weeks ended April 3, 2021. Net sales for Smart Foodservice were also impacted by the COVID-19 pandemic, albeit to a different degree.

Gross profit decreased $63 million, or 5.9%, to $1,003 million for the 13 weeks ended April 3, 2021, primarily as a result of the negative impact of COVID-19 on Net sales and customer mix, higher logistics costs and unfavorable year-over-year LIFO adjustments, which were partially offset by contributions from the Smart Foodservice acquisition. As a percentage of net sales, gross profit was 15.9% for the 13 weeks ended April 3, 2021, compared to 16.8% for the prior year period.

Total operating expenses decreased $217 million, or 18.2%, to $975 million for the 13 weeks ended April 3, 2021. The decrease was primarily due to a $185 million lower provision for doubtful accounts based on better than anticipated collection of our pre-COVID-19 accounts receivable, the negative impact of COVID-19 on case volume and the benefit of cost actions related to COVID-19. These decreases were partially offset by the inclusion of operating expenses from the Smart Foodservice acquisition.

Smart Foodservice Acquisition—On April 24, 2020, USF completed the acquisition of Smart Foodservice. Total consideration paid at the closing of the acquisition was $972 million (net of cash acquired). The acquisition of Smart Foodservice expanded the Company’s cash and carry business in the West and Northwest parts of the U.S. The assets, liabilities and results of operations of Smart Foodservice have been included in our consolidated financial statements since the date the acquisition was completed.

19

Results of Operations

The following table presents selected historical results of operations for the periods indicated:

	13 Weeks Ended
	April 3, 2021			March 28, 2020
Consolidated Statements of Operations Data:
Net sales	$	6,295		$	6,339
Cost of goods sold	5,292			5,273
Gross profit	1,003			1,066
Operating expenses:
Distribution, selling and administrative costs	972			1,192
Restructuring costs and asset impairment charges	3			—
Total operating expenses	975			1,192
Operating income (loss)	28			(126)
Other income—net	(7)			(6)
Interest expense—net	54			52
Loss on extinguishment of debt	23			—
Loss before income taxes	(42)			(172)
Income tax benefit	(18)			(40)
Net loss	(24)			(132)
Series A convertible preferred stock dividends (see Note 14)	15			—
Net loss available to common shareholders	$	(39)		$	(132)
Percentage of Net Sales:
Gross profit	15.9		%	16.8		%
Operating expenses	15.5		%	18.8		%
Operating income (loss)	0.4		%	(2.0)		%
Net loss	(0.4)		%	(2.1)		%
Adjusted EBITDA(1)	2.7		%	2.8		%
Other Data:
Cash flows—operating activities	$	176		$	(62)
Cash flows—investing activities	(46)			(74)
Cash flows—financing activities	(47)			1,123
Capital expenditures	46			79
EBITDA(1)	113			(19)
Adjusted EBITDA(1)	172			177
Adjusted net income(1)	27			32
Free cash flow(2)	130			(141)

(1)    EBITDA is defined as net (loss) income, plus interest expense—net, income tax (benefit) provision, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for: (1) restructuring costs and asset impairment charges; (2) share-based compensation expense; (3) the non-cash impact of LIFO reserve adjustments; (4) loss on extinguishment of debt; (5) business transformation costs; and (6) other gains, losses, or costs as specified in the agreements governing our indebtedness. Adjusted net income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items. EBITDA, Adjusted EBITDA, and Adjusted net income as presented in this Quarterly 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 (loss) income or any other performance measures derived in accordance with GAAP. For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

(2)     Free cash flow is defined as cash flows provided by operating activities less cash capital expenditures. Free cash flow as presented in this Quarterly Report is a supplemental measure of our liquidity that is not required by, or presented in accordance with, GAAP. It is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP. For additional information, see the discussion under the caption “Non-GAAP Reconciliations” below.

20

Non-GAAP Reconciliations

We provide EBITDA, Adjusted EBITDA, Adjusted net income and Free cash flow as supplemental measures to GAAP financial measures regarding our operating performance and liquidity. These non-GAAP financial measures, as defined above, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP.

We believe EBITDA and Adjusted EBITDA provide meaningful supplemental information about our operating performance because they exclude amounts that we do not consider part of our core operating results when assessing our performance.

We believe that Adjusted net income is a useful measure of operating performance for both management and investors because it excludes items that are not reflective of our core operating performance and provides an additional view of our operating performance including depreciation, interest expense and income taxes on a consistent basis from period to period. We believe that Adjusted net income may be used by investors, analysts and other interested parties to facilitate period-over-period comparisons and provides additional clarity as to how factors and trends impact our operating performance.

Management uses these non-GAAP financial measures (1) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors as they assist in highlighting trends, (2) to set internal sales targets and spending budgets, (3) to measure operational profitability and the accuracy of forecasting, (4) to assess financial discipline over operational expenditures, and (5) as an important factor in determining variable compensation for management and employees. EBITDA and Adjusted EBITDA are also used in connection with certain covenants and activity restrictions under the agreements governing our indebtedness. We also believe these and similar non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry. EBITDA, Adjusted EBITDA and Adjusted net income 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.

We use Free cash flow as a supplemental measure to GAAP financial measures regarding the liquidity of our operations. We measure Free cash flow as cash flows provided by operating activities less cash capital expenditures. We believe that Free cash flow is a useful financial metric to assess our ability to pursue business opportunities and investments. Free cash flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows provided by operating activities or any other liquidity measures derived in accordance with GAAP.

We caution readers that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, Adjusted net income, and Free cash flow may not be the same as similar measures used by other companies. Not all companies and analysts calculate EBITDA, Adjusted EBITDA, Adjusted net income or Free cash flow in the same manner. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by presenting the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

21

The following table reconciles EBITDA, Adjusted EBITDA, Adjusted net income and Free cash flow to the most directly comparable GAAP financial performance and liquidity measures for the periods indicated:

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Net loss available to common shareholders	$	(39)	$	(132)
Series A convertible preferred stock dividends (see Note 14)	15		—
Net loss	(24)		(132)
Interest expense—net	54		52
Income tax benefit	(18)		(40)
Depreciation expense	82		82
Amortization expense	19		19
EBITDA	113		(19)
Adjustments:
Restructuring costs and asset impairment charges(1)	3		—
Share-based compensation expense(2)	10		7
LIFO reserve change(3)	21		(13)
Loss on extinguishment of debt(4)	23		—
Business transformation costs(5)	9		6
COVID-19 bad debt (benefit) expense(6)	(15)		170
Business acquisition and integration related costs and other(7)	8		26
Adjusted EBITDA	172		177
Depreciation expense	(82)		(82)
Interest expense—net	(54)		(52)
Income tax provision, as adjusted(8)	(9)		(11)
Adjusted net income(9)	$	27	$	32
Cash flow
Cash flows from operating activities	$	176	$	(62)
Capital expenditures	(46)		(79)
Free cash flow	$	130	$	(141)

(1)    Consists primarily of severance and related costs, organizational realignment costs and asset impairment charges.

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

(3)    Represents the non-cash impact of LIFO reserve adjustments.

(4)    Includes early redemption premium and the write-off of certain pre-existing debt issuance costs. See Note 10, Debt, in our consolidated financial statements.

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

(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: (i) aggregate acquisition and integration related costs of $6 million and $25 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively; and (ii) other gains, losses or costs that we are permitted to addback 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. 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.

(9)    Effective as of the first quarter 2021, we have presented Adjusted net income. Previously, we presented Adjusted net income available to common shareholders.

22

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
GAAP income tax benefit	$	(18)	$	(40)
Tax impact of pre-tax income adjustments	21		54
Discrete tax items	6		(3)
Income tax provision, as adjusted	$	9	$	11

Comparison of Results

13 Weeks Ended April 3, 2021 and March 28, 2020

Highlights

•Total case volume decreased 0.9%, reflecting the negative impact of COVID-19 on case volumes, particularly for hospitality and education customers. These decreases were partially offset by an increase in independent restaurant case volume of 8.1%, primarily driven by contributions from Smart Foodservice in 2021.

•Net sales decreased $44 million, or 0.7%, to $6,295 million in 2021.

•Operating income increased $154 million, or 122.2%, to $28 million in 2021.

•Net loss improved $108 million, or 81.8%, to $24 million in 2021.

•Adjusted EBITDA decreased $5 million, or 2.8%, to $172 million in 2021. As a percentage of net sales, Adjusted EBITDA was 2.7% in 2021, compared to 2.8% in 2020.

Net Sales

Total case volume decreased 0.9% in 2021. The negative impact of COVID-19 on case volumes was partially offset by an increase in independent restaurant case volume of 8.1%, primarily driven by contributions from the Smart Foodservice acquisition. Organic case volume decreased 6.4%; organic independent restaurant case volume increased 0.2%.

Net sales decreased $44 million, or 0.7%, to $6,295 million in 2021, comprised of a $54 million, or 0.9%, decrease in case volume and a $10 million, or 0.2%, increase in the overall Net sales rate per case. The increase in Net sales rate per case primarily reflects a year-over-year inflation increase of 2.7% in multiple product categories including beef, poultry and disposables, partially offset by 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. Organic sales of private brands represented approximately 33% and 36% of Net sales in 2021 and 2020, respectively. Smart Foodservice contributed aggregate Net sales of $261 million in 2021.

Gross Profit

Gross profit decreased $63 million, or 5.9%, to $1,003 million in 2021, primarily as a result of the negative impact of COVID-19 on total case volume and customer mix, unfavorable year-over-year LIFO adjustments, and higher logistics costs, which were partially offset by contributions from the Smart Foodservice acquisition. Our LIFO method of inventory costing resulted in an expense of $21 million in 2021 compared to a benefit of $13 million in 2020. Gross profit as a percentage of net sales was 15.9% in 2021, compared to 16.8% in 2020, due to the aforementioned factors.

Operating Expenses

Operating expenses, comprised of distribution, selling and administrative and restructuring costs and asset impairment charges, decreased $217 million or 18.2%, to $975 million in 2021. Operating expenses as a percentage of net sales were 15.5% in 2021, compared to 18.8% in 2020. The decrease in operating expenses is primarily due to a $185 million lower provision for doubtful accounts based on better than anticipated collection of our pre-COVID-19 accounts receivable during the 13 weeks, and the negative impact of COVID-19 on total case volume and the related impact of cost actions put in place. These decreases were partially offset by operating expenses for the Smart Foodservice acquisition of $43 million.

Operating Income (Loss)

Our operating income was $28 million in 2021, compared to an operating loss of $126 million in 2020. The increase in operating income was due to the factors discussed in the relevant sections above.

23

Other Income—Net

Other income—net includes components of net periodic pension benefit credits, exclusive of the service cost component associated with our defined benefit and other postretirement plans. We recognized other income—net of $7 million and $6 million in 2021 and 2020, respectively. The increase in other income—net in 2021 is primarily due to the improved funded status of our defined benefit pension plan.

Interest Expense—Net

Interest expense—net increased $2 million to $54 million in 2021, primarily due to an increase in our indebtedness to finance the Smart Foodservice acquisition and to strengthen our liquidity position at the onset of the COVID-19 pandemic, which were partially offset by a decrease in interest rates in 2021 compared to 2020.

Loss on Extinguishment of Debt

As discussed in Note 10, Debt, in our consolidated financial statements, we incurred a $23 million loss on extinguishment of debt related to the repayment of our Unsecured Senior Notes due 2024 and 2020 Incremental Term Loan Facility related to the issuance of our Senior Unsecured Notes due 2029.

Income Taxes

For the 13 weeks ended April 3, 2021, our effective income tax rate of 43% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation. For the 13 weeks ended March 28, 2020, our 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. These discrete tax items included a tax expense of $3 million primarily related to an increase in the state valuation allowance.

Net Loss

Our net loss was $24 million in 2021, compared to a net loss of $132 million in 2020. The improvement in net income was due to the relevant factors discussed above.

Liquidity and Capital Resources

Our ongoing operations and strategic objectives require working capital and continuing capital investment. Our primary sources of liquidity include cash provided by operations, as well as access to capital from bank borrowings and other types of debt and financing arrangements. We believe that the combination of cash on hand and 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 through the end of fiscal year 2022. As of April 3, 2021, the Company had approximately $2.6 billion in cash and available liquidity.

Indebtedness

The aggregate carrying value of our indebtedness was $5,738 million, net of $52 million of unamortized deferred financing costs, as of April 3, 2021. We had no outstanding borrowings and had issued letters of credit totaling $279 million under the ABL Facility as of April 3, 2021. There was remaining capacity of $1,711 million under the ABL Facility as of April 3, 2021.

On February 4, 2021, we issued $900 million aggregate principal amount of 4.75% Unsecured Senior Notes due 2029, the proceeds of which were used, together with cash on hand, to (i) redeem all of the then outstanding Unsecured Senior Notes due 2024, (ii) repay all of the then outstanding borrowings under the 2020 Incremental Term Loan Facility and (iii) pay related fees and expenses. As of April 3, 2021, the Unsecured Senior Notes due 2029 had a carrying value of $891 million, net of $9 million of unamortized deferred financing costs.

The Initial Term Loan Facility had a carrying value of $2,093 million, net of $2 million of unamortized deferred financing costs, as of April 3, 2021. The 2019 Incremental Term Loan Facility had a carrying value of $1,449 million, net of $29 million of unamortized deferred financing costs, as of April 3, 2021.

The Secured Notes had a carrying value of $988 million, net of $12 million of unamortized deferred financing costs, as of April 3, 2021. We also had $309 million of obligations under financing leases for transportation equipment and building leases as of April 3, 2021.

The ABL Facility will mature in 2024. The Initial Term Loan Facility and the 2019 Incremental Term Loan Facility will mature in 2023 and 2026, respectively. The Secured Notes will mature in 2025. The Unsecured Senior Notes due 2029 will mature in 2029. As economic conditions permit, we will consider opportunities to repurchase, refinance or otherwise reduce our debt obligations on

24

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

The agreements governing our indebtedness contain customary covenants. These include, among other things, covenants that restrict our ability to incur certain additional indebtedness, create or permit liens on our assets, pay dividends, or engage in mergers or consolidations. USF had approximately $1.3 billion of restricted payment capacity under these covenants and approximately $2.7 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 3, 2021.

Every quarter, we review rating agency changes for all of the lenders that have a continuing obligation to provide us with funding. We are not aware of any facts that indicate our lenders will not be able to comply with the contractual terms of their agreements with us. We continue to monitor the credit markets generally and the strength of our lender counterparties.

From time to time, we repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our leverage. These actions may include open market repurchases, negotiated repurchases, and other retirements of outstanding debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, our debt trading levels, our cash position, and other considerations.

See Note 10, Debt, in our consolidated financial statements, for a further description of our indebtedness.

Cash Flows

The following table presents condensed highlights from our Consolidated Statements of Cash Flows for the periods presented:

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Net loss	$	(24)	$	(132)
Changes in operating assets and liabilities	79		(204)
Other adjustments	121		274
Net cash provided by (used in) operating activities	176		(62)
Net cash used in investing activities	(46)		(74)
Net cash (used in) provided by financing activities	(47)		1,123
Net increase in cash, cash equivalents and restricted cash	83		987
Cash, cash equivalents and restricted cash—beginning of period	829		98
Cash, cash equivalents and restricted cash—end of period	$	912	$	1,085

Operating Activities

Cash flows provided by operating activities was $176 million for the 13 weeks ended April 3, 2021, compared to cash flows used in operating activities of $62 million for the 13 weeks ended March 28, 2020. The year-over-year increase was primarily attributable to the improvement in operating results and the associated impact on the Company's working capital requirements.

Investing Activities

Cash flows used in investing activities in the 13 weeks ended April 3, 2021 and March 28, 2020 included cash expenditures of $46 million and $79 million, respectively, on investments in information technology, new construction and/or expansion of distribution facilities, and property and equipment for fleet replacement.

We expect total cash capital expenditures in fiscal year 2021 to be between $290 million and $305 million, exclusive of approximately $35 million to $45 million of capital expenditures under our fleet financing leases. We expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing.

Financing Activities

Cash flows provided by financing activities for the 13 weeks ended April 3, 2021 included aggregate borrowings of $900 million under the Unsecured Senior Notes due 2029. Cash flows used by financing activities in the 13 weeks ended April 3, 2021 included $32 million of scheduled payments under our Term Loan Facilities and financing leases. 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 2020 Incremental Term Loan Facility. We incurred approximately $18 million of lender fees and third-party costs in connection with our financing actions, consisting of a $9 million early redemption

25

premium related to 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. Financing activities for the 13 weeks ended April 3, 2021 also included $5 million of proceeds received from stock purchases under our employee stock purchase plan and $4 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.

Cash flows provided by financing activities for the 13 weeks ended March 28, 2020 included aggregate borrowings of $1,150 million under the ABL Facility and ABS Facility and $32 million of scheduled payments under our Term Loan Facilities and financing leases. We borrowed an aggregate of $1 billion under the ABL Facility and ABS Facility in March 2020 for the purposes of increasing cash on hand and to preserve financial flexibility in light of the current economic and business uncertainty resulting from the onset of the COVID-19 pandemic. Financing activities for the 13 weeks ended March 28, 2020 also included $6 million of proceeds from stock purchases under our employee stock purchase plan and $1 million of proceeds received from the exercise of employee stock options, which were partially offset by $2 million of employee tax withholdings paid in connection with the vesting of stock awards.

Retirement Plans

See Note 12, Retirement Plans, in our consolidated financial statements for a description of our retirement plans.

Off-Balance Sheet Arrangements

We had entered into $279 million of letters of credit, primarily in favor of certain commercial insurers to secure obligations with respect to our insurance programs, under the ABL Facility as of April 3, 2021.

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 position, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

See the Contractual Obligations section in Part II, Item 7—“Management's Discussion and Analysis of Financial Condition and Results of Operations" of the 2020 Annual Report for our contractual cash obligations as of January 2, 2021. There have been no material changes to our specified contractual obligations through April 3, 2021, except as disclosed in Note 10, Debt, in our consolidated financial statements.

Critical Accounting Policies and Estimates

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company's consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2020 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the 13 weeks ended April 3, 2021.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2, Recent Accounting Pronouncements, in our consolidated financial statements.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain risks arising from both our business operations and overall economic conditions. Our market risks include interest rate risk and fuel price risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk

Our debt exposes us to risk of fluctuations in interest rates. Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates. Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that we may need to refinance

26

maturing debt with new debt at higher rates. We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that position. We have entered into interest rate swap agreements to limit our exposure to variable interest rate terms on certain borrowings under our Initial Term Loan Facility. The risks from interest rate swaps include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties.

After considering interest rate swaps that fixed the interest rate on $550 million of the principal amounts of our Initial Term Loan Facility, approximately 52% of the principal amount of our debt bore interest at floating rates based on LIBOR or ABR, as of April 3, 2021. A hypothetical 1% change in the applicable rate would cause the interest expense on our floating rate debt to change by approximately $30 million per year (see Note 10, Debt, in our consolidated financial statements). In July 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR announced that it intends to phase out the use of LIBOR by the end of 2021. On March 5, 2021, the ICE Benchmark Authority ("IBA"), the administrator of LIBOR, announced the cessation of the publication of the one week and two month U.S. dollar LIBOR tenors immediately following their publication on December 31, 2021, and all other U.S. dollar LIBOR tenors immediately following their publication on June 30, 2023. We are unable to predict the impact of using alternative reference rates and corresponding rate risk as of this time.

Fuel Price Risk

We are also exposed to risk due to fluctuations in the price and availability of diesel fuel. We require significant quantities of diesel fuel for our vehicle fleet, and the price and supply of diesel fuel are unpredictable and fluctuate based on events outside our control, including geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns. Increases in the cost of diesel fuel can negatively affect consumer confidence and discretionary spending and increase the prices we pay for products, and the costs we incur to deliver products to our customers.

Our activities to minimize fuel cost risk include route optimization, improving fleet utilization and assessing fuel surcharges. We also enter into forward purchase commitments for a portion of our projected diesel fuel requirements. As of April 3, 2021, we had diesel fuel forward purchase commitments totaling $38 million, which fix approximately 42% of our projected diesel fuel purchase needs through December 2021. Our remaining fuel purchase needs will occur at market rates unless contracted for at a fixed price or hedged at a later date. Using current published market price projections for diesel and estimated fuel consumption needs, a hypothetical 10% unfavorable change in diesel prices from the market price could result in approximately $6 million in additional fuel cost on uncommitted volumes through December 2021.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that this information is accumulated and communicated to Company management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of April 3, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended April 3, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As permitted by applicable SEC guidance, the scope of our evaluation regarding changes in our internal control over financial reporting during the fiscal quarter ended April 3, 2021 excluded internal control over financial reporting for Smart Foodservice, which was acquired on April 24, 2020.

27

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

For information relating to legal proceedings, see Note 18, Commitments and Contingencies, in our consolidated financial statements.

Item 1A.    Risk Factors

There have been no material changes to the principal risks that we believe are material to our business, results of operations, and financial condition from those disclosed in Part I, Item 1A—“Risk Factors" of the 2020 Annual Report.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

    Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6.    Exhibits

Exhibit Number
4.1	Indenture, dated February 4, 2021, by and among US Foods, Inc., the subsidiary guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on February 4, 2021).
10.1	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (for Performance-Based Restricted Stock Unit Awards) under the US Foods Holding Corp. 2019 Long-Term Incentive Plan.†
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
†	Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		US FOODS HOLDING CORP.
		(Registrant)
Date:	May 10, 2021	By:	/s/ PIETRO SATRIANO
			Pietro Satriano
			Chairman and Chief Executive Officer
Date:	May 10, 2021	By:	/s/ DIRK J. LOCASCIO
			Dirk J. Locascio
			Chief Financial Officer

29

EX-10.1

RESTRICTED STOCK UNIT GRANT NOTICE
UNDER THE
US FOODS HOLDING CORP. 2019 LONG-TERM INCENTIVE PLAN

(Performance-Based Restricted Stock Unit Award)

US Foods Holding Corp. (the “Company”), pursuant to the US Foods Holding Corp. 2019 Long-Term Incentive Plan (the “Plan”), hereby grants to the Participant set forth below the target number of Restricted Stock Units set forth below. The Restricted Stock Units are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Participant:	[Insert Participant Name]
Date of Grant:	[Insert Grant Date]
Performance Period:	The four-year period beginning on the Date of Grant
Threshold Award:	[Insert Threshold No. of Restricted Stock Units Granted]
Target Award:	[Insert Target No. of Restricted Stock Units Granted]
Maximum Award:	[Insert Maximum No. of Restricted Stock Units Granted]
Vesting Schedule:

Except as otherwise provided in the Plan, the Restricted Stock Unit Agreement or any other agreement between the Company or any of its Subsidiaries and the Participant, the Restricted Stock Units shall vest based on the achievement of the performance goals set forth in this Grant Notice (the “Performance Goals”) over the Measurement Period (as defined below) and subject to the Participant’s continued service through the fourth anniversary of the Date of Grant (the “Vesting Date”), provided, however, that the Restricted Stock Units shall vest based on the achievement of the Performance Goals over the Measurement Periodin the following circumstances:

(i)immediately prior to a Change in Control if the Restricted Stock Units would not otherwise be continued, converted, assumed, or replaced by the Company, a member of the Company Group or a successor entity thereto, or provided such other treatment as determined by the Committee;

(ii)if the Participant undergoes a Termination by the Service Recipient without Cause or by the Participant for Good Reason (as defined in the Restricted Stock Unit Agreement) within the eighteen (18)-month period immediately following a Change in Control in which the Restricted Stock Units are continued, converted, assumed, or replaced by the Company, a member of the Company Group or a successor entity thereto;

(iii)if the Participant undergoes a Termination prior to the Vesting Date as a result of such Participant’s death or Disability; or

(iv)if the Participant undergoes a Termination by the Service Recipient without Cause or by the Participant for Good Reason, in each case following the third anniversary of the Date of Grant and prior to the Vesting Date, and such Termination is not within the eighteen (18)-month period immediately following a Change in Control (a “Non-CIC Qualifying Termination”), provided, however, that the number of Restricted Stock Units that shall vest in such circumstance shall be equal to seventy-five percent (75%) of the number of Restricted Stock Units that would have vested based on the achievement of the Performance Goals over the Measurement Period.

Performance Goals:

1.Absolute TSR Performance Goals

Subject to the terms of the Restricted Stock Unit Agreement and the Plan, the Restricted Stock Units shall vest based on the product of the Target Award and the Absolute TSR Payout Percentage, rounded up to the nearest whole number, with the Absolute TSR Payout Percentage determined as set forth in the table below based on the Performance Goal that is achieved. A Performance Goal shall be deemed achieved if the Absolute TSR equals or exceeds such Performance Goal on any 30 consecutive trading days during the Measurement Period.

	Performance Goal	Absolute TSR Payout Percentage
Below Threshold	>30%	0%
Threshold	30%	50%
Target	60%	100%
Maximum	90%	150%

2.Performance Between Performance Goals

If the level of achievement of Absolute TSR falls between any two of the Performance Goals , the Absolute TSR Payout Percentage will be determined based on the lower of such Performance Goals. For the avoidance of doubt, in no event may the Absolute TSR Payout Percentage exceed 150%.

3.Definitions

a.“Absolute TSR” means the internal rate of return to a holder of shares of Common Stock from the Initial Share Price to the closing price of a share of Common Stock on any applicable date (expressed as a percentage), inclusive of dividends and other distributions and adjusted for stock splits or similar changes in capital structure (as reported by Bloomberg L.P. or another recognized source).

b.“Initial Share Price” means the closing price of a share of Common Stock on the New York Stock Exchange on the Grant Date.

c.“Measurement Period” shall mean the Performance Period; provided, however, that (i) if there is a Change in Control prior to the Vesting Date, the Measurement Period will instead end on the date of the Change in Control and (ii) if, prior to a Change in Control, the Participant undergoes a Termination prior to the Vesting Date as a result of such Participant’s death or Disability or as a result of a Non-CIC Qualifying Termination, the Measurement Period will instead end on the date of such Termination.

* * *

THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCK UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT GRANT NOTICE, THE RESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.

US FOODS HOLDING CORP.		PARTICIPANT1
By:
Name:	David Works
Title:	Executive Vice President,
	Chief Human Resources Officer

1

1To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof

RESTRICTED STOCK UNIT AGREEMENT

UNDER THE

US FOODS HOLDING CORP. 2019 LONG-TERM INCENTIVE PLAN

Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the Grant Notice), and subject to the terms of this Restricted Stock Unit Agreement (this “Restricted Stock Unit Agreement”) and the US Foods Holding Corp. 2019 Long-Term Incentive Plan (the “Plan”), US Foods Holding Corp. (the “Company”) and the Participant agree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan or the Grant Notice.

1.Grant of Restricted Stock Units. The Company hereby grants to the Participant the target number of Restricted Stock Units provided in the Grant Notice.

2.Vesting. Subject to the terms and conditions set forth in the Grant Notice, this Restricted Stock Unit Agreement and the Plan, the Restricted Stock Units shall vest based on (i) the achievement of the Performance Goals set forth in the Grant Notice during the Measurement Period set forth in the Grant Notice and (ii) except as otherwise provided in the Grant Notice, the Participant’s continuous employment through the Vesting Date. Attainment of the Performance Goals shall be determined and certified by the Committee in writing prior to the vesting of the Restricted Stock Units; provided that, in the event the Restricted Stock Units vest in connection with the Participant’s Termination, as contemplated by the Grant Notice, such determination and certification shall occur no later than sixty (60) days following such Termination.

3.Settlement of Restricted Stock Units. The provisions of Section 9(d)(ii) of the Plan are incorporated herein by reference and made a part hereof, provided that the Restricted Stock Units shall be settled in Common Stock within sixty (60) days following the Vesting Date or, if earlier, (a) within sixty (60) days following a Change in Control, (b) if the Restricted Stock Units vest in connection with the Participant’s Termination other than as a result of a Non-CIC Qualifying Termination, as contemplated by the Grant Notice, within sixty (60) days following the Participant’s Termination and subject to Section 13(u) of the Plan, to the extent applicable, or (c) if the Restricted Stock Units vest in connection with the Participant’s Termination as a result of a Non-CIC Qualifying Termination, as contemplated by the Grant Notice, prior to the year in which the Vesting Date occurs, no later than March 15 of the year following the year in which such Non-CIC Qualifying Termination occurs and subject to Section 13(u) of the Plan, to the extent applicable; provided, further, that if the Change in Control does not satisfy the conditions specified in Section 13(u)(iii) of the Plan to the extent applicable or as otherwise required by Section 409A of the Code, then upon a Change in Control pursuant to which the vesting is accelerated in accordance with the Grant Notice, the Restricted Stock Units shall be settled within sixty (60) days following the Vesting Date or, if earlier, the Participant’s Termination, to the extent required by Section 409A of the Code.

4.Treatment of Restricted Stock Units upon Termination. The provisions of Section 9(c)(ii) of the Plan are incorporated herein by reference and made a part hereof.

5.Definitions.

(a)The term “Company” as used in this Restricted Stock Unit Agreement with reference to the Participant’s employment and the definitions herein shall include the Company and its Subsidiaries.

(b)The term “Good Reason” as used in the Grant Notice or in this Restricted Stock Unit Agreement shall, in the case of any Participant who is party to an employment, service or similar agreement between the Participant and the Company that contains a definition of “Good Reason”, mean and refer to the definition set forth in such agreement, and in the case of any other Participant, “Good Reason” shall mean: (A) a material diminution in the Participant’s base salary or annual bonus opportunity; (B) any material diminution in the Participant’s authority, duties or responsibilities; or (C) the relocation of the Participant’s principal work location by more than fifty (50) miles; provided that none of these events shall constitute Good Reason unless the Company fails to cure such event within thirty (30) days after receipt from the Participant of written notice of the event which constitutes Good Reason; provided, further, that “Good Reason” shall cease to exist for an event on the sixtieth (60th) day following the later of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Company written notice thereof prior to such date. Notwithstanding anything herein to the contrary, for purposes of the last proviso of the immediately foregoing sentence, a series of related events shall be deemed to have occurred on the date upon which the last event in such series of related events has occurred. In the event of the Participant’s Termination due to Good Reason, such Termination must occur within sixty (60) days following the expiration of the Company cure period described above.

(c)Whenever the word “Participant” is used in any provision of this Restricted Stock Unit Agreement under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom the Restricted Stock Units may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed to include such person or persons.

6.Non-Transferability. The Restricted Stock Units are not transferable by the Participant except to Permitted Transferees in accordance with Section 13(b) of the Plan. Except as otherwise provided herein, no assignment or transfer of the Restricted Stock Units, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Restricted Stock Units shall terminate and become of no further effect.

7.Dividend Equivalent Payments. The Participant shall be eligible to receive dividend equivalents pursuant to the provisions of Sections 9(d)(ii) and 13(c) of the Plan.

8.Tax Withholding. The provisions of Section 13(d)(i) of the Plan are incorporated herein by reference and made a part hereof. The Participant shall satisfy such Participant’s withholding liability referred to in Section 13(d)(i) of the Plan by having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable pursuant to the settlement of the Award a number of shares with a Fair Market Value equal to such withholding liability, provided that the number of such shares may not have a Fair Market Value greater than the minimum required statutory withholding liability unless the Participant elects a higher withholding rate and the Committee determines that such higher withholding rate will not result in adverse accounting consequences.

9.Notice. Every notice or other communication relating to this Restricted Stock Unit Agreement between the Company and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the

Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company Secretary, and all notices or communications by the Company to the Participant may be given to the Participant personally or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administrator and communicated to the Participant from time to time.

10.No Right to Continued Service. This Restricted Stock Unit Agreement does not confer upon the Participant any right to continue as an employee or service provider to the Company.

11.Binding Effect. This Restricted Stock Unit Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.

12.Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration, amendment or modification of any of the terms of this Restricted Stock Unit Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however, that any such waiver, alteration, amendment or modification is consented to on the Company’s behalf by the Committee. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

13.Governing Law. This Restricted Stock Unit Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Notwithstanding anything contained in this Restricted Stock Unit Agreement, the Grant Notice or the Plan to the contrary, if any suit or claim is instituted by the Participant or the Company relating to this Restricted Stock Unit Agreement, the Grant Notice or the Plan, the Participant hereby submits to the exclusive jurisdiction of and venue in the courts of Delaware.

14.Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and provisions of the Plan and the provisions of this Restricted Stock Unit Agreement, the Plan shall govern and control.

15.Compliance With Section 409A of the Code. The Award governed hereby is intended to be exempt from or comply with Section 409A of the Code, and shall be interpreted and construed accordingly. To the extent this Restricted Stock Unit Agreement provides for the Award to become vested and be settled upon the Participant’s Termination, the applicable shares of Common Stock shall be transferred to the Participant or his or her beneficiary upon the Participant’s “separation from service,” within the meaning of Section 409A of the Code; provided that if the Participant is a “specified employee,” within the meaning of Section 409A of the Code, then to the extent the Award constitutes nonqualified deferred compensation, within the meaning of Section 409A of the Code, such shares of Common Stock shall be transferred to the Participant or his or her beneficiary upon the earlier to occur of (i) the six (6)-month anniversary of such separation from service and (ii) the date of the Participant’s death.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Pietro Satriano, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of US Foods Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2021

/s/ PIETRO SATRIANO

Pietro Satriano

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dirk J. Locascio, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of US Foods Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2021

/s/ DIRK J. LOCASCIO

Dirk J. Locascio

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Foods Holding Corp. (the “Company”) on Form 10-Q for the quarterly period ended April 3, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Pietro Satriano, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2021

/s/ PIETRO SATRIANO

Pietro Satriano

Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Foods Holding Corp. (the “Company”) on Form 10-Q for the quarterly period ended April 3, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dirk J. Locascio, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2021

/s/ DIRK J. LOCASCIO

Dirk J. Locascio

Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Apr. 03, 2021	May 05, 2021
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 03, 2021
Document Transition Report	false
Entity File Number	001-37786
Entity Registrant Name	US FOODS HOLDING CORP.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-0347906
Entity Address, Address Line One	9399 W. Higgins Road
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Rosemont
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60018
City Area Code	847
Local Phone Number	720-8000
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	USFD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Outstanding (in shares)		221,911,590
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001665918
Current Fiscal Year End Date	--01-01
Entity Small Business	false

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Current assets:
Cash and cash equivalents	$ 912	$ 828
Accounts receivable, less allowances of $51 and $67	1,354	1,084
Vendor receivables, less allowances of $7 and $5	177	121
Inventories—net	1,451	1,273
Prepaid expenses	160	132
Assets held for sale	10	1
Other current assets	20	26
Total current assets	4,084	3,465
Property and equipment—net	1,987	2,021
Goodwill	5,625	5,637
Other intangibles—net	874	892
Deferred tax assets	21	1
Other assets	409	407
Total assets	13,000	12,423
Current liabilities:
Cash overdraft liability	178	136
Accounts payable	1,733	1,218
Accrued expenses and other current liabilities	538	497
Current portion of long-term debt	122	131
Total current liabilities	2,571	1,982
Long-term debt	5,616	5,617
Deferred tax liabilities	275	270
Other long-term liabilities	504	505
Total liabilities	8,966	8,374
Commitments and contingencies (Note 18)
Series A convertible preferred stock, $0.01 par value—25 shares authorized; 0.5 issued and outstanding as of April 3, 2021 and January 2, 2021	534	519
Shareholders’ equity:
Common stock, $0.01 par value—600 shares authorized; 222 and 221 issued and outstanding as of April 3, 2021 and January 2, 2021, respectively	2	2
Additional paid-in capital	2,908	2,901
Retained earnings	622	661
Accumulated other comprehensive loss	(32)	(34)
Total shareholders’ equity	3,500	3,530
Total liabilities, mezzanine equity and shareholders' equity	$ 13,000	$ 12,423

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 51	$ 67
Allowances for vendor receivables	$ 7	$ 5
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	25,000,000	25,000,000
Preferred stock, Number of shares issued	500,000	500,000
Preferred stock, outstanding (in shares)	532,281	523,127
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	222,000,000	221,000,000
Common stock, outstanding (in shares)	222,000,000	221,000,000

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Statement of Comprehensive Income [Abstract]
Net sales	$ 6,295	$ 6,339
Cost of goods sold	5,292	5,273
Gross profit	1,003	1,066
Operating expenses:
Distribution, selling and administrative costs	972	1,192
Restructuring Costs	3	0
Total operating expenses	975	1,192
Operating income (loss)	28	(126)
Other income—net	(7)	(6)
Interest expense—net	54	52
Loss on extinguishment of debt	23	0
Loss before income taxes	(42)	(172)
Income tax benefit	(18)	(40)
Net loss	(24)	(132)
Other comprehensive loss—net of tax:
Changes in retirement benefit obligations	0	0
Unrecognized gain (loss) on interest rate swaps	2	(6)
Comprehensive loss	(22)	(138)
Net loss	(24)	(132)
Series A convertible preferred stock dividends	15	0
Net loss available to common shareholders	$ (39)	$ (132)
Net loss per share
Basic	$ (0.18)	$ (0.60)
Diluted	$ (0.18)	$ (0.60)
Weighted-average common shares outstanding
Basic	221	219
Diluted	221	219

XML

Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common shares	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Shares balance beginning of period (in shares) at Dec. 28, 2019		220
Balance at beginning of period at Dec. 28, 2019	$ 3,709	$ 2	$ 2,845	$ 916	$ (54)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense	7		7
Proceeds from employee stock purchase plan	6		6
Exercise of stock options (in shares)		0
Exercise of stock options	1		1
Tax withholding payments for net share-settled equity awards	(2)		(2)
Adoption of ASU 2016-13	(1)			(1)
Unrecognized gain (loss) on interest rate swaps, net of income tax	(6)				(6)
Net loss	(132)			(132)
Shares balance end of period (in shares) at Mar. 28, 2020		220
Balance at end of period at Mar. 28, 2020	3,582	$ 2	2,857	783	(60)
Shares balance beginning of period (in shares) at Jan. 02, 2021		221
Balance at beginning of period at Jan. 02, 2021	3,530	$ 2	2,901	661	(34)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense	10		10
Proceeds from employee stock purchase plan	5		5
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	0
Vested restricted stock units, net		1
Exercise of stock options (in shares)		0
Exercise of stock options	4		4
Tax withholding payments for net share-settled equity awards	(12)		(12)
Series A convertible preferred stock dividends	(15)			(15)
Unrecognized gain (loss) on interest rate swaps, net of income tax	2				2
Net loss	(24)			(24)
Shares balance end of period (in shares) at Apr. 03, 2021		222
Balance at end of period at Apr. 03, 2021	$ 3,500	$ 2	$ 2,908	$ 622	$ (32)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Cash flows from operating activities:
Net loss	$ (24)	$ (132)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	101	101
Loss on disposal of property and equipment—net	0	1
Loss on extinguishment of debt	23	0
Amortization of deferred financing costs	3	2
Deferred tax benefit	(4)	(17)
Share-based compensation expense	10	7
(Benefit) provision for doubtful accounts	(12)	180
Changes in operating assets and liabilities:
(Increase) decrease in receivables	(315)	157
(Increase) decrease in inventories—net	(178)	6
Increase in prepaid expenses and other assets	(25)	(26)
Increase (decrease) in accounts payable and cash overdraft liability	555	(215)
Increase (decrease) in accrued expenses and other liabilities	42	(126)
Net cash provided by (used in) operating activities	176	(62)
Cash flows from investing activities:
Proceeds from sales of assets	0	5
Purchases of property and equipment	(46)	(79)
Net cash used in investing activities	(46)	(74)
Cash flows from financing activities:
Proceeds from debt borrowings	900	1,945
Principal payments on debt and financing leases	(926)	(827)
Debt financing costs and fees	(18)	0
Proceeds from employee stock purchase plan	5	6
Proceeds from exercise of stock options	4	1
Tax withholding payments for net share-settled equity awards	(12)	(2)
Net cash (used in) provided by financing activities	(47)	1,123
Net increase in cash, cash equivalents and restricted cash	83	987
Cash, cash equivalents and restricted cash—beginning of period	829	98
Cash, cash equivalents and restricted cash—end of period	912	1,085
Supplemental disclosures of cash flow information:
Interest paid—net of amounts capitalized	33	41
Income taxes paid—net	0	2
Property and equipment purchases included in accounts payable	23	38
Property and equipment transferred to assets held for sale	9	14
Leased assets obtained in exchange for financing lease liabilities	7	59
Leased assets obtained in exchange for operating lease liabilities	8	2
Paid-in-kind Series A convertible preferred stock dividends	$ 15	$ 0

XML

Overview and Basis of Presentation

3 Months Ended

Apr. 03, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Overview and Basis of Presentation

OVERVIEW AND BASIS OF PRESENTATION

US Foods Holding Corp., a Delaware corporation, and its consolidated subsidiaries are referred to in these consolidated financial statements and notes as “we,” “our,” “us,” the “Company,” or “US Foods.” US Foods Holding Corp. conducts all of its operations through its wholly owned subsidiary US Foods, Inc. (“USF”) and its subsidiaries. All of the Company’s indebtedness, as further described in Note 10, Debt, is a direct obligation of USF and its subsidiaries.

Business Description—The Company, through USF, operates in one business segment in which it markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations.

Basis of Presentation—The Company operates on a 52 or 53-week fiscal year, with all periods ending on a Saturday. When a 53-week fiscal year occurs, the Company reports the additional week in the fiscal fourth quarter. Fiscal year 2021 is a 52-week fiscal year. Fiscal year 2020 was a 53-week fiscal year.

The consolidated financial statements included in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures included in this Quarterly Report are adequate to make the information presented not misleading. These interim consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes included in the 2020 Annual Report.

The consolidated interim financial statements reflect all adjustments (consisting of normal recurring items) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results that might be achieved for the full fiscal year.

XML

Recent Accounting Pronouncements

3 Months Ended

Apr. 03, 2021

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, convertible debt will be accounted for as a single liability measured at its amortized cost. Additionally, the new guidance requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. This guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impacts of the provision of the new standard on our financial position, results of operation and cash flows.

XML

Revenue Recognition

3 Months Ended

Apr. 03, 2021

Revenue from Contract with Customer [Abstract]

Revenue recognition

REVENUE RECOGNITION

The Company recognizes revenue when the performance obligation is satisfied, which occurs when a customer obtains control of the promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services. The Company generates substantially all of its revenue from the distribution and sale of food and food-related products and recognizes revenue when title and risk of loss passes and the customer accepts the goods, which occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of revenue at the time the revenue is recognized. Sales taxes invoiced to customers and remitted to governmental authorities are excluded from net sales. 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 3, 2021 and January 2, 2021. Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $1.4 billion and $1.1 billion as of April 3, 2021 and January 2, 2021, respectively.

The Company has certain customer contracts under which incentives are paid upfront to its customers. These payments have become industry practice and are not related to financing any customer’s business, nor are these payments associated with any

distinct good or service to be received from any customer. 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 $30 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both April 3, 2021 and January 2, 2021, and $29 million and $27 million included in other assets in the Company’s Consolidated Balance Sheets as of April 3, 2021 and January 2, 2021, respectively.

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Meats and seafood	$	2,262	$	2,226
Dry grocery products	1,093		1,092
Refrigerated and frozen grocery products	994		1,047
Dairy	622		648
Equipment, disposables and supplies	693		629
Beverage products	324		344
Produce	307		353
Net sales	$	6,295	$	6,339

XML

Business Acquisitions

3 Months Ended

Apr. 03, 2021

Business Combinations [Abstract]

Business Acquisitions

BUSINESS ACQUISITIONS

Smart Foodservice Acquisition—On April 24, 2020, USF completed the acquisition of Smart Stores Holding Corp., a Delaware corporation (“Smart Foodservice”), from funds managed by affiliates of Apollo Global Management, Inc. Total consideration paid at the closing of the acquisition (net of cash acquired) was $972 million. At the time of the acquisition, Smart Foodservice operated 70 small-format cash and carry stores across California, Idaho, Montana, Nevada, Oregon, Utah, and Washington serving small and mid-sized restaurants and other food business customers. The acquisition of Smart Foodservice expanded the Company’s cash and carry business in the West and Northwest parts of the U.S.

USF financed the Smart Foodservice acquisition with a new $700 million incremental senior secured term loan facility under its existing term loan credit agreement, as further described in Note 10, Debt, and with cash on hand. The assets, liabilities and results of operations of Smart Foodservice have been included in the Company’s consolidated financial statements since the date the acquisition was completed.

The following table summarizes the final purchase price allocation recognized for the Smart Foodservice acquisition as of April 24, 2020. The decrease in goodwill during the 13 weeks ended April 3, 2021 was due to the finalization of deferred income taxes associated with the acquisition.

	Purchase Price Allocation
Accounts receivable	$	5
Inventories	43
Other current assets	24
Property and equipment	84
Goodwill(1)	895
Other intangibles(2)	14
Other assets	145
Accounts payable	(38)
Accrued expenses and other current liabilities	(32)
Deferred income taxes	(8)
Other long-term liabilities, including financing leases	(160)
Cash paid for acquisition	$	972

(1)    Goodwill recognized is primarily attributable to intangible assets that do not qualify for separate recognition, as well as expected synergies from the combined company. The acquired goodwill is not deductible for U.S. federal income tax purposes.

(2)    Other intangibles consist of a trade name of $14 million with an estimated useful life of approximately 1 year.

Smart Foodservice acquisition and integration related costs included in distribution, selling and administrative costs in the Company’s Consolidated Statements of Comprehensive Income were $4 million and $10 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

Pro Forma Financial Information—The following table presents the Company’s unaudited pro forma consolidated net sales, net income and earnings per share (“EPS”) for the 13 weeks ended April 3, 2021 and March 28, 2020. The unaudited pro forma financial information presents the combined results of operations as if the acquisition and related financing of Smart Foodservice had occurred as of December 30, 2018, which date represents the first day of the Company’s fiscal year prior to the Smart Foodservice acquisition date.

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Pro forma net sales	$	6,295	$	6,625
Pro forma net loss available to common shareholders	$	(39)	$	(106)
Pro forma net loss per share:
Basic	$	(0.18)	$	(0.48)
Diluted	$	(0.18)	$	(0.48)

The unaudited pro forma financial information above includes adjustments for: (1) incremental depreciation expense related to fair value increases of certain acquired property and equipment, (2) amortization expense related to the fair value of amortizable intangible assets acquired, (3) interest expense related to the incremental senior secured term loan facility used to finance the acquisition, (4) the elimination of acquisition-related costs that were included in the Company’s historical results, and (5) adjustments to the income tax provision based on pro forma results of operations. No effect has been given to potential synergies, operating efficiencies or costs arising from the integration of Smart Foodservice with our previously existing operations or the standalone cost estimates and estimated costs that were incurred by the former parent company. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on the date indicated. Further, the pro forma financial information does not purport to project the Company’s future consolidated results of operations following the acquisition.

XML

Inventories	3 Months Ended
	Apr. 03, 2021
Inventory Disclosure [Abstract]
Inventories	INVENTORIES The Company’s inventories, consisting mainly of food and other food-related products, are primarily considered finished goods. Inventory costs include the purchase price of the product, freight costs to deliver it to the Company’s distribution and retail facilities, and depreciation and labor related to processing facilities and equipment, and are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions.The Company records inventories at the lower of cost or market primarily using the last-in, first-out (“LIFO”) method, except for Smart Foodservice, as further described in Note 4, Business Acquisitions, which uses the retail method of inventory accounting. For our LIFO based inventories, the base year values of beginning and ending inventories are determined using the inventory price index computation method. 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 $198 million and $177 million as of April 3, 2021 and January 2, 2021, respectively. As a result of changes in LIFO reserves, cost of goods sold increased $21 million for the 13 weeks ended April 3, 2021, and decreased $13 million for the 13 weeks ended March 28, 2020.

XML

Allowance For Doubtful Accounts Disclosures

3 Months Ended

Apr. 03, 2021

Receivables [Abstract]

Allowance For Doubtful Accounts Disclosures [Text Block]

ALLOWANCE FOR DOUBTFUL ACCOUNTSThe Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for doubtful accounts based on a combination of factors. The Company maintains an allowance for doubtful accounts, which is based upon historical experience, future expected losses, as well as specific customer collection issues that have been identified. 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.

Since mid-March 2020, our business has been significantly impacted by the COVID-19 pandemic. In March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues. Since December 2020, three vaccines for COVID-19 have been authorized by the United States Food and Drug Administration ("FDA") for emergency use and beginning in April 2021, all individuals 16 years old and older in the United States are eligible to receive a vaccine. New cases of COVID-19 and its variants continue to be reported and it remains uncertain when restrictions will be fully lifted and enhanced safety measures, including physical distancing and face mask protocols, will no longer be needed. As a result, it remains uncertain when and to what extent the COVID-19 pandemic will fully abate. Due to the impact that the COVID-19 pandemic was expected to have on our customers, particularly our restaurant and hospitality customers, and to reflect the increased collection risk associated with our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020. In each subsequent quarter of fiscal year 2020 and during the 13 weeks ended April 3, 2021, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts. The remaining pre-COVID-19 accounts receivable are fully reserved as of April 3, 2021.

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

Balance as of January 2, 2021	$	67
Reversed from costs and expenses	(12)
Customer accounts written off—net of recoveries	(4)
Balance as of April 3, 2021	$	51

This table excludes the vendor receivable related allowance for doubtful accounts of $7 million and $5 million as of April 3, 2021 and January 2, 2021, respectively.

XML

Property and Equipment	3 Months Ended
	Apr. 03, 2021
Property, Plant and Equipment [Abstract]
Property and Equipment	PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 3 to 40 years. 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 3, 2021 and January 2, 2021, property and equipment-net included accumulated depreciation of $2,649 million and $2,566 million, respectively. Depreciation expense was $82 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

XML

Goodwill and Other Intangibles

3 Months Ended

Apr. 03, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

GOODWILL AND OTHER INTANGIBLES

Goodwill includes the cost of acquired businesses in excess of the fair value of the tangible and other intangible net assets acquired. Other intangible assets include customer relationships, amortizable trade names, noncompete agreements, the brand names comprising the Company’s portfolio of exclusive brands, and trademarks. Brand names and trademarks are indefinite-lived intangible assets and, accordingly, are not subject to amortization, but are subject to impairment assessments as described below.

Customer relationships, amortizable trade names and noncompete agreements are intangible assets with definite lives, and are carried at the acquired fair value less accumulated amortization. Customer relationships, amortizable trade names and noncompete agreements are amortized over the estimated useful lives (which range from approximately 1 to 15 years). Amortization expense was $19 million for both the 13 weeks ended April 3, 2021 and March 28, 2020.

Goodwill and other intangibles—net consisted of the following:  

	April 3, 2021		January 2, 2021
Goodwill	$	5,625	$	5,637
Other intangibles—net
Customer relationships—amortizable:
Gross carrying amount	$	704	$	725
Accumulated amortization	(113)		(119)
Net carrying value	591		606
Trade names—amortizable:
Gross carrying amount	1		15
Accumulated amortization	—		(11)
Net carrying value	1		4
Noncompete agreements—amortizable:
Gross carrying amount	3		3
Accumulated amortization	(2)		(2)
Net carrying value	1		1
Brand names and trademarks—not amortizing	281		281
Total other intangibles—net	$	874	$	892

The net decrease in the gross carrying amount of customer relationships as of April 3, 2021 is attributable to the write-off of fully amortized intangible assets related to certain 2017 business acquisitions. The net decrease in the gross carrying amount of amortizable trade names is attributable to the write-off of the fully amortized trade name related to the Smart Foodservice acquisition, when Smart Foodservice® warehouse stores were rebranded to CHEF'STORE® in March 2021.

The Company assesses for impairment of intangible assets with definite lives only if events occur that indicate that the carrying amount of an intangible asset may not be recoverable. The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if events occur that indicate an asset may be impaired. 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. In the third quarter of fiscal year 2020, the Company performed a quantitative assessment in testing goodwill and indefinite-lived intangible assets for impairment, which resulted in the carrying value of two trade names acquired as part of the Food Group acquisition exceeding their fair value by $9 million, and impairment charges of this amount were recognized. No other impairments were noted as part of the annual impairment assessment.

XML

Fair Value Measurements

3 Months Ended

Apr. 03, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company follows the accounting standards for fair value, under which fair value is a market-based measurement, not an entity-specific measurement. The Company’s fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

•Level 1—observable inputs, such as quoted prices in active markets

•Level 2—observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active or inactive markets that are observable either directly or indirectly, or other inputs that are observable or can be corroborated by observable market data

•Level 3—unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions

Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized as of the end of the reporting period in which the transfer occurs. 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 3, 2021 and January 2, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

	April 3, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	690	$	—	$	—	$	690
Liabilities
Interest rate swaps	$	—	$	3	$	—	$	3
	January 2, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	696	$	—	$	—	$	696
Liabilities
Interest rate swaps	$	—	$	5	$	—	$	5

There were no significant assets or liabilities on the Company's Consolidated Balance Sheets measured at fair value on a nonrecurring basis for the periods presented above, except as further disclosed in Note 8, Goodwill and Other Intangibles.

Recurring Fair Value Measurements

Money Market Funds

Money market funds include highly liquid investments with an original maturity of three or fewer months. These funds are valued using quoted market prices in active markets and are classified under Level 1 within the fair value hierarchy.

Derivative Financial Instruments

The Company uses interest rate swaps, designated as cash flow hedges, to manage its exposure to interest rate movements in connection with its variable-rate Initial Term Loan Facility (as defined in Note 10, Debt).

USF has entered into four-year interest rate swap agreements expiring July 31, 2021, which collectively have a notional value of $550 million, which was reduced from $733 million on July 31, 2020. The Company pays an aggregate effective rate of 3.45% on the notional amount of the Initial Term Loan Facility covered by the interest rate swap agreements, comprised of a rate of 1.70% plus a spread of 1.75% (see Note 10, Debt).

The Company records its interest rate swaps in its Consolidated Balance Sheets 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 and the Company. The following table presents the balance sheet location and fair value of the interest rate swaps as of April 3, 2021 and January 2, 2021:

		Fair Value
	Balance Sheet Location	April 3, 2021		January 2, 2021
Derivatives designated as hedging instruments
Interest rate swaps	Accrued expenses and    other current liabilities	$	3	$	5
	Total liabilities	$	3	$	5

Gains and losses on the interest rate swaps are initially recorded in accumulated other comprehensive loss and reclassified to interest expense during the period in which the hedged transaction affects income. The following table presents the effect of the Company’s interest rate swaps in its Consolidated Statements of Comprehensive Income for the 13 weeks ended April 3, 2021 and March 28, 2020:

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Accumulated Other Comprehensive Loss, net of tax		Location of Amounts Reclassified from Accumulated Other Comprehensive Loss	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax
For the 13 weeks ended April 3, 2021
Interest rate swaps	$	—	Interest expense—net	$	2
For the 13 weeks ended March 28, 2020
Interest rate swaps	$	(6)	Interest expense—net	$	—

During the next twelve months, the Company estimates that $3 million will be reclassified from accumulated other comprehensive loss 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 $5.8 billion, compared to its carrying value of $5.7 billion as of both April 3, 2021 and January 2, 2021.

The fair value of the Company's 4.75% unsecured senior notes due February 15, 2029 (the "Unsecured Senior Notes due 2029") was $0.9 billion as of April 3, 2021. As discussed in Note 10, Debt, the proceeds from the Unsecured Senior Notes due 2029 were used to redeem the Company's 5.875% unsecured senior notes due 2024 (the "Unsecured Senior Notes due 2024") and other debt. The fair value of the Unsecured Senior Notes due 2024 was $0.6 billion as of January 2, 2021. The fair value of the Company’s 6.25% senior secured notes due April 15, 2025 (the “Secured Notes”) was $1.1 billion as of both April 3, 2021 and January 2, 2021. Fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is based upon the closing market prices of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 on the respective dates. The fair value of the Secured Notes, the Unsecured Senior Notes due 2029 and the Unsecured Senior Notes due 2024 is classified under Level 2 of the fair value hierarchy. The fair value of the balance of the Company’s debt is primarily classified under Level 3 of the fair value hierarchy, with fair value estimated based upon a combination of the cash outflows expected under these debt facilities, interest rates that are currently available to the Company for debt with similar terms, and estimates of the Company’s overall credit risk.

XML

Debt

3 Months Ended

Apr. 03, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Total debt consisted of the following:

Debt Description	Maturity	Interest Rate as of April 3, 2021	Carrying Value as of April 3, 2021		Carrying Value as of January 2, 2021
ABL Facility	May 31, 2024	—%	$	—	$	—
Initial Term Loan Facility (net of $2 and $3 of unamortized deferred financing costs, respectively)	June 27, 2023	1.86%	2,093		2,098
2019 Incremental Term Loan Facility (net of $29       and $30 of unamortized deferred financing       costs, respectively)	September 13, 2026	2.11%	1,449		1,451
2020 Incremental Term Loan Facility (net of $11       of unamortized deferred financing costs)(1)	April 24, 2025	—%	—		284
Senior Secured Notes (net of $12 and $13 of       unamortized deferred financing costs)	April 15, 2025	6.25%	988		987
Unsecured Senior Notes due 2024 (net of $3 of       unamortized deferred financing costs)(1)	June 15, 2024	—%	—		597
Unsecured Senior Notes due 2029 (net of $9 of       unamortized deferred financing costs)	February 15, 2029	4.75%	891		—
Obligations under financing leases	2021–2031	1.63% - 6.10%	309		323
Other debt	2021–2031	5.75% - 9.00%	8		8
Total debt			5,738		5,748
Current portion of long-term debt			(122)		(131)
Long-term debt			$	5,616	$	5,617

(1)    The 2020 Incremental Term Loan Facility and Unsecured Senior Notes due 2024 were paid in full on February 4, 2021 with the issuance of the Unsecured Senior Notes due 2029 and subsequently terminated as further discussed below. The related unamortized deferred financing costs were written off in connection with the terminations.

As of April 3, 2021, after considering interest rate swaps that fixed the interest rate on $550 million of principal of the Initial Term Loan Facility described below, approximately 52% of the Company’s total debt bears interest at a floating rate.

ABL Facility

USF's asset based senior secured revolving credit facility (the “ABL Facility”) provides USF with loan commitments having a maximum aggregate principal amount of $1,990 million. The ABL Facility is scheduled to mature on May 31, 2024.

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 under the ABL Facility, plus a margin ranging from 0.00% to 0.50%, or the sum of LIBOR plus a margin ranging from 1.00% to 1.50%, in each case based on USF’s excess availability under the ABL Facility. The margin under the ABL Facility as of April 3, 2021 was 0.00% for ABR loans and 1.00% for LIBOR loans.

USF had no outstanding borrowings, and had issued letters of credit totaling $279 million, under the ABL Facility as of April 3, 2021. 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 $1,711 million under the ABL Facility as of April 3, 2021.

Term Loan Facilities

Under its term loan credit agreement, USF has entered into an initial senior secured term loan facility (the "Initial Term Loan Facility") and an incremental senior secured term loan facility (the "2019 Incremental Term Loan Facility"). The Initial Term Loan Facility had a carrying value of $2.1 billion, net of $2 million of unamortized deferred financing costs as of April 3, 2021. The table above reflects the interest rate on the unhedged portion of the Initial Term Loan Facility as of April 3, 2021. The effective interest rate of the portion of the Initial Term Loan Facility subject to interest rate hedging agreements was 3.45% as of April 3, 2021. The Initial Term Loan Facility is scheduled to mature on June 27, 2023.

The 2019 Incremental Term Loan Facility had a carrying value of $1,449 million, net of $29 million of unamortized deferred financing costs as of April 3, 2021. 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, determined in accordance with the term loan credit agreement, plus a margin of 1.00%. The 2019 Incremental Term Loan Facility is scheduled to mature on September 13, 2026.

Secured Notes

The Secured Notes had a carrying value of $988 million, net of $12 million of unamortized deferred financing costs, as of April 3, 2021. The Secured Notes are scheduled to mature on April 15, 2025.

Unsecured Senior Notes due 2029

On February 4, 2021, USF completed a private offering of $900 million aggregate principal amount of Unsecured Senior Notes due 2029. USF used the proceeds of the Unsecured Senior Notes due 2029, together with cash on hand, to redeem all of the Company's then outstanding Unsecured Senior Notes due 2024, repay all of the then outstanding borrowings under the incremental senior secured term loan facility borrowed in April 2020 (the "2020 Incremental Term Loan Facility") and to pay related fees and expenses. In connection with the repayment of the Unsecured Senior Notes due 2024 and 2020 Incremental Term Loan Facility, the Company applied debt extinguishment accounting and recorded $23 million in loss on extinguishment of debt in the Company's Consolidated Statements of Comprehensive Income, consisting of a $14 million write-off of pre-existing unamortized deferred financing costs related to the redeemed facilities and a $9 million early redemption premium related to the Unsecured Senior Notes due 2024. Lender fees and third-party costs of $9 million associated with the issuance of the Unsecured Senior Notes due 2029 were capitalized as deferred financing costs. The Unsecured Senior Notes due 2029 had an outstanding balance of $891 million, net of $9 million of unamortized deferred financing costs, as of April 3, 2021. The Unsecured Senior Notes due 2029 bear interest at a rate of 4.75% per annum and will mature on February 15, 2029. On or after February 15, 2024, the Unsecured Senior Notes due 2029 are redeemable, at USF's option, in whole or in part at a price of 102.375% of the remaining principal, plus accrued and unpaid interest, if any, to the redemption date. On or after February 15, 2025 and February 15, 2026, the optional redemption price for the Unsecured Senior Notes due 2029 declines to 101.188% and 100.000%, respectively, of the remaining principal amount, plus accrued and unpaid interest, if any, to the redemption date.

Debt Covenants

The agreements governing our indebtedness contain customary covenants. 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 $1.3 billion of restricted payment capacity under these covenants, and approximately $2.7 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 3, 2021.

XML

Restructuring Liabilities (Notes)

3 Months Ended

Apr. 03, 2021

Restructuring Liabilities [Abstract]

Restructuring Liabilities

RESTRUCTURING LIABILITIES

From time to time, the Company may implement initiatives or close or consolidate facilities in an effort to reduce costs and improve operating effectiveness. In connection with these activities, the Company may incur various costs including severance and other employee-related separation costs.

During the 13 weeks ended April 3, 2021, $3 million of net restructuring costs were recognized primarily related to initiatives to improve operational effectiveness. Net restructuring costs were de minimis during the 13 weeks ended March 28, 2020. Net restructuring liabilities were $4 million and $2 million as of April 3, 2021 and January 2, 2021, respectively.

XML

Retirement Plans

3 Months Ended

Apr. 03, 2021

Retirement Benefits [Abstract]

Retirement Plans

RETIREMENT PLANS

The Company sponsors a defined benefit pension plan and a 401(k) plan for eligible employees, and provides certain postretirement health and welfare benefits to eligible retirees and their dependents. During fiscal year 2020, in connection with the Smart Foodservice acquisition, the Company assumed a defined benefit pension plan with net liabilities of approximately $19 million. This defined benefit plan was merged into the US Foods Consolidated Defined Benefit Retirement Plan as of December 31, 2020.

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Components of net periodic pension benefit credits
Service cost	$	1	$	1
Interest cost	7		7
Expected return on plan assets	(14)		(13)
Net periodic pension benefit credits	$	(6)	$	(5)

Other postretirement benefit costs were de minimis for both the 13 weeks ended April 3, 2021 and March 28, 2020.

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) expense—net, respectively, in the Company's Consolidated Statements of Comprehensive Income.

The Company does not expect to make significant contributions to its defined benefit pension plan in fiscal year 2021.

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 $13 million and $14 million for the 13 weeks ended April 3, 2021 and March 28, 2020, 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 $10 million and $12 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively.

XML

Earnings Per Share

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Earnings per share

EARNINGS PER SHARE

The Company computes EPS in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of share-based awards—stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals. The Company applies the if-converted method to calculate the dilution impact of the Series A convertible preferred stock. For the 13 weeks ended April 3, 2021 and March 28, 2020, share-based awards representing 9 million and 10 million underlying common shares, respectively, were not included in the computation because the effect would have been anti-dilutive. For the 13 weeks ended April 3, 2021, convertible preferred stock representing 24 million of underlying common shares were not included in the computation because the effect would have been anti-dilutive.

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Numerator:
Net loss	$	(24)	$	(132)
Series A convertible preferred stock dividends (1)	15		—
Net loss available to common shareholders	$	(39)	$	(132)
Denominator:
Weighted-average common shares outstanding	221		219
Effect of dilutive securities	—		—
Effect of dilutive underlying shares of the Series A convertible preferred stock	—		—
Weighted-average dilutive shares outstanding	221		219
Net loss per share
Basic	$	(0.18)	$	(0.60)
Diluted	$	(0.18)	$	(0.60)

(1)    Preferred stock dividends for the first quarter of 2021 were declared on March 23, 2021 and were paid in kind on March 31, 2021.

XML

Convertible Preferred Stock (Notes)

3 Months Ended

Apr. 03, 2021

Convertible Preferred Stock [Abstract]

Convertible Preferred Stock

CONVERTIBLE PREFERRED STOCK

On May 6, 2020 (the “Issuance Date”), pursuant to the terms of an Investment Agreement (the "Investment Agreement") with KKR Fresh Aggregator L.P., a Delaware limited partnership, which agreement was joined on February 25, 2021 by permitted transferee KKR Fresh Holdings L.P., a Delaware limited partnership (“KKR”), the Company issued and sold 500,000 shares of the Company’s Series A convertible preferred stock, par value $0.01 per share to KKR Fresh Aggregator L.P. for an aggregate purchase price of $500 million, or $1,000 per share (the “Issuance”). The Company used the net proceeds from the Issuance for working capital and general corporate purposes. As of January 2, 2021, the Company had issued a total of 523,127 shares of Series A convertible preferred stock. On March 31, 2021, the Company paid a dividend on the shares of the Series A convertible preferred stock in the form of 9,154 shares of Series A convertible preferred stock, plus a de minimis amount in cash in lieu of fractional shares in accordance with the terms of the Certificate of Designations for the Series A convertible preferred stock.

The following table summarizes the activity for the outstanding Series A convertible preferred stock and associated carrying value for the 13 weeks ended April 3, 2021 was as follows:

	Series A Convertible Preferred Stock
	Shares	Carrying Value
Balance, January 2, 2021	523,127	$	519
Shares issued as paid in kind dividend	9,154	15
Balance April 3, 2021	532,281	$	534

XML

Changes in Accumulated Other Comprehensive Loss

3 Months Ended

Apr. 03, 2021

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss

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 3, 2021		March 28, 2020
Accumulated other comprehensive loss components
Retirement benefit obligations:
Balance as of beginning of period (1)	$	(29)	$	(52)
Reclassification adjustments:
Amortization of net loss(2) (3)	—		—
Total before income tax	—		—
Income tax provision	—		—
Current period comprehensive income, net of tax	—		—
Balance as of end of period(1)	$	(29)	$	(52)
Interest rate swaps:
Balance as of beginning of period (1)	$	(5)	$	(2)
Change in fair value of interest rate swaps	—		(8)
Amounts reclassified to interest expense—net	2		—
Total before income tax	2		(8)
Income tax benefit	—		(2)
Current period comprehensive income (loss), net of tax	2		(6)
Balance as of end of period(1)	$	(3)	$	(8)
Accumulated other comprehensive loss as of end of period(1)	$	(32)	$	(60)

(1)    Amounts are presented net of tax.

(2)    Included in the computation of net periodic benefit costs. See Note 12, Retirement Plans, for additional information.

(3)    Included in other income (expense)—net in the Company's Consolidated Statements of Comprehensive Income.

XML

Related Party Transactions	3 Months Ended
	Apr. 03, 2021
Related Party Transactions [Abstract]
Related Party Transactions	KKR Capital Markets LLC, an affiliate of KKR, received $1 million for debt advisory services rendered in connection with the Unsecured Senior Notes due 2029 financing during the 13 weeks ended April 3, 2021. As of April 3, 2021, investment funds managed by an affiliate of KKR held approximately $60 million in aggregate principal amount of the Initial Term Loan Facility and the 2019 Incremental Term Loan Facility, as reported by the administrative agent.

XML

Income Taxes

3 Months Ended

Apr. 03, 2021

Income Tax Disclosure [Abstract]

Income taxes

The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. 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 3, 2021 and March 28, 2020 for purposes of determining its year-to-date tax provision.

For the 13 weeks ended April 3, 2021, the Company's effective income tax rate of 43% differed from the 21% federal corporate income tax rate primarily as a result of state income taxes and the recognition of various discrete tax items. These discrete tax items included a tax benefit of $6 million, primarily related to excess tax benefits associated with share-based compensation. For the 13 weeks ended March 28, 2020, 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. These discrete tax items included a tax expense of $3 million, primarily related to an increase in the state valuation allowance.

XML

Commitments and Contingencies

3 Months Ended

Apr. 03, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Purchase Commitments—The Company enters into purchase orders with vendors and other parties in the ordinary course of business and has a limited number of purchase contracts with certain vendors that require it to buy a predetermined volume of

products. The Company had $1,523 million of purchase orders and purchase contract commitments as of April 3, 2021 to be purchased in the remainder of fiscal year 2021 and $67 million of information technology commitments through August 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 $38 million through December 2021, as of April 3, 2021. Additionally, the Company had electricity forward purchase commitments totaling $5 million through June 2024, as of April 3, 2021. 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.

Legal Proceedings—The Company is subject to a number of legal proceedings arising in the normal course of business. These legal proceedings, whether pending, threatened or unasserted, if decided adversely to or settled by the Company, may result in liabilities material to its financial position, results of operations, or cash flows. The Company has recognized provisions with respect to the proceedings, where appropriate, in its Consolidated Balance Sheets. It is possible that the Company could settle one or more of these proceedings or could be required to make expenditures, in excess of the established provisions, in amounts that cannot be reasonably estimated. However, the Company, at present, believes that the ultimate outcome of these proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

XML

Business Information

3 Months Ended

Apr. 03, 2021

Segment Reporting [Abstract]

Business information

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

The Company markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the U.S. The Company uses a centralized management structure, and its strategies and initiatives are implemented and executed consistently across the organization to maximize value to the organization as a whole. The Company uses shared resources for sales, procurement, and general and administrative activities across each of its distribution facilities and operations. The Company’s distribution facilities form a single network to reach its customers; it is common for a single customer to make purchases from several different distribution facilities. Capital projects, whether for cost savings or generating incremental revenue, are evaluated based on estimated economic returns to the organization as a whole.

XML

Revenue Recognition (Tables)

3 Months Ended

Apr. 03, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of revenue by principal product categories

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Meats and seafood	$	2,262	$	2,226
Dry grocery products	1,093		1,092
Refrigerated and frozen grocery products	994		1,047
Dairy	622		648
Equipment, disposables and supplies	693		629
Beverage products	324		344
Produce	307		353
Net sales	$	6,295	$	6,339

XML

Business Acquisitions (Tables)

3 Months Ended

Apr. 03, 2021

Business Combinations [Abstract]

Purchase Price Allocation

The following table summarizes the final purchase price allocation recognized for the Smart Foodservice acquisition as of April 24, 2020. The decrease in goodwill during the 13 weeks ended April 3, 2021 was due to the finalization of deferred income taxes associated with the acquisition.

	Purchase Price Allocation
Accounts receivable	$	5
Inventories	43
Other current assets	24
Property and equipment	84
Goodwill(1)	895
Other intangibles(2)	14
Other assets	145
Accounts payable	(38)
Accrued expenses and other current liabilities	(32)
Deferred income taxes	(8)
Other long-term liabilities, including financing leases	(160)
Cash paid for acquisition	$	972

(1)    Goodwill recognized is primarily attributable to intangible assets that do not qualify for separate recognition, as well as expected synergies from the combined company. The acquired goodwill is not deductible for U.S. federal income tax purposes.

(2)    Other intangibles consist of a trade name of $14 million with an estimated useful life of approximately 1 year.

Pro Forma Information

The following table presents the Company’s unaudited pro forma consolidated net sales, net income and earnings per share (“EPS”) for the 13 weeks ended April 3, 2021 and March 28, 2020. The unaudited pro forma financial information presents the combined results of operations as if the acquisition and related financing of Smart Foodservice had occurred as of December 30, 2018, which date represents the first day of the Company’s fiscal year prior to the Smart Foodservice acquisition date.

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Pro forma net sales	$	6,295	$	6,625
Pro forma net loss available to common shareholders	$	(39)	$	(106)
Pro forma net loss per share:
Basic	$	(0.18)	$	(0.48)
Diluted	$	(0.18)	$	(0.48)

XML

Allowance for Doubtful Accounts (Tables)

3 Months Ended

Apr. 03, 2021

Receivables [Abstract]

Allowance for doubtful accounts

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

Balance as of January 2, 2021	$	67
Reversed from costs and expenses	(12)
Customer accounts written off—net of recoveries	(4)
Balance as of April 3, 2021	$	51

XML

Goodwill and Other Intangibles (Tables)

3 Months Ended

Apr. 03, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Other Intangibles, Net

Goodwill and other intangibles—net consisted of the following:  

	April 3, 2021		January 2, 2021
Goodwill	$	5,625	$	5,637
Other intangibles—net
Customer relationships—amortizable:
Gross carrying amount	$	704	$	725
Accumulated amortization	(113)		(119)
Net carrying value	591		606
Trade names—amortizable:
Gross carrying amount	1		15
Accumulated amortization	—		(11)
Net carrying value	1		4
Noncompete agreements—amortizable:
Gross carrying amount	3		3
Accumulated amortization	(2)		(2)
Net carrying value	1		1
Brand names and trademarks—not amortizing	281		281
Total other intangibles—net	$	874	$	892

XML

Fair Value Measurements (Tables)

3 Months Ended

Apr. 03, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets and Liabilities

The Company’s assets and liabilities measured at fair value on a recurring basis as of April 3, 2021 and January 2, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:

	April 3, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	690	$	—	$	—	$	690
Liabilities
Interest rate swaps	$	—	$	3	$	—	$	3
	January 2, 2021
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	696	$	—	$	—	$	696
Liabilities
Interest rate swaps	$	—	$	5	$	—	$	5

Schedule of Derivative Instruments in Statement of Financial Position

The following table presents the balance sheet location and fair value of the interest rate swaps as of April 3, 2021 and January 2, 2021:

		Fair Value
	Balance Sheet Location	April 3, 2021		January 2, 2021
Derivatives designated as hedging instruments
Interest rate swaps	Accrued expenses and    other current liabilities	$	3	$	5
	Total liabilities	$	3	$	5

Schedule of Derivative Instruments, effect on OCI [Table Text Block]

The following table presents the effect of the Company’s interest rate swaps in its Consolidated Statements of Comprehensive Income for the 13 weeks ended April 3, 2021 and March 28, 2020:

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in Accumulated Other Comprehensive Loss, net of tax		Location of Amounts Reclassified from Accumulated Other Comprehensive Loss	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax
For the 13 weeks ended April 3, 2021
Interest rate swaps	$	—	Interest expense—net	$	2
For the 13 weeks ended March 28, 2020
Interest rate swaps	$	(6)	Interest expense—net	$	—

XML

Debt (Tables)

3 Months Ended

Apr. 03, 2021

Debt Disclosure [Abstract]

Components of total debt

Total debt consisted of the following:

Debt Description	Maturity	Interest Rate as of April 3, 2021	Carrying Value as of April 3, 2021		Carrying Value as of January 2, 2021
ABL Facility	May 31, 2024	—%	$	—	$	—
Initial Term Loan Facility (net of $2 and $3 of unamortized deferred financing costs, respectively)	June 27, 2023	1.86%	2,093		2,098
2019 Incremental Term Loan Facility (net of $29       and $30 of unamortized deferred financing       costs, respectively)	September 13, 2026	2.11%	1,449		1,451
2020 Incremental Term Loan Facility (net of $11       of unamortized deferred financing costs)(1)	April 24, 2025	—%	—		284
Senior Secured Notes (net of $12 and $13 of       unamortized deferred financing costs)	April 15, 2025	6.25%	988		987
Unsecured Senior Notes due 2024 (net of $3 of       unamortized deferred financing costs)(1)	June 15, 2024	—%	—		597
Unsecured Senior Notes due 2029 (net of $9 of       unamortized deferred financing costs)	February 15, 2029	4.75%	891		—
Obligations under financing leases	2021–2031	1.63% - 6.10%	309		323
Other debt	2021–2031	5.75% - 9.00%	8		8
Total debt			5,738		5,748
Current portion of long-term debt			(122)		(131)
Long-term debt			$	5,616	$	5,617

(1)    The 2020 Incremental Term Loan Facility and Unsecured Senior Notes due 2024 were paid in full on February 4, 2021 with the issuance of the Unsecured Senior Notes due 2029 and subsequently terminated as further discussed below. The related unamortized deferred financing costs were written off in connection with the terminations.

XML

Retirement Plans (Tables)

3 Months Ended

Apr. 03, 2021

Retirement Benefits [Abstract]

Schedule of Components of Net Periodic Benefit (Credit) Costs

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Components of net periodic pension benefit credits
Service cost	$	1	$	1
Interest cost	7		7
Expected return on plan assets	(14)		(13)
Net periodic pension benefit credits	$	(6)	$	(5)

XML

Earnings Per Share (Tables)

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted EPS

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

	13 Weeks Ended
	April 3, 2021		March 28, 2020
Numerator:
Net loss	$	(24)	$	(132)
Series A convertible preferred stock dividends (1)	15		—
Net loss available to common shareholders	$	(39)	$	(132)
Denominator:
Weighted-average common shares outstanding	221		219
Effect of dilutive securities	—		—
Effect of dilutive underlying shares of the Series A convertible preferred stock	—		—
Weighted-average dilutive shares outstanding	221		219
Net loss per share
Basic	$	(0.18)	$	(0.60)
Diluted	$	(0.18)	$	(0.60)

(1)    Preferred stock dividends for the first quarter of 2021 were declared on March 23, 2021 and were paid in kind on March 31, 2021.

XML

Convertible Preferred Stock (Tables)

3 Months Ended

Apr. 03, 2021

Convertible Preferred Stock [Abstract]

Preferred Stock

The following table summarizes the activity for the outstanding Series A convertible preferred stock and associated carrying value for the 13 weeks ended April 3, 2021 was as follows:

	Series A Convertible Preferred Stock
	Shares	Carrying Value
Balance, January 2, 2021	523,127	$	519
Shares issued as paid in kind dividend	9,154	15
Balance April 3, 2021	532,281	$	534

XML

Changes in Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Apr. 03, 2021

Equity [Abstract]

Schedule of 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 3, 2021		March 28, 2020
Accumulated other comprehensive loss components
Retirement benefit obligations:
Balance as of beginning of period (1)	$	(29)	$	(52)
Reclassification adjustments:
Amortization of net loss(2) (3)	—		—
Total before income tax	—		—
Income tax provision	—		—
Current period comprehensive income, net of tax	—		—
Balance as of end of period(1)	$	(29)	$	(52)
Interest rate swaps:
Balance as of beginning of period (1)	$	(5)	$	(2)
Change in fair value of interest rate swaps	—		(8)
Amounts reclassified to interest expense—net	2		—
Total before income tax	2		(8)
Income tax benefit	—		(2)
Current period comprehensive income (loss), net of tax	2		(6)
Balance as of end of period(1)	$	(3)	$	(8)
Accumulated other comprehensive loss as of end of period(1)	$	(32)	$	(60)

(1)    Amounts are presented net of tax.

(2)    Included in the computation of net periodic benefit costs. See Note 12, Retirement Plans, for additional information.

(3)    Included in other income (expense)—net in the Company's Consolidated Statements of Comprehensive Income.

XML

Overview and Basis of Presentation (Detail)	3 Months Ended
	Apr. 03, 2021 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of business segments	1

XML

Schedule of Disaggregation of Revenue (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 6,295	$ 6,339
Meats and seafood
Disaggregation of Revenue [Line Items]
Net sales	2,262	2,226
Dry grocery products
Disaggregation of Revenue [Line Items]
Net sales	1,093	1,092
Refrigerated and frozen grocery products
Disaggregation of Revenue [Line Items]
Net sales	994	1,047
Dairy
Disaggregation of Revenue [Line Items]
Net sales	622	648
Equipment, disposables and supplies
Disaggregation of Revenue [Line Items]
Net sales	693	629
Beverage products
Disaggregation of Revenue [Line Items]
Net sales	324	344
Produce
Disaggregation of Revenue [Line Items]
Net sales	$ 307	$ 353

XML

Revenue Recognition - Additional Information (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Disaggregation of Revenue [Line Items]
Accounts receivable, less allowances	$ 1,354	$ 1,084
Prepaid expenses
Disaggregation of Revenue [Line Items]
Contract assets	30	30
Other assets
Disaggregation of Revenue [Line Items]
Contract assets	$ 29	$ 27

XML

Business Acquisitions Smart Foodservice - Additional Information (Details) - USD ($) $ in Millions		3 Months Ended
	Apr. 24, 2020	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Business Acquisition [Line Items]
Total debt		$ 5,738		$ 5,748
Smart Foodservice
Business Acquisition [Line Items]
Acquisition of businesses—net of cash	$ 972
Acquisition related costs		4	$ 10
Senior secured term loan facility | 2020 Term Loan Facility
Business Acquisition [Line Items]
Total debt	$ 700	$ 0		$ 284

XML

Business Acquisitions Smart Foodservice - Purchase Price Allocation (Details) - USD ($) $ in Millions		3 Months Ended
	Apr. 24, 2020	Apr. 03, 2021	Jan. 02, 2021
Business Acquisition [Line Items]
Goodwill		$ 5,625	$ 5,637
Smart Foodservice
Business Acquisition [Line Items]
Accounts receivable		5
Inventories		43
Other current assets		24
Property and equipment		84
Goodwill		895
Other intangibles		14
Other assets		145
Accounts payable		(38)
Accrued expenses and other current liabilities		(32)
Deferred income taxes		(8)
Other long-term liabilities, including financing leases		(160)
Cash paid for acquisition		$ 972
Trade Names | Smart Foodservice
Business Acquisition [Line Items]
Amortizable trade name	$ 14
Minimum
Business Acquisition [Line Items]
Estimated useful lives of intangible assets (in years)		1 year
Minimum | Trade Names
Business Acquisition [Line Items]
Estimated useful lives of intangible assets (in years)		1 year

XML

Business Acquisitions Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Business Acquisitions Pro Forma Information [Abstract]
Pro forma net sales	$ 6,295	$ 6,625
Pro forma net loss available to common shareholders	$ (39)	$ (106)
Pro forma basic earnings per share (per share)	$ (0.18)	$ (0.48)
Pro forma diluted earnings per share (per share)	$ (0.18)	$ (0.48)

XML

Inventories (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Inventory Disclosure [Abstract]
LIFO balance sheet reserves	$ 198		$ 177
Increase (decrease) of cost of goods sold from changes in LIFO reserves	$ 21	$ (13)

XML

Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Schedule Of Financial Receivables [Line Items]
(Benefit) provision for doubtful accounts	$ (12)	$ 180
Allowances for vendor receivables	7		$ 5
SEC Schedule, 12-09, Allowance, Credit Loss
Schedule Of Financial Receivables [Line Items]
Allowance for doubtful accounts	67
(Benefit) provision for doubtful accounts	(12)
Customer accounts written off—net of recoveries	(4)
Allowance for doubtful accounts	$ 51

XML

Property and Equipment (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, accumulated depreciation	$ 2,649		$ 2,566
Depreciation expense	$ 82	$ 82
Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life (years)	3 years
Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life (years)	40 years

XML

Goodwill and Other Intangibles - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Other Intangible Assets [Line Items]
Amortization expense	$ 19	$ 19
Trade Names
Other Intangible Assets [Line Items]
Indefinite-lived intangible assets, impairment			$ 9
Minimum
Other Intangible Assets [Line Items]
Estimated useful lives of intangible assets (in years)	1 year
Maximum
Other Intangible Assets [Line Items]
Estimated useful lives of intangible assets (in years)	15 years

XML

Goodwill and Other Intangibles - Schedule of Goodwill and Other Intangibles, Net (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Other intangibles—net
Goodwill	$ 5,625	$ 5,637
Total other intangibles—net	874	892
Brand Names and Trademarks
Other intangibles—net
Brand names and trademarks—not amortizing	281	281
Customer Relationships
Other intangibles—net
Gross carrying amount	704	725
Accumulated amortization	(113)	(119)
Net carrying value	591	606
Trade Names
Other intangibles—net
Gross carrying amount	1	15
Accumulated amortization	0	(11)
Net carrying value	1	4
Noncompete Agreements
Other intangibles—net
Gross carrying amount	3	3
Accumulated amortization	(2)	(2)
Net carrying value	$ 1	$ 1

XML

Schedule of Fair Value Assets and Liabilities (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Assets
Money market funds	$ 690	$ 696
Liabilities
Interest rate swaps	3	5
Level 1
Assets
Money market funds	690	696
Liabilities
Interest rate swaps	0	0
Level 2
Assets
Money market funds	0	0
Liabilities
Interest rate swaps	3	5
Level 3
Assets
Money market funds	0	0
Liabilities
Interest rate swaps	$ 0	$ 0

XML

Fair Value Measurements - Schedule of Interest Rate Swaps (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps	$ 3	$ 5
Designated as Hedging Instrument [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps	3	5
Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swaps	$ 3	$ 5

XML

Fair Value Measurements - Schedule of Interest Rate Swaps in Comprehensive Income (Detail) - Cash Flow Hedging - Interest rate swap - Interest expense—net - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Loss Recognized in Accumulated Other Comprehensive Loss, net of tax	$ 0	$ (6)
Amount of Loss Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax	$ 2	$ 0

XML

Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Feb. 04, 2021	Jan. 02, 2021	Jul. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash flow hedge gain (loss) to be reclassified within twelve months	$ 3
Senior secured term loan facility | Initial Term Loan Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (percent)	1.86%
Senior secured term loan facility | Interest rate swap | Initial Term Loan Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative notional amount				$ 733
Notional amount of debt hedged, fourth year	$ 550
Aggregate rate on notional amount (percent)	3.45%
Variable rate on notional amount (percent)	1.70%
Basis spread on variable rate on notional amount (percent)	1.75%
Senior notes | Senior Secured Notes due 2025
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (percent)	6.25%
Senior notes | Unsecured Senior Notes due 2029
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (percent)	4.75%	4.75%
Senior notes | Senior Notes due 2024
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate (percent)	0.00%		5.875%
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Approximated fair value of debt	$ 5,800		$ 5,800
Fair Value | Senior notes | Senior Secured Notes due 2025 | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Approximated fair value of debt	1,100		1,100
Fair Value | Senior notes | Unsecured Senior Notes due 2029 | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Approximated fair value of debt	900
Fair Value | Senior notes | Senior Notes due 2024 | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Approximated fair value of debt			600
Carrying value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Approximated fair value of debt	$ 5,700		$ 5,700

XML

Debt - Schedule of Components of Total Debt (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Feb. 04, 2021	Jan. 02, 2021	Apr. 24, 2020
Debt Instrument [Line Items]
Total debt	$ 5,738		$ 5,748
Current portion of long-term debt	(122)		(131)
Long-term debt	$ 5,616		5,617
Revolving credit facility | ABL Facility
Debt Instrument [Line Items]
Interest rate (percent)	0.00%
Total debt	$ 0		0
Senior secured term loan facility | Initial Term Loan Facility
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 2		3
Interest rate (percent)	1.86%
Total debt	$ 2,093		2,098
Senior secured term loan facility | 2019 Term Loan Facility
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 29		30
Interest rate (percent)	2.11%
Total debt	$ 1,449		1,451
Senior secured term loan facility | 2020 Term Loan Facility
Debt Instrument [Line Items]
Unamortized deferred financing costs			11
Interest rate (percent)	0.00%
Total debt	$ 0		284	$ 700
Senior notes | Senior Secured Notes due 2025
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 12		13
Interest rate (percent)	6.25%
Total debt	$ 988		987
Senior notes | Senior Notes due 2024
Debt Instrument [Line Items]
Unamortized deferred financing costs			$ 3
Interest rate (percent)	0.00%		5.875%
Total debt	$ 0		$ 597
Senior notes | Unsecured Senior Notes due 2029
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 9		0
Interest rate (percent)	4.75%	4.75%
Total debt	$ 891		0
Lease agreements | Obligations under financing leases
Debt Instrument [Line Items]
Total debt	$ 309		323
Lease agreements | Obligations under financing leases | Minimum
Debt Instrument [Line Items]
Interest rate (percent)	1.63%
Lease agreements | Obligations under financing leases | Maximum
Debt Instrument [Line Items]
Interest rate (percent)	6.10%
Other debt obligations | Other debt
Debt Instrument [Line Items]
Total debt	$ 8		$ 8
Other debt obligations | Other debt | Minimum
Debt Instrument [Line Items]
Interest rate (percent)	5.75%
Other debt obligations | Other debt | Maximum
Debt Instrument [Line Items]
Interest rate (percent)	9.00%

XML

Debt - Additional Information (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Total debt	$ 5,738	$ 5,748
Percentage of principal amount of total debt borrowed at floating rate (percent)	52.00%
Initial Term Loan Facility | Senior secured term loan facility
Debt Instrument [Line Items]
Total debt	$ 2,093	$ 2,098
Initial Term Loan Facility | Interest rate swap | Senior secured term loan facility
Debt Instrument [Line Items]
Total debt	$ 550

XML

Debt - ABL Facility (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Total debt	$ 5,738	$ 5,748
Revolving credit facility | ABL Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	1,990
Total debt	0	$ 0
Letters of credit, outstanding amount	279
Available capacity	$ 1,711
Revolving credit facility | ABL Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	1.00%
Revolving credit facility | ABL Facility | Alternative Base Rate
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	0.00%
Revolving credit facility | ABL Facility | Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	1.00%
Revolving credit facility | ABL Facility | Minimum | Alternative Base Rate
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	0.00%
Revolving credit facility | ABL Facility | Maximum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	1.50%
Revolving credit facility | ABL Facility | Maximum | Alternative Base Rate
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	0.50%

XML

Debt - Term Loan Agreement (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Total debt	$ 5,738	$ 5,748
Senior secured term loan facility | Initial Term Loan Facility
Debt Instrument [Line Items]
Total debt	2,093	2,098
Unamortized deferred financing costs	2	3
Senior secured term loan facility | Initial Term Loan Facility | Interest rate swap
Debt Instrument [Line Items]
Total debt	$ 550
Aggregate interest rate (percent)	3.45%
Senior secured term loan facility | 2019 Term Loan Facility
Debt Instrument [Line Items]
Total debt	$ 1,449	1,451
Unamortized deferred financing costs	$ 29	$ 30
Senior secured term loan facility | 2019 Term Loan Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	2.00%
Senior secured term loan facility | 2019 Term Loan Facility | Alternative Base Rate
Debt Instrument [Line Items]
Margin spread on variable rate (percent)	1.00%

XML

Debt Debt - Secured Notes (Detail) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Total debt	$ 5,738	$ 5,748
Senior notes | Senior Secured Notes due 2025
Debt Instrument [Line Items]
Total debt	988	987
Unamortized deferred financing costs	$ 12	$ 13

XML

Debt - Unsecured Senior Notes Due 2029 (Detail) - USD ($) $ in Millions		3 Months Ended
	Feb. 04, 2021	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Debt Instrument [Line Items]
Loss on extinguishment of debt		$ 23	$ 0
Total debt		$ 5,738		$ 5,748
Unsecured Senior Notes due 2029 | Senior notes
Debt Instrument [Line Items]
Debt instrument original amount	$ 900
Interest rate (percent)	4.75%	4.75%
Loss on extinguishment of debt		$ 23
Write off of Pre-Existing Unamortized Deferred Financing Cost		14
Early Redemption Premium		9
Unamortized deferred financing costs		9		0
Total debt		$ 891		$ 0
Unsecured Senior Notes due 2029 | Senior notes | Debt redemption, period one
Debt Instrument [Line Items]
Debt instrument redemption price (percent)	102.375%
Unsecured Senior Notes due 2029 | Senior notes | Debt redemption, period two
Debt Instrument [Line Items]
Debt instrument redemption price (percent)	101.188%
Unsecured Senior Notes due 2029 | Senior notes | Debt redemption, period three (percent)
Debt Instrument [Line Items]
Debt instrument redemption price (percent)	100.00%
Unsecured Senior Notes due 2029 | Senior notes | Third party costs
Debt Instrument [Line Items]
Unamortized deferred financing costs	$ 9

XML

Debt - Restrictive Covenants (Detail) $ in Billions	Apr. 03, 2021 USD ($)
Debt Disclosure [Abstract]
Restricted payment capacity	$ 1.3
Restricted assets	$ 2.7

XML

Restructuring Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring Costs	$ 3	$ 0
Restructuring Reserve	4		$ 2
Severance and Related Costs and Facility Closing Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Costs	$ 3

XML

Retirement Plans - Components of Net Periodic Benefit Costs (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Retirement Benefits [Abstract]
Service cost	$ 1	$ 1
Interest cost	7	7
Expected return on plan assets	(14)	(13)
Net periodic pension benefit credits	$ (6)	$ (5)

XML

Retirement Plans - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Apr. 24, 2020
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution	$ 13	$ 14
Multiemployer plan contributions	$ 10	$ 12
Smart Foodservice
Defined Benefit Plan Disclosure [Line Items]
Smart Foodservice Net Benefit Obligation			$ 19

XML

Schedule of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Numerator:
Net loss	$ (24)	$ (132)
Series A convertible preferred stock dividends	15	0
Net loss available to common shareholders	$ (39)	$ (132)
Denominator:
Weighted-average common shares outstanding	221	219
Effect of dilutive securities	0	0
Effect of dilutive underlying shares of the Series A convertible preferred stock	0	0
Weighted-average dilutive shares outstanding	221	219
Basic	$ (0.18)	$ (0.60)
Diluted	$ (0.18)	$ (0.60)

XML

Earnings Per Share Other Information (Details) - shares shares in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Common shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	9	10
Series A Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	24

XML

Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended
	Mar. 31, 2021	May 06, 2020	Apr. 03, 2021	Jan. 02, 2021
Convertible Preferred Stock [Abstract]
Preferred stock, Number of shares issued		500,000	500,000	500,000
Preferred stock par value (dollars per share)		$ 0.01	$ 0.01	$ 0.01
Proceeds from Issuance of Preferred Stock and Preference Stock		$ 500
Preferred Stock Per Share Proceeds		$ 1,000
Preferred Stock Dividends, Shares	9,154,000		9,154
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Preferred Stock, Shares Outstanding, Beginning Balance			523,127
Preferred Stock Dividends, Shares	9,154,000		9,154
Preferred Stock, Shares Outstanding, Ending Balance			532,281
Preferred Stock, Value, Outstanding, Beginning Balance			$ 519
Dividends, Preferred Stock			15
Preferred Stock, Value, Outstanding, Ending Balance			$ 534

XML

Changes in Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 3,530	$ 3,709
Balance at end of period	3,500	3,582
Retirement benefit obligations
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(29)	(52)
Total before income tax	0	0
Income tax benefit	0	0
Current period comprehensive income (loss), net of tax	0	0
Balance at end of period	(29)	(52)
Amortization of net loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	0	0
Interest rate swap
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(5)	(2)
Change in fair value of interest rate swaps	0	(8)
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	2	0
Total before income tax	2	(8)
Income tax benefit	0	(2)
Current period comprehensive income (loss), net of tax	2	(6)
Balance at end of period	(3)	(8)
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(34)	(54)
Balance at end of period	$ (32)	$ (60)

XML

Related Party Transactions - Additional Information (Detail) - KKR Capital Markets LLC $ in Millions	3 Months Ended
	Apr. 03, 2021 USD ($)
Related Party Transaction [Line Items]
Payments of Debt Restructuring Costs	$ 1
Long-term Debt [Member]
Related Party Transaction [Line Items]
Principal amount	$ 60

XML

Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Income Tax Disclosure [Abstract]
Effective tax rate (percent)	43.00%	23.00%
Federal corporate income tax rate (percent)	21.00%	21.00%
Tax benefit related to excess tax benefits associated with share-based compensation	$ 6
Tax expense related to a change in valuation allowance		$ 3

XML

Commitments and Contingencies - Additional Information (Detail) $ in Millions	Apr. 03, 2021 USD ($)
Purchase orders and contract commitments
Unrecorded Unconditional Purchase Obligation [Line Items]
Purchase commitments	$ 1,523
Information technology commitments
Unrecorded Unconditional Purchase Obligation [Line Items]
Purchase commitments	67
Diesel fuel
Unrecorded Unconditional Purchase Obligation [Line Items]
Purchase commitments	38
Electricity [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
Purchase commitments	$ 5

XML

Business Information - Additional Information (Detail)	3 Months Ended
	Apr. 03, 2021 segment
Segment Reporting [Abstract]
Number of business segments	1