usfd-20220402

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 2, 2022

☐ 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 ☒

223,891,807 shares of the registrant’s common stock were outstanding as of May 6, 2022.

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;
• our reputation in the industry;
• indebtedness and restrictions under agreements governing our 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 increased labor 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;
• KKR’s interests may not align with our other shareholders;
• actions of activist shareholders could adversely impact our business;
• changes in tax laws and regulations and resolution of tax disputes;
• adverse judgments or settlements resulting from litigation;
• extreme weather conditions, natural disasters and other catastrophic events, including pandemics and the rapid spread of contagious illnesses; 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 1, 2022 (the “2021 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 and contained elsewhere in this Quarterly Report. 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 2, 2022 and January 1, 2022	1
	Consolidated Statements of Comprehensive Income for the 13 weeks ended April 2, 2022 and April 3, 2021	2
	Consolidated Statements of Shareholders’ Equity for the 13 weeks ended April 2, 2022 and April 3, 2021	3
	Consolidated Statements of Cash Flows for the 13 weeks ended April 2, 2022 and April 3, 2021	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24

Part II. Other Information
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25

Signatures		26

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


US FOODS HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value)

	April 2, 2022		January 1, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	190	$	148
Accounts receivable, less allowances of $33 and $33	1,658		1,469
Vendor receivables, less allowances of $11 and $7	199		145
Inventories—net	1,826		1,686
Prepaid expenses	148		120
Assets held for sale	8		8
Other current assets	21		18
Total current assets	4,050		3,594
Property and equipment—net	2,022		2,033
Goodwill	5,625		5,625
Other intangibles—net	819		830
Deferred tax assets	9		8
Other assets	435		431
Total assets	$	12,960	$	12,521
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft liability	$	214	$	183
Accounts payable	2,077		1,662
Accrued expenses and other current liabilities	635		610
Current portion of long-term debt	103		95
Total current liabilities	3,029		2,550
Long-term debt	4,890		4,916
Deferred tax liabilities	312		307
Other long-term liabilities	473		479
Total liabilities	8,704		8,252
Commitments and contingencies (Note 17)
Mezzanine equity:
Series A convertible preferred stock, $0.01 par value—25 shares authorized; 0.5 issued and outstanding as of April 2, 2022 and January 1, 2022	534		534
Shareholders’ equity:
Common stock, $0.01 par value—600 shares authorized; 224 and 223 issued and outstanding as of April 2, 2022 and January 1, 2022, respectively	2		2
Additional paid-in capital	2,973		2,970
Retained earnings	766		782
Accumulated other comprehensive loss	(19)		(19)
Total shareholders’ equity	3,722		3,735
Total liabilities, mezzanine equity and shareholders’ equity	$	12,960	$	12,521

See Notes to Consolidated Financial Statements (Unaudited).


US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per share data)

	13 Weeks Ended
		April 2, 2022		April 3, 2021
Net sales		$	7,798	$	6,295
Cost of goods sold		6,603		5,292
Gross profit		1,195		1,003
Operating expenses:
Distribution, selling and administrative costs		1,161		972
Restructuring costs and asset impairment charges		—		3
Total operating expenses		1,161		975
Operating income		34		28
Other income—net		(6)		(7)
Interest expense—net		55		54
Loss on extinguishment of debt		—		23
Loss before income taxes		(15)		(42)
Income tax benefit		(8)		(18)
Net loss		(7)		(24)
Other comprehensive loss—net of tax:
Changes in retirement benefit obligations		—		—
Recognition of interest rate swaps		—		2
Comprehensive loss		$	(7)	$	(22)
Net loss		$	(7)	$	(24)
Series A convertible preferred stock dividends		(9)		(15)
Net loss available to common shareholders		$	(16)	$	(39)
Net loss per share
Basic (Note 12)		$	(0.07)	$	(0.18)
Diluted (Note 12)		$	(0.07)	$	(0.18)
Weighted-average common shares outstanding
Basic (Note 12)		223		221
Diluted (Note 12)		223		221

See Notes to Consolidated Financial Statements (Unaudited).


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 1, 2022	223	$	2	$	2,970	$	782	$	(19)	$	3,735
Share-based compensation expense	—	—		12		—		—		12
Proceeds from employee stock purchase plan	—	—		5		—		—		5
Vested restricted stock units, net	1	—		—		—		—		—
Exercise of stock options	—	—		2		—		—		2
Tax withholding payments for net share-settled equity awards	—	—		(16)		—		—		(16)
Series A convertible preferred stock dividends	—	—		—		(9)		—		(9)
Net Loss	—	—		—		(7)		—		(7)
BALANCE—April 2, 2022	224	$	2	$	2,973	$	766	$	(19)	$	3,722


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

See Notes to Consolidated Financial Statements (Unaudited).


US FOODS HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
	13 Weeks Ended
	April 2, 2022		April 3, 2021
Cash flows from operating activities:
Net loss	$	(7)	$	(24)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	89		101
Gain on disposal of property and equipment—net	(1)		—
Loss on extinguishment of debt	—		23
Amortization of deferred financing costs	3		3
Deferred tax provision (benefit)	4		(4)
Share-based compensation expense	12		10
Provision (benefit) for doubtful accounts	—		(12)
Changes in operating assets and liabilities:
Increase in receivables	(243)		(315)
Increase in inventories—net	(140)		(178)
Increase in prepaid expenses and other assets	(37)		(25)
Increase in accounts payable and cash overdraft liability	463		555
Increase in accrued expenses and other liabilities	15		42
Net cash provided by operating activities	158		176
Cash flows from investing activities:
Proceeds from sales of property and equipment	2		—
Purchases of property and equipment	(72)		(46)
Net cash used in investing activities	(70)		(46)
Cash flows from financing activities:
Proceeds from debt borrowings	103		900
Principal payments on debt and financing leases	(131)		(926)
Dividends paid on Series A convertible preferred stock	(9)		—
Debt financing costs and fees	—		(18)
Proceeds from employee stock purchase plan	5		5
Proceeds from exercise of stock options	2		4
Tax withholding payments for net share-settled equity awards	(16)		(12)
Net cash used in financing activities	(46)		(47)
Net increase in cash, and cash equivalents and restricted cash	42		83
Cash, cash equivalents and restricted cash—beginning of period	148		829
Cash, cash equivalents and restricted cash—end of period	$	190	$	912
Supplemental disclosures of cash flow information:
Interest paid—net of amounts capitalized	$	37	$	33
Income taxes paid—net	1		—
Property and equipment purchases included in accounts payable	29		23
Property and equipment transferred to assets held for sale	—		9
Leased assets obtained in exchange for financing lease liabilities	7		7
Leased assets obtained in exchange for operating lease liabilities	7		8
Cashless exercise of stock options	1		—
Paid-in-kind Series A convertible preferred stock dividends	—		15

See Notes to Consolidated Financial Statements (Unaudited).

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 9, Debt, is a direct obligation of USF and its subsidiaries.

Business Description—The Company, through USF, operates in one business segment in which it markets and distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the United States (“U.S.”). 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 years 2022 and 2021 are both 52-week fiscal years.

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 2021 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 any other interim period or the full fiscal year.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted 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. The Company adopted the provisions of ASU No. 2020-06 at the beginning of the first quarter of fiscal year 2022, with no impact on our financial position, results of operations, cash flows or diluted earnings per share reporting.

In October 2021, the FASB issued ASU No. 2021-08 Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification (“ASC”) 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606). The guidance is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and is to be applied prospectively to business combinations occurring on or after adoption of the new guidance. The Company adopted the provisions of ASU No. 2021-08 at the beginning of the first quarter of fiscal year 2022, with no impact on our financial position, results of operations or 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 2, 2022 or January 1, 2022. Customer receivables, which are included in accounts receivable, less allowances in the Company’s Consolidated Balance Sheets, were $1.7 billion and $1.5 billion as of April 2, 2022 and January 1, 2022, 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 $27 million included in prepaid expenses in the Company’s Consolidated Balance Sheets as of both April 2, 2022 and January 1, 2022, and $28 million and $26 million included in other assets in the Company’s Consolidated Balance Sheets as of April 2, 2022 and January 1, 2022 respectively.

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


	13 Weeks Ended
		April 2, 2022		April 3, 2021
Meats and seafood		$	2,950	$	2,262
Dry grocery products		1,333		1,093
Refrigerated and frozen grocery products		1,179		994
Dairy		761		622
Equipment, disposables and supplies		811		693
Beverage products		376		324
Produce		388		307
Total Net sales		$	7,798	$	6,295

4. 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. 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 $414 million and $342 million as of April 2, 2022 and January 1, 2022, respectively. As a result of changes in LIFO reserves, cost of goods sold increased $72 million and $21 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

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

Due to the impact that the COVID-19 pandemic was expected to have on our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020. Since that initial charge in 2020, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts for by $12 million the 13 weeks ended April 3, 2021. Activity in the allowance for doubtful accounts for the 13 weeks ended April 2, 2022 was de minimis.

A summary of the activity in the allowance for doubtful accounts for the 13 weeks ended April 2, 2022 and April 3, 2021 was as follows:


	April 2, 2022		April 3, 2021
Balance as of beginning of year	$	33	$	67
Charged (benefit) to costs and expenses, net	—		(12)
Customer accounts written off—net of recoveries	—		(4)
Balance as of end of period	$	33	$	51

This table excludes the vendor receivable related allowance for doubtful accounts of $11 million and $7 million as of April 2, 2022 and January 1, 2022, respectively.

6. 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 2, 2022 and January 1, 2022, property and equipment-net included accumulated depreciation of $2,788 million and $2,722 million, respectively. Depreciation expense was $78 million and $82 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

7. 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 their estimated useful lives (which range from approximately 3 to 15 years). Amortization expense was $11 million and $19 million for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

Goodwill and other intangibles—net consisted of the following:


	April 2, 2022		January 1, 2022
Goodwill	$	5,625	$	5,625
Other intangibles—net
Customer relationships—amortizable:
Gross carrying amount	$	655	$	655
Accumulated amortization	(110)		(99)
Net carrying value	545		556
Trade names—amortizable:
Gross carrying amount	4		4
Accumulated amortization	(1)		(1)
Net carrying value	3		3
Brand names and trademarks—not amortizing	271		271
Total other intangibles—net	$	819	$	830

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. No impairments were recognized for the 13 weeks ended April 2, 2022 and April 3, 2021, respectively.

8. FAIR VALUE MEASUREMENTS

Certain assets and liabilities are carried at fair value under GAAP, 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

SEC Form 10-Q filed by US Foods Holding Corp.