Retirement Plans

12 Months Ended

Jan. 02, 2021

Retirement Benefits [Abstract]

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. During fiscal year 2020, in connection with the Smart Foodservice acquisition, the Company assumed a defined benefit pension plan with net liabilities of approximately $19 million. This defined benefit pension plan was merged into the US Foods Consolidated Defined Benefit Retirement Plan as of December 31, 2020. 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:

	2020		2019		2018
Components of net periodic pension benefit (credits) costs:
Service cost	$	3	$	2	$	2
Interest cost	32		37		36
Expected return on plan assets	(55)		(49)		(52)
Amortization of net loss	1		4		3
Settlements	—		12		—
Net periodic pension benefit (credits) costs	$	(19)	$	6	$	(11)

Other postretirement benefit costs were de minimis for fiscal years 2020, 2019 and 2018.

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 (income) expense—net in the Company's Consolidated Statements of Comprehensive Income.

The Company did not make a significant contribution to the Retirement Plan in fiscal years 2020 and 2019. The Company contributed approximately $71 million to the Retirement Plan during fiscal year 2018, of which $35 million represented an additional, voluntary contribution.

During 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, during 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 costs of $12 million in fiscal year 2019. The fiscal year 2019 settlement costs were included in other (income) expense—net in the Company's Consolidated Statements of Comprehensive Income. No non-cash settlement costs were incurred in fiscal years 2020 and 2018.

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:

	2020		2019		2018
Changes recognized in accumulated other comprehensive loss:
Actuarial gain	$	29	$	44	$	6
Amortization of net loss	1		4		3
Settlements	—		12		—
Net amount recognized	$	30	$	60	$	9

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
	2020		2019		2018
Change in benefit obligation:
Benefit obligation as of beginning of year	$	903	$	871	$	976
Service cost	3		2		2
Interest cost	32		37		36
Actuarial loss (gain)	98		100		(97)
Settlements	—		(84)		—
Benefit disbursements	(45)		(23)		(46)
Smart Foodservice assumed benefit obligations	70		—		—
Benefit obligation as of end of year	1,061		903		871
Change in plan assets:
Fair value of plan assets as of beginning of year	923		836		851
Return on plan assets	183		193		(40)
Employer contribution	—		1		71
Settlements	—		(84)		—
Benefit disbursements	(45)		(23)		(46)
Smart Foodservice acquired plan assets	51		—		—
Fair value of plan assets as of end of year	1,112		923		836
Net funded status	$	51	$	20	$	(35)

The net funded status of the Retirement Plan for fiscal year 2020 improved from a net asset of $20 million to a net asset of $51 million, primarily due to asset returns, partially offset by a decrease in the discount rate and the merger of the Smart Foodservice

pension plan. The net funded status of the Retirement Plan for fiscal year 2019 improved from a net liability of $35 million to a net asset of $20 million, primarily due to asset returns and lump sum payments made that released more benefit obligation than assets paid, partially offset by a decrease in the discount rate. The net funded status of the Retirement Plan for fiscal year 2018 improved from a net liability of $125 million to a net liability of $35 million due to an increase in the discount rate, which reduced the value of the benefit obligations, and a $71 million contribution by the Company to the Retirement Plan, partially offset by negative asset returns.

The fiscal year 2020 pension benefits actuarial loss of $98 million was primarily due to a decrease in the discount rate. 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.

	Other Postretirement Plans
	2020		2019		2018
Change in benefit obligation:
Benefit obligation as of beginning of year	$	6	$	6	$	7
Benefit disbursements	(1)		(1)		(1)
Other	1		1		—
Benefit obligation as of end of year	6		6		6
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)	$	(6)

Service cost, interest cost and actuarial (gain) loss for other postretirement benefits were de minimis for fiscal years 2020, 2019 and 2018.

The amounts recognized on the Company's Consolidated Balance Sheets related to the company-sponsored defined benefit plans and other postretirement benefit plans consisted of the following:

	Pension Benefits
	2020		2019		2018
Amounts recognized in the consolidated    balance sheets consist of the following:
Prepaid benefit obligation—noncurrent	$	53	$	22	$	—
Accrued benefit obligation—current	—		—		—
Accrued benefit obligation—noncurrent	(2)		(2)		(35)
Net amount recognized in the consolidated    balance sheets	$	51	$	20	$	(35)
Amounts recognized in accumulated other    comprehensive loss consist of the following:
Net loss	$	98	$	129	$	190
Net loss recognized in accumulated other    comprehensive loss	$	98	$	129	$	190
Additional information:
Accumulated benefit obligation	$	1,057	$	899	$	869

	Other Postretirement Plans
	2020		2019		2018
Amounts recognized in the consolidated    balance sheets consist of the following:
Accrued benefit obligation—current	$	—	$	(1)	$	(1)
Accrued benefit obligation—noncurrent	(6)		(5)		(5)
Net amount recognized in the consolidated    balance sheets	$	(6)	$	(6)	$	(6)
Amounts recognized in accumulated other    comprehensive loss consist of the following:
Gain, net of prior service cost	$	—	$	1	$	1
Net gain recognized in accumulated other    comprehensive loss	$	—	$	1	$	1
Additional information:
Accumulated postretirement benefit obligation	$	6	$	6	$	6

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
	2020		2019		2018
Benefit obligation:
Discount rate	2.80	%	3.50	%	4.35	%
Annual compensation increase	2.96	%	3.60	%	3.60	%
Net cost:
Discount rate	3.50	%	4.35	%	3.70	%
Expected return on plan assets	6.00	%	6.00	%	6.00	%
Annual compensation increase	3.60	%	3.60	%	3.60	%

	Other Postretirement Plans
	2020		2019		2018
Benefit obligation—discount rate	2.80	%	3.50	%	4.35	%
Net cost—discount rate	3.50	%	4.35	%	3.70	%

The measurement date for the defined benefit and other postretirement benefit plans was December 31 for fiscal years 2020, 2019 and 2018. 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, 2020 are based on the Pri-2012 base mortality table with the MP-2020 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:

	2020		2019		2018
Immediate rate	5.60	%	5.90	%	6.30	%
Ultimate trend rate	4.50	%	4.50	%	4.50	%
Year the rate reaches the ultimate trend rate	2037		2037		2037

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 US Foods, Inc. Retirement Investment Committee (the “Committee”) has authority and responsibility to oversee the investment and management of the trust (“the Trust”) which holds the assets of the Retirement Plan and has adopted an Investment Policy to provide a framework for the management of the Trust’s assets, including the objectives and long-term strategy with respect to the investment program of the Trust. Pursuant to the Investment Policy, the primary goal of investing Trust assets is to ensure that pension liabilities are met over time, and that Trust assets are invested in a manner that maximizes the probability of meeting pension liabilities. The second goal of investing Trust assets is to maximize long-term investment return consistent with a reasonable level of risk. Through consultation with its investment consultant, the Committee has developed long-term asset allocation guidelines intended to achieve investment objectives relative to projected liabilities. Based on those projections, the Committee has approved a dynamic asset allocation strategy that increases the liability-hedging assets of the Trust and decreases the return-seeking assets of the Trust as the funded ratio of the Retirement Plan improves. Based upon the funded ratio of the Retirement Plan, an asset allocation of 35% equity securities (U.S. large cap equities, U.S. small and mid-cap equities and non-U.S. equities) and 65% fixed income securities (U.S. Treasuries, STRIPs, and investment grade corporate bonds) was targeted during the Company’s fiscal year 2020. The actual mix of assets in the Trust as of January 2, 2021 consisted of 35% equity securities and 65% fixed income securities.

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 January 2, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	7	$	—	$	—	$	7
Equities:
Domestic	56		—		—		56
International	2		—		—		2
Mutual fund:
International equities	29		—		—		29
Long-term debt securities:
Corporate debt securities:
Domestic	—		292		—		292
International	—		36		—		36
U.S. government securities	—		53		—		53
Other	—		3		—		3
	$	94	$	384	$	—	478
Common collective trust funds:
Cash equivalents							11
Domestic equities							240
International equities							62
Treasury STRIPS							321
Total investments measured at net asset value      as a practical expedient							634
Total defined benefit plans’ assets							$	1,112

	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

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, 2020 and 2019 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 January 2, 2021, were as follows:

	Pension Benefits		Other Postretirement Plans
2021	$	50	$	—
2022	51		—
2023	52		1
2024	53		1
2025	53		1
Subsequent five years	247		2

The Company does not expect to make a significant contribution to the Retirement Plans in fiscal year 2021.

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 $47 million, $51 million and $47 million for fiscal years 2020, 2019 and 2018, 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 January 2, 2021 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 2020 and 2019 is for the plan years beginning in 2019 and 2018, 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
		2020	2019
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	23-6230368/001	Red	Red	Implemented	No	2/13/22

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)
	2020		2019		2018		2019	2018
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		2		Yes	Yes
United Teamsters Trust Fund A	1		2		2		Yes	Yes
Warehouse Employees Local 169 and Employers  Joint Pension Fund	1		1		1		Yes	Yes
Other funds	31		24		21		—	—
	$	44	$	38	$	35

(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 $157 million as of January 2, 2021. 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.