UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~Form10-Q~~

Form 10-Q

(Mark One)

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

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

For the quarterly period ended December 30, ~~2017~~2023

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

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

For the transition period fromto ___________

Commission File Number001-37578

Performance Food Group Company

(Exact name of registrant as specified in its charter)


Delaware		43-1983182
(State or other jurisdiction of incorporation or organization)		(IRS employer identification number)

12500 West Creek Parkway Richmond, Virginia23238		~~23238~~ (804) 484-7700
(Address of principal executive offices)		(~~Zip Code)~~Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

~~(804)484-7700~~


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PFGC	New York Stock Exchange

~~(Registrant’s Telephone Number, Including Area Code)~~

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

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 Rule12b-2 of the Exchange Act). Yes ☐ No ☒

~~104,000,540~~155,585,868 shares of common stock were outstanding as of ~~February 1, 2018.~~January 31, 2024.

TABLE OF CONTENTS


							Page
					~~Page~~
Special Note Regarding Forward-Looking Statements				3

PART I - FINANCIAL INFORMATION				5

~~Item 1.~~			~~Financial Statements~~			5

Item 1.	Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
		20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk			33

~~Item 4.~~	~~Controls and Procedures~~			33

Item 4.	Controls and Procedures	33

PART II - OTHER INFORMATION				34

~~Item 1.~~			~~Legal Proceedings~~			34

Item ~~1A.~~1.	~~Risk Factors~~Legal Proceedings			34


Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			34


Item 3.	Defaults Upon Senior Securities			34

~~Item 4.~~	~~Mine Safety Disclosures~~			34

~~Item 5.~~	~~Other Information~~			34

~~Item 6.~~	~~Exhibits~~			35

~~SIGNATURE~~Item 4.	Mine Safety Disclosures	36 34

Item 5.	Other Information	34

Item 6.	Exhibits	35

SIGNATURE		36

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form10-Q (this “Form10-Q”) may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position, ~~and~~ our business outlook, business trends and other information ~~may be~~are forward-looking statements. Words such as “estimates,” “expects,” “contemplates,” “will,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates, ~~and~~ projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, ~~we cannot assure you~~there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved, and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under Part I, Item 1A. Risk Factors in ~~the Company’s~~our Annual Report on Form10-K for the fiscal year ended July 1, ~~2017 and Quarterly Report on Form10-Q~~ ~~for the fiscal quarter ended September 30, 2017,~~2023 (the “Form 10-K”), as such risk factors may be updated from time to time in our periodic filings with the ~~SEC,~~Securities and Exchange Commission (the “SEC”), and are accessible on the SEC’s website atwww.sec.gov, and also include the following:

•

economic factors, including inflation or other adverse changes such as a downturn in economic conditions or a public health crisis, negatively affecting consumer confidence and discretionary spending;

•

our reliance on third-party suppliers;

•

labor relations and cost risks and availability of qualified labor;

•

costs and risks associated with a potential cybersecurity incident or other technology disruption;

•

our reliance on technology and risks associated with disruption or delay in implementation of new technology;

•

competition in our industry is intense, and we may not be able to compete successfully;

•

we operate in a low margin industry, which could increase the volatility of our results of operations;

•

we may not realize anticipated benefits from our operating cost reduction and productivity improvement efforts;

•

our profitability is directly affected by cost inflation and deflation and other factors;

•

we do not have long-term contracts with certain ~~of our~~ customers;

•

group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of these organizations;

•

changes in eating habits of consumers;

•

extreme weather ~~conditions;~~

~~our reliance on third-party suppliers;~~

~~labor relations~~conditions, including hurricane, earthquake and ~~cost risks and availability of qualified labor;~~natural disaster damage;

•

volatility of fuel and other transportation costs;

•

our inability to adjust cost structure where one or more of our competitors successfully implement lower costs;

~~we may be unable~~•

our inability to increase our sales in the highest margin portion of our business;

•

changes in pricing practices of our suppliers;

•

our growth strategy may not achieve the anticipated results;

•

risks relating to ~~any future acquisitions;~~acquisitions, including the risk that we are not able to realize benefits of acquisitions or successfully integrate the businesses we acquire;

•

environmental, health, and safety ~~costs;~~costs, including compliance with current and future environmental laws and regulations relating to carbon emissions and climate change and related legal or market measures;

~~the risk that we fail~~•

our inability to comply with requirements imposed by applicable law or government ~~regulations;~~regulations, including increased regulation of electronic cigarette and other alternative nicotine products;

•

a portion of our ~~reliance on technology~~sales volume is dependent upon the distribution of cigarettes and ~~risks associated with disruption or delay in implementation~~other tobacco products, sales of ~~new technology;~~which are generally declining;

~~costs~~•

the potential impact of product recalls and ~~risks associated with a potential cybersecurity incident or other technology disruption;~~

product liability claims relating to the products we distribute and other litigation;

•

adverse judgments or settlements or unexpected outcomes in legal proceedings;

•

negative media exposure and other events that damage our reputation;

~~anticipated multiemployer pension related liabilities and contributions to our multiemployer pension plan;~~•

decrease in earnings from amortization charges associated with acquisitions;

•

impact of uncollectibility of accounts receivable;

~~difficult economic conditions affecting consumer confidence;~~•

increase in excise taxes or reduction in credit terms by taxing jurisdictions;

~~departure of key members of senior management;~~

~~risks relating to federal, state, and local tax rules;~~

•

the cost and adequacy of insurance ~~coverage;~~coverage and increases in the number or severity of insurance and claims expenses;

•

risks relating to our substantial outstanding ~~indebtedness;~~indebtedness, including the impact of interest rate increases on our variable rate debt; and

•

our ability to ~~maintain an effective system of disclosure controls and internal control over financial reporting.~~raise additional capital on commercially reasonable terms or at all.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. We cannot assure you (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Unless this Form10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “the Company,” or “PFG” as used in this Form10-Q refer to Performance Food Group Company and its consolidated subsidiaries.

Part I – FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1.Financial Statements

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions, except per share data)	As of December 30, 2017		As of July 1, 2017		As of December 30, 2023		As of July 1, 2023
*ASSETS*
Current assets:
Cash	$	10.1	$	8.1	$	16.4	$	12.7
Accounts receivable, less allowances of $22.0 and $17.0		1,034.9		1,028.5
Accounts receivable, less allowances of $62.7 and $56.3						2,298.9		2,399.3
Inventories, net		1,043.4		1,013.3		3,342.1		3,390.0
Income taxes receivable						62.4		41.7
Prepaid expenses and other current assets		51.6		35.0		236.5		227.8

Total current assets		2,140.0		2,084.9		5,956.3		6,071.5
Goodwill		740.1		718.6		2,418.3		2,301.0
Other intangible assets, net		206.8		201.1		1,072.5		1,028.4
Property, plant and equipment, net		734.9		740.7		2,465.8		2,264.0
Restricted cash		12.9		12.9
Operating lease right-of-use assets						841.0		703.6
Other assets		47.9		45.9		158.6		130.5

Total assets	$	3,882.6	$	3,804.1	$	12,912.5	$	12,499.0

*LIABILITIES AND SHAREHOLDERS’ EQUITY*
Current liabilities:
Outstanding checks in excess of deposits	$	181.4	$	218.2
Trade accounts payable		886.9		907.1
Accrued expenses		204.8		246.0
Long-term debt—current installments		—		5.8
Capital lease obligations—current installments		7.0		5.9
Derivative liabilities		—		0.3

Trade accounts payable and outstanding checks in excess of deposits						2,423.5		2,453.5
Accrued expenses and other current liabilities						837.0		891.5
Finance lease obligations—current installments						118.8		102.6
Operating lease obligations—current installments						108.4		105.5
Total current liabilities		1,280.1		1,383.3		3,487.7		3,553.1
Long-term debt		1,358.7		1,241.9		3,502.0		3,460.1
Deferred income tax liability, net		66.0		103.0		474.7		446.2
Capital lease obligations, excluding current installments		47.4		44.0
Finance lease obligations, excluding current installments						536.1		447.3
Operating lease obligations, excluding current installments						773.1		628.9
Other long-term liabilities		114.9		106.4		277.2		217.9

Total liabilities		2,867.1		2,878.6		9,050.8		8,753.5

Commitments and contingencies (Note 9)
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common Stock
Common Stock: $0.01 par value per share, 1.0 billion shares authorized, 102.3 million shares issued and outstanding as of December 30, 2017; 1.0 billion shares authorized, 100.8 million shares issued and outstanding as of July 1, 2017		1.0		1.0
Common Stock: $0.01 par value per share, 1.0 billion shares authorized, 153.9 million shares issued and outstanding as of December 30, 2023; 154.5 million shares issued and outstanding as of July 1, 2023						1.5		1.5
Additionalpaid-in capital		842.9		855.5		2,786.5		2,863.0
Accumulated other comprehensive income, net of tax expense of $2.2 and $1.5		4.4		2.4
Accumulated other comprehensive income, net of tax expense of $2.7 and $4.9						7.7		14.0
Retained earnings		167.2		66.6		1,066.0		867.0

Total shareholders’ equity		1,015.5		925.5		3,861.7		3,745.5

Total liabilities and shareholders’ equity	$	3,882.6	$	3,804.1	$	12,912.5	$	12,499.0

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per share data)
   Three months
ended
December 30, 2017 Three months
ended
December 31, 2016 Six months
ended
December 30, 2017 Six months
ended
December 31, 2016
Net sales
   $ 4,311.1 $ 4,051.8 $ 8,676.0 $ 8,097.9
Cost of goods sold
   3,743.5 3,534.6 7,553.7 7,069.4


Gross profit
   567.6 517.2 1,122.3 1,028.5
Operating expenses
   518.5 465.9 1,022.7 945.6


Operating profit
   49.1 51.3 99.6 82.9


Other expense, net:

Interest expense
   15.1 13.6 29.7 26.5
Other, net
   (0.1 ) (0.5 ) (0.4 ) (1.3 )


Other expense, net
   15.0 13.1 29.3 25.2


Income before taxes
   34.1 38.2 70.3 57.7
Income tax (benefit) expense
   (43.9 ) 15.3 (30.3 ) 22.6


Net income
   $ 78.0 $ 22.9 $ 100.6 $ 35.1


Weighted-average common shares outstanding:

Basic
   101.4 100.1 101.2 100.0
Diluted
   104.5 102.7 104.5 102.5
Earnings per common share:

Basic
   $ 0.77 $ 0.23 $ 0.99 $ 0.35
Diluted
   $ 0.75 $ 0.22 $ 0.96 $ 0.34


(In millions, except per share data)	Three Months Ended December 30, 2023		Three Months Ended December 31, 2022			Six Months Ended December 30, 2023			Six Months Ended December 31, 2022
Net sales	$	14,295.7	$	13,898.9		$	29,234.3		$	28,618.2
Cost of goods sold		12,697.6		12,399.3			25,973.3			25,543.5
Gross profit		1,598.1		1,499.6			3,261.0			3,074.7
Operating expenses		1,424.2		1,355.6			2,870.9			2,739.5
Operating profit		173.9		144.0			390.1			335.2
Other expense, net:
Interest expense		61.4		55.7			117.5			106.1
Other, net		0.8		(7.9	)		(2.4	)		3.0
Other expense, net		62.2		47.8			115.1			109.1
Income before taxes		111.7		96.2			275.0			226.1
Income tax expense		33.4		25.1			76.0			59.3
Net income	$	78.3	$	71.1		$	199.0		$	166.8
Weighted-average common shares outstanding:
Basic		154.2		154.1			154.5			153.9
Diluted		155.7		156.1			156.2			155.9
Earnings per common share:
Basic	$	0.51	$	0.46		$	1.29		$	1.08
Diluted	$	0.50	$	0.46		$	1.27		$	1.07

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


($ in millions)	Three months ended December 30, 2017		Three months ended December 31, 2016		Six months ended December 30, 2017		Six months ended December 31, 2016		Three Months Ended December 30, 2023			Three Months Ended December 31, 2022			Six Months Ended December 30, 2023			Six Months Ended December 31, 2022
Net income	$	78.0	$	22.9	$	100.6	$	35.1	$	78.3		$	71.1		$	199.0		$	166.8
Other comprehensive income, net of tax:
Other comprehensive (loss) income, net of tax:
Interest rate swaps:
Change in fair value, net of tax		1.8		5.0		1.8		6.0		(2.8	)		1.1			(0.6	)		8.2
Reclassification adjustment, net of tax		0.2		0.7		0.2		1.5		(3.1	)		(2.0	)		(6.0	)		(2.8	)

Other comprehensive income		2.0		5.7		2.0		7.5

Foreign currency translation adjustment, net of tax										1.0			0.9			0.3			(1.5	)
Other comprehensive (loss) income										(4.9	)		-			(6.3	)		3.9
Total comprehensive income	$	80.0	$	28.6	$	102.6	$	42.6	$	73.4		$	71.1		$	192.7		$	170.7

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


																						Additional			Accumulated Other					Total
	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			(Accumulated Deficit) Retained			Total Shareholders’			Common Stock					Paid-in			Comprehensive			Retained		Shareholders’
(In millions)	Shares		Amount		Capital			Income (Loss)			Earnings			Equity			Shares			Amount		Capital			Income			Earnings		Equity
Balance as of July 2, 2016		99.9	$	1.0	$	836.8		$	(5.8	)	$	(29.2	)	$	802.8
Issuance of common stock under stock-based compensation plans		0.2		—		(0.3	)		—			—			(0.3	)
Balance as of October 1, 2022																		154.0		$	1.5	$	2,818.4		$	15.3		$	565.5	$	3,400.7
Net income		—		—		—			—			35.1			35.1			—			—		—			—			71.1		71.1
Interest rate swaps		—		—		—			7.5			—			7.5			—			—		—			(0.9	)		—		(0.9	)
Foreign currency translation adjustment																		—			—		—			0.9			—		0.9
Issuance of common stock under stock-based compensation plans																		0.1			—		0.3			—			—		0.3
Issuance of common stock under employee stock purchase plan																		0.2			—		14.3			—			—		14.3
Stock-based compensation expense		—		—		8.1			—			—			8.1			—			—		10.1			—			—		10.1
Change in accounting principle (1)		—		—		0.9			—			(0.5	)		0.4
Balance as of December 31, 2022																		154.3		$	1.5	$	2,843.1		$	15.3		$	636.6	$	3,496.5

Balance as of December 31, 2016		100.1	$	1.0	$	845.5		$	1.7		$	5.4		$	853.6

Balance as of July 1, 2017		100.8	$	1.0	$	855.5		$	2.4		$	66.6		$	925.5
Issuance of common stock under stock-based compensation plans		1.5		—		(27.1	)		—			—			(27.1	)
Balance as of September 30, 2023																		154.7		$	1.5	$	2,826.5		$	12.6		$	987.7	$	3,828.3
Net income		—		—		—			—			100.6			100.6			—			—		—			—			78.3		78.3
Interest rate swaps		—		—		—			2.0			—			2.0			—			—		—			(5.9	)		—		(5.9	)
Foreign currency translation adjustment																		—			—		—			1.0			—		1.0
Issuance of common stock under stock-based compensation plans																		—			—		0.1			—			—		0.1
Common stock repurchased																		(0.8	)		—		(50.0	)		—			—		(50.0	)
Stock-based compensation expense		—		—		14.5			—			—			14.5			—			—		9.9			—			—		9.9

Balance as of December 30, 2017		102.3	$	1.0	$	842.9		$	4.4		$	167.2		$	1,015.5

Balance as of December 30, 2023																		153.9		$	1.5	$	2,786.5		$	7.7		$	1,066.0	$	3,861.7

~~(1)~~

~~As of the beginning of fiscal 2017, the Company elected to early adopt the provisions of ASU2016-09,~~~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~~~. The Company has made a policy election to account for forfeitures as they occur and recorded a cumulative-effect adjustment to Accumulated Deficit as of the date of adoption.~~


						Additional			Accumulated Other					Total
	Common Stock					Paid-in			Comprehensive			Retained		Shareholders’
(In millions)	Shares			Amount		Capital			Income			Earnings		Equity
Balance as of July 2, 2022		153.6		$	1.5	$	2,816.8		$	11.4		$	469.8	$	3,299.5
Net income		—			—		—			—			166.8		166.8
Interest rate swaps		—			—		—			5.4			—		5.4
Foreign currency translation adjustment		—			—		—			(1.5	)		—		(1.5	)
Issuance of common stock under stock-based compensation plans		0.5			—		(8.7	)		—			—		(8.7	)
Issuance of common stock under employee stock purchase plan		0.2			—		14.3			—			—		14.3
Stock-based compensation expense		—			—		20.7			—			—		20.7
Balance as of December 31, 2022		154.3		$	1.5	$	2,843.1		$	15.3		$	636.6	$	3,496.5

Balance as of July 1, 2023		154.5			1.5		2,863.0			14.0			867.0		3,745.5
Net income		—			—		—			—			199.0		199.0
Interest rate swaps		—			—		—			(6.6	)		—		(6.6	)
Foreign currency translation adjustment		—			—		—			0.3			—		0.3
Issuance of common stock under stock-based compensation plans		0.7			—		(17.8	)		—			—		(17.8	)
Common stock repurchased		(1.3	)		—		(78.1	)		—			—		(78.1	)
Stock-based compensation expense		—			—		19.4			—			—		19.4
Balance as of December 30, 2023		153.9		$	1.5	$	2,786.5		$	7.7		$	1,066.0	$	3,861.7

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.

PERFORMANCE FOOD GROUP COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


($ in millions)	Six months ended December 30, 2017			Six months ended December 31, 2016 ⁽¹⁾			Six Months Ended December 30, 2023			Six Months Ended December 31, 2022
Cash flows from operating activities:
Net income	$	100.6		$	35.1		$	199.0		$	166.8
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		49.1			43.3			170.1			153.5
Amortization of intangible assets		14.6			16.6			102.5			90.9
Amortization of deferred financing costs and other		2.4			2.2
Amortization of deferred financing costs								5.3			5.2
Provision for losses on accounts receivables		7.5			6.8			11.6			7.2
Expense related to modification of debt		—			0.1
Stock-based compensation expense		14.5			8.1
Deferred income tax benefit		(37.8	)		(4.0	)
Change in LIFO reserve								41.0			51.8
Stock compensation expense								21.7			22.9
Deferred income tax (benefit) expense								(14.5	)		1.5
Change in fair value of derivative assets and liabilities		(0.2	)		(1.8	)		(3.7	)		15.9
Other		7.3			1.1
Other non-cash activities								(3.0	)		5.1
Changes in operating assets and liabilities, net
Accounts receivable		(1.2	)		(15.1	)		107.2			147.9
Inventories		(14.3	)		(54.4	)		32.7			90.1
Income taxes receivable								(20.7	)		(51.6	)
Prepaid expenses and other assets		(15.0	)		12.5			(40.9	)		9.3
Trade accounts payable		(29.4	)		(68.2	)
Outstanding checks in excess of deposits		(36.8	)		29.7
Trade accounts payable and outstanding checks in excess of deposits								(46.9	)		(202.6	)
Accrued expenses and other liabilities		(28.7	)		(37.5	)		(7.4	)		(89.4	)

Net cash provided by (used in) operating activities		32.6			(25.5	)

Net cash provided by operating activities								554.0			424.5
Cash flows from investing activities:
Purchases of property, plant and equipment		(38.5	)		(79.9	)		(147.1	)		(98.1	)
Net cash paid for acquisitions		(63.2	)		(82.1	)		(308.1	)		(65.8	)
Proceeds from sale of property, plant and equipment		0.3			0.2

Proceeds from sale of property, plant and equipment and other								18.8			3.6
Net cash used in investing activities		(101.4	)		(161.8	)		(436.4	)		(160.3	)

Cash flows from financing activities:
Net borrowings under ABL Facility		116.4			192.8
Payment of Promissory Note		(6.0	)		—
Net borrowings (payments) under ABL Facility								39.0			(232.1	)
Payments under finance lease obligations								(56.5	)		(42.8	)
Proceeds from employee stock purchase plan								—			14.3
Proceeds from exercise of stock options								1.1			0.4
Cash paid for shares withheld to cover taxes		(27.8	)		(1.1	)		(18.9	)		(9.1	)
Cash paid for acquisitions		(7.4	)		(0.8	)
Repurchases of common stock								(78.1	)		—
Other financing activities		(4.4	)		(2.8	)		(0.3	)		(0.3	)

Net cash provided by financing activities		70.8			188.1

Net increase in cash and restricted cash		2.0			0.8
Net cash used in financing activities								(113.7	)		(269.6	)
Net increase (decrease) in cash and restricted cash								3.9			(5.4	)
Cash and restricted cash, beginning of period		21.0			23.8			20.0			18.7

Cash and restricted cash, end of period	$	23.0		$	24.6		$	23.9		$	13.3

~~(1)~~

~~The consolidated statement of cash flows for the six months ended December 31, 2016 has been adjusted to reflect the adoption of ASU2016-18,~~~~Statement of Cash Flows (Topic 230): Restricted Cash~~. The consolidated statements of cash flows explain the change during the periods in the total of cash and restricted cash. Therefore, restricted cash activity is included with cash when reconciling the~~beginning-of-period~~ ~~andend-of-period~~ ~~total amounts shown on the statement of cash flows. Refer to Note 3 for further discussion.~~

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


(In millions)	As of December 30, 2017		As of July 1, 2017		As of December 30, 2023		As of July 1, 2023
Cash	$	10.1	$	8.1	$	16.4	$	12.7
Restricted cash⁽²⁾		12.9		12.9

Restricted cash(1)						7.5		7.3
Total cash and restricted cash	$	23.0	$	21.0	$	23.9	$	20.0

~~(2)~~

~~Restricted cash represents the amounts required by insurers to collateralize a part of the deductibles for the Company’s workers’ compensation and liability claims.~~

(1)

Restricted cash is reported within Other assets and represents the amounts required by insurers to collateralize a part of the deductibles for the Company’s workers’ compensation and liability claims.

~~Supplemental disclosures ofnon-cash~~ ~~transactions are as follows:~~

(In millions)
   Six months
ended
December 30, 2017    Six months
ended
December 31, 2016
Purchases of property, plant and equipment, financed
   $ 3.2    $ —
Debt assumed through new capital lease obligations
   7.7    19.6
Disposal of property, plant and equipment under sale-leaseback transaction
   —      3.2

Supplemental disclosures of cash flow information are as follows:


(In millions)	Six months ended December 30, 2017		Six months ended December 31, 2016		Six Months Ended December 30, 2023		Six Months Ended December 31, 2022
Cash paid during the year for:
Interest	$	28.1	$	23.2	$	122.3	$	105.0
Income taxes, net of refunds		25.1		10.2
Income tax payments net of refunds						109.0		105.1

See accompanying notes, ~~to consolidated financial statements,~~ which are an integral part of these unaudited consolidated financial statements.

PERFORMANCE FOOD GROUP COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	~~Summary of Business Activities~~

1. Summary of Business Activities

Business Overview

Performance Food Group Company, through its subsidiaries, markets and distributes primarily national and company-branded food and food-related products to customer locations across ~~the United States.~~North America. The Company serves both of the major customer types in the restaurant industry: (i) independent ~~or “Street”~~ customers, and (ii) multi-unit, or “Chain” customers, which include ~~regional and national~~some of the most recognizable family and casual dining restaurant chains, ~~fast casual chains, and quick-service restaurants. The Company also serves~~as well as schools, ~~healthcare facilities,~~ business and industry locations, healthcare facilities, and retail establishments. The Company also specializes in distributing candy, snacks, beverages, cigarettes, other tobacco products, health and beauty care products and other ~~institutional customers.~~items to vending distributors, big box retailers, theaters, convenience stores, drug stores, grocery stores, travel providers, and hospitality providers.

~~Secondary Offerings~~

~~In September 2017,~~Share Repurchase Program

On November ~~2017 and December 2017 Wellspring Capital Management (“Wellspring”) sold an aggregate~~16, 2022, the Board of ~~16,272,914 shares~~Directors of the Company authorized a share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. During the three months ended December 30, 2023, the Company repurchased and subsequently retired 0.8 million shares of common stock, ~~in transactions registered under~~for a total of $50.0 million or an average cost of $58.01 per share. During the ~~Securities Act. The~~six months ended December 30, 2023, the Company ~~did not receive any proceeds from these sales. As a result of these sales, Wellspring no longer beneficially owns any~~repurchased and subsequently retired 1.3 million shares of ~~the Company’s~~ common ~~stock.~~stock, for a total of $78.1 million or an average cost of $58.83 per share. As of December 30, 2023, approximately $210.6 million remained available for additional share repurchases.

2. Summary of Significant Accounting Policies and Estimates

2.	~~Basis of Presentation~~

Basis of Presentation

The consolidated financial statements have been prepared by the Company, without audit, with the exception of the July 1, ~~2017~~2023 consolidated balance sheet, which was derived from the audited consolidated financial statements included in the ~~Company’s Annual Report on~~ Form~~10-K~~ ~~for the fiscal year ended July 1, 2017 (the “Form10-K”).~~ 10-K. The financial statements include consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of shareholders’ equity, and consolidated statements of cash flows. Certain prior period amounts have been reclassified to conform to current period presentation. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, shareholders’ equity, and cash flows for all periods presented have been made.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ~~(GAAP)~~(“GAAP”) requires management 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 revenue and expenses during the reporting period. The most significant estimates used by management are related to the accounting for the allowance for doubtful accounts, reserve for inventories, impairment testing of goodwill and other intangible assets, acquisition accounting, reserves for claims and recoveries under insurance programs, vendor rebates and other promotional incentives, bonus accruals, depreciation, amortization, determination of useful lives of tangible and intangible assets, leases, and income taxes. Actual results could differ from these estimates.

The results of operations are not necessarily indicative of the results to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto included in theForm 10-K. Certain footnote disclosures included in annual financial statements prepared in accordance with GAAP have been condensed or omitted herein pursuant to applicable rules and regulations for interim financial statements.

3. Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

3.	~~Recently Issued Accounting Pronouncements~~

~~Recently~~

~~Adopted Accounting Pronouncements~~

In ~~July 2015,~~September 2022, the Financial Accounting Standards Board ~~(FASB)~~(“FASB”) issued Accounting Standards ~~Update (ASU)2015-11,~~Updated (“ASU”) 2022-04, Liabilities— Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The update enhances the transparency of supplier finance programs by requiring the disclosure of the effect of those programs on an entity’s

~~Inventory (Topic 330): Simplifying~~10

working capital, liquidity, and cash flows. The guidance requires disclosure of the ~~Measurement~~key terms of ~~Inventory~~~~. This ASU requires an entity to measure most inventory at~~supplier finance programs as well as the ~~lower~~obligation amount outstanding as of ~~cost and net realizable value. When evidence exists that~~ the ~~net realizable value~~end of ~~inventory~~the period, a description of where the obligation is ~~lower than its cost, the difference shall be recognized as a loss in earnings~~presented in the balance sheet and a rollforward of the obligations balance during the period, including the amount of obligations confirmed and the amount of obligations paid. The amendments in this update are to be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which is applied prospectively. The Company determined that adoption of this update at the beginning of fiscal 2024 has not had a material impact on the Company's consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The update improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The guidance requires that an acquiring entity in a business combination recognize and measure contract assets and contract liabilities acquired in accordance with Topic 606 as if it ~~occurs.~~had originated the contract. The amendments in this update were adopted at the beginning of fiscal 2024 and will be applied prospectively to applicable business combinations. Historically, the contract assets and liabilities included in the Company’s business combinations have been limited to prepaid customer incentives that are immaterial in comparison to total assets acquired. The Company determined that adoption of this update has not had a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. It further requires disclosure of the amount and description of its composition for other segment items, and interim disclosures of both a reportable segment’s profit or loss and assets. The guidance requires disclosure of the title and position of the chief operating decision maker and how reported measures of segment profit or loss are used to assess performance and allocate resources. This pronouncement is effective for ~~public companies prospectively for~~annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this ASU as of the beginning of fiscal 2018 and concluded that it does not have a material impact on its consolidated financial statements.

~~In August 2016, the FASB issued ASU2016-15,~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is

effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. An entity that elects early adoption must adopt all of the amendments in the same period using the retrospective transition method. The Company elected to early adopt ASU~~2016-15~~ as of the beginning of fiscal 2018. Based on our review of the ASU, the Company concluded that it has historically classified the specified cash receipts and cash payments in accordance with the clarified guidance. This ASU did not have a material impact on the Company’s consolidated financial statements.

~~In November 2016, the FASB issued ASU2016-18,~~~~Statement of Cash Flows (Topic 230): Restricted Cash~~. This ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the~~beginning-of-period~~ ~~andend-of-period~~ ~~total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years,~~2024, with early adoption permitted. The ~~ASU requires a retrospective transition method for each period presented. The Company elected to early adopt ASU2016-18~~ ~~as of the beginning of fiscal 2018. The statements of cash flows for the six months ended December 30, 2017 and December 31, 2016 include restricted cash with cash when reconciling thebeginning-of-period~~ ~~andend-of-period~~ ~~total amounts.~~

~~In January 2017, the FASB issued ASU2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This ASU eliminates Step 2 of the goodwill impairment test, which is performed by estimating the fair value of individual assets and liabilities of the reporting unit to calculate the implied fair value of goodwill. Instead, an entity will record a goodwill impairment charge based on the excess of a reporting unit’s carrying value over its estimated fair value, not to exceed the carrying amount of goodwill. This ASU is effective for annual and interim goodwill impairment testsamendments in ~~fiscal years beginning after December 15, 2019 and~~this update should be applied ~~prospectively. Early adoption is permitted. The Company elected~~retrospectively to ~~early adoptASU 2017-04~~ ~~as of the beginning of fiscal 2018. Upon adoption of the ASU, the Company concluded that it did not have a material impact on its consolidated financial statements. The Company will apply ASU2017-04~~ ~~on a prospective basis when analyzing goodwill impairment.~~

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~

~~In May 2014, the FASB issued ASU2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~ and has issued subsequent amendments to this guidance. This Update is a comprehensive new revenue recognition model that requires a company to recognize revenue that represents the transfer of promised goods or services to a customereach period presented in ~~an amount that reflects the consideration it expects to receive in exchange for those goods or services.~~

Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Companies may either use a full retrospective or modified retrospective approach for adoption of Topic 606. The Company will adopt the guidance in fiscal 2019 and currently plans to implement the new standard using the modified retrospective approach. However, our method is subject to change as we finalize our adoption approach for the new standard. The Company has conducted a preliminary assessment and anticipates that the timing of recognition of revenue to be substantially unchanged under the new standard. The amended guidance also requires additional quantitative and qualitative disclosures, which the Company believes will be significant to the consolidated financial statements. The Company is in the process of ~~designing and implementing relevant controls related to adoption of the new standard.~~

~~In February 2016, the FASB issued ASU2016-02,~~~~Leases (Topic 842)~~. The ASU is a comprehensive new lease accounting model that requires companies to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. For public entities, the ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt the guidance in fiscal 2020. Companies are required to recognize and measure leases at the beginning of the earliest period presented in its financial statements using a modified retrospective approach. The Company is in the process of evaluatingassessing the impact of this ASU on its future ~~financial statements and believes adoption of this standard will have a significant impact on our~~ consolidated financial statements. ~~Information about our undiscounted future lease payments and the timing of those payments is in Note 12. Leases in our Form10-K.~~

In ~~June 2016,~~December 2023, the FASB issued ASU~~2016-13,~~~~Financial Instruments—Credit Losses (Topic 326)~~ 2023-09, Income Taxes(Topic 740): ~~Measurement~~Improvements to Income Tax Disclosures. The update expands public entities’ income tax disclosure requirements primarily by requiring disaggregation of ~~Credit Losses on Financial Instruments.~~ ~~The pronouncement changes~~specific categories and reconciling items that meet a quantitative threshold within the ~~impairment model for most financial assets, and will require the use~~rate reconciliation, as well as disaggregation of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.income taxes paid by jurisdiction. This pronouncement is effective for ~~fiscal years, and for interim~~annual periods ~~within those fiscal years,~~ beginning after December 15, ~~2019. Early~~2024, with early adoption is permitted. ~~Companies are required to apply the standard using~~The amendments in this update should be applied on a ~~modified~~prospective basis, with retrospective ~~approach, with a cumulative-effect adjustment recorded to beginning retained earnings on the effective date.~~application permitted. The Company is in the process of ~~evaluating the impact of this ASU on our future consolidated financial statements.~~

~~In January 2017, the FASB issued ASU2017-01,~~~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~.This ASU clarifies the definition of a business in order to assist companies in the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amended guidance also removes the existing evaluation of a market participant’s ability to replace missing elements and narrows the definition of output to achieve consistency with other topics. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and should be applied on a prospective basis. Early adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company’s financial statements at the date of adoption.

~~In August 2017, the FASB issued ASU2017-12,~~~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.~~ This ASU expands hedge accounting for both financial and nonfinancial risk components to better align hedge accounting with a company’s risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. For cash flow hedges existing at the adoption date, the standard requires adoption on a modified retrospective basis with a cumulative-effect adjustment to the Consolidated Balance Sheet as of the beginning of the year of adoption. The amendments to presentation guidance and disclosure requirements are required to be adopted prospectively. The Company is in the process of evaluatingassessing the impact of this ASU on its future ~~financial statements and believes adoption of this standard will not have a material impact on its~~ consolidated financial statements.

4. Revenue Recognition

4.	~~Business Combinations~~

The Company markets and distributes primarily national and Company-branded food and food-related products to customer locations across North America. The Foodservice segment primarily services restaurants and supplies a “broad line” of products to its customers, including the Company’s Performance Brands and custom-cut meats and seafood, as well as products that are specific to each customer’s menu requirements. Vistar specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. The Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other items to convenience stores across North America. The Company disaggregates revenue by customer type and product offerings and determined that disaggregating revenue at the segment level achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 13. Segment Information for external revenue by reportable segment.

The Company has customer contracts in which incentives are paid upfront to certain customers. These payments have become industry practice and are not related to financing the customer’s business, nor are they associated with any distinct good or service to be received from the customer. These incentive payments are capitalized and amortized over the life of the contract or the expected life of the customer relationship on a straight-line basis. The Company’s contract asset for these incentives totaled $31.6 million and $32.5 million as of December 30, 2023 and July 1, 2023, respectively.

5. Business Combinations

During the first six months of fiscal ~~2018,~~2024, the Company paid cash of ~~$64.9~~$308.1 million for ~~an acquisition~~two acquisitions. These acquisitions are reported in the Vistar and ~~during~~Corporate and All Other segments. During the first six months of fiscal ~~2017,~~2023, the Company paid cash of ~~$82.8~~$65.8 million for ~~four acquisitions.~~one acquisition which is reported in the Corporate and All Other segment. These acquisitions did not materially affect the ~~Company’s~~Company's results of operations.

Assets acquired and liabilities assumed are recognized at their respective fair values as of the acquisition date. The following table summarizes the preliminary purchase price allocation for each major class of assets acquired and liabilities assumed for the two acquisitions in the first six months of fiscal ~~2018 acquisition.~~2024:


(In millions)	Fiscal 2024
Net working capital	$	23.6
Goodwill		116.5
Intangible assets with definite lives:
Customer relationships		120.2
Trade names and trademarks		21.4
Technology		0.5
Non-Compete		7.8
Property, plant and equipment		72.6
ROU Assets		9.0
Other assets		0.9
Deferred tax liabilities		(45.5	)
Operating lease obligations		(9.0	)
Finance lease obligations		(9.9	)
Total purchase price	$	308.1

(In millions)
   Fiscal 2018
Net working capital
   $ 21.4
Goodwill
   21.1
Other intangible assets
   20.6
Property, plant and equipment
   1.8


Total purchase price
   $ 64.9

Intangible assets consist primarily of customer relationships, trade names, non-compete agreements, and technology with useful lives of two to seven years, and a total weighted-average useful life of 4.6 years. The ~~goodwill is a result of expected synergies from combined operations~~excess of the ~~acquisition and the Company. The following table presents the changes in the carrying amount of goodwill:~~

(In millions)
   Performance
Foodservice    PFG
Customized    Vistar    Corporate
and Other    Total
Balance as of July 1, 2017
   $ 428.2    $ 166.5    $ 64.9    $ 59.0    $ 718.6
Acquisitions - current year
   —      —      21.1    —      21.1
Adjustments related to prior year acquisitions
   0.1    —      —      0.3    0.4










Balance as of December 30, 2017
   $ 428.3    $ 166.5    $ 86.0    $ 59.3    $ 740.1

~~The adjustments related to prior year acquisitions are the result of net working capital adjustments.~~

~~Subsequent to December 30, 2017, the Company paid $6.6 million for an acquisition. The Company is in the process of determining the~~estimated fair ~~values~~value of the assets acquired and the liabilities ~~assumed.~~assumed over consideration paid was recorded as $116.5 million of goodwill.

6. Debt

5. ~~Debt~~

The Company is a holding company and conducts its operations through its subsidiaries, which have incurred or guaranteed indebtedness as described below.

Debt consisted of the following:



(In millions)	As of December 30, 2023			As of July 1, 2023
Credit Agreement	$	1,193.0		$	1,154.0
6.875% Notes due 2025, effective interest rate 7.211%		275.0			275.0
5.500% Notes due 2027, effective interest rate 5.930%		1,060.0			1,060.0
4.250% Notes due 2029, effective interest rate 4.439%		1,000.0			1,000.0
Less: Original issue discount and deferred financing costs		(26.0	)		(28.9	)
Long-term debt		3,502.0			3,460.1
Less: current installments		-			-
Total debt, excluding current installments	$	3,502.0		$	3,460.1

Credit Agreement

(In millions)
   As of
December 30, 2017    As of
July 1, 2017
ABL
   $ 1,016.3    $ 899.9
5.500% Notes due 2024
   350.0    350.0
Promissory Note
   —      6.0
Less: Original issue discount and deferred financing costs
   (7.6 )    (8.2 )




Long-term debt
   1,358.7    1,247.7
Capital and finance lease obligations
   54.4    49.9




Total debt
   1,413.1    1,297.6
Less: current installments
   (7.0 )    (11.7 )




Total debt, excluding current installments
   $ 1,406.1    $ 1,285.9

~~ABL Facility~~

PFGC, Inc. (“PFGC”), a wholly-owned subsidiary of the Company, ~~is a party to the Second Amended~~ and Restated Credit Agreement dated February 1, 2016, as amended by the First Amendment to Second Amended and Restated Credit Agreement dated August 3, 2017 (the “ABL Facility”). The ABL Facility has an aggregate principal amount of $1.95 billion and matures February 2021. The ABL Facility is secured by the majority of the tangible assets of PFGC and its subsidiaries. Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, are parties to the Fifth Amended and Restated Credit Agreement dated September 17, 2021, as amended by the First Amendment to the Fifth Amended and Restated Credit Agreement, dated April 17, 2023 (as amended, the “ABL Facility”), with Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent, and the other lenders party thereto. The ABL Facility has an aggregate principal amount available of $4.0 billion and matures September 17, 2026.

trade accounts receivable, inventory, owned real properties, and owned transportation equipment. The borrowing base is reduced quarterly by a cumulative fraction of the real properties and transportation equipment values. Advances on accounts receivable and inventory are subject to change based on periodic commercial finance examinations and appraisals, and the real property and transportation equipment values included in the borrowing base are subject to change based on periodic appraisals. Audits and appraisals are conducted at the direction of the administrative agent for the benefit and on behalf of all lenders.

Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the ~~greater~~greatest of (i) a floor rate of 0.00%, (ii) the ~~Federal Funds Rate~~federal funds rate in effect on such date plus ~~0.5%~~0.5%, ~~(ii)~~(iii) the ~~Prime Rate~~prime rate on such day, or ~~(iii)~~(iv) one month ~~LIBOR~~Term SOFR plus ~~1.0%~~1.0%) plus a spread or (b) ~~LIBOR~~Adjusted Term SOFR plus a spread. The ABL Facility also provides for an unused commitment fee ~~ranging from 0.25% to 0.375%.~~at a rate of 0.250% per annum.

The following table summarizes outstanding borrowings, availability, and the average interest rate under the Company's ABL Facility:


(Dollars in millions)	As of December 30, 2023			As of July 1, 2023
Aggregate borrowings	$	1,193.0		$	1,154.0
Letters of credit		171.5			172.2
Excess availability, net of lenders’ reserves of $100.7 and $99.7		2,635.5			2,673.8
Average interest rate, excluding impact of interest rate swaps		6.60	%		6.35	%

7. Leases

(Dollars in millions)
   As of
December 30, 2017 As of
July 1, 2017
Aggregate borrowings
   $ 1,016.3 $ 899.9
Letters of credit
   123.6 105.5
Excess availability, net of lenders’ reserves of $12.2 and $11.2
   577.8 594.6
Average interest rate
   2.98 % 2.59 %

~~Senior Notes~~

~~On May 17, 2016, Performance Food Group, Inc. issued~~The Company determines if an arrangement is a lease at inception and ~~sold $350.0 million aggregate principal amount~~recognizes a financing or operating lease liability and right-of-use asset in the Company’s consolidated balance sheet. Right-of-use assets and lease liabilities for both operating and finance leases are recognized based on present value of ~~its 5.500% Senior Notes due 2024 (the “Notes”), pursuant to~~lease payments over the lease term at commencement date. When the Company’s leases do not provide an indenture dated as of May 17, 2016. The Notes are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes are not guaranteed by Performance Food Group Company.

~~The ABL Facility and~~implicit rate, the ~~indenture governing~~Company uses the Notes contain customary restrictive covenants under which all of the net assets of PFGC and its subsidiaries are restricted from distribution to Performance Food Group Company, except for approximately $302.0 million of restricted payment capacity available under such debt agreements, as of December 30, 2017. Such minimum estimated restricted payment capacity is calculatedincremental borrowing rate based on the ~~most restrictive~~information available at commencement date to determine the present value of ~~our~~lease payments. This rate was determined by using the yield curve based on the Company’s credit rating adjusted for the Company’s specific debt ~~agreements~~profile and ~~may fluctuate from period to period, which fluctuations may be material. Our restricted payment capacity under other~~secured debt ~~instruments to which the Company is subject may be materially higher than the foregoing estimate.~~

~~Unsecured Subordinated Promissory Note~~

~~In connection~~risk. Leases with an acquisition, Performance Food Group, Inc. issued a $6.0 million interest only, unsecured subordinated promissory note on December 21, 2012. The $6.0 million promissory note was paid off in December 2017.

6.	~~Derivatives and Hedging Activities~~

~~Risk Management Objective~~initial term of ~~Using Derivatives~~

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt12 months or ~~payment of future known and uncertain cash amounts, the value of which~~less are determined by interest rates and diesel fuel costs. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and payments related to the Company’s borrowings and diesel fuel purchases.

~~The effective portion of changes in the fair value of derivatives that are both designated and qualify as cash flow hedges is~~not recorded in other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction occurs. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.

~~Hedges of Interest Rate Risk~~

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. Since the Company has a substantial portion of its debt in variable-rate instruments, it accomplishes this objective with interest rate swaps. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. All of the Company’s interest rate swaps are designated and qualify as cash flow hedges.

As of December 30, 2017, Performance Food Group, Inc. had eight interest rate swaps with a combined $650 million notional amount. The following table summarizes the outstanding Swap Agreements as of December 30, 2017 (in millions):

Effective Date
   Maturity Date    Notional Amount    Fixed Rate Swapped
August 9, 2013
   August 9, 2018    $ 200.0    1.51 %
June 30, 2017
   June 30, 2019    50.0    1.13 %
June 30, 2017
   June 30, 2020    50.0    1.23 %
June 30, 2017
   June 30, 2020    50.0    1.25 %
June 30, 2017
   June 30, 2020    50.0    1.26 %
August 9, 2018
   August 9, 2021    75.0    1.21 %
August 9, 2018
   August 9, 2021    75.0    1.20 %
June 30, 2020
   December 31, 2021    100.0    2.16 %

~~Hedges of Forecasted Diesel Fuel Purchases~~

From time to time, Performance Food Group, Inc. enters into costless collar arrangements to manage its exposure to variability in cash flows expected to be paid for its forecasted purchases of diesel fuel. As of December 30, 2017, Performance Food Group, Inc. was a party to two such arrangements, with an aggregate 4.5 million gallon original notional amount. The 4.5 million gallon forecasted purchases of diesel fuel are expected to be made between January 1, 2018 and June 30, 2018.

The fuel collar instruments do not qualify for hedge accounting. Accordingly, the derivative instruments are recorded as an asset or liability on the balance sheet at fair value and any changes in fair value are recorded in the period of change as unrealized gains or losses on fuel hedging instruments and included in Other, net in the accompanying consolidated statements of operations.

7. ~~Fair Value of Financial Instruments~~

The carrying values of cash, accounts receivable, outstanding checks in excess of deposits, trade accounts payable, and accrued expenses approximate their fair values because of the relatively short maturities of those instruments. The derivative assets and liabilities are recorded at fair value on the balance sheet. The ~~fair value of long-term debt, which has~~lease expenses for these short-term leases are recognized on a carrying value of $1,358.7 million and $1,247.7 million, is $1,378.1 million and $1,258.3 million at December 30, 2017 and July 1, 2017, respectively, and is determined by reviewing current market pricing related to comparable debt issued atstraight-line basis over the ~~time of the balance sheet date, and is considered a Level 2 measurement.~~

8.	~~Income Taxes~~

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various United States federal and state jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

On December 22, 2017, H.R.1, known as the “Tax Cuts and Jobs Act,” (the “Act”) was signed into law. The Act makes broad and complex changes to the U.S. Internal Revenue Code including, but not limited to: reducing the U.S. federal corporate tax rate from 35% to 21%; creating a new limitation on deductible interest expense; repealing the domestic production activity deduction, providing for bonus depreciation that will allow for full expensing of certain qualified property; and limiting other deductions.

The Company’s net deferred tax liability of $103.0 million as of July 1, 2017 was determined using the federal corporate tax rate of 35% prior to the passage of the Act. The Act reduces the federal corporate tax rate to 21%, effective January 1, 2018. Consequently, we have recorded a $10.2 million decrease in deferred tax assets and a $47.6 million decrease in deferred tax liabilities with a corresponding net benefit to deferred income tax expense of $37.4 million for the three and six months ended December 30, 2017.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period that should not extend beyond one year from the Act enactment date for companies to complete the accounting under FASB ASC 740 – Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Act.lease term. The Company has ~~not identified any items~~several lease agreements that contain lease and non-lease components, such as maintenance, taxes, and insurance, which are accounted for ~~which~~separately. The difference between the ~~income tax effects of the Act have not been substantially completed.~~operating lease right-of-use assets and operating lease liabilities primarily relates to adjustments for deferred rent, favorable leases, and prepaid rent.

~~The Company’s effective tax rate was-128.3%~~ ~~for the three months ended December 30, 2017 and 40.1% for the three months ended December 31, 2016. The Company’s effective tax rate was-43.1%~~ for the six months ended December 30, 2017 and 39.2% for the six months ended December 31, 2016. As a result in the reduction in the federal corporate income tax rate to 21% from 35% under the Act, the Company has a blended statutory rate of 28% for the three and six months ended December 30, 2017. For the three and six months ended December 30, 2016, the statutory rate was 35%. Additionally, during the three months ended December 30, 2017, performance vesting criteria for certain stock-based compensation awards was met resulting in a significant permanent tax deduction difference. The impact to the provision for stock-based compensation and the impact of the reduction in tax rate under the Act are summarized as follows:

(Dollars in millions)
Three Months Ended December 30, 2017 Six Months Ended December 30, 2017
Income Tax
Expense Effective Tax
Rate Income Tax
Expense Effective Tax
Rate
Income tax benefit, reported
$ (43.9 ) -128.3 % $ (30.3 ) -43.1 %
Revaluation of net deferred income tax liability
37.4 109.6 % 37.4 53.3 %
Stock-based compensation – performance vesting
15.4 45.2 % 15.4 21.9 %
Impact of rate reduction on first quarter fiscal 2018 income
2.5 7.4 % — —

Income tax expense, excluding benefits
$ 11.4 33.9 % $ 22.5 32.1 %

As of December 30, 2017 and July 1, 2017, the Company had net deferred tax assets of $28.4 million and $43.1 million, respectively, and deferred tax liabilities of $94.4 million and $146.1 million, respectively. The Company believes that it is more likely than not that the remaining deferred tax assets will be realized.

~~The Company records a liability for Uncertain Tax Positions in accordance with FASB ASC740-10-25,~~~~Income Taxes – General - Recognition~~. As of December 30, 2017 and July 1, 2017, the Company had approximately $1.4 million and $1.3 million of unrecognized tax benefits, respectively. It is reasonably possible that a decrease of approximately $0.1 million in the balance of unrecognized tax benefits may occur within the next twelve months because of statute of limitations expirations, that, if recognized, would affect the effective tax rate.

9.	~~Commitments and Contingencies~~

~~Purchase Obligations~~

The Company had outstanding contracts and purchase orders for capital projects and services totaling $10.1 million at December 30, 2017. Amounts due under these contracts were not included on the Company’s consolidated balance sheet as of December 30, 2017. Subsequent to December 30, 2017, the Company entered into an additional contract totaling $8.8 million.

~~Guarantees~~

Subsidiaries of the Company have entered into numerous operating and finance leases ~~including leases of buildings,~~for various warehouses, office facilities, equipment, tractors, and trailers. Our leases have remaining lease terms of 1 year to 25 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Certain full-service fleet lease agreements include variable lease payments associated with usage, which are recorded and paid as incurred. When calculating lease liabilities, lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Certain of the leases for tractors, trailers, and other vehicles and equipment provide for residual value guarantees to the lessors. Circumstances that would require the subsidiary to perform under the guarantees include either (1) default on the leases with the leased assets being sold for less than the specified residual values in the lease agreements, or (2) decisions not to purchase the assets at the end of the lease terms combined with the sale of the assets, with sales proceeds less than the residual value of the leased assets specified in the lease agreements. Residual value guarantees under these operating lease agreements typically range between 7%6% and ~~20%~~20% of the value of the leased assets at inception of the lease. These leases have original terms ranging from 45 to 810 years and ~~expiration~~are set to expire at various dates ranging from ~~2018~~2024 to ~~2025.~~2032. As of December 30, ~~2017,~~2023, the undiscounted maximum amount of potential future payments for lease residual value guarantees totaled approximately ~~$28.4~~$12.0 million, which would be mitigated by the fair value of the leased assets at lease expiration.

The ~~assessment as to whether it is probable that subsidiaries~~following table presents the location of the ~~Company will be required to make payments under~~right-of-use assets and lease liabilities in the ~~terms of the guarantees is based upon their actual and expected loss experience. Consistent with the requirements of FASB ASC460-10-50,~~~~Guarantees-Overall-Disclosure,~~ ~~the Company has recorded $0.2 million of the potential future guarantee payments on its~~Company's consolidated balance sheet as of December 30, ~~2017.~~2023 and July 1, 2023 (in millions), as well as the weighted-average lease term and discount rate for the Company's leases:


Leases	Consolidated Balance Sheet Location	As of December 30, 2023			As of July 1, 2023
Assets:
Operating	Operating lease right-of-use assets	$	841.0		$	703.6
Finance	Property, plant and equipment, net		672.6			566.2
Total lease assets		$	1,513.6		$	1,269.8
Liabilities:
Current
Operating	Operating lease obligations—current installments	$	108.4		$	105.5
Finance	Finance lease obligations—current installments		118.8			102.6
Non-current
Operating	Operating lease obligations, excluding current installments		773.1			628.9
Finance	Finance lease obligations, excluding current installments		536.1			447.3
Total lease liabilities		$	1,536.4		$	1,284.3

Weighted average remaining lease term
Operating leases		10.0 years			8.7 years
Finance leases		5.8 years			5.7 years
Weighted average discount rate
Operating leases			5.2	%		4.7	%
Finance leases			4.7	%		4.2	%

The following table presents the location of lease costs in the Company’s consolidated statement of operations for the periods reported (in millions):


		Three Months Ended				Six Months Ended
Lease Cost	Statement of Operations Location	December 30, 2023		December 31, 2022		December 30, 2023		December 31, 2022
Finance lease cost:
Amortization of finance lease assets	Operating expenses	$	27.8	$	21.2	$	53.8	$	41.6
Interest on lease liabilities	Interest expense		7.6		4.5		14.5		8.7
Total finance lease cost		$	35.4	$	25.7	$	68.3	$	50.3
Operating lease cost	Operating expenses		41.8		37.2		80.3		73.9
Short-term lease cost	Operating expenses		16.5		16.7		32.8		34.7
Total lease cost		$	93.7	$	79.6	$	181.4	$	158.9

The following table presents the supplemental cash flow information related to leases for the periods reported (in millions):


	Six Months Ended
(In millions)	December 30, 2023		December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	71.9	$	68.8
Operating cash flows from finance leases		14.5		8.7
Financing cash flows from finance leases		56.5		42.8
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		190.2		108.1
Finance leases		151.6		63.2

The following table presents the future minimum lease payments under non-cancelable leases as of December 30, 2023 (in millions):


Fiscal Year	Operating Leases		Finance Leases
2024	$	76.2	$	74.2
2025		146.9		144.4
2026		126.4		139.4
2027		114.9		123.3
2028		104.4		97.4
Thereafter		635.3		178.0
Total future minimum lease payments	$	1,204.1	$	756.7
Less: Interest		322.6		101.8
Present value of future minimum lease payments	$	881.5	$	654.9

As of December 30, 2023, the Company had additional operating and finance leases that had not yet commenced which total $882.1 million in future minimum lease payments. These leases relate primarily to build-to-suit warehouse leases which will replace existing distribution centers and will commence upon building completion with terms of 15 to 25 years. In addition, these leases include vehicle leases expected to commence in fiscal 2024 with lease terms of 2 to 10 years.

8. Fair Value of Financial Instruments

The carrying values of cash, accounts receivable, outstanding checks in excess of deposits, trade accounts payable, and accrued expenses approximate their fair values because of the relatively short maturities of those instruments. The derivative assets and liabilities are recorded at fair value on the balance sheet. The fair value of long-term debt, which has a carrying value of $3,502.0 million and $3,460.1 million, is $3,417.5 million and $3,338.2 million at December 30, 2023 and July 1, 2023, respectively, and is determined by reviewing current market pricing related to comparable debt issued at the time of the balance sheet date, and is considered a Level 2 measurement.

9. Income Taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state, and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

The Company’s effective tax rate was 29.9% for the three months ended December 30, 2023 and 26.1% for the three months ended December 31, 2022. The Company's effective tax rate was 27.6% for the six months ended December 30, 2023 and 26.2% for the six months ended December 31, 2022. The effective tax rate varies from the 21% statutory rate primarily due to state taxes, federal credits, and other permanent items. The excess tax benefit of exercised and vested stock awards is treated as a discrete item. The effective tax rate for periods ended December 30, 2023 differed from the prior year periods primarily due to an increase in non-deductible expenses and state and foreign taxes as a percentage of income, partially offset by an increase in deductible discrete items related to stock-based compensation.

As of December 30, 2023 and July 1, 2023, the Company had net deferred tax assets of $192.8 million and $178.5 million, respectively, and deferred tax liabilities of $667.5 million and $624.7 million, respectively. As of December 30, 2023 and July 1, 2023, the Company had established a valuation allowance of $2.2 million and $2.1 million, respectively, net of federal benefit, against deferred tax assets related to certain net operating losses and certain other losses which are not likely to be realized due to limitations on utilization. The change in the deferred tax balances and the valuation allowance relates primarily to deferred taxes established in purchase accounting. The Company believes that it is more likely than not that the remaining deferred tax assets will be realized.

10. Commitments and Contingencies

Purchase Obligations

The Company had outstanding contracts and purchase orders of $320.4 million related to capital projects and services including purchases of compressed natural gas for its trucking fleet at December 30, 2023. Amounts due under these contracts were not included on the Company’s consolidated balance sheet as of December 30, 2023.

Guarantees

The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to: (i)certain real estate leases under which subsidiaries of the Company may be required to indemnify property owners for environmental and other liabilities and other claims arising from their use of the applicable premises; (ii)certain agreements with the Company’s officers, directors, and employees under which the Companymay be required to indemnify such persons for liabilities arising out of their employment relationship; and (iii)customer agreements under which the Company may be required to indemnify customers for certain claims brought against them with respect to the supplied products.

Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation cannot be reasonably estimated. Historically, the Company has not been required to make payments under these obligations and, therefore, no liabilities have been recorded for these obligations in the Company’s consolidated balance sheets.

Litigation

The Company is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss arising from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When losses are probable and reasonably estimable, they have been accrued. Based on estimates of the range of potential losses associated with these matters, management does not believe that the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the Company. However, the final results of legal proceedings cannot be predicted with certainty and, if the Company failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the Company’s current estimates of the range of potential losses, the Company’s consolidated financial position or results of operations could be materially adversely affected in future periods.

~~U.S. Equal Employment Opportunity Commission Lawsuit~~JUUL Labs, Inc. Marketing Sales Practices, and Products Liability Litigation. In October 2019, a Multidistrict Litigation action (“MDL”) was initiated in order to centralize litigation against JUUL Labs, Inc. (“JUUL”) and other parties in connection with JUUL’s e-cigarettes and related devices and components in the United States District Court for the Northern District of California. On March 11, 2020, counsel for plaintiffs and the Plaintiffs’ Steering Committee filed a Master Complaint in the MDL ("Master Complaint") naming, among several other entities and individuals including JUUL, Altria Group, Inc., Philip Morris USA, Inc., Altria Client Services LLC, Altria Group Distribution Company, Altria Enterprises LLC, certain members of management and/or individual investors in JUUL, various e-liquid manufacturers, and various retailers, including the Company’s subsidiaries Eby-Brown Company LLC (“Eby-Brown”) and Core-Mark Holding Company, Inc. (“Core-Mark”), as defendants. The Master Complaint also named additional distributors of JUUL products (collectively with Eby-Brown and Core-Mark, the “Distributor Defendants”). ~~In March 2009,~~The Master Complaint contains various state law claims and alleges that the ~~Baltimore Equal Employment Opportunity Commission,~~Distributor Defendants: (i) failed to disclose JUUL’s nicotine contents or the ~~“EEOC,” Field Office served us~~risks associated; (ii) pushed a product designed for a youth market; (iii) engaged with ~~company-wide (excluding, however, our Vistar~~JUUL in planning and ~~Roma Foodservice operations) subpoenas relating~~marketing its product in a manner designed to ~~alleged violations~~maximize the flow of JUUL products; (iv) met with JUUL management in San Francisco, California to further these business dealings; and (v) received incentives and business development funds for marketing and efficient sales. Individual plaintiffs may also file separate and abbreviated Short Form Complaints that incorporate the ~~Equal Pay Act~~allegations in the Master Complaint. JUUL and ~~Title VII of the Civil Rights Act (“Title VII”), seeking certain information from January 1, 2004~~Eby-Brown are parties to a ~~specified date~~Domestic Wholesale Distribution Agreement dated March 10, 2020 (the "Distribution Agreement"), and JUUL has agreed to defend and indemnify Eby-Brown under the terms of that agreement and is paying Eby-Brown’s outside counsel fees directly. In addition, Core-Mark and JUUL have entered into a Defense and Indemnity Agreement dated March 8, 2021 (the "Defense Agreement") pursuant to which JUUL has agreed to defend and indemnify Core-Mark, and JUUL is paying Core-Mark’s outside counsel fees directly.

On December 6, 2022, JUUL announced that it had reached settlements with the plaintiffs in the MDL and related cases that had been consolidated in the U.S. District Court for Northern District of California (the “MDL Settlement”). On January 18, 2023, the parties who were set to participate in the first ~~fiscal quarter~~round of ~~2009. In August 2009,~~bellwether trials in the ~~EEOC moved to enforce~~MDL submitted a joint status filing with the ~~subpoenas in federal~~ court in ~~Maryland, and we opposed the motion. In February 2010,~~which they notified the court ~~ruled that~~of, among other things, the ~~subpoena related to~~settlement JUUL reached with the ~~Equal Pay Act investigation was enforceable company-wide but on a narrower scope~~plaintiffs. Per the settlement agreement, the MDL Settlement encompasses the various personal injury, consumer class action, government entity, and Native American tribe claims made against JUUL and includes, among others, all of ~~data than~~ the ~~original subpoena sought (the court ruled that the subpoena was~~Distributor Defendants (including Core-Mark and Eby-Brown) as released parties. The release applicable to the ~~transportation, logistics,~~Distributor Defendants, as well as certain other defendants, took effect when JUUL

made the first settlement payment on October 27, 2023. The MDL Settlement Master has informed the parties that there are ten plaintiffs who named both Core-Mark and ~~warehouse functions~~Eby-Brown as defendants who have opted out of ~~our broadline~~the MDL Settlement. Those opt-out plaintiff cases are now in the early stages of discovery and no trial dates have been set. If any of the opt-out plaintiffs continue to litigate their claims apart from the MDL Settlement, the duty of JUUL to defend and indemnify Eby-Brown and Core-Mark remains, and the Company will vigorously defend itself.

On September 10, 2021, Michael Lumpkins filed a parallel lawsuit in Illinois state court against several entities, including JUUL, e-liquid manufacturers, various retailers, and various distributors, including Eby-Brown and Core-Mark, alleging similar claims to the claims at issue in the MDL (the “Illinois Litigation”). Because there is no federal jurisdiction for this case, it will proceed in Illinois state court. Plaintiff alleges as damages that his use of JUUL products caused a brain injury that was later exacerbated by medical negligence. The court has not yet entered a case management schedule. Eby-Brown and Core-Mark have filed a substantive motion to dismiss. The defense and indemnity of Eby-Brown and Core-Mark for the Illinois Litigation is covered by the Distribution Agreement and the Defense Agreement, respectively. If the Illinois Litigation is not resolved pursuant to the MDL Settlement or otherwise, the Company will continue to vigorously defend itself.

On June 23, 2022, the U.S. Food and Drug Administration (“FDA”) announced it had issued marketing denial orders (“MDOs”) to JUUL for all of its products currently marketed and sold in the U.S. According to the FDA, the MDOs banned the distribution ~~centers only~~ and ~~not to our PFG Customized distribution centers). We cooperated~~sale of all JUUL products domestically. That same day, JUUL filed a petition for review of the MDOs with the ~~EEOC on~~United States Court of Appeals for the ~~production~~D.C. Circuit. On June 24, 2022, the court of ~~information. In September 2011,~~appeals stayed the ~~EEOC notified us~~MDOs and issued a briefing schedule in the case. Thereafter, JUUL informed the FDA that ~~the EEOC was terminating the investigation into alleged violations~~per applicable regulations it would submit a request for supervisory review of the ~~Equal Pay Act. In determinations issued in September 2012 by the EEOC with respect~~MDOs to the ~~charges~~FDA. In response, the FDA notified JUUL that upon further review of the briefing JUUL made to the court of appeals, the FDA determined there are scientific issues unique to JUUL’s Pre-Market Tobacco Application (“PMTA”) that warrant additional review. Accordingly, the FDA entered an administrative stay of the MDOs. If the FDA ultimately decides to maintain or re-issue the MDOs, the administrative stay will remain in place for an additional thirty days to provide JUUL the opportunity to seek further judicial relief. JUUL and the FDA filed a joint motion with the court of appeals to hold the petition for review in abeyance on July 6, 2022, which the ~~EEOC had based its company-wide investigation, the EEOC concluded that we engaged in a pattern~~court of denying hiring and promotion to a class of female applicants and employees into certain positions within the transportation, logistics, and warehouse functions within our broadline division in violation of Title VII. In June 2013, the EEOC filed suit in federal court in Baltimore against us. The litigation concerns two issues: (1) whether we unlawfully engaged in an ongoing pattern and practice of failing to hire female applicants into operations positions; and (2) whether we unlawfully failed to promote one of the three individuals who filed charges with the EEOC because of her gender. The EEOC seeks the following relief in the lawsuit: (1) to permanently enjoin us from denying employment to female applicants because of their sex and denying promotions to female employees because of their sex; (2) a court order mandating that we institute and carry out policies, procedures, practices and programs which provide equal employment opportunities for females; (3) back pay with prejudgment interest and compensatory damages for a former female employee and an alleged class of aggrieved female applicants; (4) punitive damages; and (5) costs. The court bifurcated the litigation into two phases. In the first phase, the jury will decide whether we engaged in a gender-based pattern and practice of discrimination and the individual claims of one former employee. If the EEOC prevailsappeals granted on all counts in the first phase, no monetary relief would be awarded, except possibly for the single individual’s claims, which would be immaterial. The remaining individual claims would then be tried in the second phase. July 7, 2022.

At this ~~stage in the proceedings,~~time, the Company ~~cannot estimate either~~is unable to predict whether the ~~number of individual trials that could occur in~~FDA will approve JUUL’s PMTA or re-issue the ~~second phase of~~MDOs, nor is the ~~litigation or the value of those claims. For these reasons, we are unable~~Company able to estimate any potential loss or range of loss in the event of an adverse finding against JUUL in ~~the first and second phases~~any case that falls outside of the ~~litigation. The parties are engaged in discovery. We intend to vigorously defend ourselves.~~MDL Settlement.

~~Wilder, et al. v. Roma Food Enterprises, Inc., et al.~~ ~~The court granted final approval of the settlement stipulation on November 6, 2017. The Company funded the $1.9 million settlement on January 10, 2018, thereby ending the litigation.~~

Tax Liabilities

The Company is subject to customary audits by authorities in the jurisdictions where it conducts business in the United States and foreign countries, which may result in assessments of additional taxes.

11. Related-Party Transactions

~~10.~~

~~Related-Party Transactions~~

~~Transaction and Advisory Fee Agreement~~

The Company was a party to an advisory fee agreement pursuant to which affiliates of The Blackstone Group L.P. and Wellspring provided management certain strategic and structuring advice and certain monitoring, advising, and consulting services to the Company. The advisory fee agreement provided for the payment by the Company of an annual advisory fee and the reimbursement of out of pocket expenses. In fiscal 2018 the Company will pay a total of $3.0 million related to this agreement, of which $1.5 million was paid in the second quarter of fiscal 2018 and during the six months ended December 30, 2017 and $1.5 million will be paid in the third quarter of fiscal 2018. The payments made under this agreement totaled $5.5 million during the six months ended December 31, 2016.

~~Under its terms, this agreement terminated on October 6, 2017.~~

~~Other~~

The Company participates in, and has an equity method investment in, a purchasing alliance that was formed to obtain better pricing, to expand product options, to reduce internal costs, and to achieve greater inventory turnover. The Company’s investment in the purchasing alliance was ~~$4.7~~$11.7 million as of December 30, ~~2017~~2023 and ~~$4.6~~$9.9 million as of July 1, ~~2017. During~~2023. For the three-month periods ended December 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the Company recorded purchases of ~~$177.5~~$521.1 million and ~~$176.6~~$467.1 million, respectively, through the purchasing alliance. ~~During~~For thesix-month periods ended December 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the Company recorded purchases of ~~$390.4~~$1,070.6 million and ~~$387.0~~$965.6 million, respectively, through the purchasing alliance.

~~11.~~ ~~Earnings Per Share~~

12. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted ~~EPS~~earnings per common share is calculated using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. The Company’s potential common shares include outstanding stock-based compensation awards and expected issuable shares under the employee stock purchase plan. In computing diluted ~~EPS,~~earnings per common share, the average closing stock price for the period is used in determining the number of shares assumed to be purchased with the assumed proceeds ~~from the exercise of stock options~~ under the treasury stock method. ~~Potential~~No potential common shares ~~of 0.7 million and 0.7 million~~were considered antidilutive for the three and six months ended December 30, ~~2017, respectively, were not included in computing diluted earnings per share because the effect would have been antidilutive. Potential common shares of 1.2 million~~2023 and ~~1.0 million for the three and six months ended~~ December 31, ~~2016, respectively, were not included in computing diluted earnings per share because the effect would have been antidilutive.~~2022.

A reconciliation of the numerators and denominators for the basic and diluted ~~EPS~~earnings per common share computations is as follows:


(In millions, except per share amounts)	Three months ended December 30, 2017		Three months ended December 31, 2016		Six months ended December 30, 2017		Six months ended December 31, 2016		Three Months Ended December 30, 2023		Three Months Ended December 31, 2022		Six Months Ended December 30, 2023		Six Months Ended December 31, 2022
Numerator:
Net income	$	78.0	$	22.9	$	100.6	$	35.1	$	78.3	$	71.1	$	199.0	$	166.8

Denominator:
Weighted-average common shares outstanding		101.4		100.1		101.2		100.0		154.2		154.1		154.5		153.9
Dilutive effect of share-based awards		3.1		2.6		3.3		2.5

Dilutive effect of potential common shares										1.5		2.0		1.7		2.0
Weighted-average dilutive shares outstanding		104.5		102.7		104.5		102.5		155.7		156.1		156.2		155.9

Basic earnings per share	$	0.77	$	0.23	$	0.99	$	0.35

Diluted earnings per share	$	0.75	$	0.22	$	0.96	$	0.34

Basic earnings per common share									$	0.51	$	0.46	$	1.29	$	1.08
Diluted earnings per common share									$	0.50	$	0.46	$	1.27	$	1.07

~~12.~~

~~Segment Information~~

~~The~~13. Segment Information

Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable ~~segments, as defined by ASC 280~~~~Segment Reporting~~~~, related to disclosures about segments~~segments: Foodservice, Vistar, and Convenience.

The Foodservice segment distributes a broad line of ~~an enterprise. The Performance Foodservice (“PFS”) segment markets~~national brands, customer brands, and ~~distributes~~our proprietary-branded food and food-related products, or “Performance Brands.” Foodservice sells to independent ~~restaurants, chain~~and multi-unit “Chain” restaurants and other ~~institutional “food-away-from-home” locations. The PFG Customized segment principally serves~~institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our Chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining ~~channel but also serves fine dining, and fast casual~~ restaurant chains. ~~The~~Our Vistar segment specializes in distributing candy, snacks, beverages, and other items nationally to vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, ~~snack, beverage,~~snacks, beverages, cigarettes, other tobacco products, food and foodservice related products, and other ~~products~~items to customers in the vending, office coffee services, theater, retail, and other channels. Intersegment sales represent sales between the segments, which are eliminated in consolidation. Management evaluates the performance of each operating segment based on various operating and financial metrics, including total sales and EBITDA. For PFG Customized, EBITDA includes certain allocated corporate charges that are included in operating expenses. The allocated corporate charges are determined based on a percentage of total sales. This percentage is reviewed on a periodic basis to ensure that the segment is allocated a reasonable rate of corporate expenses based on their use of corporate services.convenience stores across North America.

Corporate & All Other is comprised of corporate overhead and certain operations that are not considered separate reportable segments based on their size. This includes the operations of the Company’s internal logistics unit responsible for managing and allocating inbound logistics revenue and ~~expense, as well as the operations of~~expense. Corporate & All Other may also include capital expenditures for certain ~~recent acquisitions.~~

~~In the first quarter of fiscal 2018, the Company reorganized its~~ information technology ~~department, and expenses associated with business application teams~~projects that are ~~now included in~~transferred to the segments ~~results. The~~ once placed in service.

Intersegment sales represent sales between the segments, which are eliminated in consolidation.


(In millions)	Foodservice		Vistar		Convenience		Corporate & All Other		Eliminations			Consolidated
For the three months ended December 30, 2023
Net external sales	$	7,073.6	$	1,201.0	$	5,941.4	$	79.7	$	—		$	14,295.7
Inter-segment sales		5.7		0.9		—		148.0		(154.6	)		—
Total sales		7,079.3		1,201.9		5,941.4		227.7		(154.6	)		14,295.7
Depreciation and amortization		72.7		12.8		37.2		20.6		—			143.3
Capital expenditures		61.6		15.2		7.9		9.2		—			93.9
For the three months ended December 31, 2022
Net external sales	$	6,892.1	$	1,118.3	$	5,864.1	$	24.4	$	—		$	13,898.9
Inter-segment sales		4.5		0.6		—		129.6		(134.7	)		—
Total sales		6,896.6		1,118.9		5,864.1		154.0		(134.7	)		13,898.9
Depreciation and amortization		71.8		10.6		36.5		6.3		—			125.2
Capital expenditures		48.3		1.6		5.9		2.2		—			58.0


(In millions)	Foodservice		Vistar		Convenience		Corporate & All Other		Eliminations			Consolidated
For the Six Months Ended December 30, 2023
Net external sales	$	14,345.3	$	2,450.6	$	12,278.4	$	160.0	$	—		$	29,234.3
Inter-segment sales		11.0		1.7		—		308.1		(320.8	)		—
Total sales		14,356.3		2,452.3		12,278.4		468.1		(320.8	)		29,234.3
Depreciation and amortization		143.3		23.2		74.9		31.2		—			272.6
Capital expenditures		92.6		18.6		11.9		24.0		—			147.1
For the Six Months Ended December 31, 2022
Net external sales	$	14,216.1	$	2,207.6	$	12,151.0	$	43.5	$	—		$	28,618.2
Inter-segment sales		10.5		1.4		—		262.8		(274.7	)		—
Total sales		14,226.6		2,209.0		12,151.0		306.3		(274.7	)		28,618.2
Depreciation and amortization		137.8		21.3		73.3		12.0		—			244.4
Capital expenditures		76.6		4.5		13.5		3.5		—			98.1

Adjusted EBITDA for ~~PFS, Vistar~~each reportable segment and Corporate & All Other ~~for the three~~is presented below along with a reconciliation to consolidated income before taxes.


	Three Months Ended						Six Months Ended
	December 30, 2023			December 31, 2022			December 30, 2023			December 31, 2022
Foodservice Adjusted EBITDA	$	224.1		$	214.2		$	470.1		$	450.3
Vistar Adjusted EBITDA		93.6			92.2			182.2			166.6
Convenience Adjusted EBITDA		83.5			69.3			178.2			174.9
Corporate & All Other Adjusted EBITDA		(55.8	)		(66.9	)		(101.3	)		(128.3	)
Depreciation and amortization		(143.3	)		(125.2	)		(272.6	)		(244.4	)
Interest expense		(61.4	)		(55.7	)		(117.5	)		(106.1	)
Change in LIFO reserve		(21.8	)		(25.0	)		(41.0	)		(51.8	)
Stock-based compensation expense		(11.0	)		(11.4	)		(21.7	)		(22.9	)
(Loss) gain on fuel derivatives		(1.8	)		7.3			1.7			(2.5	)
Acquisition, integration & reorganization expenses		(3.9	)		(2.8	)		(13.7	)		(5.8	)
Other adjustments (1)		9.5			0.2			10.6			(3.9	)
Income before taxes	$	111.7		$	96.2		$	275.0		$	226.1

(1)

Other adjustments include asset impairments, gains and ~~six months ended December 31, 2016 has been adjusted~~losses on disposal of fixed assets, amounts related to ~~reflect this change.~~

favorable and unfavorable leases, foreign currency transaction gains and losses, and franchise tax expense.

(In millions)
   PFS    PFG
Customized    Vistar    Corporate
& All Other Eliminations Consolidated
For the three months ended December 30, 2017

Net external sales
   $ 2,532.8    $ 888.1    $ 838.3    $ 51.9 $ —   $ 4,311.1
Inter-segment sales
   2.5    0.1    0.6    58.7 (61.9 ) —








Total sales
   2,535.3    888.2    838.9    110.6 (61.9 ) 4,311.1
EBITDA
   83.0    5.9    34.0    (41.4 ) —   81.5
Depreciation and amortization
   14.6    3.7    6.9    7.1 —   32.3
Capital expenditures
   9.3    4.1    5.3    3.3 —   22.0
For the three months ended December 31, 2016

Net external sales
   $ 2,356.8    $ 933.4    $ 737.4    $ 24.2 $ —   $ 4,051.8
Inter-segment sales
   1.4    0.1    0.5    53.7 (55.7 ) —








Total sales
   2,358.2    933.5    737.9    77.9 (55.7 ) 4,051.8
EBITDA
   75.5    6.7    33.0    (33.0 ) —   82.2
Depreciation and amortization
   14.0    3.6    6.6    6.2 —   30.4
Capital expenditures
   34.1    2.7    0.8    7.5 —   45.1
(In millions)
   PFS    PFG
Customized    Vistar    Corporate
& All Other Eliminations Consolidated
For the six months ended December 30, 2017

Net external sales
   $ 5,157.3    $ 1,784.1    $ 1,634.5    $ 100.1 $ —   $ 8,676.0
Inter-segment sales
   5.1    0.2    1.2    118.6 (125.1 ) —








Total sales
   5,162.4    1,784.3    1,635.7    218.7 (125.1 ) 8,676.0
EBITDA
   161.8    11.1    59.8    (69.0 ) —   163.7
Depreciation and amortization
   28.4    7.3    13.2    14.8 —   63.7
Capital expenditures
   20.5    6.3    5.6    6.1 —   38.5
For the six months ended December 31, 2016

Net external sales
   $ 4,791.5    $ 1,800.1    $ 1,478.2    $ 28.1 $ —   $ 8,097.9
Inter-segment sales
   3.1    0.7    1.2    108.7 (113.7 ) —








Total sales
   4,794.6    1,800.8    1,479.4    136.8 (113.7 ) 8,097.9
EBITDA
   148.1    10.6    54.8    (69.4 ) —   144.1
Depreciation and amortization
   27.1    8.8    11.8    12.2 —   59.9
Capital expenditures
   53.8    4.9    2.2    19.0 —   79.9

Total assets by reportable segment, excluding intercompany receivables between segments, are as follows:


(In millions)	As of December 30, 2023		As of July 1, 2023
Foodservice	$	6,582.5	$	6,511.6
Vistar		1,434.9		1,292.7
Convenience		4,085.7		4,226.2
Corporate & All Other		809.4		468.5
Total assets	$	12,912.5	$	12,499.0

(In millions)
   As of
December 30, 2017    As of
July 1, 2017
PFS
   $ 2,162.3    $ 2,161.2
PFG Customized
   645.9    667.1
Vistar
   754.0    654.5
Corporate & All Other
   320.4    321.3




Total assets
   $ 3,882.6    $ 3,804.1

~~13.~~ ~~Stock-based Compensation~~

~~Performance Food Group Company provides compensation benefits to employees andnon-employee~~ directors under several share based payment arrangements. The Performance Food Group Company 2007 Management Option Plan (the”2007 Option Plan”) allowed for the granting of awards to employees, officers, directors, consultants, and advisors of the Company or its affiliates. The terms and conditions of awards granted under the 2007 Option Plan were determined by the Board of Directors.

The Tranche II and Tranche III options and restricted stock granted under the 2007 Option Plan are subject to both time and performance vesting, including performance criteria based on the internal rate of return and sponsor cash inflows as outlined in the 2007 Option Plan.

During the second quarter of fiscal 2018, Wellspring sold all of their remaining interest in shares of the Company’s common stock. On December 7, 2017, the Company determined that the performance criteria for the Tranche II and III awards had been met and 2.1 million shares of restricted stock and 1.4 million options vested. In the second quarter of fiscal 2018, the Company recognized approximately $6.3 million of accelerated compensation expense in connection with the vesting of the Tranche II and III awards. Based on the performance achieved, total compensation expense for the Tranche II and III awards was $24.9 million. The excess tax benefit recognized in the consolidated statements of operations for the three and six months ended December 30, 2017 was $15.4 million.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

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

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form~~10-Q(the “Form 10-Q”)~~ 10-Q and the audited consolidated financial statements and the notes thereto included in the ~~Company’s annual report on~~Form ~~10-K~~ ~~for the fiscal year ended July 1, 2017 (the “Form10-K”).~~10-K. In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Item 1A. Risk Factors” section of the Form10-K, ~~and~~ as such risk factors may be updated from time to time in our periodic filings with the ~~“Part II. Item 1A. Risk Factors” section of our quarterly report on Form10-Q~~ ~~for the fiscal quarter ended September 30, 2017.~~SEC. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this quarterly report on Form10-Q.

Our Company

We market and distribute ~~approximately 150,000~~ food and food-related products to customers across ~~the United States~~North America from ~~approximately 76 distribution facilities~~our over 150 locations to over ~~150,000~~300,000 customer locations in the “food-away-from-home” industry. We offer our customers a broad assortment of products including our proprietary-branded products, ~~nationally-branded~~nationally branded products, and products bearing our customers’ brands. Our product assortment ranges from~~“center-of-the-plate”~~ “center-of-the-plate” items (such as beef, pork, poultry, and seafood), frozen foods, and groceries to candy, snacks, and beverages. We also sell disposables, cleaning and kitchen supplies, and related products used by our ~~customers.~~customers, as well as cigarettes and other tobacco products. In addition to the products we offer to our customers, we provide value-added services by allowing our customers to benefit from our industry knowledge, scale, and expertise in the areas of product selection and procurement, menu development, and operational strategy.

~~We have~~Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: ~~Performance~~ Foodservice, ~~PFG Customized,~~Vistar, and ~~Vistar.~~Convenience. Our ~~Performance~~ Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “Performance Brands.” ~~Performance~~ Foodservice sells to independent ~~or “Street,”~~ and multi-unit ~~or “Chain,”~~“Chain” restaurants and other institutions such as schools, healthcare facilities, ~~and~~ business and industry ~~locations.~~locations, and retail establishments. Our ~~PFG Customized segment has provided longstanding service to~~Chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining ~~restaurant chains and recently expanded service into fast casual~~ restaurant chains. Our Vistar segment specializes in distributing candy, snacks, beverages, and other items nationally to ~~the~~ vending, office coffee service, theater, retail, hospitality, and other channels. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products and other items to convenience stores across North America. We believe that there are substantial synergies across our segments. Cross-segment synergies include procurement, operational best practices such as the use of new productivity technologies, and supply chain and network optimization, as well as shared corporate functions such as accounting, treasury, tax, legal, information systems, and human resources.

~~Recent Trends and Initiatives~~

Our case volume has grown in each quarter over the comparable prior fiscal year quarter, starting in the second quarter of fiscal 2010 and continuing through the most recent quarter. We believe that we gained industry share during the second quarter of fiscal 2018 given that we have grown our sales more rapidly than the industry growth rate forecasted by Technomic, a research and consulting firm serving the food and food related industry. Our Net income increased 240.6% from the second quarter of fiscal 2017 to the second quarter of fiscal 2018 and increased 186.6% from the first six months of fiscal 2017 to the first six months of fiscal 2018. Adjusted EBITDA increased 12.2% from the second quarter of fiscal 2017 to the second quarter of fiscal 2018 and increased 15.4% from the first six months of fiscal 2017 to the first six months of fiscal 2018, driven primarily by case growth and improved profit per case. Case volume grew 4.2% in the second quarter of fiscal 2018 and 3.9% in the first six months of fiscal 2018 compared to the prior year periods. Gross margin dollars rose 9.7% and 9.1% in the second quarter of fiscal 2018 and the first six months of fiscal 2018, respectively, versus the prior year periods primarily as a result of shifting our channel mix toward higher gross margin customers and shifting our product mix toward sales of Performance Brands. Our operating expenses, compared to the second quarter and first six months of fiscal 2017, increased 11.3% and 8.2%, respectively, as a result of increases in variable operational and selling expenses associated with the increase in case volume, as well as due to several~~one-time~~ ~~expenses including accelerated stock-based compensation expense.~~

Key Factors Affecting Our Business

Our business, our industry and the U.S. economy are influenced by a number of general macroeconomic factors, including, but not limited to, changes in the rate of inflation and fuel prices, interest rates, supply chain disruptions, labor shortages, and the effects of health epidemics and pandemics. We continue to actively monitor the impacts of the evolving macroeconomic and geopolitical landscape on all aspects of our business. The Company and our industry may face challenges related to product and fleet supply, increased product and logistics costs, access to labor supply, and lower disposable incomes due to inflationary pressures and macroeconomic conditions. The extent to which these challenges will affect our future financial position, liquidity, and results of operations remains uncertain.

We believe that our long-term performance is principally affected by the following key factors:

•

Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, and changes in the prices of certain goods.

•

~~Changing demographic and macroeconomic trends.~~~~The share of consumer spending captured by thefood-away-from-home~~ industry increased steadily for several decades and paused during the recession that began in 2008. Following the recession, the share has again increased as a result of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments. The foodservice distribution industry is also sensitive to national and regional economic conditions, such as changes in consumer spending, changes in consumer confidence, and changes in the prices of certain goods.

•

~~Food distribution market structure.~~We are the third largest foodservice distributer by revenue in the United States behind Sysco and US Foods, which are both national broadline distributors. The balance of the market consists of a wide spectrum of companies ranging from businesses selling a single category of product (e.g., produce) to large regional broadline distributors with many distribution centers and thousands of products across all categories. We believe our scale enables us to invest in our Performance Brands, to benefit from economies of scale in purchasing and procurement, and to drive supply chain efficiencies that enhance our customers’ satisfaction and profitability. We believe that the relative growth of larger foodservice distributors will continue to outpace that of smaller, independent players in our industry.

•

Food distribution market structure. The food distribution market consists of a wide spectrum of companies ranging from businesses selling a single category of product (e.g., produce) to large national and regional broadline distributors with many distribution centers and thousands of products across all categories. We believe our scale enables us to invest in our Performance Brands, to benefit from economies of scale in purchasing and procurement, and to drive supply chain efficiencies that enhance our customers’ satisfaction and profitability. We believe that the relative growth of larger foodservice distributors will continue to outpace that of smaller, independent players in our industry.

•

Our ability to successfully execute our segment strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our segment strategies and to implement our current and future initiatives. The key strategies include focusing on independent sales and Performance Brands, pursuing new customers for our three reportable segments, expansion of geographies, utilizing our infrastructure to gain further operating and purchasing efficiencies, and making strategic acquisitions.

•

~~Our ability to successfully execute our segment strategies and implement our initiatives.~~Our performance will continue to depend on our ability to successfully execute our segment strategies and to implement our current and future initiatives. The key strategies include focusing on independent sales and Performance Brands, pursuing new customers for all three of our reportable segments, expansion of geographies, utilizing our infrastructure to gain further operating and purchasing efficiencies, and making strategic acquisitions.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on rounded numbers.

Net Sales

Net sales is equal to gross sales, plus excise taxes, minus sales returns; sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in case volumes, product inflation that is reflected in the pricing of our products and mix of products sold.

Gross Profit

Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration), inbound freight, and ~~inbound freight.~~remittances of excise tax. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.

~~EBITDA and~~ Adjusted EBITDA

Management measures operating performance based on our EBITDA, defined as net income before interest expense, interest income, income taxes, and depreciation and amortization. EBITDA is not defined under U.S. GAAP and is not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. GAAP and is subject to important limitations. Our definition of EBITDA may not be the same as similarly titled measures used by other companies.

We believe that the presentation of EBITDA enhances an investor’s understanding of our performance. We use this measure to evaluate the performance of our segments and for business planning purposes. We present EBITDA in order to provide supplemental information that we consider relevant for the readers of our consolidated financial statements included elsewhere in this report, and such information is not meant to replace or supersede U.S. GAAP measures.

~~In addition, our management uses~~ Adjusted EBITDA, defined as net income before interest expense, interest income, income and franchise taxes, and depreciation and amortization, further adjusted to exclude certain items that we do not consider part of our core operating results. Such adjustments include certain unusual,non-cash,non-recurring, cost reduction, and other adjustment items permitted in calculating covenant compliance under our ~~credit agreement~~ABL Facility and ~~indenture~~indentures (other than certain pro forma adjustments permitted under our ~~credit agreement~~ABL Facility and ~~indenture~~indentures governing the Notes due 2025, Notes due 2027, and Notes due 2029 relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under our ~~credit agreement~~ABL Facility and ~~indenture,~~indentures, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the ~~credit agreement~~ABL Facility and ~~indenture)~~indentures). Our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.

Adjusted EBITDA is not defined under ~~U.S.~~GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with GAAP, and is subject to important limitations. We use this measure to evaluate the performance of our business on a consistent basis over time and for business planning purposes. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties, including our lenders under the ABL Facility ~~(as defined below under “-Liquidity and Capital Resources”)~~ and holders of our Notes ~~(as defined below under “-Liquidity~~due 2025, Notes due 2027, and ~~Capital Resources”),~~Notes due 2029 in their evaluation of the operating performance of companies in industries similar to ours. ~~In addition, targets based on~~

Adjusted EBITDA ~~are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans.~~

~~EBITDA and Adjusted EBITDA have~~has important limitations as an analytical ~~tools~~tool, and you should not consider ~~them~~it in isolation or as ~~substitutes~~a substitute for analysis of our results as reported under ~~U.S.~~ GAAP. For example, ~~EBITDA and~~ Adjusted EBITDA:

~~exclude~~•

excludes certain tax payments that may represent a reduction in cash available to us;

do•

does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•

does not reflect changes in, or cash requirements for, our working capital needs; and

do•

does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.

In calculating Adjusted EBITDA, we add back certainnon-cash,non-recurring, and other items as permitted or required by our ~~credit agreement~~ABL Facility and ~~indenture.~~indentures. Adjusted EBITDA among other things:

•

does not includenon-cash stock-based employee compensation expense, changes in the LIFO reserve, and ~~certain~~ othernon-cash charges; and

•

does not include ~~cash~~acquisition, restructuring, and~~non-cash~~ ~~restructuring, severance, and relocation~~ other costs incurred to realize future cost savings and enhance our ~~operations; and~~operations.

~~does not reflect advisory fees paid.~~

We have included the ~~calculations~~calculation of ~~EBITDA and~~ Adjusted EBITDA for the periods presented.

Results of Operations ~~EBITDA,~~ and Adjusted EBITDA

The following table sets forth a summary of our results of operations ~~EBITDA,~~ and Adjusted EBITDA for the periods indicated (in millions, except per share data):


	Three Months Ended
	December 30, 2023		December 31, 2022			Change			%
Net sales	$	14,295.7	$	13,898.9		$	396.8			2.9
Cost of goods sold		12,697.6		12,399.3			298.3			2.4
Gross profit		1,598.1		1,499.6			98.5			6.6
Operating expenses		1,424.2		1,355.6			68.6			5.1
Operating profit		173.9		144.0			29.9			20.8
Other expense, net
Interest expense		61.4		55.7			5.7			10.2
Other, net		0.8		(7.9	)		8.7			110.1
Other expense, net		62.2		47.8			14.4			30.1
Income before income taxes		111.7		96.2			15.5			16.1
Income tax expense		33.4		25.1			8.3			33.1
Net income (GAAP)	$	78.3	$	71.1		$	7.2			10.1
Adjusted EBITDA (Non-GAAP)	$	345.4	$	308.8		$	36.6			11.9
Weighted-average common shares outstanding:
Basic		154.2		154.1			0.1			0.1
Diluted		155.7		156.1			(0.4	)		(0.3	)
Earnings per common share:
Basic	$	0.51	$	0.46		$	0.05			10.9
Diluted	$	0.50	$	0.46		$	0.04			8.7

   Three Months Ended
   December 30, 2017    December 31, 2016    Change    %
Net sales
   $ 4,311.1    $ 4,051.8    $ 259.3    6.4
Cost of goods sold
   3,743.5    3,534.6    208.9    5.9








Gross profit
   567.6    517.2    50.4    9.7
Operating expenses
   518.5    465.9    52.6    11.3








Operating profit
   49.1    51.3    (2.2 )    (4.3 )
Other expense

Interest expense
   15.1    13.6    1.5    11.0
Other, net
   (0.1 )    (0.5 )    0.4    80.0








Other expense, net
   15.0    13.1    1.9    14.5
Income before income taxes
   34.1    38.2    (4.1 )    (10.7 )
Income tax expense
   (43.9 )    15.3    (59.2 )    NM








Net income
   $ 78.0    $ 22.9    $ 55.1    240.6








EBITDA
   $ 81.5    $ 82.2    $ (0.7 )    (0.9 )
Adjusted EBITDA
   $ 105.0    $ 93.6    $ 11.4    12.2
Weighted-average common shares outstanding:

Basic
   101.4    100.1    1.3    1.3
Diluted
   104.5    102.7    1.8    1.8
Earnings per common share:

Basic
   $ 0.77    $ 0.23    $ 0.54    234.8
Diluted
   $ 0.75    $ 0.22    $ 0.53    240.9
   Six Months Ended
   December 30, 2017    December 31, 2016    Change ��    %
Net sales
   $ 8,676.0    $ 8,097.9    $ 578.1    7.1
Cost of goods sold
   7,553.7    7,069.4    484.3    6.9








Gross profit
   1,122.3    1,028.5    93.8    9.1
Operating expenses
   1,022.7    945.6    77.1    8.2








Operating profit
   99.6    82.9    16.7    20.1
Other expense

Interest expense
   29.7    26.5    3.2    12.1
Other, net
   (0.4 )    (1.3 )    0.9    69.2








Other expense, net
   29.3    25.2    4.1    16.3
Income before income taxes
   70.3    57.7    12.6    21.8
Income tax expense
   (30.3 )    22.6    (52.9 )    NM








Net income
   $ 100.6    $ 35.1    $ 65.5    186.6








EBITDA
   $ 163.7    $ 144.1    $ 19.6    13.6
Adjusted EBITDA
   $ 195.7    $ 169.6    $ 26.1    15.4
Weighted-average common shares outstanding:

Basic
   101.2    100.0    1.2    1.2
Diluted
   104.5    102.5    2.0    2.0
Earnings per common share:

Basic
   $ 0.99    $ 0.35    $ 0.64    182.9
Diluted
   $ 0.96    $ 0.34    $ 0.62    182.4


	For the Six Months Ended
	December 30, 2023			December 31, 2022		Change			%
Net sales	$	29,234.3		$	28,618.2	$	616.1			2.2
Cost of goods sold		25,973.3			25,543.5		429.8			1.7
Gross profit		3,261.0			3,074.7		186.3			6.1
Operating expenses		2,870.9			2,739.5		131.4			4.8
Operating profit		390.1			335.2		54.9			16.4
Other expense, net
Interest expense		117.5			106.1		11.4			10.7
Other, net		(2.4	)		3.0		(5.4	)		(180.0	)
Other expense, net		115.1			109.1		6.0			5.5
Income before income taxes		275.0			226.1		48.9			21.6
Income tax expense		76.0			59.3		16.7			28.2
Net income (GAAP)	$	199.0		$	166.8	$	32.2			19.3
Adjusted EBITDA (Non-GAAP)	$	729.2		$	663.5	$	65.7			9.9
Weighted-average common shares outstanding:
Basic		154.5			153.9		0.6			0.4
Diluted		156.2			155.9		0.3			0.2
Earnings per common share:
Basic	$	1.29		$	1.08	$	0.21			19.4
Diluted	$	1.27		$	1.07	$	0.20			18.7

We believe that the most directly comparable GAAP measure to ~~EBITDA and~~ Adjusted EBITDA is net income. The following table reconciles ~~EBITDA and~~ Adjusted EBITDA to net income for the periods presented:

   Three Months Ended    Six Months Ended
   December 30, 2017    December 31, 2016    December 30, 2017    December 31, 2016
   (dollars in millions)    (dollars in millions)
Net income
   $ 78.0    $ 22.9    $ 100.6    $ 35.1
Interest expense
   15.1    13.6    29.7    26.5
Income tax (benefit) expense
   (43.9 )    15.3    (30.3 )    22.6
Depreciation
   24.3    22.5    49.1    43.3
Amortization of intangible assets
   8.0    7.9    14.6    16.6








EBITDA
   81.5    82.2    163.7    144.1
Non-cash items(1)
   11.8    3.8    16.1    8.5
Acquisition, integration and reorganization charges(2)
   1.7    3.8    4.1    6.2
Productivity initiatives(3)
   8.5    2.7    9.8    6.8
Other adjustment items(4)
   1.5    1.1    2.0    4.0








Adjusted EBITDA
   $ 105.0    $ 93.6    $ 195.7    $ 169.6


	Three Months Ended						Six Months Ended
	December 30, 2023			December 31, 2022			December 30, 2023			December 31, 2022
	(In millions)						(In millions)
Net income (GAAP)	$	78.3		$	71.1		$	199.0		$	166.8
Interest expense		61.4			55.7			117.5			106.1
Income tax expense		33.4			25.1			76.0			59.3
Depreciation		86.3			77.4			170.1			153.5
Amortization of intangible assets		57.0			47.8			102.5			90.9
Change in LIFO reserve (1)		21.8			25.0			41.0			51.8
Stock-based compensation expense		11.0			11.4			21.7			22.9
Loss (gain) on fuel derivatives		1.8			(7.3	)		(1.7	)		2.5
Acquisition, integration & reorganization expenses (2)		3.9			2.8			13.7			5.8
Other adjustments (3)		(9.5	)		(0.2	)		(10.6	)		3.9
Adjusted EBITDA (Non-GAAP)	$	345.4		$	308.8		$	729.2		$	663.5

~~(1)~~

~~Includes adjustments fornon-cash~~ charges arising from stock-based compensation, interest rate swap hedge ineffectiveness, and gain/loss on disposal of assets. Stock-based compensation cost was $11.1 million and $3.9 million in the second quarter of fiscal 2018 and fiscal 2017, respectively, and $14.5 million and $8.1 million in the first six months of fiscal 2018 and fiscal 2017, respectively. In addition, this includes an increase in the LIFO reserve of $0.4 million and $0.6 million for the second quarter of fiscal 2018 and fiscal 2017, respectively, and an increase in the LIFO reserve of $1.2 million in both the first six months of fiscal 2018 and fiscal 2017.

~~(2)~~

~~Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, facility closing costs, and advisory fees.~~

~~(3)~~

~~Consists primarily of professional fees and related expenses associated with productivity initiatives.~~

~~(4)~~

~~Consists of amounts related to fuel collar derivatives, certain financing transactions, lease amendments, and franchise tax expense and other adjustments permitted by our credit agreements.~~

(1)

Includes a decrease in the LIFO reserve of $1.1 million for Foodservice and an increase of $22.9 million for Convenience for the second quarter of fiscal 2024 compared to an increase of $2.0 million for Foodservice and an increase of $23.0 million for Convenience for the second quarter of fiscal 2023. The LIFO reserve increased $0.6 million for Foodservice and $40.4 million for Convenience for the first six months of fiscal 2024 compared to a decrease of $2.0 million for Foodservice and an increase of $53.8 million for Convenience for the first six months of fiscal 2023.

(2)

Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.

(3)

Includes $8.1 million gain on the sale of a Foodservice warehouse facility for the three and six months ended December 30, 2023, as well as asset impairments, insurance proceeds due to hurricane and other weather related events, amounts related to favorable and unfavorable leases, foreign currency transaction gains and losses, franchise tax expense, and other adjustments permitted by our ABL Facility.

Consolidated Results of Operations

Three and six months ended December 30, ~~2017~~2023 compared to the three and six months ended December 31, ~~2016~~2022

Net Sales

Net sales growth is a function of acquisitions, case growth, pricing (which is primarily based on product inflation/deflation), and a changing mix of customers, channels, and product categories sold.

Net sales increased ~~$259.3~~$396.8 million, or ~~6.4%~~2.9%, ~~for~~from the second quarter of fiscal ~~2018 compared~~2023 to the second quarter of fiscal ~~2017 and~~2024 due to an increase in cases sold. Net sales increased ~~$578.1~~$616.1 million, or ~~7.1%~~2.2%, for the first six months of fiscal ~~2018~~2024 compared to the first six months of fiscal ~~2017.~~2023. The increase in net sales was primarily attributable to ~~sales growth~~an increase in ~~Vistar, particularly~~cases sold, partially offset by a decrease in selling price per case as a result of 1.4% year-to-date deflation in our Foodservice segment as compared to the ~~theater, hospitality, retail, and vending channels, case growth in Performance Foodservice, particularly in the independent channel, and recent acquisitions. Net sales growth was driven by~~same prior fiscal year period. Total organic case volume ~~growth of 4.2%~~increased 2.1% and ~~3.9%~~2.4%, in the second quarter and first six months of fiscal ~~2017,~~2024, respectively, ~~as well as~~compared to the same periods of fiscal 2023. Total organic case volume benefited from an increase of 8.7% and 8.1% in ~~selling price per case in both~~organic independent cases sold during the second quarter and first six months of fiscal ~~2018 compared~~2024, respectively, growth in Performance Brands cases, growth in cases sold to ~~the prior year periods.~~Foodservice's Chain business, and broad-based growth across Vistar's channels.

Gross Profit

Gross profit increased ~~$50.4~~$98.5 million, or ~~9.7%~~6.6%, for the second quarter of fiscal ~~2018~~2024 compared to the second quarter of fiscal ~~2017~~2023. The increase in gross profit for the second quarter of fiscal 2024 was primarily driven by growth in cases sold and a favorable shift in the mix of cases sold, including growth in the independent channel and Performance Brands. Gross profit increased ~~$93.8~~$186.3 million, or ~~9.1%~~6.1%, for the first six months of fiscal ~~2018~~2024 compared to the first six months of fiscal ~~2017.~~2023. The increase in gross profit for the first six months of fiscal 2024 was primarily ~~the result~~driven by cost of goods sold optimization through procurement efficiencies, as well as growth in ~~cases. Within Performance Foodservice, case~~cases sold, including growth toin the independent ~~customers positively affected gross profit per case.~~channel. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers. Also, in the second quarter and first six months of fiscal 2018, Performance Foodservice grew our Performance Brand sales, which have higher gross profit per case compared to the other brands we sell. See “—Segment Results—Performance Foodservice” below for additional discussion.

Operating Expenses

Operating expenses increased ~~$52.6~~$68.6 million, or ~~11.3%~~5.1%, for the second quarter of fiscal ~~2018~~2024 compared to the second quarter of fiscal ~~2017 and increased $77.1 million, or 8.2%, for the first six months of fiscal 2018 compared to the first six months of fiscal 2017.~~2023. The increase in operating expenses was primarily driven by ~~the~~a $42.6 million increase in ~~case volume~~personnel expense primarily related to wages, commissions, and ~~the resulting impact on variable operational~~benefits, a $23.4 million increase in insurance expense primarily related to vehicle liability and ~~selling expenses, as well as cost of living and other increases in~~workers’ compensation, and ~~benefits. Operating expenses also increased~~a $11.4 million increase in repairs and maintenance expense primarily related to transportation equipment, partially offset by a $11.0 million decrease in fuel expense primarily due to lower fuel prices in the second quarter of fiscal ~~2018 due~~2024 as compared to ~~a $7.2~~the prior year period.

Operating expenses increased $131.4 million, ~~increase in stock-based compensation as a result of the accelerated vesting of performance-based awards under the 2007 Option Plan andnon-recurring~~ ~~development costs related to certain productivity initiatives the Company no longer plans to pursue. For~~or 4.8%, for the first six months of fiscal ~~2018,~~2024 compared to the first six months of fiscal 2023. The increase in operating expenses ~~also increased as~~for the first six months of fiscal 2024 was primarily driven by a ~~result~~$74.9 million increase in personnel expenses primarily related to wages, commissions, and benefits, a $31.4 million increase in insurance expense primarily related to vehicle liability and workers’ compensation, and a $26.3 million increase in repairs and maintenance expense primarily related to transportation equipment for the first six months of fiscal 2024 compared to the prior year period. These increases ~~in stock-based compensation expense of $6.4 million and fuel expense of $5.6 million,~~were partially offset by a $28.0 million decrease in fuel expense primarily due to lower fuel prices for the first six months of ~~$2.0 million in professional, legal and consulting fees.~~fiscal 2024 compared to the prior year period.

Depreciation and amortization of intangible assets increased from ~~$30.4~~$125.2 million in the second quarter of fiscal ~~2017~~2023 to ~~$32.3~~$143.3 million in the second quarter of fiscal ~~2018.~~2024. Depreciation and amortization of intangible assets increased from ~~$59.9~~$244.4 million in the first six months of fiscal 2023 to $272.6 million in the first six months of fiscal 2024. Depreciation and amortization of intangible assets increased as a result of recent acquisitions, accelerated amortization of certain customer relationships and trade names, and an increase in transportation equipment under finance leases.

Net Income

Net income increased $7.2 million, or 10.1%, for the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023 driven by the increase in operating profit, partially offset by increases in income tax expense, other expense, and interest expense. Net income increased $32.2 million, or 19.3%, for the first six months of fiscal ~~2017~~2024 compared to ~~$63.7 million~~the first six months of fiscal 2023 due to the increase in operating profit and an increase in other income, partially offset by increases in income tax expense and interest expense. The increase in other income for the first six months of fiscal ~~2018. Depreciation of fixed assets increased as a result of larger capital outlays~~2024 primarily relates to support our growth, as well as recent acquisitions. This increase was partially offset by decreases in amortization of intangible assets, since certain intangibles are now fully amortized compared to the prior year.

~~Net Income~~

~~Net income increased $55.1 million, or 240.6%,~~realized and unrealized gains for the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017 as a result of the $59.2 million decrease in income tax expense, partially offset by the $2.2 million decrease in operating profit, a $1.5 million increasefuel hedging instruments. The increases in interest expense ~~and a $0.4 million decrease in other income.~~

~~The decrease in operating profit was a result of the increase in operating expenses discussed above. The increase in interest expense was~~were primarily the result of ~~higher average borrowings and~~ an increase in the average interest rate during the second quarter and first six months of fiscal ~~2018~~2024 compared to the ~~second quarter of fiscal 2017.~~ prior year periods.

The ~~$0.4 million decrease in other income related primarily to derivative activity.~~

~~The decrease in~~Company reported income tax expense ~~was primarily a result~~ of ~~the impact of the Tax Cuts~~$33.4 million and ~~Jobs Act (the “Act”) and the excess tax benefit associated with the vesting of stock-based compensation awards. Our effective tax rate in~~$76.0 million for the second quarter and first six months of fiscal ~~2018 was-128.3%~~2024, respectively, compared ~~to 40.1% in the second quarter of fiscal 2017.~~

The Act was signed into law on December 22, 2017. Among its numerous changes to the U.S. Internal Revenue Code, the Act reduces the U.S. federal corporate rate from 35% to 21%, which will result in a blended U.S. Federal statutory rate of approximately 28% for the Company. As a result of the Act, the Company revalued its net deferred tax liability, resulting in a decrease to the net deferred tax liability of $37.4 million with a corresponding net benefit to income tax expense of ~~$37.4~~$25.1 million and $59.3 million for the ~~three and six months ended December 30, 2017. The Company estimates that its effective tax rate for fiscal 2018 will be approximately 33%.~~

~~Additionally, in the~~ second quarter ~~of fiscal 2018, performance vesting criteria for certain stock-based compensation awards was met resulting in an excess tax benefit of $15.4 million for the three~~ and ~~six months ended December 30, 2017.~~

~~Net income increased $65.5 million, or 186.6%, for the~~ first six months of fiscal ~~2018 compared to~~2023, respectively. Our effective tax rates for the second quarter and first six months of fiscal ~~2017 as a result of~~2024 were 29.9% and 27.6%, respectively, compared to 26.1% and 26.2%, for the ~~$52.9 million decrease in income tax expense~~second quarter and ~~the $16.7 million increase in operating profit partially offset by a $3.2 million increase in interest expense and a $0.9 decrease in other income.~~

The increase in operating profit was a result of the increase in gross profit discussed above. The increase in interest expense was primarily the result of higher average borrowings and an increase in the average interest rate during the first six months of fiscal ~~2018 compared to the first six months of fiscal 2017.~~2023, respectively. The ~~$0.9 million decrease in other income related primarily to derivative activity.~~

~~The decrease in income tax expense was primarily a result of the impact of the Act and the excess tax benefit associated with the vesting of stock-based compensation awards. Our~~ effective tax rate for the periods ended December 30, 2023 differed from the prior year periods primarily due to an increase in ~~the first six months~~non-deductible expenses and state and foreign taxes as a percentage of ~~fiscal 2018 was-43.1%~~ ~~compared~~income, partially offset by an increase in deductible discrete items related to ~~39.2% in the first six months of fiscal 2017.~~

stock-based compensation.

Segment Results

~~We have~~The Company has three reportable ~~segments as described above—Performance~~segments: Foodservice, ~~PFG Customized,~~Vistar, and ~~Vistar.~~Convenience. Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Adjusted EBITDA. ~~For PFG Customized,~~Adjusted EBITDA ~~includes~~is defined as net income before interest expense, interest income, income taxes, depreciation, amortization and excludes certain allocated corporate expenses that are included in operating expenses. The allocated corporate expenses are determined based on a percentage of total sales. This percentage is reviewed on a periodic basis to ensureitems that the ~~allocation reflects a reasonable rate~~Company does not consider part of ~~corporate~~its segments' core operating results, including but not limited to stock-based compensation expense, changes in the LIFO reserve, acquisition, integration and reorganization expenses, ~~based on their use~~and gains and losses related to fuel derivatives. See Note 13. Segment Information within Part I, Item 1. Financial Statements of ~~corporate services.~~the consolidated financial statements in this Form 10-Q.

Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size. This includes the operations of our internal logistics unit responsible for managing and allocating inbound logistics revenue and ~~expense, as well as the operations of recent acquisitions.~~expense.

In the first quarter of fiscal 2018, the Company reorganized its information technology department, and expenses associated with business application teams are now included in the segments results. The EBITDA for Performance Foodservice, Vistar and Corporate & All Other for the three and six months ended December 31, 2016 has been adjusted to reflect this change.

The following tables set forth net sales and Adjusted EBITDA by segment for the periods indicated (dollars in millions):

Net Sales


	Three Months Ended												Three Months Ended
	December 30, 2017			December 31, 2016			Change			%			December 30, 2023			December 31, 2022			Change			%
Performance Foodservice	$	2,535.3		$	2,358.2		$	177.1			7.5
PFG Customized		888.2			933.5			(45.3	)		(4.9	)
Foodservice													$	7,079.3		$	6,896.6		$	182.7			2.6
Vistar		838.9			737.9			101.0			13.7			1,201.9			1,118.9			83.0			7.4
Convenience														5,941.4			5,864.1			77.3			1.3
Corporate & All Other		110.6			77.9			32.7			42.0			227.7			154.0			73.7			47.9
Intersegment Eliminations		(61.9	)		(55.7	)		(6.2	)		(11.1	)		(154.6	)		(134.7	)		(19.9	)		(14.8	)

Total net sales	$	4,311.1		$	4,051.8		$	259.3			6.4		$	14,295.7		$	13,898.9		$	396.8			2.9


	Six Months Ended
	December 30, 2017			December 31, 2016			Change			%
Performance Foodservice	$	5,162.4		$	4,794.6		$	367.8			7.7
PFG Customized		1,784.3			1,800.8			(16.5	)		(0.9	)
Vistar		1,635.7			1,479.4			156.3			10.6
Corporate & All Other		218.7			136.8			81.9			59.9
Intersegment Eliminations		(125.1	)		(113.7	)		(11.4	)		(10.0	)

Total net sales	$	8,676.0		$	8,097.9		$	578.1			7.1

~~EBITDA~~


	Six Months Ended
	December 30, 2023			December 31, 2022			Change			%
Foodservice	$	14,356.3		$	14,226.6		$	129.7			0.9
Vistar		2,452.3			2,209.0			243.3			11.0
Convenience		12,278.4			12,151.0			127.4			1.0
Corporate & All Other		468.1			306.3			161.8			52.8
Intersegment Eliminations		(320.8	)		(274.7	)		(46.1	)		(16.8	)
Total net sales	$	29,234.3		$	28,618.2		$	616.1			2.2

   Three Months Ended
   December 30, 2017    December 31, 2016    Change    %
Performance Foodservice
   $ 83.0    $ 75.5    $ 7.5    9.9
PFG Customized
   5.9    6.7    (0.8 )    (11.9 )
Vistar
   34.0    33.0    1.0    3.0
Corporate & All Other
   (41.4 )    (33.0 )    (8.4 )    (25.5 )








Total EBITDA
   $ 81.5    $ 82.2    $ (0.7 )    (0.9 )








   Six Months Ended
   December 30, 2017    December 31, 2016    Change    %
Performance Foodservice
   $ 161.8    $ 148.1    $ 13.7    9.3
PFG Customized
   11.1    10.6    0.5    4.7
Vistar
   59.8    54.8    5.0    9.1
Corporate & All Other
   (69.0 )    (69.4 )    0.4    0.6








Total EBITDA
   $ 163.7    $ 144.1    $ 19.6    13.6








Adjusted EBITDA


	Three Months Ended
	December 30, 2023			December 31, 2022			Change		%
Foodservice	$	224.1		$	214.2		$	9.9		4.6
Vistar		93.6			92.2			1.4		1.5
Convenience		83.5			69.3			14.2		20.5
Corporate & All Other		(55.8	)		(66.9	)		11.1		16.6
Total Adjusted EBITDA	$	345.4		$	308.8		$	36.6		11.9


	Six Months Ended
	December 30, 2023			December 31, 2022			Change		%
Foodservice	$	470.1		$	450.3		$	19.8		4.4
Vistar		182.2			166.6			15.6		9.4
Convenience		178.2			174.9			3.3		1.9
Corporate & All Other		(101.3	)		(128.3	)		27.0		21.0
Total Adjusted EBITDA	$	729.2		$	663.5		$	65.7		9.9

Segment Results—~~Performance~~ Foodservice

Three and six months ended December 30, ~~2017~~2023, compared to the three and six months ended December 31, ~~2016~~2022

Net Sales

Net sales for ~~Performance~~ Foodservice increased ~~$177.1~~$182.7 million, or ~~7.5%~~2.6%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024 and increased ~~$367.8~~$129.7 million, or ~~7.7%~~0.9%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018.~~2024. These increases in net sales were ~~attributable to~~driven by case volume growth in ~~cases sold. Case growth was driven~~our independent and Chain business, partially offset by ~~securing new independent customers and further penetrating existing customers.~~a decrease in selling price per case. Securing new and ~~expanded~~expanding business with independent customers resulted in organic independent ~~sales~~case growth of approximately ~~10.4%~~8.7% in the second quarter of fiscal 2024 and approximately 8.1% in the first six months of fiscal ~~2018~~2024, compared to the prior year periods. For the quarter, independent sales as a percentage of total ~~segment~~Foodservice sales were ~~44.5%~~39.1%. Overall product cost deflation was 0.4% for the second quarter of fiscal 2024 and 1.4% for the first six months of fiscal 2024.

Adjusted EBITDA

Adjusted EBITDA for ~~Performance~~ Foodservice increased ~~$7.5~~$9.9 million, or ~~9.9%~~4.6%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024 and increased ~~$13.7~~$19.8 million, or ~~9.3%~~4.4%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018.~~2024. These increases were the result of an increase in gross profit, partially offset by an increase in operating ~~expenses excluding depreciation and amortization.~~expenses. Gross profit contributing to Foodservice's Adjusted EBITDA increased ~~by 7.6%~~$48.0 million, or 5.2%, in the second quarter of fiscal ~~2018~~2024 and ~~7.0%~~increased $106.2 million, or 5.6% in the first six months of fiscal ~~2018,~~2024, compared to the prior year ~~periods, as a result of an increase in cases sold, as well as an increase in the gross profit per case.~~periods. The increase in gross profit ~~per case~~ was

driven by growth in cases sold and a favorable shift in the mix of cases sold, ~~toward independent customers and~~including more Performance Brands ~~as well as by an increase in procurement gains. Independent business has higher gross margins than Chain customers within this segment.~~products sold to our independent customers.

Operating expenses ~~excluding depreciation and amortization for Performance Foodservice~~impacting Foodservice's Adjusted EBITDA increased ~~by $19.4~~$38.2 million, or ~~7.0%~~5.3%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024. Operating expenses increased primarily as a result of a $23.2 million increase in personnel expenses primarily related to wages, commissions, and benefits due to an increase in full-time employees, a $12.9 million increase in insurance expense primarily related to vehicle liability and workers' compensation, and a $2.9 million increase in building rent expense primarily the result of incremental short term duplicative lease expenses associated with expansion projects, compared to the prior year period.

Operating expenses impacting Foodservice's Adjusted EBITDA increased ~~by $36.4~~$86.6 million, or ~~6.5%~~6.0%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018.~~2024. Operating expenses increased primarily as a result of a $57.1 million increase in personnel expenses primarily related to wages, commissions, and benefits due to an increase in ~~case volume~~full-time employees, a $15.7 million increase in insurance expense primarily related to vehicle liability and ~~the resulting impact on variable operational and selling expenses, as well as cost of living and other increases in~~workers' compensation, and ~~benefits. Operating expenses also increased~~an increase of $7.1 million of repairs and maintenance expense primarily related to transportation equipment as ~~a result of increases in fuel expense of $2.1 million and $3.4 million for~~ the second quarter and first six months of fiscal 2018, respectively. Additionally, insurance expense increased $0.9 million and $2.5 million in the second quarter of fiscal 2018 and the first six months of fiscal 2018, respectively, asCompany is waiting on replacement fleet, compared to the prior year ~~periods.~~period.

Depreciation and amortization of intangible assets recorded in this segment increased from ~~$14.0~~$71.8 million in the second quarter of fiscal ~~2017~~2023 to ~~$14.6~~$72.7 million in the second quarter of fiscal ~~2018~~2024 and increased from ~~$27.1~~$137.8 million in the first six months of fiscal ~~2017~~2023 to ~~$28.4~~$143.3 million in the first six months of fiscal ~~2018. These increases were the~~2024 as a result of ~~recent warehouse expansion and computer software projects being placed into service, partially offset by a decrease~~an increase in ~~amortization of intangible assets since certain intangibles are now fully amortized.~~transportation equipment under finance leases.

Segment Results—~~PFG Customized~~Vistar

Three and six months ended December 30, ~~2017~~2023, compared to the three and six months ended December 31, ~~2016~~2022

Net Sales

Net sales for ~~PFG Customized decreased $45.3~~Vistar increased $83.0 million, or ~~4.9%~~7.4%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024 and ~~decreased $16.5~~increased $243.3 million, or ~~0.9%~~11.0%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018. Excluding the impact~~2024. These increases in net sales were driven primarily by an increase in selling price per case as a result of ~~the Georgia facility that was closed~~inflation, a recent acquisition, and case volume growth in the ~~fourth quarter of fiscal 2017, net sales would have increased $14.0 million~~vending, office supply, office coffee service, and travel channels in the second quarter ~~of fiscal 2018~~ and ~~would have increased $102.6 million in the~~ first six months of fiscal ~~2018~~2024 compared to the prior year periods. ~~These increases were the result of a favorable shift in customer mix.~~

Adjusted EBITDA

Adjusted EBITDA for ~~PFG Customized decreased $0.8~~Vistar increased $1.4 million, or ~~11.9%~~1.5%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018. This decrease was primarily attributable to an increase in operating expenses, excluding depreciation~~2024 and ~~amortization, partially offset by an increase in gross profit. Gross profit for PFG Customized~~ increased ~~primarily as a result of a favorable shift in customer mix. EBITDA for this segment increased $0.5~~$15.6 million, or ~~4.7%~~9.4%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018 as a~~2024. These increases were the result of ~~a favorable shift in customer mix and~~ an increase in ~~case volume.~~

~~Operating expenses, excluding depreciation and amortization, decreased~~gross profit, partially offset by ~~$0.2~~an increase in operating expenses. Gross profit contributing to Vistar's Adjusted EBITDA increased $18.5 million, or ~~0.3%~~9.0%, infor the second quarter of fiscal ~~2018~~2024 and ~~decreased $1.2~~increased $38.5 million, or ~~1.2%~~9.7%, infor the first six months of fiscal ~~2018,~~2024 compared to the prior year ~~periods. These~~periods driven by a recent acquisition, pricing improvement from procurement efficiencies, and growth in cases sold, partially offset by expected decreases in ~~operating~~inventory holding gains.

Operating expenses ~~were~~impacting Vistar's Adjusted EBITDA increased $16.9 million, or 14.7%, from the second quarter of fiscal 2023 to the second quarter of fiscal 2024 and increased $22.7 million, or 9.9%, from the first six months of fiscal 2023 to the first six months of fiscal 2024. Operating expenses increased primarily as a result of a recent acquisition and increases of $2.0 million and $3.4 million in building rent expense as a result of lease renewals and expansion, for the ~~closed Georgia facility, partially offset by increases in personnel expenses~~second quarter and ~~fuel expense.~~first six months of fiscal 2024, respectively, compared to the prior year periods.

Depreciation and amortization of intangible assets recorded in this segment increased from ~~$3.6~~$10.6 million in the second quarter of fiscal ~~2017~~2023 to ~~$3.7~~$12.8 million in the second quarter of fiscal ~~2018~~2024 and ~~decreased~~increased from ~~$8.8~~$21.3 million in the first six months of fiscal ~~2017~~2023 to ~~$7.3~~$23.2 million in the first six months of fiscal ~~2018. The $1.5 million decrease in the first six months of fiscal 2018 is primarily~~2024 due to a ~~result of the absence of accelerated amortization of customer relationship intangible assets that was recorded in fiscal 2017.~~recent acquisition.

Segment Results—~~Vistar~~Convenience

Three and six months ended December 30, ~~2017~~2023, compared to the three and six months ended December 31, ~~2016~~2022

Net Sales

Net sales for ~~Vistar~~Convenience increased ~~$101.0~~$77.3 million, or ~~13.7%~~1.3%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024 and increased ~~$156.3~~$127.4 million, or ~~10.6%~~1.0%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018. These~~2024. The

increase in net sales for the second quarter and first six months of fiscal 2024 for Convenience was driven primarily by an increase in selling price per case as a result of cigarette manufacturers’ price increases ~~were driven~~and continued inflation for food and foodservice related products, partially offset by ~~case~~a decline in cigarette carton sales ~~growth in the segment’s theater, hospitality, retail,~~ and ~~vending channels.~~food and foodservice related cases sold.

Adjusted EBITDA

Adjusted EBITDA for ~~Vistar~~Convenience increased ~~$1.0~~$14.2 million, or ~~3.0%~~20.5%, from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024. This increase was a result of an increase in gross profit and a decrease in operating expenses. Gross profit contributing to Convenience's Adjusted EBITDA increased ~~$5.0~~$8.2 million, or ~~9.1%~~2.2%, for the second quarter of fiscal 2024 compared to the prior year period driven by pricing improvement from procurement efficiencies. Operating expenses impacting Convenience's Adjusted EBITDA decreased $5.9 million, or 1.9%, from the second quarter of fiscal 2023 to the second quarter of fiscal 2024. Operating expenses decreased primarily as a result of an $8.3 million decrease in personnel expenses from reduced contract labor and overtime, partially offset by a $4.4 million increase in insurance expenses primarily related to workers compensation and vehicle liability compared to the prior year period.

Adjusted EBITDA for Convenience increased $3.3 million, or 1.9%, from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018.~~2024. This increase was a result of a decrease in operating expenses, partially offset by a decrease in gross profit. Gross profit ~~dollar growth of $19.4~~contributing to Convenience's Adjusted EBITDA decreased $14.2 million, or ~~19.3%, for the second quarter of fiscal 2018 and $32.6 million, or 16.8%~~1.8%, for the first six months of fiscal ~~2018~~2024 compared to the prior year ~~periods, was driven~~period primarily due to expected decreases in inventory holding gains, partially offset by ~~an increase in~~pricing improvement from procurement efficiencies. Operating expenses impacting Convenience's Adjusted EBITDA decreased $17.5 million, or 2.8%, from the ~~number~~first six months of ~~cases sold, as well~~fiscal 2023 to the first six months of fiscal 2024. Operating expenses decreased primarily as a ~~favorable change~~result of a $15.0 million decrease in ~~sales mix.~~

~~Operating~~personnel expenses ~~excluding depreciation~~from reduced contract labor and ~~amortization, increased $19.1million, or 28.6%, for the second quarter of fiscal 2018 and $28.3 million, or 20.5%,~~overtime for the first six months of fiscal ~~2018~~2024 as compared to the prior year periods. Operating expenses increased primarily as a result of an increase in case volume and the resulting impact on variable operational and selling expenses, as well as cost of living and other increases in compensation and benefits. Operating expenses also increased a result of recent acquisitions and due to an increase in fuel expense.period.

Depreciation and amortization of intangible assets recorded in this segment increased from ~~$6.6~~$36.5 million in the second quarter of fiscal ~~2017~~2023 to ~~$6.9~~$37.2 million in the second quarter of fiscal ~~2018~~2024 and increased from ~~$11.8~~$73.3 million in the first six months of fiscal ~~2017~~2023 to ~~$13.2~~$74.9 million in the first six months of fiscal 2018. Amortization of intangible assets increased as a result of prior year acquisitions. Depreciation of fixed assets increased as a result of an increase in transportation equipment obtained under capital leases.2024.

Segment Results—Corporate & All Other

Three and six months ended December 30, ~~2017~~2023, compared to the three and six months ended December 31, ~~2016~~2022

Net Sales

Net sales for Corporate & All Other increased ~~$32.7~~$73.7 million from the second quarter of fiscal ~~2017~~2023 to the second quarter of fiscal ~~2018~~2024 and increased ~~$81.9~~$161.8 million from the first six months of fiscal ~~2017~~2023 to the first six months of fiscal ~~2018. The increase was~~2024. These increases were primarily attributable to recent acquisitions within a non-reportable segment and an increase in ~~logistics~~ services provided to our other segments.

Adjusted EBITDA

Adjusted EBITDA for Corporate & All Other was a negative ~~$41.4~~$55.8 million for the second quarter of fiscal ~~2018~~2024 compared to a negative ~~$33.0~~$66.9 million for the second quarter of fiscal 2017. The decrease in EBITDA in the second quarter of fiscal 2018 was driven by a $7.2 million increase in stock-based compensation as a result of the accelerated vesting of performance-based awards under the 2007 Option Plan. EBITDA in the second quarter of fiscal 2018 also included~~non-recurring~~ ~~development costs related to certain productivity initiatives the Company no longer plans to pursue.~~

~~EBITDA for Corporate & All Other~~2023 and was a negative ~~$69.0~~$101.3 million for the first six months of fiscal ~~2018~~2024 compared to a negative ~~$69.4~~$128.3 million for the first six months of fiscal ~~2017. The increase~~2023. Corporate & All Other’s Adjusted EBITDA benefited in ~~EBITDA was primarily driven by contributions~~the second quarter and first six months of fiscal 2024 from ~~recent acquisitions and decreases in professional, legal and consulting fees of $2.5~~$11.1 million and ~~insurance expense~~$21.6 million in Adjusted EBITDA, respectively, from the operations of ~~$2.3 million, partially offset by an increase~~acquisitions made in ~~stock-based compensation expense~~the second quarter of ~~$6.4 million.~~

fiscal 2023 and in the first quarter of fiscal 2024.

Depreciation and amortization of intangible assets recorded in this segment increased from ~~$6.2~~$6.3 million in the second quarter of fiscal ~~2017~~2023 to ~~$7.1~~$20.6 million in the second quarter of fiscal ~~2018~~2024 and increased from ~~$12.2~~$12.0 million infor the first six months of fiscal ~~2017~~2023 to ~~$14.8~~$31.2 million infor the first six months of fiscal ~~2018. The increase was primarily a result~~2024 due to recent acquisitions and accelerated amortization of ~~recent acquisitions.~~certain customer relationships and trade names.

Liquidity and Capital Resources

We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our credit facility, operating and ~~capital~~finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our credit ~~facility.~~facility or other debt instruments. Our working capital and borrowing levels are subject to seasonal fluctuations, typically with the lowest borrowing levels in the third and fourth fiscal quarters and the highest borrowing levels occurring in the first and second fiscal quarters. We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next twelve months and to maintain sufficient liquidity for normal operating purposes.

At December 30, 2017, our cash balance totaled $23.0 million, including restricted cash of $12.9 million, as compared to a cash balance totaling $21.0 million, including restricted cash of $12.9 million, at July 1, 2017. This increase in cash during the first six months of fiscal 2018 was attributable to net cash provided by financing activities of $70.8 million and net cash provided by operating activities of $32.6 million, partially offset by net cash used in investing activities of $101.4 million. We borrow under our ~~ABL Facility~~credit facility or pay it down regularly based on our cash flows from operating and investing activities. Our practice is to minimize interest expense while maintaining reasonable liquidity.

As market conditions warrant, we ~~and our stockholders~~ may from time to time ~~depending upon market conditions,~~ seek to repurchase our securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such repurchases may be funded by incurring new debt, including additional borrowings under our ~~ABL Facility.~~credit facility. In addition, depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness, make investments or acquisitions or for other purposes. Any new debt may be secured debt.

~~Operating Activities~~We are exposed to interest rate risk related to changes in interest rates for borrowings under our ABL Facility. To add stability to interest expense and manage our exposure to interest rate movements, we enter into interest rate swap agreements. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments. As of December 30, 2023, $350.0 million of the outstanding ABL Facility balance is currently hedged under interest rate swaps which results in 80% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.

On November 16, 2022, the Board of Directors authorized a new share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The new share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon marketplace conditions and other factors, including compliance with the covenants in the agreements governing our existing indebtedness. During the six months ended December 30, 2023, the Company repurchased 1.3 million shares of the Company's common stock for a total of $78.1 million. As of December 30, 2023, $210.6 million remained available for share repurchases.

Our contractual cash requirements over the next 12 months and beyond relate to our long-term debt and associated interest payments, operating and finance leases, and purchase obligations. For information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, see Note 6. Debt and Note 7. Leases, respectively, of the consolidated financial statements in this Form 10-Q. As of December 30, 2023, the Company had total purchase obligations of $320.4 million, which includes agreements for purchases related to capital projects and services in the normal course of business, for which all significant terms have been confirmed, as well as a minimum amount due for various Company meetings and conferences. Purchase obligations also include amounts committed to various capital projects in process or scheduled to be completed in the coming fiscal years. As of December 30, 2023, the Company had commitments of $228.8 million for capital projects related to warehouse expansion and improvements and warehouse equipment. The Company anticipates using cash flows from operations or borrowings under the ABL Facility to fulfill these commitments. Amounts due under these agreements were not included in the Company’s consolidated balance sheet as of December 30, 2023.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next 12 months and to maintain sufficient liquidity for normal operating purposes and to fund capital expenditures.

As of December 30, 2023, our cash balance totaled $23.9 million, including restricted cash of $7.5 million, as compared to a cash balance totaling $20.0 million, including restricted cash of $7.3 million, as of July 1, 2023.

Six months ended December 30, ~~2017~~2023, compared to ~~Six~~the six months ended December 31, ~~2016~~2022

Operating Activities

During the first six months of fiscal ~~2018,~~2024 and fiscal 2023, our operating activities provided cash flow of ~~$32.6~~$554.0 million ~~while during the first six months of fiscal 2017 our operating activities used cash flow of $25.5 million.~~and $424.5 million, respectively. The increase in cash ~~flows~~flow provided by operating activities in the first six months of fiscal ~~2018~~2024 compared to the first six months of fiscal ~~2017~~2023 was largely driven by improvements in working capital and higher operating ~~income and improved working capital management.~~income.

Investing Activities

Cash used in investing activities totaled ~~$101.4~~$436.4 million in the first six months of fiscal ~~2018~~2024 compared to ~~$161.8~~$160.3 million in the first six months of fiscal ~~2017.~~2023. These investments consisted ~~primarily~~ of ~~payments~~cash paid for ~~business~~ acquisitions of ~~$63.2~~$308.1 million in the first six months of fiscal 2024 compared to $65.8 million in the first six months of fiscal 2023, along with capital purchases of property, plant, and equipment of $147.1 million and $98.1 million for the first six months of fiscal ~~2018 and $82.1 million for the first six months of fiscal 2017 and capital purchases of property, plant, and equipment of $38.5 million and $79.9 million for the first six months of fiscal 2018~~2024 and the first six months of fiscal ~~2017,~~2023, respectively. For the first six months of fiscal ~~2018,~~2024, purchases of property, plant, and equipment primarily consisted of ~~information technology and equipment, as well as the~~ outlays for warehouse ~~expansions~~improvements and ~~improvements.~~expansion, warehouse equipment, transportation equipment, and information technology. The following table presents the capital purchases of property, plant, and equipment by ~~segment:~~segment.

(Dollars in millions)
   Six Months Ended
   December 30, 2017    December 31, 2016
Performance Foodservice
   $ 20.5    $ 53.8
PFG Customized
   6.3    4.9
Vistar
   5.6    2.2
Corporate & All Other
   6.1    19.0




Total capital purchases of property, plant and equipment
   $ 38.5    $ 79.9

As of December 30, 2017, the Company had commitments of $7.0 million for capital projects related to warehouse expansion and improvements. The Company anticipates using borrowings from the ABL Facility to fulfill these commitments.


	Six Months Ended
(Dollars in millions)	December 30, 2023		December 31, 2022
Foodservice	$	92.6	$	76.6
Vistar		18.6		4.5
Convenience		11.9		13.5
Corporate & All Other		24.0		3.5
Total capital purchases of property, plant and equipment	$	147.1	$	98.1

Financing Activities

During the first six months of fiscal ~~2018,~~2024, our financing activities ~~provided~~used cash flow of ~~$70.8~~$113.7 million, which consisted primarily of ~~$116.4~~$78.1 million in ~~net borrowings~~payments to repurchase common stock and payments under ~~our ABL facility, which was partially offset by cash paid for shares withheld to cover taxes of $27.8 million and other financing activities.~~finance lease obligations.

During the first six months of fiscal ~~2017,~~2023, our financing activities ~~provided~~used cash flow of ~~$188.1~~$269.6 million, which consisted primarily of ~~$192.8~~$232.1 million in net ~~borrowings~~payments under our ABL ~~facility, which was partially offset by cash paid for shares withheld to cover taxes of $1.1 million and other financing activities.~~Facility.

The following describes our financing arrangements as of December 30, ~~2017:~~2023:

~~ABL Facility~~Credit Agreement: PFGC, ~~Inc. (“PFGC”),~~ a wholly-owned subsidiary of the Company, ~~is a party to the ABL Facility. On August 3, 2017, PFGC~~ and Performance Food Group, Inc., each a wholly-owned subsidiary of the Company, entered into the First Amendment to the ABL Facility (the “Amendment”). The Amendment amended the ABL Facility by, among other things, (i) increasing the aggregate principal amount under the ABL Facility from $1.6 billion to $1.95 billion by increasing Tranche A Commitments by $325,000,000 and the Tranche~~A-1~~ Commitments by $25,000,000 and (ii) maintaining the level of additional commitments permitted, excluding the additional commitments effected pursuant to the Amendment, at $800,000,000 under uncommitted incremental facilities.

~~The ABL Facility is secured by the majority of the tangible assets of PFGC and its subsidiaries.~~ Performance Food Group, Inc., a wholly-owned subsidiary of PFGC, are parties to the ABL Facility. The ABL Facility has an aggregate principal amount of $4.0 billion under the revolving loan facility and is scheduled to mature on September 17, 2026.

Performance Food Group, Inc. is the lead borrower under the ABL Facility, which is jointly and severally guaranteed by, and secured by the majority of the assets of, PFGC and all material domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). Availability for loans and letters of credit under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including trade accounts receivable, inventory, owned real properties, and owned transportation equipment. The borrowing base is reduced quarterly by a cumulative fraction of the real properties and transportation equipment values. Advances on accounts receivable and inventory are subject to change based on periodic commercial finance examinations and appraisals, and the real property and transportation equipment values included in the borrowing base are subject to change based on periodic appraisals. Audits and appraisals are conducted at the direction of the administrative agent for the benefit and on behalf of all lenders.

Borrowings under the ABL Facility bear interest, at Performance Food Group, Inc.’s option, at (a) the Base Rate (defined as the ~~greater~~greatest of (i) a floor rate of 0.00%, (ii) the ~~Federal Funds Rate~~federal funds rate in effect on such date plus 0.5%, ~~(ii)~~(iii) the ~~Prime Rate~~prime rate on such day, or ~~(iii)~~(iv) one month ~~LIBOR~~Term SOFR (as defined in the ABL Facility) plus 1.0%) plus a spread or (b) ~~LIBOR~~Adjusted Term SOFR (as defined in the ABL Facility) plus a spread. The ABL Facility also provides for an unused commitment fee ~~ranging from 0.25% to 0.375%.~~at a rate of 0.250% per annum.

The following table summarizes outstanding borrowings, availability, and the average interest rate under the Company's ABL Facility:


(Dollars in millions)	As of December 30, 2017			As of July 1, 2017			As of December 30, 2023			As of July 1, 2023
Aggregate borrowings	$	1,016.3		$	899.9		$	1,193.0		$	1,154.0
Letters of credit		123.6			105.5			171.5			172.2
Excess availability, net of lenders’ reserves of $12.2 and $11.2		577.8			594.6
Average interest rate		2.98	%		2.59	%
Excess availability, net of lenders’ reserves of $100.7 and $99.7								2,635.5			2,673.8
Average interest rate, excluding impact of interest rate swaps								6.60	%		6.35	%

The ABL Facility contains covenants requiring the maintenance of a minimum consolidated fixed charge coverage ratio if excess availability falls below the greater of (i) ~~$160.0~~$320.0 million and (ii) 10% of the lesser of the borrowing base and the revolving credit facility amount for five consecutive business days. The ABL Facility also contains customary restrictive covenants that include, but are not limited to, restrictions on PFGC’s and certain of its subsidiary's ability to incur additional indebtedness, pay dividends, create liens, make investments or specified payments, and dispose of assets. The ABL Facility provides for customary events of default, including payment defaults and cross-defaults on other material indebtedness. If an event of default occurs and is continuing, amounts due under such agreement may be accelerated and the rights and remedies of the lenders under ~~such agreement available under~~ the ABL Facility may be exercised, including rights with respect to the collateral securing the obligations under such agreement.

Senior ~~Notes:~~Notes due 2025: On ~~May 17, 2016,~~April 24, 2020, Performance Food Group, Inc. issued and sold ~~$350.0~~$275.0 million aggregate principal amount of its ~~5.500%~~6.875% Senior Notes due ~~2024~~2025 (the ~~“Notes”~~"Notes due 2025")~~, pursuant to an indenture dated as of May 17, 2016.~~. The Notes due 2025 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2025 are not guaranteed by Performance Food Group Company.

The proceeds from the Notes due 2025 were used ~~to pay in full the remaining outstanding aggregate principal amount of loans under a Credit Agreement providing~~ for ~~a term loan facility~~working capital and ~~to terminate the facility; to temporarily repay a portion of the outstanding borrowings under the ABL Facility;~~general corporate purposes and to pay the fees, expenses, and other transaction costs incurred in connection with the ~~Notes.~~Notes due 2025.

The Notes due 2025 were issued at 100.0% of their par value. The Notes due 2025 mature on ~~June~~May 1, ~~2024~~2025 and bear interest at a rate of ~~5.500%~~6.875% per year, payable semi-annually in arrears.

The indenture governing the Notes due 2025 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to ~~but~~incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2025 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2025 to become or be declared due and payable.

Senior Notes due 2027:On September 27, 2019, PFG Escrow Corporation (which merged with and into Performance Food Group, Inc.) issued and sold $1,060.0 million aggregate principal amount of its 5.500% Senior Notes due 2027 ("the "Notes due 2027"). The Notes due 2027 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2027 are not ~~including,~~guaranteed by Performance Food Group Company.

The proceeds from the ~~redemption date. In addition, beginning~~Notes due 2027 along with an offering of shares of the Company’s common stock and borrowings under a prior credit agreement, were used to fund the cash consideration for the acquisition of Reinhart Foodservice, L.L.C and to pay related fees and expenses.

The Notes due 2027 were issued at 100.0% of their par value. The Notes due 2027 mature on ~~June 1, 2019,~~October 15, 2027 and bear interest at a rate of 5.500% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2027 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2027 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or a part of the Notes due 2027 at a redemption price equal to ~~102.750%~~101.375% of the principal amount ~~redeemed.~~redeemed, plus accrued and unpaid interest. The redemption price decreases to ~~101.325% and 100.000%~~100% of the principal amount redeemed, on June 1, 2020 and June 1, 2021, respectively. In addition, at any time prior to June 1, 2019, Performance Food Group, Inc. may redeem up to 40% of the Notes from the proceeds of certain equity offerings at a redemption price equal to 105.500% of the principal amount thereof, plus accrued and unpaid ~~interest.~~interest on October 15, 2024.

The indenture governing the Notes due 2027 contains covenants limiting, among other things, PFGC and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2027 also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes due 2027 to become or be declared due and payable.

Senior Notes due 2029: On July 26, 2021, Performance Food Group, Inc. issued and sold $1.0 billion aggregate principal amount of its 4.250% Senior Notes due 2029 (the “Notes due 2029”). The Notes due 2029 are jointly and severally guaranteed on a senior unsecured basis by PFGC and all domestic direct and indirect wholly-owned subsidiaries of PFGC (other than captive insurance subsidiaries and other excluded subsidiaries). The Notes due 2029 are not guaranteed by Performance Food Group Company.

The proceeds from the Notes due 2029 were used to pay down the outstanding balance of the ABL Facility, to redeem the 5.500% Senior Notes due 2024, and to pay the fees, expenses, and other transaction costs incurred in connection with the Notes due 2029.

The Notes due 2029 were issued at 100.0% of their par value. The Notes due 2029 mature on August 1, 2029 and bear interest at a rate of 4.250% per year, payable semi-annually in arrears.

Upon the occurrence of a change of control triggering event or upon the sale of certain assets in which Performance Food Group, Inc. does not apply the proceeds as required, the holders of the Notes due 2029 will have the right to require Performance Food Group, Inc. to repurchase each holder’s Notes due 2029 at a price equal to 101% (in the case of a change of control triggering event) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest. Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at any time prior to August 1, 2024, at a redemption price equal to 100% of the principal amount of the Notes due 2029 being redeemed plus a make-whole premium and accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, beginning on August 1, 2024, Performance Food Group, Inc. may redeem all or part of the Notes due 2029 at a redemption price equal to 102.125% of the principal amount redeemed, plus accrued and unpaid interest. The redemption price decreases to 101.163% and 100% of the principal amount redeemed, plus accrued and unpaid interest on August 1, 2025, and August 1, 2026, respectively. In addition, at any time prior to August 1, 2024, Performance Food Group, Inc. may redeem up to 40% of the Notes due 2029 from the proceeds of certain equity offerings at a redemption price equal to 104.250% of the principal amount thereof, plus accrued and unpaid interest.

The indenture governing the Notes due 2029 contains covenants limiting, among other things, PFGC’s and its restricted subsidiaries’ ability to incur or guarantee additional debt or issue disqualified stock or preferred stock; pay dividends and make other distributions on, or redeem or repurchase, capital stock; make certain investments; incur certain liens; enter into transactions with affiliates; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; create certain restrictions on the ability of PFGC’s restricted subsidiaries to make dividends or other payments to PFGC; designate restricted subsidiaries as unrestricted subsidiaries; and transfer or sell certain assets. These covenants are subject to a number of important exceptions and qualifications. The Notes due 2029 also contain customary ~~restrictive covenants under~~events of default, the occurrence of which ~~all~~could result in the principal of ~~the net assets of PFGC~~ and its subsidiaries were restricted from distribution to Performance Food Group Company, except for approximately $302.0 million of restricted payment capacity available under such debt agreements, as of December 30, 2017. Such minimum estimated restricted payment capacity is calculated basedaccrued interest on the ~~most restrictive of our debt agreements~~Notes due 2029 to become or be declared due and may fluctuate from period to period, which fluctuations may be material. Our restricted payment capacity under other debt instruments to which the Company is subject may be materially higher than the foregoing estimate.payable.

As of December 30, ~~2017, we were~~2023, the Company was in compliance with all of the covenants under the ABL Facility and ~~Notes.~~the indentures governing the Notes due 2025, the Notes due 2027 and the Notes due 2029.

~~Unsecured Subordinated Promissory Note.~~ In connection with an acquisition, Performance Food Group, Inc. issued a $6.0 million interest only, unsecured subordinated promissory note on December 21, 2012, bearing an interest rate of 3.5%. The $6.0 million promissory note was paid off in December 2017.

~~Contractual Obligations~~

~~Refer to the “Contractual Cash Obligations” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form10-K~~ for the fiscal year ended July 1, 2017 for details on our contractual obligations and commitments to make specified contractual future cash payments as of July 1, 2017. Other than in connection with the Amendment described above, there have been no material changes to our specified contractual obligations through December 30, 2017.

~~Off-Balance~~ ~~Sheet Arrangements~~

~~We do not have anyoff-balance~~ sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Total Assets by Segment

Total assets by segment discussed below exclude intercompany receivables between segments.

Total assets for ~~Performance~~ Foodservice increased ~~$150.5~~$288.5 million from ~~$2,011.8~~$6,294.0 million as of December 31, ~~2016~~2022 to ~~$2,162.3~~$6,582.5 million as of December 30, ~~2017.~~2023. During this time period, this segment increased its ~~accounts receivable, inventory,~~ property, plant and equipment, operating lease right-of-use assets, and accounts receivable, partially offset by a decrease in intangible assets and ~~goodwill, of which $96.8 million was a result of acquisitions.~~inventory. Total assets for ~~Performance~~ Foodservice increased ~~$1.1~~$70.9 million from ~~$2,161.2~~$6,511.6 million as of July 1, ~~2017~~2023 to ~~$2,162.3~~$6,582.5 million as of December 30, ~~2017.~~2023. During this time period, this segment increased its ~~inventory~~operating lease right-of-use assets and property, plant and equipment, ~~which was~~partially offset by a decrease in inventory, intangible assets, and accounts receivable.

Total assets for Vistar increased $218.9 million from $1,216.0 million as of December 31, 2022 to $1,434.9 million as of December 30, 2023. During this time period, this segment increased its operating lease right-of-use assets, intangible assets, goodwill, accounts receivable, property, plant and equipment, and inventory primarily as a result of a recent acquisition. Total assets for Vistar increased $142.2 million from $1,292.7 million as of July 1, 2023 to $1,434.9 million as of December 30, 2023. During this time period, this segment increased its operating lease right-of-use assets, intangible assets, goodwill, and property, plant and equipment primarily as a result of a recent acquisition, partially offset by a decrease in accounts receivable and ~~intangible assets.~~inventory.

Total assets for ~~PFG Customized~~Convenience decreased ~~$19.7~~$50.2 million from ~~$665.6~~$4,135.9 million atas of December 31, ~~2016~~2022 to ~~$645.9~~$4,085.7 million atas of December 30, ~~2017.~~2023. During this time period, the segment decreased its intangible assets and operating lease right-of-use assets, partially offset by an increase in accounts receivable. Total assets for ~~PFG Customized~~Convenience decreased ~~$21.2~~$140.5 million from ~~$667.1~~$4,226.2 million as of July 1, ~~2017~~2023 to ~~$645.9~~$4,085.7 million as of ~~September~~December 30, ~~2017.~~2023. During ~~these~~this time ~~periods, this~~period, the segment decreased its accounts receivable, intangible assets, inventory, prepaid expenses and ~~intangible~~other current assets, and operating lease right-of-use assets.

Total assets for ~~Vistar~~Corporate & All Other increased ~~$82.6~~$265.7 million from ~~$671.4~~$543.7 million as of December 31, ~~2016~~2022 to ~~$754.0~~$809.4 million as of December 30, ~~2017.~~2023. Total assets for ~~Vistar~~Corporate & All Other increased ~~$99.5~~$340.9 million from ~~$654.5~~$468.5 million as of July 1, ~~2017~~2023 to ~~$754.0~~$809.4 million as of December 30, ~~2017.~~2023. During ~~these~~both time periods, ~~this segment~~Corporate & All Other primarily increased its ~~accounts receivable, inventory, goodwill and intangible~~ assets ~~primarily~~ due to ~~acquisitions.~~recent acquisitions within a non-reportable operating segment.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to portraying our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, inventory valuation, insurance programs, income taxes, vendor rebates and promotional incentives, leases, and goodwill and other intangible assets, ~~and stock-based compensation,~~ which are described in the ~~Company’s~~ Form~~10-K~~ ~~for the fiscal year ended July 1, 2017.~~ 10-K. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form10-K.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures about Market Risk~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk and fuel price risk. There have been no material changes to our market risks since July 1, ~~2017.~~2023. For a discussion on our exposure to market risk, see Part II, Item ~~7A, “Quantitative~~7A. Quantitative and Qualitative Disclosures ~~about~~About Market ~~Risks”~~ Risks in ~~our Annual Report on~~the Form~~10-K~~ ~~for the fiscal year ended July 1, 2017.~~ 10-K.

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Regulations under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”),~~ require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule13a-15(e) and Rule15d-15(e) under the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. In accordance with Rule13a-15(b) of the Exchange Act, as of the end of the period covered by this ~~Quarterly Report on~~ Form10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this ~~Quarterly Report on~~ Form10-Q, were effective to accomplish their objectives at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rule13a-15(f) under the Exchange Act), that occurred during the fiscal quarter ended December 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1.Legal Proceedings

We are subject to various allegations, claims, and legal actions arising in the ordinary course of business.

While it is impossible to determine with certainty the ultimate outcome of any of these proceedings, lawsuits, and claims, management believes that adequate provisions have been made or insurance secured for all currently pending proceedings so that the ultimate outcomes will not have a material adverse effect on our financial position. ~~During the three months ended December 30, 2017, there have been no material changes~~Refer to ~~legal proceedings from those discussed in the Company’s Form10-K~~Note 10. Commitments and Contingencies within Part I, Item 1. Financial Statementsfor ~~the fiscal year ended July 1, 2017, except as it relates to the matter discussed below.~~

~~Wilder, et al. v. Roma Food Enterprises, Inc., et al.~~ ~~The court granted final approval~~disclosure of ~~the settlement stipulation on November 6, 2017. We funded the $1.9 million settlement on January 10, 2018, thereby ending the~~ongoing litigation.

~~Item 1A.~~

~~Risk Factors~~

Item 1A.Risk Factors

There have been no material changes to our principal risks that we believe are material to our business, results of operations, and financial condition from the risk factors previously disclosed in the ~~Company’s~~ Form~~10-K~~ ~~for the fiscal year ended July 1, 2017 and Form10-Q~~ ~~for the fiscal quarter ended September 30, 2017, which are accessible on the SEC’s website at~~~~www.sec.gov~~. 10-K.

~~Item 2:~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

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

The following table provides information relating to our purchases of the Company’s common stock during the second quarter of fiscal ~~2018.~~2024.

Period
   Total Number
of Shares
Purchased (1)    Average Price
Paid per
Share    Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs    Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
October 1, 2017 – October 28, 2017
   —      —      —      —
October 29, 2017 – November 25, 2017
   —      —      —      —
November 26, 2017 – December 30, 2017
   829,386    $ 30.85    —      —
Total
   829,386    $ 30.85    —      —


Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan(2)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan (in millions)(2)
October 1, 2023—October 28, 2023		500,391	$	55.69		500,255	$	232.7
October 29, 2023—November 25, 2023		282,615	$	60.26		282,139	$	215.7
November 26, 2023—December 30, 2023		79,509	$	64.91		79,204	$	210.6
Total		862,515	$	58.04		861,598

~~(1)~~

During the second quarter of fiscal 2018, the Company purchased 829,386 shares of the Company’s common stock in transactions unrelated to a publicly announced plan or program. These transactions consisted of acquisitions of shares of the Company’s common stock via share withholding for payroll tax obligations due from employees in connection with the delivery of shares of the Company’s common stock under our incentive plans.

(1)

During the second quarter of fiscal 2024, the Company repurchased 917 shares of the Company’s common stock via share withholding for payroll tax obligations due from employees in connection with the delivery of shares of the Company’s common stock under our incentive plans.

(2)

On November 16, 2022, the Board of Directors authorized a new share repurchase program for up to $300 million of the Company’s outstanding common stock. This authorization replaced the previously authorized $250 million share repurchase program. The new share repurchase program has an expiration date of November 16, 2026 and may be amended, suspended, or discontinued at any time at the Company’s discretion, subject to compliance with applicable laws. Repurchases under this program depend upon market place conditions and other factors, including compliance with the covenants under the ABL Facility and the indentures governing the Notes due 2025, Notes due 2027, and Notes due 2029. As of December 30, 2023, approximately $210.6 million remained available for additional share repurchases.

~~Item 3:~~

~~Defaults Upon Senior Securities~~

~~None~~

Item 3:Defaults Upon Senior Securities

None

~~Item 4:~~

~~Mine Safety Disclosures~~

Item 4:Mine Safety Disclosures

Not applicable

~~Item 5:~~

~~Other Information~~

~~None~~

Item 5:Other Information

During the three months ended December 30, 2023, no director or officer of the Company adopted or terminated a ‘Rule 10b5-1 trading arrangement’ or ‘non-Rule 10b5-1 trading arrangement,’ as each term is defined in Item 408(a) of Regulation S-K.

~~Item 6:~~

~~Exhibits~~

Item 6:Exhibits


Exhibit No.		Description

~~10.1~~	~~Letter Agreement, dated December 14, 2017, between Performance Food Group Company and Thomas G. Ondrof.~~
31.1*
~~10.2~~	~~Form of Deferred Stock Unit Agreement(Non-Employee~~ ~~Director) under the 2015 Omnibus Incentive Plan.~~

~~31.1~~	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.2~~ 31.2*	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~ 32.1*	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~ 32.2*	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document

101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document

~~101.CAL~~ 104	Cover Page Interactive Data File (formatted as inline XBRL ~~Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~and contained in Exhibit 101)

* Filed herewith.

+ Identifies exhibits that consist of a management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

~~SIGNATURE~~

SIGNATURE

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 hereunto duly authorized.



				PERFORMANCE FOOD GROUP COMPANY (Registrant)

Dated: February 7, ~~2018~~	~~By:~~	2024				By:	/s/ ~~Thomas G. Ondrof~~H. Patrick Hatcher
	~~Name:~~		~~Thomas G. Ondrof~~ Name:		H. Patrick Hatcher
	~~Title:~~					Title:	Executive Vice President and Chief Financial Officer (Principal Financial Officer and Authorized Signatory)


(In millions)	Fiscal 2018
Net working capital	$	21.4
Goodwill		21.1
Other intangible assets		20.6
Property, plant and equipment		1.8

Total purchase price	$	64.9


(In millions)	Performance Foodservice		PFG Customized		Vistar		Corporate and Other		Total
Balance as of July 1, 2017	$	428.2	$	166.5	$	64.9	$	59.0	$	718.6
Acquisitions - current year		—		—		21.1		—		21.1
Adjustments related to prior year acquisitions		0.1		—		—		0.3		0.4

Balance as of December 30, 2017	$	428.3	$	166.5	$	86.0	$	59.3	$	740.1


Effective Date	Maturity Date		Notional Amount		Fixed Rate Swapped
August 9, 2013		August 9, 2018	$	200.0		1.51	%
June 30, 2017		June 30, 2019		50.0		1.13	%
June 30, 2017		June 30, 2020		50.0		1.23	%
June 30, 2017		June 30, 2020		50.0		1.25	%
June 30, 2017		June 30, 2020		50.0		1.26	%
August 9, 2018		August 9, 2021		75.0		1.21	%
August 9, 2018		August 9, 2021		75.0		1.20	%
June 30, 2020		December 31, 2021		100.0		2.16	%


(Dollars in millions)	Three Months Ended December 30, 2017						Six Months Ended December 30, 2017
(Dollars in millions)	Income Tax Expense			Effective Tax Rate			Income Tax Expense			Effective Tax Rate
Income tax benefit, reported	$	(43.9	)		-128.3	%	$	(30.3	)		-43.1	%
Revaluation of net deferred income tax liability		37.4			109.6	%		37.4			53.3	%
Stock-based compensation – performance vesting		15.4			45.2	%		15.4			21.9	%
Impact of rate reduction on first quarter fiscal 2018 income		2.5			7.4	%		—			—

Income tax expense, excluding benefits	$	11.4			33.9	%	$	22.5			32.1	%


(In millions)	PFS		PFG Customized		Vistar		Corporate & All Other			Eliminations			Consolidated
For the three months ended December 30, 2017
Net external sales	$	2,532.8	$	888.1	$	838.3	$	51.9		$	—		$	4,311.1
Inter-segment sales		2.5		0.1		0.6		58.7			(61.9	)		—

Total sales		2,535.3		888.2		838.9		110.6			(61.9	)		4,311.1
EBITDA		83.0		5.9		34.0		(41.4	)		—			81.5
Depreciation and amortization		14.6		3.7		6.9		7.1			—			32.3
Capital expenditures		9.3		4.1		5.3		3.3			—			22.0
For the three months ended December 31, 2016
Net external sales	$	2,356.8	$	933.4	$	737.4	$	24.2		$	—		$	4,051.8
Inter-segment sales		1.4		0.1		0.5		53.7			(55.7	)		—

Total sales		2,358.2		933.5		737.9		77.9			(55.7	)		4,051.8
EBITDA		75.5		6.7		33.0		(33.0	)		—			82.2
Depreciation and amortization		14.0		3.6		6.6		6.2			—			30.4
Capital expenditures		34.1		2.7		0.8		7.5			—			45.1

(In millions)	PFS		PFG Customized		Vistar		Corporate & All Other			Eliminations			Consolidated
For the six months ended December 30, 2017
Net external sales	$	5,157.3	$	1,784.1	$	1,634.5	$	100.1		$	—		$	8,676.0
Inter-segment sales		5.1		0.2		1.2		118.6			(125.1	)		—

Total sales		5,162.4		1,784.3		1,635.7		218.7			(125.1	)		8,676.0
EBITDA		161.8		11.1		59.8		(69.0	)		—			163.7
Depreciation and amortization		28.4		7.3		13.2		14.8			—			63.7
Capital expenditures		20.5		6.3		5.6		6.1			—			38.5
For the six months ended December 31, 2016
Net external sales	$	4,791.5	$	1,800.1	$	1,478.2	$	28.1		$	—		$	8,097.9
Inter-segment sales		3.1		0.7		1.2		108.7			(113.7	)		—

Total sales		4,794.6		1,800.8		1,479.4		136.8			(113.7	)		8,097.9
EBITDA		148.1		10.6		54.8		(69.4	)		—			144.1
Depreciation and amortization		27.1		8.8		11.8		12.2			—			59.9
Capital expenditures		53.8		4.9		2.2		19.0			—			79.9


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2017 – October 28, 2017		—		—		—		—
October 29, 2017 – November 25, 2017		—		—		—		—
November 26, 2017 – December 30, 2017		829,386	$	30.85		—		—
Total		829,386	$	30.85		—		—

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