☒ | QUARTERLY 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 |
Delaware | 26-0347906 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☐ | ||||
Emerging growth company | ☐ |
• cost inflation/deflation and commodity volatility; |
• competition; |
• reliance on third-party suppliers; |
• interruption of product supply or increases in product costs; |
• our substantial indebtedness and restrictions placed upon us under our debt agreements; |
• potential interest rate increases; |
• customer retention and changes in our relationships with group purchasing organizations; |
• our ability to achieve increased sales to independent restaurants; |
• successful consummation and integration of acquisitions; |
• realization of the expected benefits from our cost savings initiatives; |
• fuel shortages or volatility in fuel costs; |
• industry and general economic factors affecting consumer confidence and buying habits; |
• changes in consumer eating habits and preferences; |
• product liability claims; |
• our reputation in the industry; |
• labor relations and continued access to qualified labor; |
• pricing and cost structures; |
• environmental, occupational health and safety, and food safety compliance; |
• government laws and regulations and potential changes in existing laws or regulations; |
• technology disruptions and our ability to implement new technologies; |
• cybersecurity incidents; |
• management of retirement benefits and pension liabilities; |
• business disruptions caused by extreme weather conditions; |
• litigation risk; |
• adequate protection of our brand/trade names; and |
• risks associated with intellectual property including potential infringement. |
TABLE OF CONTENTS | ||
Page No. | ||
Part I. Financial Information | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II. Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
US FOODS HOLDING CORP. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except par value) | |||||||
June 30, 2018 | December 30, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 100,203 | $ | 118,849 | |||
Accounts receivable, less allowances of $26,600 and $25,971 | 1,338,894 | 1,301,631 | |||||
Vendor receivables, less allowances of $2,851 and $2,934 | 141,359 | 97,198 | |||||
Inventories—net | 1,208,250 | 1,207,830 | |||||
Prepaid expenses | 95,885 | 80,255 | |||||
Assets held for sale | 5,178 | 5,178 | |||||
Other current assets | 23,180 | 8,440 | |||||
Total current assets | 2,912,949 | 2,819,381 | |||||
PROPERTY AND EQUIPMENT—Net | 1,822,597 | 1,801,215 | |||||
GOODWILL | 3,966,863 | 3,966,565 | |||||
OTHER INTANGIBLES—Net | 343,884 | 363,618 | |||||
DEFERRED TAX ASSETS | 11,787 | 21,505 | |||||
OTHER ASSETS | 77,175 | 64,874 | |||||
TOTAL ASSETS | $ | 9,135,255 | $ | 9,037,158 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Bank checks outstanding | $ | 147,220 | $ | 153,565 | |||
Accounts payable | 1,454,172 | 1,289,349 | |||||
Accrued expenses and other current liabilities | 397,015 | 450,742 | |||||
Current portion of long-term debt | 101,458 | 109,226 | |||||
Total current liabilities | 2,099,865 | 2,002,882 | |||||
LONG-TERM DEBT | 3,497,847 | 3,648,055 | |||||
DEFERRED TAX LIABILITIES | 305,213 | 263,322 | |||||
OTHER LONG-TERM LIABILITIES | 212,358 | 371,536 | |||||
Total liabilities | 6,115,283 | 6,285,795 | |||||
COMMITMENTS AND CONTINGENCIES (Note 18) | |||||||
SHAREHOLDERS’ EQUITY: | |||||||
Common stock, $0.01 par value—600,000 shares authorized; 216,982 and 214,963 issued and outstanding as of June 30, 2018 and December 30, 2017, respectively | 2,170 | 2,150 | |||||
Additional paid-in capital | 2,758,675 | 2,721,454 | |||||
Retained earnings | 316,364 | 123,514 | |||||
Accumulated other comprehensive loss | (57,237 | ) | (95,755 | ) | |||
Total shareholders’ equity | 3,019,972 | 2,751,363 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 9,135,255 | $ | 9,037,158 |
US FOODS HOLDING CORP. | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | |||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
NET SALES | $ | 6,158,491 | $ | 6,158,654 | $ | 11,981,012 | $ | 11,947,079 | |||||||
COST OF GOODS SOLD | 5,044,638 | 5,104,605 | 9,875,232 | 9,901,722 | |||||||||||
Gross profit | 1,113,853 | 1,054,049 | 2,105,780 | 2,045,357 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Distribution, selling and administrative costs | 908,881 | 926,451 | 1,796,762 | 1,840,042 | |||||||||||
Restructuring (benefit) charges | (387 | ) | 704 | 1,165 | 2,577 | ||||||||||
Total operating expenses | 908,494 | 927,155 | 1,797,927 | 1,842,619 | |||||||||||
OPERATING INCOME | 205,359 | 126,894 | 307,853 | 202,738 | |||||||||||
OTHER (INCOME) EXPENSE—Net | (3,145 | ) | 1,320 | (6,275 | ) | 640 | |||||||||
INTEREST EXPENSE—Net | 48,001 | 41,003 | 90,845 | 82,889 | |||||||||||
Income before income taxes | 160,503 | 84,571 | 223,283 | 119,209 | |||||||||||
INCOME TAX PROVISION | 34,970 | 19,113 | 30,433 | 26,935 | |||||||||||
NET INCOME | 125,533 | 65,458 | 192,850 | 92,274 | |||||||||||
OTHER COMPREHENSIVE INCOME—Net of tax: | |||||||||||||||
Changes in retirement benefit obligations | 25,231 | 1,880 | 25,834 | 2,537 | |||||||||||
Unrecognized gain on interest rate swaps | 3,644 | — | 12,684 | — | |||||||||||
COMPREHENSIVE INCOME | $ | 154,408 | $ | 67,338 | $ | 231,368 | $ | 94,811 | |||||||
NET INCOME PER SHARE | |||||||||||||||
Basic | $ | 0.58 | $ | 0.29 | $ | 0.90 | $ | 0.42 | |||||||
Diluted | $ | 0.58 | $ | 0.29 | $ | 0.89 | $ | 0.41 | |||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||
Basic | 215,827,074 | 222,754,030 | 215,453,656 | 222,059,022 | |||||||||||
Diluted | 217,770,313 | 226,791,449 | 217,491,267 | 226,557,430 |
US FOODS HOLDING CORP. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
(In thousands) | |||||||
26-Weeks Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 192,850 | $ | 92,274 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 165,420 | 213,792 | |||||
Gain on disposal of property and equipment—net | (891 | ) | (221 | ) | |||
Amortization and write-off of deferred financing costs | 4,710 | 2,358 | |||||
Deferred tax provision | 38,356 | 18,075 | |||||
Share-based compensation expense | 17,324 | 8,553 | |||||
Provision for doubtful accounts | 9,078 | 8,975 | |||||
Changes in operating assets and liabilities, net of business acquisitions: | |||||||
Increase in receivables | (98,191 | ) | (188,565 | ) | |||
(Increase) decrease in inventories | (420 | ) | 4,179 | ||||
Increase in prepaid expenses and other assets | (18,663 | ) | (20,634 | ) | |||
Increase in accounts payable and bank checks outstanding | 174,579 | 276,493 | |||||
Decrease in accrued expenses and other liabilities | (173,498 | ) | (46,807 | ) | |||
Net cash provided by operating activities | 310,654 | 368,472 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of businesses—net of cash | (299 | ) | (134,808 | ) | |||
Proceeds from sales of property and equipment | 2,124 | 1,679 | |||||
Purchases of property and equipment | (117,396 | ) | (107,967 | ) | |||
Proceeds from redemption of industrial revenue bonds | — | 22,139 | |||||
Net cash used in investing activities | (115,571 | ) | (218,957 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from debt borrowings | 2,151,107 | 1,117,267 | |||||
Principal payments on debt and capital leases | (2,382,384 | ) | (1,212,792 | ) | |||
Redemption of industrial revenue bonds | — | (22,139 | ) | ||||
Contingent consideration paid for business acquisitions | (1,560 | ) | (5,000 | ) | |||
Payment for debt financing costs and fees | (823 | ) | (426 | ) | |||
Proceeds from employee share purchase plan | 10,116 | 7,729 | |||||
Proceeds from exercise of stock options | 15,605 | 10,944 | |||||
Tax withholding payments for net share-settled equity awards | (5,646 | ) | (25,693 | ) | |||
Common stock and share-based awards settled | (133 | ) | (497 | ) | |||
Net cash used in financing activities | (213,718 | ) | (130,607 | ) | |||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (18,635 | ) | 18,908 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | 119,184 | 131,436 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period | $ | 100,549 | $ | 150,344 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||
Cash paid during the period for: | |||||||
Interest (net of amounts capitalized) | $ | 87,701 | $ | 79,135 | |||
Income taxes paid—net | 41,530 | 2,862 | |||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Property and equipment purchases included in accounts payable | 13,375 | 17,405 | |||||
Capital lease additions | 68,163 | 60,730 | |||||
Cashless exercise of equity awards | 1,221 | 25,535 | |||||
Contingent consideration payable for business acquisitions | — | 4,200 |
2. | RECENT ACCOUNTING PRONOUNCEMENTS |
June 30, 2018 | December 30, 2017 | ||||||
Cash and cash equivalents | $ | 100,203 | $ | 118,849 | |||
Restricted cash included in other assets | 346 | 335 | |||||
Total cash, cash equivalents and restricted cash | $ | 100,549 | $ | 119,184 |
3. | REVENUE RECOGNITION |
1) | Identify the contract with a customer |
2) | Identify the performance obligation in the contract |
3) | Determine the transaction price |
4) | Allocate the transaction price to performance obligations in the contract |
5) | Recognize Revenue when or as the Company satisfies a performance obligation |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Meats and seafood | $ | 2,217,977 | $ | 2,255,136 | $ | 4,285,895 | $ | 4,287,322 | |||||||
Dry grocery products | 1,068,936 | 1,069,624 | 2,111,195 | 2,126,009 | |||||||||||
Refrigerated and frozen grocery products | 972,816 | 942,658 | 1,916,958 | 1,874,652 | |||||||||||
Dairy | 650,104 | 636,038 | 1,259,610 | 1,242,814 | |||||||||||
Equipment, disposables and supplies | 587,750 | 571,757 | 1,127,721 | 1,112,036 | |||||||||||
Beverage products | 335,686 | 331,438 | 654,118 | 651,107 | |||||||||||
Produce | 325,222 | 352,003 | 625,515 | 653,139 | |||||||||||
Net sales | $ | 6,158,491 | $ | 6,158,654 | $ | 11,981,012 | $ | 11,947,079 |
4. | BUSINESS ACQUISITIONS |
December 30, 2017 | |||
Accounts receivable | $ | 17,108 | |
Inventories | 25,232 | ||
Other current assets | 677 | ||
Property and equipment | 29,492 | ||
Goodwill | 58,528 | ||
Other intangible assets | 72,050 | ||
Accounts payable | (7,986 | ) | |
Accrued expenses and other current liabilities | (5,837 | ) | |
Deferred income taxes | (7,277 | ) | |
Cash paid for acquisitions | $ | 181,987 |
6. | ACCOUNTS RECEIVABLE FINANCING PROGRAM |
7. | ASSETS HELD FOR SALE |
8. | PROPERTY AND EQUIPMENT |
9. | GOODWILL AND OTHER INTANGIBLES |
June 30, 2018 | December 30, 2017 | ||||||
Goodwill | $ | 3,966,863 | $ | 3,966,565 | |||
Other intangibles—net | |||||||
Customer relationships—amortizable: | |||||||
Gross carrying amount | $ | 154,230 | $ | 154,230 | |||
Accumulated amortization | (65,482 | ) | (46,203 | ) | |||
Net carrying value | 88,748 | 108,027 | |||||
Noncompete agreements—amortizable: | |||||||
Gross carrying amount | 3,950 | 3,950 | |||||
Accumulated amortization | (1,614 | ) | (1,159 | ) | |||
Net carrying value | 2,336 | 2,791 | |||||
Brand names and trademarks—not amortizing | 252,800 | 252,800 | |||||
Total Other intangibles—net | $ | 343,884 | $ | 363,618 |
10. | FAIR VALUE MEASUREMENTS |
• | Level 1—observable inputs, such as quoted prices in active markets |
• | Level 2—observable inputs other than those included in Level 1—such as quoted prices for similar assets and liabilities in active or inactive markets that are observable either directly or indirectly, or other inputs that are observable or can be corroborated by observable market data |
• | Level 3—unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions |
June 30, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Money market funds | $ | 100 | $ | — | $ | — | $ | 100 | |||||||
Interest rate swaps | — | 29,695 | — | 29,695 | |||||||||||
$ | 100 | $ | 29,695 | $ | — | $ | 29,795 | ||||||||
Liabilities | |||||||||||||||
Contingent consideration payable for business acquisition | $ | — | $ | — | $ | 500 | $ | 500 | |||||||
December 30, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Money market funds | $ | 1,100 | $ | — | $ | — | $ | 1,100 | |||||||
Interest rate swaps | — | 12,717 | — | 12,717 | |||||||||||
$ | 1,100 | $ | 12,717 | $ | — | $ | 13,817 | ||||||||
Liabilities | |||||||||||||||
Contingent consideration payable for business acquisition | $ | — | $ | — | $ | 1,000 | $ | 1,000 |
Fair Value | |||||||||
Balance Sheet Location | June 30, 2018 | December 30, 2017 | |||||||
Derivatives designated as hedging instruments | |||||||||
Interest rate swaps | Other current assets | $ | 7,480 | $ | 430 | ||||
Interest rate swaps | Other noncurrent assets | $ | 22,215 | $ | 12,287 | ||||
Total | $ | 29,695 | $ | 12,717 |
Derivatives in Cash Flow Hedging Relationships | Amount of Gain Recognized in Accumulated Other Comprehensive Loss, net of tax | Location of Amounts Reclassified from Accumulated Other Comprehensive Loss | Amount of Gain Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax | |||||||
For the 13-weeks ended June 30, 2018 | ||||||||||
Interest rate swaps | $ | 4,063 | Interest expense—net | $ | (419 | ) | ||||
For the 26-weeks ended June 30, 2018 | ||||||||||
Interest rate swaps | $ | 12,877 | Interest expense—net | $ | (193 | ) |
11. | DEBT |
Debt Description | Maturity | Interest Rate at June 30, 2018 | June 30, 2018 | December 30, 2017 | |||||||
ABL Facility | October 20, 2020 | 6.50 | % | $ | 26,000 | $ | 80,000 | ||||
2012 ABS Facility | September 21, 2020 | 3.09 | 470,000 | 580,000 | |||||||
Amended and Restated 2016 Term Loan (net of $6,605 and $9,963 of unamortized deferred financing costs) | June 27, 2023 | 4.09 | 2,149,395 | 2,157,037 | |||||||
2016 Senior Notes (net of $5,752 and $6,229 of unamortized deferred financing costs) | June 15, 2024 | 5.88 | 594,248 | 593,771 | |||||||
Obligations under capital leases | 2018–2025 | 2.36 - 6.18 | 350,289 | 336,603 | |||||||
Other debt | 2018–2031 | 5.75 - 9.00 | 9,373 | 9,870 | |||||||
Total debt | 3,599,305 | 3,757,281 | |||||||||
Current portion of long-term debt | (101,458 | ) | (109,226 | ) | |||||||
Long-term debt | $ | 3,497,847 | $ | 3,648,055 |
12. | RESTRUCTURING LIABILITIES |
Severance and Related Costs | Facility Closing Costs | Total | |||||||||
Balance at December 30, 2017 | $ | 4,835 | $ | 500 | $ | 5,335 | |||||
Current period charges | 1,165 | — | 1,165 | ||||||||
Payments and usage—net of accretion | (3,873 | ) | — | (3,873 | ) | ||||||
Balance at June 30, 2018 | $ | 2,127 | $ | 500 | $ | 2,627 |
13. | RELATED PARTY TRANSACTIONS |
14. | RETIREMENT PLANS |
13-Weeks Ended | |||||||||||||||
Pension Benefits | Other Postretirement Plans | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Components of net periodic benefit (credits) costs | |||||||||||||||
Service cost | $ | 561 | 506 | $ | 8 | $ | 9 | ||||||||
Interest cost | 8,881 | 10,139 | 59 | 72 | |||||||||||
Expected return on plan assets | (12,818 | ) | (11,964 | ) | — | — | |||||||||
Amortization of prior service cost | 1 | 34 | 1 | 2 | |||||||||||
Amortization of net loss (gain) | 770 | 1,050 | (39 | ) | (13 | ) | |||||||||
Settlements | — | 2,000 | — | — | |||||||||||
Net periodic (credits) benefit costs | $ | (2,605 | ) | 1,765 | $ | 29 | $ | 70 | |||||||
26-Weeks Ended | |||||||||||||||
Pension Benefits | Other Postretirement Plans | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Components of net periodic benefit (credits) costs | |||||||||||||||
Service cost | $ | 1,134 | $ | 1,012 | $ | 17 | $ | 19 | |||||||
Interest cost | 17,662 | 20,277 | 118 | 144 | |||||||||||
Expected return on plan assets | (25,598 | ) | (23,928 | ) | — | — | |||||||||
Amortization of prior service cost | 2 | 69 | 3 | 3 | |||||||||||
Amortization of net loss (gain) | 1,616 | 2,101 | (78 | ) | (26 | ) | |||||||||
Settlements | — | 2,000 | — | — | |||||||||||
Net periodic (credits) benefit costs | $ | (5,184 | ) | $ | 1,531 | $ | 60 | $ | 140 |
15. | EARNINGS PER SHARE |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 125,533 | $ | 65,458 | $ | 192,850 | $ | 92,274 | |||||||
Denominator: | |||||||||||||||
Weighted-average common shares outstanding | 215,827,074 | 222,754,030 | 215,453,656 | 222,059,022 | |||||||||||
Dilutive effect of share-based awards | 1,943,239 | 4,037,419 | 2,037,611 | 4,498,408 | |||||||||||
Weighted-average dilutive shares outstanding | 217,770,313 | 226,791,449 | 217,491,267 | 226,557,430 | |||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.29 | $ | 0.90 | $ | 0.42 | |||||||
Diluted earnings per share | $ | 0.58 | $ | 0.29 | $ | 0.89 | $ | 0.41 |
16. | CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Accumulated other comprehensive loss components | |||||||||||||||
Retirement benefit obligations: | |||||||||||||||
Balance at beginning of period(1) | $ | (102,589 | ) | $ | (118,706 | ) | $ | (103,192 | ) | $ | (119,363 | ) | |||
Reclassification adjustments: | |||||||||||||||
Amortization of prior service cost(2) (3) | 2 | 36 | 5 | 72 | |||||||||||
Amortization of net loss(2) (3) | 731 | 1,037 | 1,538 | 2,075 | |||||||||||
Pension remeasurement(4) | 33,180 | — | 33,180 | — | |||||||||||
Settlements(2) (3) | — | 2,000 | — | 2,000 | |||||||||||
Total before income tax | 33,913 | 3,073 | 34,723 | 4,147 | |||||||||||
Income tax provision | 8,682 | 1,193 | 8,889 | 1,610 | |||||||||||
Current period comprehensive income, net of tax | 25,231 | 1,880 | 25,834 | 2,537 | |||||||||||
Balance at end of period(1) | $ | (77,358 | ) | $ | (116,826 | ) | $ | (77,358 | ) | $ | (116,826 | ) | |||
Interest rate swaps: | |||||||||||||||
Balance at beginning of period(1) | $ | 16,477 | $ | — | $ | 7,437 | $ | — | |||||||
Change in fair value of interest rate swaps | 5,461 | — | 17,308 | — | |||||||||||
Amounts reclassified to interest expense—net | (563 | ) | — | (260 | ) | — | |||||||||
Total before income tax | 4,898 | — | 17,048 | — | |||||||||||
Income tax provision | 1,254 | — | 4,364 | — | |||||||||||
Current period comprehensive income, net of tax | 3,644 | — | 12,684 | — | |||||||||||
Balance at end of period(1) | $ | 20,121 | $ | — | $ | 20,121 | $ | — | |||||||
Accumulated other comprehensive loss at end of period(1) | $ | (57,237 | ) | $ | (116,826 | ) | $ | (57,237 | ) | $ | (116,826 | ) |
(1) | Amounts are presented net of tax. |
(2) | Included in the computation of net periodic benefit costs. See Note 14, Retirement Plans, for additional information. |
(3) | Included in other (income) expense—net in the Consolidated Statements of Comprehensive Income. |
(4) | Resulting from the $35 million incremental contribution to the Company's defined benefit pension plan. See Note 14, Retirement Plans, for additional information. |
17. | INCOME TAXES |
18. | COMMITMENTS AND CONTINGENCIES |
19. | BUSINESS INFORMATION |
20. | SUBSEQUENT EVENTS |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Consolidated Statements of Operations Data: | |||||||||||||||
Net sales | $ | 6,158 | $ | 6,159 | $ | 11,981 | $ | 11,947 | |||||||
Cost of goods sold | 5,045 | 5,105 | 9,875 | 9,902 | |||||||||||
Gross profit | 1,114 | 1,054 | 2,106 | 2,045 | |||||||||||
Operating expenses: | |||||||||||||||
Distribution, selling and administrative costs | 908 | 926 | 1,797 | 1,840 | |||||||||||
Restructuring charges | — | 1 | 1 | 3 | |||||||||||
Total operating expenses | 908 | 927 | 1,798 | 1,843 | |||||||||||
Operating income | 205 | 127 | 308 | 203 | |||||||||||
Other (income) expense—net | (3 | ) | 1 | (6 | ) | 1 | |||||||||
Interest expense—net | 48 | 41 | 91 | 83 | |||||||||||
Income before income taxes | 161 | 85 | 223 | 119 | |||||||||||
Income tax provision | 35 | 19 | 30 | 27 | |||||||||||
Net income | $ | 126 | $ | 65 | $ | 193 | $ | 92 | |||||||
Percentage of Net Sales: | |||||||||||||||
Gross profit | 18.1 | % | 17.1 | % | 17.6 | % | 17.1 | % | |||||||
Distribution, selling and administrative costs | 14.8 | % | 15.0 | % | 15.0 | % | 15.4 | % | |||||||
Operating expenses | 14.8 | % | 15.1 | % | 15.0 | % | 15.4 | % | |||||||
Operating income | 3.3 | % | 2.1 | % | 2.6 | % | 1.7 | % | |||||||
Net income | 2.0 | % | 1.1 | % | 1.6 | % | 0.8 | % | |||||||
Adjusted EBITDA(1) | 4.9 | % | 4.6 | % | 4.4 | % | 4.2 | % | |||||||
Other Data: | |||||||||||||||
Cash flows—operating activities | $ | 119 | $ | 246 | $ | 311 | $ | 368 | |||||||
Cash flows—investing activities | (59 | ) | (87 | ) | (116 | ) | (219 | ) | |||||||
Cash flows—financing activities | (46 | ) | (162 | ) | (214 | ) | (131 | ) | |||||||
Capital expenditures | 60 | 38 | 117 | 108 | |||||||||||
EBITDA(1) | 293 | 232 | 480 | 416 | |||||||||||
Adjusted EBITDA(1) | 300 | 286 | 523 | 501 | |||||||||||
Adjusted net income(1) | 124 | 85 | 199 | 125 | |||||||||||
Free cash flow(2) | 58 | 208 | 193 | 260 |
(*) | Amounts may not add due to rounding. |
(1) | EBITDA is defined as net income, plus interest expense—net, income tax provision, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for 1) restructuring charges and tangible asset impairments; 2) share-based compensation expense; 3) the non-cash impact of LIFO reserve adjustments; 4) business transformation costs; and 5) other gains, losses, or charges as specified in USF’s debt agreements. Adjusted net income is defined as net income excluding the items used to calculate Adjusted EBITDA listed above and further adjusted for the tax effect of the exclusions and discrete tax items. |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | 7/2/2018 | June 30, 2018 | July 1, 2017 | ||||||||||||
Net income | $ | 126 | $ | 65 | $ | 193 | $ | 92 | |||||||
Interest expense—net | 48 | 41 | 91 | 83 | |||||||||||
Income tax provision | 35 | 19 | 30 | 27 | |||||||||||
Depreciation and amortization expense | 84 | 106 | 165 | 214 | |||||||||||
EBITDA | 293 | 232 | 480 | 416 | |||||||||||
Adjustments: | |||||||||||||||
Restructuring charges(1) | — | 1 | 1 | 3 | |||||||||||
Share-based compensation expense(2) | 10 | 5 | 17 | 9 | |||||||||||
LIFO reserve change(3) | (11 | ) | 30 | 8 | 40 | ||||||||||
Business transformation costs(4) | 7 | 13 | 15 | 27 | |||||||||||
Other(5) | 1 | 5 | 3 | 7 | |||||||||||
Adjusted EBITDA | 300 | 286 | 523 | 501 | |||||||||||
Depreciation and amortization expense | (84 | ) | (106 | ) | (165 | ) | (214 | ) | |||||||
Interest expense—net | (48 | ) | (41 | ) | (91 | ) | (83 | ) | |||||||
Income tax provision, as adjusted(6) | (43 | ) | (54 | ) | (68 | ) | (79 | ) | |||||||
Adjusted net income | $ | 124 | $ | 85 | $ | 199 | $ | 125 | |||||||
Free cash flow | |||||||||||||||
Cash flows from operating activities | $ | 119 | $ | 246 | $ | 311 | $ | 368 | |||||||
Capital expenditures | (60 | ) | (38 | ) | (117 | ) | (108 | ) | |||||||
Free cash flow | $ | 58 | $ | 208 | 193 | $ | 260 |
(*) | Amounts may not add due to rounding. |
(1) | Consists primarily of severance and related costs and organizational realignment costs. |
(2) | Share-based compensation expense for vesting of stock awards and share purchase plan. |
(3) | Represents the non-cash impact of LIFO reserve adjustments. |
(4) | Consists primarily of costs related to significant process and systems redesign across multiple functions. |
(5) | Other includes gains, losses or charges as specified under our debt agreements. |
(6) | Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net income and the removal of applicable discrete tax items. Applicable discrete tax items include changes in tax laws or rates, changes related to prior year unrecognized tax benefits, discrete changes in valuation allowances, and excess tax benefits associated with share-based compensation. The tax effect of pre-tax items excluded from Adjusted net income is computed using a corporate tax rate after considering the impact of permanent differences and valuation allowances. |
13-Weeks Ended | 26-Weeks Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
GAAP income tax provision | $ | 35 | $ | 19 | $ | 30 | $ | 27 | |||||||
Tax impact of pre-tax income adjustments | 2 | 21 | 11 | 32 | |||||||||||
Discrete tax items | 6 | 14 | 27 | 20 | |||||||||||
Income tax provision, as adjusted | $ | 43 | $ | 54 | $ | 68 | $ | 79 |
• | Total case volume decreased 0.9%. Independent restaurant case volume increased 3.8%. |
• | Net sales of $6,158 million in 2018 were flat as compared to the prior year. |
• | Operating income increased $78 million, or 61.8%, to $205 million. As a percentage of net sales, operating income increased to 3.3% in 2018, compared to 2.1% in 2017. |
• | Net income was $126 million in 2018, compared to $65 million in 2017. |
• | Adjusted EBITDA increased $14 million, or approximately 4.9%, to $300 million. As a percentage of net sales, Adjusted EBITDA increased to 4.9% in 2018, compared to 4.6% in 2017. |
• | Total case volume decreased 1.6%. Independent restaurant case volume increased 4.0%. |
• | Net sales increased $34 million, or 0.3%, to $11,981 million. |
• | Operating income increased $105 million, or 51.8%, to 308 million. As a percentage of net sales, operating income increased to 2.6% in 2018, compared to 1.7% in 2017. |
• | Net income was $193 million in 2018, compared to $92 million in 2017. |
• | Adjusted EBITDA increased $22 million, or approximately 4.4%, to $523 million. As a percentage of net sales, Adjusted EBITDA increased to 4.4% in 2018, compared to 4.2% in 2017. |
26-Weeks Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
Net income | $ | 193 | $ | 92 | |||
Changes in operating assets and liabilities, net of business acquisitions | (116 | ) | 25 | ||||
Other adjustments | 234 | 252 | |||||
Net cash provided by operating activities | 311 | 368 | |||||
Net cash used in investing activities | (116 | ) | (219 | ) | |||
Net cash used in financing activities | (214 | ) | (131 | ) | |||
Net (decrease) increase in cash and cash equivalents | (19 | ) | 19 | ||||
Cash, cash equivalents and restricted cash—beginning of period | 119 | 131 | |||||
Cash, cash equivalents and restricted cash—end of period | $ | 101 | $ | 150 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Exhibit Number | ||
10.1 | ||
31.1* | ||
31.2* | ||
32.1† | ||
32.2† | ||
101* | Interactive Data File. | |
* | Filed herewith. | |
† | Furnished with this Report. |
US FOODS HOLDING CORP. | ||||
(Registrant) | ||||
Date: | August 1, 2018 | By: | /s/ PIETRO SATRIANO | |
Pietro Satriano | ||||
Chairman and Chief Executive Officer | ||||
Date: | August 1, 2018 | By: | /s/ DIRK J. LOCASCIO | |
Dirk J. Locascio | ||||
Chief Financial Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ PIETRO SATRIANO |
Pietro Satriano |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ DIRK J. LOCASCIO |
Dirk J. Locascio |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ PIETRO SATRIANO |
Pietro Satriano |
Chairman and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DIRK J. LOCASCIO |
Dirk J. Locascio |
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2018 |
Jul. 27, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | USFD | |
Entity Registrant Name | US FOODS HOLDING CORP. | |
Entity Central Index Key | 0001665918 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Outstanding (in shares) | 217,012,968 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable | $ 26,600 | $ 25,971 |
Allowances for vendor receivables | $ 2,851 | $ 2,934 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, issued (in shares) | 216,982,000 | 214,963,000 |
Common stock, outstanding (in shares) | 216,982,000 | 214,963,000 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
NET SALES | $ 6,158,491 | $ 6,158,654 | $ 11,981,012 | $ 11,947,079 |
COST OF GOODS SOLD | 5,044,638 | 5,104,605 | 9,875,232 | 9,901,722 |
Gross profit | 1,113,853 | 1,054,049 | 2,105,780 | 2,045,357 |
OPERATING EXPENSES: | ||||
Distribution, selling and administrative costs | 908,881 | 926,451 | 1,796,762 | 1,840,042 |
Restructuring (benefit) charges | (387) | 704 | 1,165 | 2,577 |
Total operating expenses | 908,494 | 927,155 | 1,797,927 | 1,842,619 |
OPERATING INCOME | 205,359 | 126,894 | 307,853 | 202,738 |
OTHER (INCOME) EXPENSE—Net | (3,145) | 1,320 | (6,275) | 640 |
INTEREST EXPENSE—Net | 48,001 | 41,003 | 90,845 | 82,889 |
Income before income taxes | 160,503 | 84,571 | 223,283 | 119,209 |
INCOME TAX PROVISION | 34,970 | 19,113 | 30,433 | 26,935 |
NET INCOME | 125,533 | 65,458 | 192,850 | 92,274 |
OTHER COMPREHENSIVE INCOME—Net of tax: | ||||
Changes in retirement benefit obligations | 25,231 | 1,880 | 25,834 | 2,537 |
Unrecognized gain on interest rate swaps | 3,644 | 0 | 12,684 | 0 |
COMPREHENSIVE INCOME | $ 154,408 | $ 67,338 | $ 231,368 | $ 94,811 |
NET INCOME PER SHARE | ||||
Basic (in dollars per share) | $ 0.58 | $ 0.29 | $ 0.90 | $ 0.42 |
Diluted (in dollars per share) | $ 0.58 | $ 0.29 | $ 0.89 | $ 0.41 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 215,827,074 | 222,754,030 | 215,453,656 | 222,059,022 |
Diluted (in shares) | 217,770,313 | 226,791,449 | 217,491,267 | 226,557,430 |
Overview and Basis of Presentation |
6 Months Ended |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview and Basis of Presentation | OVERVIEW AND BASIS OF PRESENTATION US Foods Holding Corp., a Delaware corporation, and its consolidated subsidiaries are referred to herein as “we,” “our,” “us,” “the Company,” or “US Foods.” US Foods conducts all of its operations through its wholly owned subsidiary US Foods, Inc. and its subsidiaries (“USF”). All of the Company’s indebtedness, as further described in Note 11, Debt, is an obligation of USF. US Foods was previously controlled by investment funds associated with or designated by Clayton, Dubilier & Rice, LLC (“CD&R”) and Kohlberg Kravis Roberts & Co., L.P. (“KKR”), as discussed in Note 13, Related Party Transactions. KKR and CD&R, collectively referred to herein as the “Sponsors,” completed the sale of their shares during 2017. Business Description—The Company, through USF, operates in one business segment in which it markets and primarily distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the United States. These customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. Basis of Presentation—The Company operates on a 52-53 week fiscal year with all periods ending on a Saturday. When a 53-week fiscal year occurs, the Company reports the additional week in the fourth quarter. Fiscal years 2018 and 2017 are 52-week fiscal years. The consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the SEC. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures included herein are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2017 Annual Report. The consolidated interim financial statements reflect all adjustments (consisting of normal recurring items, unless otherwise disclosed) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results that might be achieved for the full year. |
Recent Accounting Pronouncements |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company’s only hedging activities are its interest rate swaps designated as cash flow hedges, which are highly effective. As discussed in Note 18, Commitments and Contingencies, the Company does not measure its forward purchase commitments for fuel and electricity at fair value, as the amounts under contract meet the physical delivery criteria in the normal purchase exception. The Company prospectively adopted this guidance at the beginning of fiscal year 2018, with no impact to its financial position or results of operations. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This ASU should be applied prospectively to an award modified on or after the adoption date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance at the beginning of fiscal year 2018, with no impact to its financial position or results of operations, as the Company has not modified any share-based payment awards since adoption. In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the statement of comprehensive income separately from the service cost component and outside of operating income. Additionally, only the service cost component is eligible for capitalization, when applicable. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The amendments in this update require retrospective presentation in the statement of comprehensive income. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company retrospectively adopted this guidance at the beginning of fiscal year 2018. For the 13-weeks and 26-weeks ended July 1, 2017, $1.3 million and $0.6 million, respectively, of net periodic benefit costs, other than the service cost components, were reclassified to other income (expense)—net, in the Consolidated Statement of Comprehensive Income. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies the presentation of restricted cash on the statement of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending cash balances on the statement of cash flows. The Company retrospectively adopted this standard at the beginning of fiscal year 2018, resulting in immaterial increases in the beginning and ending balances of cash, cash equivalents and restricted cash in the Company’s Consolidated Statement of Cash Flows for the 26-weeks ended July 1, 2017. For the periods presented, cash, cash equivalents and restricted cash consisted of the following:
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to amend the guidance on the classification and measurement of financial instrument. ASU No. 2016-01 was further amended in February 2018 by ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The Company adopted the guidance in this ASU at the beginning of fiscal year 2018, with no impact to its financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which has been introduced into the FASB’s Accounting Standards Codification (“ASC”) as Topic 606. Topic 606, as amended, replaces Topic 605, the previous revenue recognition guidance. The new standard’s core principle is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the Company expects to be entitled in exchange for those goods or services. The new standard also results in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improves guidance for multiple-element arrangements. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. See Note 3, Revenue Recognition. Recently Issued Accounting Pronouncements In February 2018, the FASB issued ASU No. 2018-02, Income Statement, Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income. This ASU permits an entity to reclassify the income tax effects of the 2017 Tax Cuts and Jobs Act (the “Tax Act”) on items within accumulated other comprehensive income to retained earnings. The FASB refers to these amounts as “stranded tax effects.” The amendments in this ASU also require certain disclosures about stranded tax effects. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company is currently reviewing the provisions of the new standard. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendment also eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The new standard is not expected to materially affect the Company’s financial position or results of operations, as the fair value of the Company’s reporting unit exceeded its carrying value by a substantial margin, based on the fiscal year 2017 annual impairment analysis. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to use a forward looking, expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company does not expect the adoption of the provisions of the new standard to materially affect its financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. This update requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. Adoption of this guidance will use a modified retrospective transition approach, which includes a number of practical expedients. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Upon adoption, we will recognize right-of-use assets and related lease liabilities on our Consolidated Balance Sheets, which will increase our total assets and total liabilities. The Company is in the process of gathering lease data, reviewing its lease portfolio, and completing an impacts assessment with respect to the adoption of the provisions of the new standard. |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | REVENUE RECOGNITION In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five steps:
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. For the Company, the contract is the approved sales order, which may also be supplemented by other agreements that formalize various terms and conditions with customers, including restaurant chains, government organizations or group purchase organizations. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer. For the Company, this includes the delivery of food and food-related products, which provide immediate benefit to the customer. While certain additional services may be identified within a contract, we have concluded that those services are individually immaterial in the context of the contract with the customer and therefore not assessed as performance obligations.
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer, and is generally stated on the approved sales order. Variable consideration, which typically includes volume-based rebates or discounts, are estimated utilizing the most likely amount method.
Since our contracts contain a single performance obligation, delivery of food and food-related products, the transaction price is allocated to that single performance obligation.
The Company recognizes revenue from the sale of food and food-related products when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Sales taxes invoiced to customers and remitted to governmental authorities are excluded from net sales. Shipping and handling costs are treated as fulfillment costs and presented in distribution, selling and administrative costs. The Company does not have any material outstanding performance obligations, contract assets and liabilities or capitalized contract acquisition costs. The following table presents the disaggregation of revenue according to sales mix for the Company’s principal product categories:
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Business Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions | BUSINESS ACQUISITIONS Acquisitions during fiscal year 2017 included three broadline and two specialty distributors for cash consideration of approximately $182 million. There were no business acquisitions during the 26-weeks ended June 30, 2018. Business acquisitions periodically provide for contingent consideration, including earnout agreements in the event certain operating results are achieved during a defined post-closing period. During the 26-weeks ended June 30, 2018, the Company paid approximately $0.5 million of contingent consideration for the first year of a two-year post-closing earnout period related to a 2016 business acquisition. As of June 30, 2018, potential aggregate contingent consideration outstanding for business acquisitions was approximately $5 million, including approximately $0.5 million for the estimated fair value of earnout liabilities. The 2017 acquisitions, reflected in the Company’s consolidated financial statements commencing from the date of acquisition, did not materially affect the Company’s results of operations or financial position and, therefore, pro forma financial information has not been provided. The 2017 acquisitions were integrated into the Company’s foodservice distribution network and funded primarily with cash from operations. The following table summarizes the purchase price allocations recognized for the 2017 acquisitions as follows:
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Inventories |
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Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES The Company’s inventories, consisting mainly of food and other food-related products, are primarily considered finished goods. Inventory costs include the purchase price of the product, freight charges to deliver it to the Company’s warehouses, and depreciation and labor related to processing facilities and equipment, and are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions. The Company records inventories at the lower of cost or market, using the last-in, first-out (“LIFO”) method. The base year values of beginning and ending inventories are determined using the inventory price index computation method. This “links” current costs to original costs in the base year when the Company adopted LIFO, or date of acquisition in the case of a business acquisition, where applicable. At June 30, 2018 and December 30, 2017, the LIFO balance sheet reserves were $138 million and $130 million, respectively. As a result of changes in LIFO reserves, cost of goods sold decreased $11 million and increased $30 million for the 13-weeks ended June 30, 2018 and July 1, 2017, respectively, and increased $8 million and $40 million for the 26-weeks ended June 30, 2018 and July 1, 2017, respectively. |
Accounts Receivable Financing Program |
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Jun. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable Financing Program | ACCOUNTS RECEIVABLE FINANCING PROGRAM Under its accounts receivable financing facility dated as of August 27, 2012, as amended (the “2012 ABS Facility”), USF sells, on a revolving basis, its eligible receivables to a wholly owned, special purpose, bankruptcy remote subsidiary (the “Receivables Company”). The Receivables Company, in turn, grants a continuing security interest in all of its rights, title and interest in the eligible receivables to the administrative agent, for the benefit of the lenders as defined by the 2012 ABS Facility. The Company consolidates the Receivables Company and, consequently, the transfer of the receivables is a transaction internal to the Company and the receivables have not been derecognized from the Company’s Consolidated Balance Sheets. Included in the Company’s accounts receivable balance as of June 30, 2018 and December 30, 2017 was $996 million and $964 million, respectively, of receivables held as collateral in support of the 2012 ABS Facility. See Note 11, Debt, for a further description of the 2012 ABS Facility. |
Assets Held for Sale |
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Jun. 30, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held for Sale | ASSETS HELD FOR SALE The Company classifies its closed facilities as assets held for sale at the time management commits to a plan to sell the facility, the facility is actively marketed and available for immediate sale, and the sale is expected to be completed within one year. Due to market conditions, certain facilities may be classified as assets held for sale for more than one year as the Company continues to actively market the facilities at reasonable prices. The Company had $5 million of assets held for sale at June 30, 2018 and December 30, 2017. |
Property and Equipment |
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Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to 40 years. Property and equipment under capital leases and leasehold improvements are amortized on a straight-line basis over the shorter of the remaining terms of the related lease or the estimated useful lives of the assets. At June 30, 2018 and December 30, 2017, property and equipment-net included accumulated depreciation of $2,021 million and $1,926 million, respectively. Depreciation expense was $74 million and $70 million for the 13-weeks ended June 30, 2018 and July 1, 2017, respectively, and $145 million and $139 million for the 26-weeks ended June 30, 2018 and July 1, 2017, respectively. |
Goodwill and Other Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangibles | GOODWILL AND OTHER INTANGIBLES Goodwill includes the cost of acquired businesses in excess of the fair value of the tangible net assets acquired. Other intangible assets include customer relationships, noncompete agreements, and the brand names and trademarks comprising the Company’s portfolio of exclusive brands and trademarks. Brand names and trademarks are indefinite-lived intangible assets, and accordingly, are not subject to amortization. Customer relationships and noncompete agreements are intangible assets with definite lives, and are carried at the acquired fair value less accumulated amortization. Customer relationships and noncompete agreements are amortized over the estimated useful lives (two to four years). Amortization expense was $10 million and $36 million for the 13-weeks ended June 30, 2018 and July 1, 2017, respectively, and $20 million and $75 million for the 26-weeks ended June 30, 2018 and July 1, 2017, respectively. Goodwill and other intangibles, net, consisted of the following:
The 2018 increase in goodwill is attributable to net purchase price adjustments related to 2017 business acquisitions. The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if events occur that indicate an asset may be impaired. For goodwill and indefinite-lived intangible assets, the Company’s policy is to assess for impairment at the beginning of each fiscal third quarter. For intangible assets with definite lives, the Company assesses impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable. The Company completed its most recent annual impairment assessment for goodwill and indefinite-lived intangible assets as of July 2, 2017, the first day of the third quarter of 2017, with no impairments noted. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company follows the accounting standards for fair value, where fair value is a market-based measurement, not an entity-specific measurement. The Company’s fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized at the end of the reporting period in which the transfer occurs. There were no transfers between fair value levels in any of the periods presented below. The Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:
There were no significant assets or liabilities on the Company's Consolidated Balance Sheets measured at fair value on a nonrecurring basis. Recurring Fair Value Measurements Money Market Funds Money market funds include highly liquid investments with a maturity of three or fewer months. They are valued using quoted market prices in active markets and are classified under Level 1 within the fair value hierarchy. Derivative Financial Instruments The Company uses interest rate swaps, designated as cash flow hedges, to manage its exposure to interest rate movements under its variable-rate Amended and Restated 2016 Term Loan (as defined in Note 11, Debt). On August 1, 2017, USF entered into four-year interest rate swap agreements, as amended, with a notional amount of $1.1 billion, reducing to $825 million in the fourth year, effectively converting approximately half of the principal amount of the Amended and Restated 2016 Term Loan from a variable to a fixed rate loan. After giving effect to the June 22, 2018 amendment to the Amended and Restated 2016 Term Loan, the Company now effectively pays an aggregate rate of 3.71% on the notional amount covered by the interest rate swaps, comprised of 1.71% plus a spread of 2.00% (see Note 11, Debt). The Company records its interest rate swaps in the Consolidated Balance Sheets at fair value, based on projections of cash flows and future interest rates. The determination of fair value includes the consideration of any credit valuation adjustments necessary, giving consideration to the creditworthiness of the respective counterparties or the Company, as appropriate. The following table presents the balance sheet location and fair value of the interest rate swaps at June 30, 2018 and December 30, 2017:
Gains and losses on the interest rate swaps are initially recorded in accumulated other comprehensive loss and reclassified to interest expense during the period in which the hedged transaction affects income. The following table presents the effect of the Company’s interest rate swaps in the Consolidated Statement of Comprehensive Income for the 13-weeks and 26-weeks ended June 30, 2018:
During the next twelve months, the Company estimates that $7 million will be reclassified from accumulated other comprehensive loss to income. Credit Risk-Related Contingent Features—The interest swap agreements contain a provision whereby the Company could be declared in default on its hedging obligations if more than $75 million of the Company’s other indebtedness is accelerated. As of June 30, 2018, none of our indebtedness was accelerated. We review counterparty credit risk and currently are not aware of any facts that indicate our counterparties will not be able to comply with the contractual terms of their agreements. Contingent Consideration Payable for Business Acquisitions As discussed in Note 4, Business Acquisitions, contingent consideration may be paid under an earnout agreement in the event certain operating results are achieved during a defined post-closing period. The amounts included in the above table, classified under Level 3 within the fair value hierarchy, represent the estimated fair value of the earnout liability for the respective periods. We estimate the fair value of earnout liabilities based on financial projections of the acquired companies and estimated probability of achievement. Changes in fair value resulting from changes in the estimated amount of contingent consideration are included in distribution, selling and administrative costs in the Consolidated Statements of Comprehensive Income. Other Fair Value Measurements The carrying value of cash, accounts receivable, bank checks outstanding, accounts payable and accrued expenses approximate their fair values due to their short-term maturities. The fair value of the Company’s total debt, $3.6 billion and $3.8 billion as of June 30, 2018 and December 30, 2017, respectively, approximated its carrying value at the end of each period. The June 30, 2018 and December 30, 2017 fair value of the Company’s 5.875% unsecured Senior Notes due June 15, 2024 (the “2016 Senior Notes”), estimated at $0.6 billion, at the end of each period, was classified under Level 2 of the fair value hierarchy, with fair value based upon the closing market price at the end of the reporting period. The fair value of the balance of the Company’s debt is primarily classified under Level 3 of the fair value hierarchy, with fair value estimated based upon a combination of the cash outflows expected under these debt facilities, interest rates that are currently available to the Company for debt with similar terms, and estimates of the Company’s overall credit risk. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT Total debt consisted of the following:
At June 30, 2018, after considering interest rate swaps, as described in Note 10, Fair Value Measurements, that fixed the interest rate on $1.1 billion of the principal amount of the Amended and Restated 2016 Term Loan, approximately 57% of the Company’s total debt was at a fixed rate and approximately 43% was at a floating rate. Revolving Credit Agreement—The Amended and Restated ABL Credit Agreement, dated October 20, 2015, as amended, is USF’s asset backed senior secured revolving loan facility (the “ABL Facility”) and provides for loans of up to $1,300 million, with its capacity limited by a borrowing base. As of June 30, 2018, USF had $26 million of outstanding borrowings, and had issued letters of credit totaling $374 million under the ABL Facility. Outstanding letters of credit included: (1) $78 million issued to secure USF’s obligations with respect to certain facility leases, (2) $295 million issued in favor of certain commercial insurers securing USF’s obligations with respect to its self-insurance program, and (3) $1 million in letters of credit for other obligations. There was available capacity on the ABL Facility of $900 million at June 30, 2018. As of June 30, 2018, USF can periodically elect to pay interest at an alternative base rate (“ABR”), as defined in the ABL Facility, or the London Inter Bank Offered Rate (“LIBOR”) plus applicable interest rate spreads as provided for in the agreement. The interest rate spreads are the lowest provided for in the agreement, based upon USF’s consolidated secured leverage ratio (as defined in the agreement). Accounts Receivable Financing Program—Under the 2012 ABS Facility, USF sells, on a revolving basis, its eligible receivables to the Receivables Company. See Note 6, Accounts Receivable Financing Program. The maximum capacity under the 2012 ABS Facility is $800 million. Borrowings under the 2012 ABS Facility were $470 million at June 30, 2018. The Company, at its option, can request additional borrowings up to the maximum commitment, provided sufficient eligible receivables are available as collateral. There was available capacity on the 2012 ABS Facility of $254 million at June 30, 2018 based on eligible receivables as collateral. Amended and Restated 2016 Term Loan Agreement—The Amended and Restated 2016 Term Loan Credit Agreement, dated June 27, 2016 (as amended, the “Amended and Restated 2016 Term Loan”) provides USF with a $2.1 billion senior secured term loan facility. On June 22, 2018, the Amended and Restated 2016 Term Loan was further amended to lower the interest rate margins under the term loan facility to 2.00% for LIBOR borrowings and 1.00% for ABR borrowings. The table above reflects the June 30, 2018 interest rate on the unhedged portion of the term loan facility. With respect to the portion of the term loan facility subject to interest rate hedging agreements ($1.1 billion as of June 30, 2018), the June 22, 2018 amendment reduced the effective interest rate to 3.71%. In connection with the June 22, 2018 amendment of the term loan facility, under accounting guidance, the Company applied modification accounting to the majority of the continuing lenders as the terms were not substantially different from the terms that applied to those lenders prior to the amendment. For the remaining lenders, the Company applied debt extinguishment accounting. The Company recorded $0.5 million of third-party costs, and a write-off of $2.6 million of unamortized deferred financing costs, related to the June 22, 2018 amendment, in interest expense. Unamortized deferred financing costs of $7 million at June 30, 2018 were carried forward and will be amortized through June 27, 2023, the maturity date of the term loan facility. Restrictive Covenants USF’s credit facilities, loan agreements and indentures contain customary covenants. These include, among other things, covenants that restrict USF’s ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends, or engage in mergers or consolidations. As of June 30, 2018, USF had $859 million of restricted payment capacity under these covenants, and approximately $2,161 million of its net assets were restricted after taking into consideration the net deferred tax assets and intercompany balances that eliminate in consolidation. |
Restructuring Liabilities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Liabilities | RESTRUCTURING LIABILITIES The following table summarizes the changes in the restructuring liabilities for the 26-weeks ended June 30, 2018:
The Company periodically closes or consolidates distribution facilities and implements initiatives in its ongoing efforts to reduce costs and improve operating effectiveness. In connection with these activities, the Company may incur various costs including multiemployer pension withdrawal liabilities, severance and other employee separation costs. During the 26-weeks ended June 30, 2018, $1 million was recognized primarily for changes in estimates of prior year initiatives. During the 26-weeks ended July 1, 2017, the Company incurred a net charge of $3 million for severance and related costs associated with its efforts to streamline its corporate back office organization and centralize replenishment activities. |
Related Party Transactions |
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Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Based solely on the most recent information available to the Company, FMR LLC held approximately 9% of the Company’s outstanding common stock. As reported by the Company’s administrative agent, as of June 30, 2018, investment funds managed by an affiliate of FMR LLC held approximately $41 million in principal amount of the Amended and Restated 2016 Term Loan. Certain FMR LLC affiliates provide recordkeeping services for the Company’s 401(k) plan and provide administrative services for other Company sponsored employee benefit plans. Fees earned by FMR LLC affiliates are not material to the Company’s consolidated financial statements. During fiscal year 2017, the Company completed four secondary offerings of its common stock held primarily by the Sponsors. Following the completion of the final offering in December 2017, the Sponsors no longer hold any shares of the Company’s common stock. The Company did not receive any proceeds from the offerings. In accordance with terms of the previously effective registration rights agreement with the Sponsors, the Company incurred approximately $4 million of expenses in connection with the offerings during fiscal year 2017, approximately $2 million of which was incurred during the 26-weeks ended July 1, 2017. Underwriting discounts and commissions were paid by the selling shareholders. |
Retirement Plans |
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Retirement Plans | RETIREMENT PLANS The Company has defined benefit and defined contribution retirement plans for its employees, and provides certain health care benefits to eligible retirees and their dependents. The components of net periodic benefit (credits) costs for pension and other postretirement benefits, for Company sponsored plans, are provided below:
The service cost component of net periodic (credits) benefit costs is included in distribution, selling and administrative costs, while the other components of net periodic (credits) benefit costs are included in other income—net, respectively, in the Consolidated Statements of Comprehensive Income. The Company contributed approximately $70 million to its defined benefit and other postretirement plans during the 26-week period ended June 30, 2018, of which $35 million was incremental to its originally planned 2018 contributions. As a result of the incremental contribution, the Company remeasured its defined benefit pension liability as of May 31, 2018, resulting in a reduction in the benefit obligation of $33 million, with a corresponding benefit to accumulated other comprehensive loss. The remeasurement resulted in an immaterial increase in the 2018 annual net periodic benefit (credits). The Company has completed substantially all of the 2018 contributions to its defined benefit and other postretirement plans. The Company’s employees are eligible to participate in a Company sponsored defined contribution 401(k) plan that provides for Company matching on the participant’s contributions of up to 100% of the first 3% of participant’s compensation and 50% of the next 2% of a participant’s compensation, for a maximum Company matching contribution of 4%. The Company’s 401(k) plan matching contributions were $11 million for each of the 13-weeks ended June 30, 2018 and July 1, 2017, and $25 million and $23 million for the 26-weeks ended June 30, 2018 and July 1, 2017, respectively. The Company also contributes to numerous multiemployer pension plans under the terms of certain collective bargaining agreements that cover its union-represented employees. The Company does not administer these multiemployer pension plans. The Company’s contributions to these plans were $9 million for each of the 13-weeks ended June 30, 2018 and July 1, 2017, and $18 million and $17 million for the 26-weeks ended June 30, 2018 and July 1, 2017, respectively. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding. Diluted EPS is computed using the weighted average number of shares of common stock, plus the effect of potentially dilutive securities. Stock options, non-vested restricted shares with forfeitable dividend rights, restricted stock units, and employee stock purchase plan deferrals are considered potentially dilutive securities. The following table sets forth the computation of basic and diluted EPS:
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Changes in Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss | CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents changes in accumulated other comprehensive loss by component for the periods presented:
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Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The determination of the Company’s overall effective tax rate requires the use of estimates. The effective tax rate reflects the income earned and taxed in various United States federal and state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. On December 22, 2017 the U.S. government enacted comprehensive tax legislation referred to herein as the Tax Act. The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to (1) a reduction of the U.S. federal corporate tax rate and (2) bonus depreciation that permits full expensing of qualified property. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740, Income Taxes is complete. To the extent that a company’s accounting for certain income tax effects of the Tax 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, Income Taxes on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Tax Act reduced the corporate tax rate to 21%, effective January 1, 2018 and provided for bonus depreciation that allows for full expensing of qualified assets placed into service after September 27, 2017. The Company’s accounting for the reduction of the corporate tax rate and bonus depreciation that allows for full expensing of qualified property is incomplete. However, the Company was able to determine a reasonable estimate of the impact of the corporate tax rate reduction and bonus depreciation that will allow for full expensing of qualified property. Consequently, the Company recorded a provisional decrease to deferred tax liabilities of $173 million with a corresponding adjustment to deferred income tax benefit of $173 million for the year ended December 30, 2017 related to the reduction of the corporate tax rate. Additionally, the Company recorded a provisional increase in net deferred tax liabilities of $4 million with a corresponding adjustment of $4 million to other long-term liabilities for the year ended December 30, 2017 related to bonus depreciation that allowed for full expensing of qualified property. The income tax effects for these positions require further analysis to prepare the accounting related to the income tax effects of the Tax Act in reasonable detail. An adjustment to the provisional estimates recorded for the year ended December 30, 2017 was recorded in the 26-weeks ended June 30, 2018 resulting from the $35 million of incremental contributions to the Company's defined benefit and other postretirement plans. The Company recorded a provisional decrease to deferred tax liabilities of $3 million and a provisional decrease to current taxes payable of $1 million with a corresponding adjustment to income tax benefit of $4 million related to the reduction of the federal corporate tax rate. The accounting for these items is expected to be complete when the Company's consolidated 2017 U.S. federal income tax return is filed in 2018. The Company estimated its annual effective tax rate for the full fiscal year and applied the annual effective tax rate to the results of the 26-weeks ended June 30, 2018 and July 1, 2017 for purposes of determining its year-to-date tax provision. The effective tax rate for the 13-weeks ended June 30, 2018 of 22% varied from the 21% federal corporate tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items. The discrete tax items included a tax benefit of $3 million, primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $4 million resulting from the change in provisional estimate recorded as of December 30, 2017 related to the reduction of the corporate tax rate. The effective tax rate for the 13-weeks ended July 1, 2017 of 23% varied from the 35% federal corporate tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items. The discrete tax items included a tax benefit of $14 million, primarily related to excess tax benefits associated with share-based compensation. The effective tax rate for the 26-weeks ended June 30, 2018 of 14% varied from the 21% federal corporate tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items. The discrete tax items included a tax benefit of $17 million, primarily related to the reduction of an unrecognized tax benefit due to the receipt of an affirmative written consent from the IRS to change a method of accounting, a tax benefit of $5 million, primarily related to excess tax benefits associated with share-based compensation and a tax benefit of $4 million resulting from the change in provisional estimate recorded as of December 30, 2017 related to the reduction of the federal tax rate. The effective tax rate for the 26-weeks ended July 1, 2017 of 23% varied from the 35% federal corporate tax rate, primarily as a result of state income taxes and the recognition of various discrete tax items. The discrete tax items included a tax benefit of $20 million, primarily related to excess tax benefits associated with share-based compensation. |
Commitments and Contingencies |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Purchase Commitments—The Company enters into purchase orders with vendors and other parties in the ordinary course of business, and has a limited number of purchase contracts with certain vendors that require it to buy a predetermined volume of products. As of June 30, 2018, the Company had $753 million of purchase orders and purchase contract commitments, for products to be purchased in the remainder of fiscal year 2018, that were not recorded in the Consolidated Balance Sheets. To minimize fuel cost risk, the Company enters into forward purchase commitments for a portion of its projected diesel fuel requirements. At June 30, 2018, the Company had diesel fuel forward purchase commitments totaling $22 million through December 2018. Additionally, as of June 30, 2018, the Company had electricity forward purchase commitments totaling $5 million through March 2021. The Company does not measure its forward purchase commitments for fuel and electricity at fair value, as the amounts under contract meet the physical delivery criteria in the normal purchase exception under GAAP guidance. Legal Proceedings — The Company and its subsidiaries are parties to a number of legal proceedings arising from the normal course of business. These legal proceedings, whether pending, threatened or unasserted, if decided adversely to or settled by the Company, may result in liabilities material to its financial position, results of operations, or cash flows. The Company recognized provisions with respect to the proceedings, where appropriate, in the Consolidated Balance Sheets. It is possible that the Company could be required to make expenditures, in excess of the established provisions, in amounts that cannot be reasonably estimated. However, the Company believes that the ultimate resolution of these proceedings will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows. |
Business Information |
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Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Business Information | BUSINESS INFORMATION The Company’s consolidated results represents the results of its one business segment based on how the Company’s chief operating decision maker, the Chief Executive Officer, views the business for purposes of evaluating performance and making operating decisions. The Company markets and, primarily, distributes fresh, frozen and dry food and non-food products to foodservice customers throughout the United States. The Company uses a centralized management structure, and its strategies and initiatives are implemented and executed consistently across the organization to maximize value to the organization as a whole. The Company uses shared resources for sales, procurement, and general and administrative activities across each of its distribution centers and operations. The Company’s distribution centers form a single network to reach its customers; it is common for a single customer to make purchases from several different distribution centers. Capital projects, whether for cost savings or generating incremental revenue, are evaluated based on estimated economic returns to the organization as a whole. |
Subsequent Events |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On July 28, 2018, USF entered into a Stock Purchase Agreement with Services Group of America, Inc. (“SGA”) under which it will acquire SGA’s Food Group Companies (doing business as Food Services of America, Inc., Systems Services of America, Inc., Amerifresh, Inc., Ameristar Meats, Inc. and Gampac Express, Inc.) for $1.8 billion in cash. The closing of the transaction is subject to customary conditions, including the receipt of required regulatory approvals. On the same date, USF also entered into a commitment letter with JPMorgan Chase Bank, N.A., Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the “Committed Parties”) pursuant to which the Committed Parties have committed to provide USF with a $1.5 billion senior secured term loan facility under USF’s term loan credit agreement. |
Recent Accounting Pronouncements (Policies) |
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to better align a company’s risk management activities and financial reporting for hedging relationships, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company’s only hedging activities are its interest rate swaps designated as cash flow hedges, which are highly effective. As discussed in Note 18, Commitments and Contingencies, the Company does not measure its forward purchase commitments for fuel and electricity at fair value, as the amounts under contract meet the physical delivery criteria in the normal purchase exception. The Company prospectively adopted this guidance at the beginning of fiscal year 2018, with no impact to its financial position or results of operations. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. This ASU should be applied prospectively to an award modified on or after the adoption date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance at the beginning of fiscal year 2018, with no impact to its financial position or results of operations, as the Company has not modified any share-based payment awards since adoption. In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires an employer to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the statement of comprehensive income separately from the service cost component and outside of operating income. Additionally, only the service cost component is eligible for capitalization, when applicable. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The amendments in this update require retrospective presentation in the statement of comprehensive income. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company retrospectively adopted this guidance at the beginning of fiscal year 2018. For the 13-weeks and 26-weeks ended July 1, 2017, $1.3 million and $0.6 million, respectively, of net periodic benefit costs, other than the service cost components, were reclassified to other income (expense)—net, in the Consolidated Statement of Comprehensive Income. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies the presentation of restricted cash on the statement of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending cash balances on the statement of cash flows. The Company retrospectively adopted this standard at the beginning of fiscal year 2018, resulting in immaterial increases in the beginning and ending balances of cash, cash equivalents and restricted cash in the Company’s Consolidated Statement of Cash Flows for the 26-weeks ended July 1, 2017. For the periods presented, cash, cash equivalents and restricted cash consisted of the following:
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to amend the guidance on the classification and measurement of financial instrument. ASU No. 2016-01 was further amended in February 2018 by ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The Company adopted the guidance in this ASU at the beginning of fiscal year 2018, with no impact to its financial position or results of operations. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which has been introduced into the FASB’s Accounting Standards Codification (“ASC”) as Topic 606. Topic 606, as amended, replaces Topic 605, the previous revenue recognition guidance. The new standard’s core principle is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the Company expects to be entitled in exchange for those goods or services. The new standard also results in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improves guidance for multiple-element arrangements. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. See Note 3, Revenue Recognition. Recently Issued Accounting Pronouncements In February 2018, the FASB issued ASU No. 2018-02, Income Statement, Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income. This ASU permits an entity to reclassify the income tax effects of the 2017 Tax Cuts and Jobs Act (the “Tax Act”) on items within accumulated other comprehensive income to retained earnings. The FASB refers to these amounts as “stranded tax effects.” The amendments in this ASU also require certain disclosures about stranded tax effects. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company is currently reviewing the provisions of the new standard. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendment also eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for the annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The new standard is not expected to materially affect the Company’s financial position or results of operations, as the fair value of the Company’s reporting unit exceeded its carrying value by a substantial margin, based on the fiscal year 2017 annual impairment analysis. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to use a forward looking, expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company does not expect the adoption of the provisions of the new standard to materially affect its financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. This update requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. Adoption of this guidance will use a modified retrospective transition approach, which includes a number of practical expedients. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Upon adoption, we will recognize right-of-use assets and related lease liabilities on our Consolidated Balance Sheets, which will increase our total assets and total liabilities. The Company is in the process of gathering lease data, reviewing its lease portfolio, and completing an impacts assessment with respect to the adoption of the provisions of the new standard. |
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Revenue Recognition | REVENUE RECOGNITION In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services. The Company adopted this standard at the beginning of fiscal year 2018, with no significant impact to its financial position or results of operations, using the modified retrospective method. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five steps:
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. For the Company, the contract is the approved sales order, which may also be supplemented by other agreements that formalize various terms and conditions with customers, including restaurant chains, government organizations or group purchase organizations. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer. For the Company, this includes the delivery of food and food-related products, which provide immediate benefit to the customer. While certain additional services may be identified within a contract, we have concluded that those services are individually immaterial in the context of the contract with the customer and therefore not assessed as performance obligations.
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer, and is generally stated on the approved sales order. Variable consideration, which typically includes volume-based rebates or discounts, are estimated utilizing the most likely amount method.
Since our contracts contain a single performance obligation, delivery of food and food-related products, the transaction price is allocated to that single performance obligation.
The Company recognizes revenue from the sale of food and food-related products when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. Customer sales incentives such as volume-based rebates or discounts are treated as a reduction of sales at the time the sale is recognized. Sales taxes invoiced to customers and remitted to governmental authorities are excluded from net sales. Shipping and handling costs are treated as fulfillment costs and presented in distribution, selling and administrative costs. The Company does not have any material outstanding performance obligations, contract assets and liabilities or capitalized contract acquisition costs. |
Recent Accounting Pronouncements (Tables) |
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Schedule of Cash, Cash Equivalents and Restricted Cash | For the periods presented, cash, cash equivalents and restricted cash consisted of the following:
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Revenue Recognition (Tables) |
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Schedule of Disaggregation of Revenue According to Sales Mix for Principal Product Categories | The following table presents the disaggregation of revenue according to sales mix for the Company’s principal product categories:
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Business Acquisitions (Tables) |
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Purchase Price Allocations Recognized for Acquisitions | The following table summarizes the purchase price allocations recognized for the 2017 acquisitions as follows:
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Goodwill and Other Intangibles (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Other Intangibles, Net | Goodwill and other intangibles, net, consisted of the following:
|
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis | The Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Balance Sheet Location and Fair Value of Company’s Interest Rate Swaps | The following table presents the balance sheet location and fair value of the interest rate swaps at June 30, 2018 and December 30, 2017:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effect of Company Interest Rate Swaps in Consolidated Statement of Comprehensive Income | The following table presents the effect of the Company’s interest rate swaps in the Consolidated Statement of Comprehensive Income for the 13-weeks and 26-weeks ended June 30, 2018:
|
Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Total Debt | Total debt consisted of the following:
|
Restructuring Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Restructuring Liabilities | The following table summarizes the changes in the restructuring liabilities for the 26-weeks ended June 30, 2018:
|
Retirement Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Net Periodic Benefit (Credit) Costs for Pensions and Other Postretirement Benefits | The components of net periodic benefit (credits) costs for pension and other postretirement benefits, for Company sponsored plans, are provided below:
|
Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted EPS | The following table sets forth the computation of basic and diluted EPS:
|
Changes in Accumulated Other Comprehensive Loss (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Loss | The following table presents changes in accumulated other comprehensive loss by component for the periods presented:
|
Overview and Basis of Presentation - Additional Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business segment | 1 |
Recent Accounting Pronouncements - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jul. 01, 2017 |
Jul. 01, 2017 |
|
ASU 2017-07 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net periodic benefit credits, other than service cost components, reclassified to other income—net | $ 1.3 | $ 0.6 |
Recent Accounting Pronouncements - Schedule of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 30, 2017 |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Accounting Changes and Error Corrections [Abstract] | ||||
Cash and cash equivalents | $ 100,203 | $ 118,849 | ||
Restricted cash included in other assets | 346 | 335 | ||
Total cash, cash equivalents and restricted cash | $ 100,549 | $ 119,184 | $ 150,344 | $ 131,436 |
Revenue Recognition - Schedule of Disaggregation of Revenue According to Sales Mix for Principal Product Categories (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 6,158,491 | $ 6,158,654 | $ 11,981,012 | $ 11,947,079 |
Meats and seafood | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,217,977 | 2,255,136 | 4,285,895 | 4,287,322 |
Dry grocery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,068,936 | 1,069,624 | 2,111,195 | 2,126,009 |
Refrigerated and frozen grocery products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 972,816 | 942,658 | 1,916,958 | 1,874,652 |
Dairy | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 650,104 | 636,038 | 1,259,610 | 1,242,814 |
Equipment, disposables and supplies | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 587,750 | 571,757 | 1,127,721 | 1,112,036 |
Beverage products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 335,686 | 331,438 | 654,118 | 651,107 |
Produce | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 325,222 | $ 352,003 | $ 625,515 | $ 653,139 |
Business Acquisitions - Additional Information (Detail) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2018
USD ($)
business
|
Dec. 30, 2017
USD ($)
broadline_distributor
|
Dec. 30, 2017
specialty_distributor
|
|
Business Combinations [Abstract] | |||
Business acquisitions during the period | 0 | 3 | 2 |
Cash consideration for acquisition | $ 182.0 | ||
Estimated fair value of earnout liabilities | $ 0.5 | ||
Post-closing earnout period | 2 years | ||
Aggregate contingent consideration outstanding for acquisition | $ 5.0 |
Business Acquisitions - Purchase Price Allocations Recognized for Acquisitions (Detail) $ in Thousands |
Dec. 30, 2017
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Accounts receivable | $ 17,108 |
Inventories | 25,232 |
Other current assets | 677 |
Property and equipment | 29,492 |
Goodwill | 58,528 |
Other intangible assets | 72,050 |
Accounts payable | (7,986) |
Accrued expenses and other current liabilities | (5,837) |
Deferred income taxes | (7,277) |
Cash paid for acquisitions | $ 181,987 |
Inventories - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
Dec. 30, 2017 |
|
Inventory Disclosure [Abstract] | |||||
LIFO balance sheet reserves | $ 138 | $ 138 | $ 130 | ||
Effect of LIFO reserves on cost of goods sold | $ (11) | $ 30 | $ 8 | $ 40 |
Accounts Receivable Financing Program - Additional Information (Detail) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
2012 ABS Facility | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 996 | $ 964 |
Assets Held for Sale - Additional Information (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
Discontinued Operations and Disposal Groups [Abstract] | ||
Assets held for sale | $ 5,178 | $ 5,178 |
Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
Dec. 30, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, accumulated depreciation | $ 2,021 | $ 2,021 | $ 1,926 | ||
Depreciation expense | $ 74 | $ 70 | $ 145 | $ 139 | |
Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of assets | 3 years | ||||
Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives of assets | 40 years |
Goodwill and Other Intangibles - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Other Intangible Assets [Line Items] | |||||
Amortization expense | $ 10,000,000 | $ 36,000,000 | $ 20,000,000 | $ 75,000,000 | |
Goodwill, impairment | $ 0 | ||||
Indefinite-lived intangible assets, impairment | $ 0 | ||||
Customer Relationship | Minimum | |||||
Other Intangible Assets [Line Items] | |||||
Estimated useful lives of intangible assets | 2 years | ||||
Customer Relationship | Maximum | |||||
Other Intangible Assets [Line Items] | |||||
Estimated useful lives of intangible assets | 4 years | ||||
Noncompete Agreements | Minimum | |||||
Other Intangible Assets [Line Items] | |||||
Estimated useful lives of intangible assets | 2 years | ||||
Noncompete Agreements | Maximum | |||||
Other Intangible Assets [Line Items] | |||||
Estimated useful lives of intangible assets | 4 years |
Goodwill and Other Intangibles - Schedule of Goodwill and Other Intangibles, Net (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
Other intangibles—net | ||
Goodwill | $ 3,966,863 | $ 3,966,565 |
Total Other intangibles—net | 343,884 | 363,618 |
Brand Names and Trademarks | ||
Other intangibles—net | ||
Brand names and trademarks—not amortizing | 252,800 | 252,800 |
Customer Relationship | ||
Other intangibles—net | ||
Gross carrying amount | 154,230 | 154,230 |
Accumulated amortization | (65,482) | (46,203) |
Net carrying value | 88,748 | 108,027 |
Noncompete Agreements | ||
Other intangibles—net | ||
Gross carrying amount | 3,950 | 3,950 |
Accumulated amortization | (1,614) | (1,159) |
Net carrying value | $ 2,336 | $ 2,791 |
Fair Value Measurements - Schedule of Balance Sheet Location and Fair Value of Company's Interest Rate Swaps (Detail) - Derivatives designated as hedging instruments - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Interest rate swaps | $ 29,695 | $ 12,717 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate swaps | 7,480 | 430 |
Other noncurrent assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate swaps | $ 22,215 | $ 12,287 |
Fair Value Measurements - Schedule of Effect of Company Interest Rate Swaps in Consolidated Statement of Comprehensive Income (Detail) - Cash Flow Hedging - Interest Rate Swap - Amounts reclassified to interest expense—net - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Gain Recognized in Accumulated Other Comprehensive Loss, net of tax | $ 4,063 | $ 12,877 |
Amount of Gain Reclassified from Accumulated Other Comprehensive Loss to Income, net of tax | $ (419) | $ (193) |
Debt - Additional Information (Detail) - Interest Rate Swap - Amended and Restated 2016 Term Loan $ in Billions |
Jun. 30, 2018
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Total debt | $ 1.1 |
Percentage of principal amount of total debt borrowed at fixed rate | 57.00% |
Percentage of principal amount of total debt borrowed at floating rate | 43.00% |
Debt - Revolving Credit Agreement - Additional Information (Detail) - USD ($) |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
ABL Facility | ||
Debt Instrument [Line Items] | ||
Revolving credit facility, outstanding amount | $ 26,000,000 | $ 80,000,000 |
ABL Senior Secured Revolving Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 1,300,000,000 | |
Letters of credit, outstanding amount | 374,000,000 | |
Available capacity | 900,000,000 | |
ABL Senior Secured Revolving Facility | Standby Letters of Credit for Self Insurance Program | ||
Debt Instrument [Line Items] | ||
Letters of credit, outstanding amount | 295,000,000 | |
ABL Senior Secured Revolving Facility | Other Obligations | ||
Debt Instrument [Line Items] | ||
Letters of credit, outstanding amount | 1,000,000 | |
Obligations under capital leases | ABL Senior Secured Revolving Facility | ||
Debt Instrument [Line Items] | ||
Letters of credit, outstanding amount | $ 78,000,000 |
Debt - Accounts Receivable Financing Program - Additional Information (Detail) - USD ($) |
Jun. 30, 2018 |
Dec. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Term loan facility | $ 3,599,305,000 | $ 3,757,281,000 |
2012 ABS Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 800,000,000 | |
Term loan facility | 470,000,000 | $ 580,000,000 |
Available capacity | 254,000,000 | |
ABL Senior Secured Revolving Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 1,300,000,000 | |
Available capacity | $ 900,000,000 |
Debt - Restrictive Covenants - Additional Information (Detail) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Restricted payment capacity | $ 859 |
Restricted asset | $ 2,161 |
Restructuring Liabilities - Summary of Changes in Restructuring Liabilities (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 30, 2017 | $ 5,335 |
Current period charges | 1,165 |
Payments and usage—net of accretion | (3,873) |
Balance at June 30, 2018 | 2,627 |
Severance and Related Costs | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 30, 2017 | 4,835 |
Current period charges | 1,165 |
Payments and usage—net of accretion | (3,873) |
Balance at June 30, 2018 | 2,127 |
Facility Closing Costs | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 30, 2017 | 500 |
Current period charges | 0 |
Payments and usage—net of accretion | 0 |
Balance at June 30, 2018 | $ 500 |
Restructuring Liabilities - Additional Information (Detail) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Restructuring and Related Activities [Abstract] | ||
Change in estimates of prior year initiatives | $ 1 | |
Net costs recognized related to initiatives launched in late 2016 | $ 3 |
Related Party Transactions - Additional Information (Detail) - USD ($) |
6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2017 |
Dec. 30, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Secondary Offerings | ||||
Related Party Transaction [Line Items] | ||||
Expenses related to shares sold | $ 2,000,000 | $ 4,000,000 | ||
FMR LLC | Amended and Restated 2016 Term Loan | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 41,000,000 | |||
FMR LLC | US Foods Holding Corp | ||||
Related Party Transaction [Line Items] | ||||
Percentage of company's outstanding common stock | 9.00% | |||
Sponsor | Follow-on Offerings | ||||
Related Party Transaction [Line Items] | ||||
Proceeds from common stock sales | $ 0 |
Retirement Plans - Components of Net Periodic Benefit (Credits) Costs for Pension and Other Postretirement Benefits (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Pension Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 561 | $ 506 | $ 1,134 | $ 1,012 |
Interest cost | 8,881 | 10,139 | 17,662 | 20,277 |
Expected return on plan assets | (12,818) | (11,964) | (25,598) | (23,928) |
Amortization of prior service cost | 1 | 34 | 2 | 69 |
Amortization of net loss (gain) | 770 | 1,050 | 1,616 | 2,101 |
Settlements | 0 | 2,000 | 0 | 2,000 |
Net periodic (credits) benefit costs | (2,605) | 1,765 | (5,184) | 1,531 |
Other Postretirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 8 | 9 | 17 | 19 |
Interest cost | 59 | 72 | 118 | 144 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 1 | 2 | 3 | 3 |
Amortization of net loss (gain) | (39) | (13) | (78) | (26) |
Settlements | 0 | 0 | 0 | 0 |
Net periodic (credits) benefit costs | $ 29 | $ 70 | $ 60 | $ 140 |
Earnings Per Share - Schedule of Computation of Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
|
Numerator: | ||||
Net income | $ 125,533 | $ 65,458 | $ 192,850 | $ 92,274 |
Denominator: | ||||
Weighted-average common shares outstanding (in shares) | 215,827,074 | 222,754,030 | 215,453,656 | 222,059,022 |
Dilutive effect of share-based awards (in shares) | 1,943,239 | 4,037,419 | 2,037,611 | 4,498,408 |
Weighted-average dilutive shares outstanding (in shares) | 217,770,313 | 226,791,449 | 217,491,267 | 226,557,430 |
Basic earnings per share (in dollars per share) | $ 0.58 | $ 0.29 | $ 0.90 | $ 0.42 |
Diluted earnings per share (in dollars per share) | $ 0.58 | $ 0.29 | $ 0.89 | $ 0.41 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jul. 01, 2017 |
Jun. 30, 2018 |
Jul. 01, 2017 |
Dec. 30, 2017 |
|
Income Taxes [Line Items] | |||||
Decrease to deferred tax liabilities | $ (173) | ||||
Adjustment to deferred income tax benefit | 173 | ||||
Increase to deferred tax liabilities | 4 | ||||
Adjustment to other long-term liabilities | 4 | ||||
Incremental to planned contributions | $ 35 | ||||
Provisional decrease to deferred tax liabilities | 3 | ||||
Decrease to current taxes payable | 1 | ||||
Tax benefit | $ 4 | $ 4 | |||
Effective tax rate | 22.00% | 23.00% | 14.00% | 23.00% | |
Income tax benefit related to excess tax benefits | $ 3 | $ 14 | $ 5 | $ 20 | |
Accounting Standards Update 2015-17 | Internal Revenue Service (IRS) | |||||
Income Taxes [Line Items] | |||||
Income tax benefit related to reduction of unrecognized tax benefit | $ 17 |
Commitments and Contingencies - Additional Information (Detail) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Gain Contingencies [Line Items] | |
Purchase commitments, remainder of fiscal year | $ 753 |
Electricity | |
Gain Contingencies [Line Items] | |
Purchase commitments | 5 |
Diesel Fuel | |
Gain Contingencies [Line Items] | |
Purchase commitments | $ 22 |
Business Information - Additional Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of operating business segments | 1 |
Subsequent Events (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Jul. 28, 2018 |
Dec. 30, 2017 |
|
Subsequent Event [Line Items] | ||
Cash consideration for acquisition | $ 182,000,000 | |
SGA Food Group Companies | Subsequent event | ||
Subsequent Event [Line Items] | ||
Cash consideration for acquisition | $ 1,800,000,000 | |
Senior Secured Term Loan Facility | Subsequent event | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 1,500,000,000.0 |
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