Allowance For Doubtful Accounts Disclosures

6 Months Ended

Jul. 03, 2021

Allowance For Doubtful Accounts Disclosures [Text Block]

ALLOWANCE FOR DOUBTFUL ACCOUNTSThe Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information. Collections and payments from customers are continuously monitored. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for doubtful accounts based on a combination of factors. The Company maintains an

allowance for doubtful accounts, which is based upon historical experience, future expected losses, as well as specific customer collection issues that have been identified. The Company uses specific criteria to determine uncollectible receivables to be written off, including bankruptcy, accounts referred to outside parties for collection, and accounts past due over specified periods.

Since mid-March 2020, our business has been significantly impacted by the COVID-19 pandemic. Starting in March 2020, in order to reduce the spread of COVID-19 and its variants, many countries, including the United States, took steps to restrict travel, temporarily close or enforce capacity restrictions on businesses, schools and other public gathering spaces, including restaurants and recreational, sporting and other similar venues. Since December 2020, three vaccines for COVID-19 have been authorized by the United States Food and Drug Administration ("FDA") for emergency use and beginning in May 2021, all individuals 12 years old and older in the United States became eligible to receive a vaccine. During the 13 weeks ended July 3, 2021, the Center for Disease Control and Prevention ("CDC") and most states have significantly relaxed restrictions and safety measures, such as capacity limits, physical distancing and face mask protocols, as a result of significant progress made in vaccinating the U.S. public and the resulting decline in COVID-19 cases. Due to the impact that the COVID-19 pandemic was expected to have on our customers, particularly our restaurant and hospitality customers, and to reflect the increased collection risk associated with our customers, we significantly increased our allowance for doubtful accounts during the 13 weeks ended March 28, 2020. In each subsequent quarter of fiscal year 2020 and during the 13 weeks ended April 3, 2021, due to more favorable than anticipated collections on our pre-COVID-19 accounts receivable, we reduced our allowance for doubtful accounts while leaving the remaining pre-COVID-19 accounts receivable fully reserved. During the 13 weeks ended July 3, 2021, amounts expensed for the period were more consistent with pre-pandemic activity.

A summary of the activity in the allowance for doubtful accounts for the 26 weeks ended July 3, 2021 was as follows:


Balance as of January 2, 2021	$	67
Reversed from costs and expenses	(13)
Customer accounts written off—net of recoveries	(9)
Balance as of July 3, 2021	$	45

This table excludes the vendor receivable related allowance for doubtful accounts of $6 million and $5 million as of July 3, 2021 and January 2, 2021, respectively.