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Retirement Plans
 12 Months Ended
Dec. 28, 2019
Retirement Benefits [Abstract]  
Retirement Plans
RETIREMENT PLANS
The Company sponsors a defined benefit pension plan and 401(k) plan for eligible employees, and provides certain postretirement health and welfare benefits to eligible retirees and their dependents.
Company Sponsored Defined Benefit Plans —The Company sponsors the US Foods Consolidated Defined Benefit Retirement Plan, a qualified defined benefit retirement plan (the "Retirement Plan"), that pays benefits to certain employees at the time of retirement, using actuarial formulas based upon a participant’s years of credited service and compensation. The Company also maintains postretirement health and welfare plans for certain employees. Amounts related to the Retirement Plan and other postretirement plans recognized in the Company's consolidated financial statements are determined on an actuarial basis.
The components of net periodic pension benefit costs (credits) for the Retirement Plan the last three fiscal years were as follows:
 
2019
 
2018
 
2017
Components of net periodic pension benefit costs (credits):
 
 
 
 
 
Service cost
$
2

 
$
2

 
$
2

Interest cost
37

 
36

 
40

Expected return on plan assets
(49
)
 
(52
)
 
(48
)
Amortization of net loss
4

 
3

 
4

Settlements
12

 
—

 
18

Net periodic pension benefit costs (credits)
$
6

 
$
(11
)
 
$
16

    
Other postretirement benefit costs were de minimis for fiscal years 2019, 2018 and 2017.
The service cost component of net periodic benefit costs (credits) is included in distribution, selling and administrative costs, while the other components of net periodic benefit costs (credits) are included in other expense (income)—net in the Company's Consolidated Statements of Comprehensive Income.
The Company did not make a significant contribution to the Retirement Plan in fiscal year 2019. The Company contributed approximately $71 million to the Retirement Plan during fiscal year 2018, of which $35 million represented an additional, voluntary contribution. As a result of the incremental voluntary 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 had an immaterial impact on the annual net periodic benefit costs (credits) for fiscal year 2018.
In the fourth quarter of fiscal year 2019, the Company completed a voluntary lump sum settlement offer to certain terminated plan participants who held vested accrued benefits under a certain threshold amount. In addition, in the fourth quarter of fiscal year 2019, the Company completed a spin-off of liabilities associated with certain active participants with small accrued benefits and retirees into a separate plan and immediately terminated that plan. As a result of the termination of the spin-off of the plan, those participants were able to elect to receive immediate lump sum payouts, with any remaining liabilities transferred to an insurance company through the purchase of an annuity contract. Pension obligation settlement payments of $66 million related to these transactions, consisting of lump sum payments and the annuity contract premium, were paid from plan assets. The Company incurred non-cash settlement charges of $12 million in fiscal year 2019, including approximately $9 million in the fourth quarter when the settlement payments were paid. The other $3 million of settlement charges incurred during fiscal year 2019 relate to ordinary course lump sum payment elections as provided under the continuing plan. The Company also incurred non-cash settlement charges of $18 million in fiscal year 2017 from a voluntary lump sum settlement offer to certain terminated plan participants. No non-cash settlement charges were incurred in fiscal year 2018. Settlement charges are included in other expense (income)—net in the Company's Consolidated Statements of Comprehensive Income.
Changes in plan assets and benefit obligations recorded in accumulated other comprehensive loss for pension benefits for the last three fiscal years were as follows:
 
2019
 
2018
 
2017
Changes recognized in accumulated other comprehensive loss:
 
 
 
 
 
Actuarial gain
$
44

 
$
6

 
$
—

Amortization of net loss
4

 
3

 
4

Settlements
12

 
—

 
18

Net amount recognized
$
60

 
$
9

 
$
22

Changes in plan assets and benefit obligations recorded in accumulated other comprehensive loss for other postretirement benefits for the last three fiscal years were de minimis.
The funded status of the Retirement Plan for the last three fiscal years was as follows:
 
Pension Benefits
 
2019
 
2018
 
2017
Change in benefit obligation:
 
 
 
 
 
Benefit obligation as of beginning of year
$
871

 
$
976

 
$
966

Service cost
2

 
2

 
2

Interest cost
37

 
36

 
40

Actuarial loss (gain)
100

 
(97
)
 
76

Settlements
(84
)
 
—

 
(87
)
Benefit disbursements
(23
)
 
(46
)
 
(21
)
Benefit obligation as of end of year
903

 
871

 
976

Change in plan assets:
 
 
 
 
 
Fair value of plan assets as of beginning of year
836

 
851

 
799

Return on plan assets
193

 
(40
)
 
124

Employer contribution
1

 
71

 
36

Settlements
(84
)
 
—

 
(87
)
Benefit disbursements
(23
)
 
(46
)
 
(21
)
Fair value of plan assets as of end of year
923

 
836

 
851

Net funded status
$
20

 
$
(35
)
 
$
(125
)


The fiscal year 2019 pension benefits actuarial loss of $100 million was primarily due to a decrease in the discount rate. The fiscal year 2018 pension benefits actuarial gain of $97 million was primarily due to an increase in the discount rate. The fiscal year 2017 pension benefits actuarial loss of $76 million was primarily due to a decrease in the discount rate.

 
Other Postretirement Plans
 
2019
 
2018
 
2017
Change in benefit obligation:
 
 
 
 
 
Benefit obligation as of beginning of year
$
6

 
$
7

 
$
7

Benefit disbursements
(1
)
 
(1
)
 
(1
)
Other
1

 
—

 
1

Benefit obligation as of end of year
6

 
6

 
7

Change in plan assets:
 
 
 
 
 
Fair value of plan assets as of beginning of year
—

 
—

 
—

Employer contribution
1

 
1

 
1

Benefit disbursements
(1
)
 
(1
)
 
(1
)
Fair value of plan assets as of end of year
—

 
—

 
—

Net funded status
$
(6
)
 
$
(6
)
 
$
(7
)

Service cost, interest cost and actuarial (gain) loss for other postretirement benefits were de minimis for fiscal years 2019, 2018 and 2017.
 
Pension Benefits
 
2019
 
2018
 
2017
Amounts recognized in the consolidated
   balance sheets consist of the following:
 
 
 
 
 
Prepaid benefit obligation—noncurrent
$
22

 
$
—

 
$
—

Accrued benefit obligation—current
—

 
—

 
(1
)
Accrued benefit obligation—noncurrent
(2
)
 
(35
)
 
(124
)
Net amount recognized in the consolidated
   balance sheets
$
20

 
$
(35
)
 
$
(125
)
Amounts recognized in accumulated other
   comprehensive loss consist of the following:
 
 
 
 
 
Net loss
$
129

 
$
190

 
$
199

Net loss recognized in accumulated other
   comprehensive loss
$
129

 
$
190

 
$
199

Additional information:
 
 
 
 
 
Accumulated benefit obligation
$
899

 
$
869

 
$
974

 
Other Postretirement Plans
 
2019
 
2018
 
2017
Amounts recognized in the consolidated
   balance sheets consist of the following:
 
 
 
 
 
Accrued benefit obligation—current
$
(1
)
 
$
(1
)
 
$
(1
)
Accrued benefit obligation—noncurrent
(5
)
 
(5
)
 
(6
)
Net amount recognized in the consolidated
   balance sheets
$
(6
)
 
$
(6
)
 
$
(7
)
Amounts recognized in accumulated other
   comprehensive loss consist of the following:
 
 
 
 
 
Gain, net of prior service cost
$
1

 
$
1

 
$
1

Net gain recognized in accumulated other
   comprehensive loss
$
1

 
$
1

 
$
1


 
Pension Benefits
Amounts expected to be amortized from
   accumulated other comprehensive loss in the
   next fiscal year:
 
Net loss
$
1


Amounts expected to be amortized from accumulated other comprehensive loss in the next fiscal year for other postretirement benefits are expected to be de minimis.
Weighted average assumptions used to determine benefit obligations as of period-end and net pension costs for the last three fiscal years were as follows:
 
Pension Benefits
 
2019
 
2018
 
2017
Benefit obligation:
 
 
 
 
 
Discount rate
3.50
%
 
4.35
%
 
3.70
%
Annual compensation increase
3.60
%
 
3.60
%
 
3.60
%
Net cost:
 
 
 
 
 
Discount rate
4.35
%
 
3.70
%
 
4.25
%
Expected return on plan assets
6.00
%
 
6.00
%
 
6.00
%
Annual compensation increase
3.60
%
 
3.60
%
 
3.60
%
 
Other Postretirement Plans
 
2019
 
2018
 
2017
Benefit obligation—discount rate
3.50
%
 
4.35
%
 
3.70
%
Net cost—discount rate
4.35
%
 
3.70
%
 
4.25
%


The measurement date for the defined benefit and other postretirement benefit plans was December 31 for fiscal years 2019, 2018 and 2017. The Company applies the practical expedient under ASU No. 2015-4 to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to its fiscal year-end.
The mortality assumptions used to determine the pension benefit obligation as of December 31, 2019 are based on the Pri-2012 base mortality table with the MP-2019 mortality improvement scale published by the Society of Actuaries.
A health care cost trend rate is used in the calculations of postretirement medical benefit plan obligations. The assumed healthcare trend rates for the last three fiscal years were as follows:
 
2019
 
2018
 
2017
Immediate rate
5.90
%
 
6.30
%
 
6.70
%
Ultimate trend rate
4.50
%
 
4.50
%
 
4.50
%
Year the rate reaches the ultimate trend rate
2037

 
2037

 
2037



A hypothetical 1% change in the rate would result in a change to the postretirement medical plan obligation of less than $1 million. Retirees covered under these plans are responsible for the cost of coverage in excess of the subsidy, including all future cost increases.
In determining the discount rate, the Company determines the implied rate of return on a hypothetical portfolio of high-quality fixed-income investments, for which the timing and amount of cash outflows approximates the estimated pension plan payouts. The discount rate assumption is reviewed annually and revised as appropriate.
The expected long-term rate of return on plan assets is derived from a mathematical asset model. This model incorporates assumptions on the various asset class returns, reflecting a combination of historical performance analysis and the forward-looking views of the financial markets regarding the yield on long-term bonds and the historical returns of the major stock markets. The rate of return assumption is reviewed annually and revised as deemed appropriate.
The investment objective for the Retirement Plan is to provide a common investment platform. Investment consultants, overseen by the US Foods, Inc. Benefits Administration Committee (the "Committee), are expected to adopt and maintain an asset allocation strategy for the plan's assets designed to address the Retirement Plan's liability structure. The Committee has developed an asset allocation policy and rebalancing policy. The Committee reviews the major asset classes, through consultation with its investment consultants, periodically to determine if the plan's assets are performing as expected. The Company’s fiscal year 2019 strategy targeted a mix of 35% equity securities and 65% long-term debt securities and cash equivalents. The actual mix of investments as of December 28, 2019 was 34% equity securities and 66% long-term debt securities and cash equivalents. The Committee plans to manage the actual mix of investments to achieve its target mix.
The following table sets forth the fair value of our defined benefit plans’ assets by asset fair value hierarchy level:
 
Asset Fair Value as of December 28, 2019
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash and cash equivalents
$
3

 
$
—

 
$
—

 
$
3

Equities:
 
 
 
 
 
 
 
Domestic
46

 
—

 
—

 
46

International
2

 
—

 
—

 
2

Mutual fund:
 
 
 
 
 
 
 
International equities
26

 
—

 
—

 
26

Long-term debt securities:
 
 
 
 
 
 
 
Corporate debt securities:
 
 
 
 
 
 
 
Domestic
—

 
248

 
—

 
248

International
—

 
38

 
—

 
38

U.S. government securities
—

 
6

 
—

 
6

Other
—

 
2

 
—

 
2

 
$
77

 
$
294

 
$
—

 
371

Common collective trust funds:
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
16

Domestic equities
 
 
 
 
 
 
193

International equities
 
 
 
 
 
 
50

Treasury STRIPS
 
 
 
 
 
 
293

Total investments measured at net asset value
     as a practical expedient
 
 
 
 
 
 
552

Total defined benefit plans’ assets
 
 
 
 
 
 
$
923

 
Asset Fair Value as of December 29, 2018
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash and cash equivalents
$
5

 
$
—

 
$
—

 
$
5

Equities:
 
 
 
 
 
 
 
Domestic
34

 
—

 
—

 
34

International
1

 
—

 
—

 
1

Mutual fund:
 
 
 
 
 
 
 
International equities
21

 
—

 
—

 
21

Long-term debt securities:
 
 
 
 
 
 
 
Corporate debt securities:
 
 
 
 
 
 
 
Domestic
—

 
236

 
—

 
236

International
—

 
33

 
—

 
33

U.S. government securities
—

 
8

 
—

 
8

Other
—

 
2

 
—

 
2

 
$
61

 
$
279

 
$
—

 
340

Common collective trust funds:
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
9

Domestic equities
 
 
 
 
 
 
156

International equities
 
 
 
 
 
 
40

Treasury STRIPS
 
 
 
 
 
 
291

Total investments measured at net asset value
     as a practical expedient
 
 
 
 
 
 
496

Total defined benefit plans’ assets
 
 
 
 
 
 
$
836



A description of the valuation methodologies used for assets measured at fair value is as follows:
•
Cash and cash equivalents are valued at original cost plus accrued interest.
•
Equities are valued at the closing price reported on the active market on which individual securities are traded.
•
Mutual funds are valued at the closing price reported on the active market on which individual funds are traded.
•
Long-term debt securities are valued at the estimated price a dealer will pay for the individual securities.
•
Common collective trust funds are measured at the net asset value as of the December 31, 2019 and 2018 measurement dates. This class represents investments in common collective trust funds that invest in:
◦
Equity securities, which may include common stocks, options and futures in actively managed funds; and
◦
Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) representing zero coupon Treasury securities with long-term maturities.
Estimated future benefit payments, under Company sponsored plans as of December 28, 2019, were as follows:
 
Pension Benefits
 
Other Postretirement Plans
2020
$
52

 
$
1

2021
50

 
1

2022
48

 
1

2023
45

 
1

2024
43

 
1

Subsequent five years
220

 
2



The Company does not expect to make a significant contribution to the Retirement Plans in fiscal year 2020.
Other Company Sponsored Benefit Plans—Certain employees are eligible to participate in the Company's 401(k) savings plan. The Company made employer matching contributions to the 401(k) plan of $51 million, $47 million and $46 million for fiscal years 2019, 2018 and 2017, respectively.
Multiemployer Pension Plans—The Company is also required to contribute to various multiemployer pension plans under the terms of collective bargaining agreement ("CBAs") that cover certain of its union-represented employees. These plans are jointly administered by trustees for participating employers and the applicable unions.
The risks of participating in multiemployer pension plans differ from traditional single-employer defined benefit plans as follows:
•
Assets contributed to a multiemployer pension plan by one employer may be used to provide benefits to the employees of other participating employers.
•
If a participating employer stops contributing to a multiemployer pension plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
•
If the Company elects to stop participation in a multiemployer pension plan, or if the number of the Company’s employees participating in a plan is reduced to a certain degree over certain periods of time, the Company may be required to pay a withdrawal liability based upon the underfunded status of the plan.
The Company’s participation in multiemployer pension plans for the fiscal year ended December 28, 2019 is outlined in the tables below. The Company considers significant plans to be those plans to which the Company contributed more than 5% of total contributions to the plan in a given plan year, or for which the Company believes its estimated withdrawal liability, should it decide to voluntarily withdraw from the plan, may be material to the Company. For each plan that is considered individually significant to the Company, the following information is provided:
•
The EIN/Plan Number column provides the Employee Identification Number (“EIN”) and the three-digit plan number assigned to a plan by the Internal Revenue Service.
•
The most recent Pension Protection Act (“PPA”) zone status available for fiscal years 2019 and 2018 is for the plan years beginning in 2018 and 2017, respectively. The zone status is based on information provided to participating employers by each plan and is certified by the plan’s actuary. A plan in the red zone has been determined to be in critical status, or critical and declining status, based on criteria established under the Internal Revenue Code (the “Code”), and is generally less than 65% funded. Plans are generally considered “critical and declining” if they are projected to become insolvent within 20 years. A plan in the yellow zone has been determined to be in endangered status, based on criteria established under the Code, and
is generally less than 80% but more than 65% funded. A plan in the green zone has been determined to be neither in critical status nor in endangered status, and is generally at least 80% funded.
•
The FIP/RP Status Pending/Implemented column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. In addition to regular plan contributions, participating employers may be subject to a surcharge if the plan is in the red zone.
•
The Surcharge Imposed column indicates whether a surcharge has been imposed on participating employers contributing to the plan.
•
The Expiration Dates column indicates the expiration dates of the CBAs to which the plans are subject.
Pension Fund
 
EIN/
Plan Number
 
PPA
Zone Status
 
FIP/RP Status
Pending/
Implemented
 
Surcharge
Imposed
 
Expiration Dates
 
 
 
 
2019
 
2018
 
 
 
 
 
 
Minneapolis Food Distributing
   Industry Pension Plan
 
41-6047047/001
 
Green
 
Green
 
N/A
 
No
 
04/01/21
Teamster Pension Trust Fund of
   Philadelphia and Vicinity
 
23-1511735/001
 
Yellow
 
Yellow
 
Implemented
 
No
 
2/13/22
Local 703 I.B. of T. Grocery and
Food Employees’ Pension Plan
 
36-6491473/001
 
Green
 
Green
 
N/A
 
No
 
6/30/21
United Teamsters Trust Fund A
 
13-5660513/001
 
Yellow
 
Yellow
 
Implemented
 
No
 
5/30/22
Warehouse Employees Local
   169 and Employers Joint
   Pension Fund(1)
 
23-6230368/001
 
Red
 
Red
 
Implemented
 
No
 
2/13/22

(1)
Local 169 filed a Notice of Critical and Declining Status in 2017.

The following table provides information about the Company’s contributions to its multiemployer pension plans. For plans that are not individually significant to the Company, the total amount of the Company's contributions is aggregated.
 
Contributions(1)(2)
 
Contributions That
Exceed 5% of
Total Plan Contributions(3)
 
2019
 
2018
 
2017
 
2018
 
2017
Pension Fund
 
 
 
 
 
 
 
 
 
Minneapolis Food Distributing Industry Pension Plan
$
5

 
$
5

 
$
5

 
Yes

 
Yes

Teamster Pension Trust Fund of Philadelphia and Vicinity
4

 
4

 
4

 
No

 
No

Local 703 I.B. of T. Grocery and Food Employees’ 
     Pension Plan
2

 
2

 
1

 
Yes

 
Yes

United Teamsters Trust Fund A
2

 
2

 
2

 
Yes

 
Yes

Warehouse Employees Local 169 and Employers 
     Joint Pension Fund
1

 
1

 
1

 
Yes

 
Yes

Other funds
24

 
21

 
21

 
—

 
—

 
$
38

 
$
35

 
$
34

 
 
 
 

(1)
Contributions made to these plans during the Company’s fiscal year, which may not coincide with the plans’ respective fiscal years.
(2)
Contributions do not include payments related to multiemployer pension plan withdrawals/settlements.
(3)
Indicates whether the Company was listed in the respective multiemployer pension plan Form 5500 for the applicable plan year as having made more than 5% of total contributions to the plan.     

If the Company elects to voluntarily withdraw from a multiemployer pension plan, it may be responsible for its proportionate share of the respective plan’s unfunded vested liability. Based on the latest information available from plan administrators, the Company estimates its aggregate withdrawal liability from the multiemployer pension plans in which it participates to be approximately $120 million as of December 28, 2019. Actual withdrawal liabilities incurred by the Company, if it were to withdraw from one or
more plans, could be materially different from the estimates noted here, based on better or more timely information from plan administrators or other changes affecting the respective plans' funded status.