☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 29, 2017 |
OR |
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________ |
Commission file number: 001-35249 |
THE CHEFS’ WAREHOUSE, INC. |
(Exact name of registrant as specified in its charter) |
Delaware | 20-3031526 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
100 East Ridge Road Ridgefield, Connecticut | 06877 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (203) 894-1345 | ||
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Name of each exchange on which registered | |
Common Stock, $.01 par value per share | The Nasdaq Stock Market LLC (Nasdaq Global Select Market) | |
Securities registered pursuant to Section 12(g) of the Act: None |
Large accelerated filer ☐ | Accelerated filer ☒ | Non-accelerated filer ☐ (Do not check if a smaller reporting company) |
Smaller reporting company ☐ | Emerging growth company ☐ |
Class | Outstanding at March 5, 2018 | |
Common Stock, $.01 par value per share | 28,441,253 shares |
Document | Parts Into Which Incorporated | |
Proxy Statement for the Annual Meeting of Stockholders expected to be held on May 18, 2018 (Proxy Statement) | Part III |
Description | Page Number | |||
Part I | ||||
Part II | ||||
Part III | ||||
Part IV | ||||
• | our success depends to a significant extent upon general economic conditions, including disposable income levels and changes in consumer discretionary spending; |
• | a significant portion of our future growth is dependent upon our ability to expand our operations in our existing markets and to penetrate new markets through acquisitions; |
• | we may not achieve the benefits expected from our acquisitions, including our recent acquisitions of Fells Point Wholesale Meats, Inc. (“Fells Point”) and M.T. Food Service, Inc. (“MT Food”), which could adversely impact our business and operating results; |
• | we may have difficulty managing and facilitating our future growth; |
• | conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate products and/or interrupt our distribution network; |
• | our increased distribution of center-of-the-plate products, like meat, poultry and seafood, following our acquisitions of Michael’s Finer Meats, LLC (“Michael’s”), Allen Brothers, Inc. (“Allen Brothers”), Del Monte Capital Meat Co. and related entities (“Del Monte”) and Fells Point, involves increased exposure to price volatility experienced by those products; |
• | our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures; |
• | group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of these organizations; |
• | because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, including adverse weather conditions, in these areas; |
• | damage to our reputation or lack of acceptance of our specialty food products, center-of-the-plate products and/or the brands we carry in existing and new markets could materially and adversely impact our business, financial condition or results of operations; |
• | our customers are generally not obligated to continue purchasing products from us; |
• | we have experienced losses due to our inability to collect accounts receivable in the past and could experience increases in such losses in the future if our customers are unable to pay their debts to us in a timely manner or at all; |
• | product liability claims could have a material adverse effect on our business, financial condition or results of operations; |
• | fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations; |
• | new information or attitudes regarding diet and health or adverse opinions about the health effects of the products we distribute could result in changes in consumer eating habits, which could have a material adverse effect on our business, financial condition or results of operations; |
• | we have significant competition from a variety of sources, and we may not be able to compete successfully; |
• | our substantial indebtedness may limit our ability to invest in the ongoing needs of our business; |
• | our ability to raise capital in the future may be limited; |
• | we may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all; |
• | information technology system failures or breaches of our network security could interrupt our operations and adversely affect our business; |
• | our investments in information technology may not produce the benefits that we anticipate; |
• | we may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business; |
• | our business operations and future development could be significantly disrupted if we lose key members of our management team; |
• | our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs could negatively impact our profitability. In addition, if we fail to establish proper reserves and adequately estimate future expenses, the costs associated with our self-insured group medical, workers’ compensation liability and auto liability plans may adversely affect our business, financial condition or results of operations; |
• | increases in our labor costs, including as a result of labor shortages, the unionization of some of our associates, the price or unavailability of insurance and changes in government regulation, could slow our growth or harm our business; |
• | we are subject to significant governmental regulation and failure to comply could subject us to enforcement actions, recalls or other penalties, which could have a material adverse effect on our business, financial condition or results of operations; |
• | federal, state, provincial and local tax rules in the United States and Canada may adversely impact our business, financial condition or results of operations; |
• | the price of our common stock may be volatile and our stockholders could lose all or a part of their investment; |
• | concentration of ownership among our existing executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions; |
• | if securities analysts or industry analysts downgrade our stock, publish negative research or reports or do not publish reports about our business, our stock price and trading volume could decline; |
• | we do not intend to pay dividends for the foreseeable future and our stock may not appreciate in value; |
• | our issuance of preferred stock or debt securities could adversely affect holders of our common stock and discourage a takeover; and |
• | some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management. |
Market Name | Geographies Served | Year Entered | ||
New York | Boston to Atlantic City | 1985 | ||
Washington, D.C. | Philadelphia to Richmond | 1999 | ||
Los Angeles | Santa Barbara to San Diego | 2005 | ||
San Francisco | Napa Valley to Monterey Bay | 2005 | ||
Las Vegas | Las Vegas | 2005 | ||
Miami | Miami | 2010 | ||
Portland | Bend, OR to Seattle, WA | 2011 | ||
Columbus | Midwest | 2012 | ||
Cincinnati | Dayton, OH to Lexington, KY | 2013 | ||
Chicago | Chicago | 2013 | ||
Vancouver | Vancouver and Western Canada | 2013 | ||
Edmonton | Edmonton and Calgary | 2013 | ||
Toronto | Toronto | 2013 | ||
Seattle | Seattle | 2013 | ||
Sacramento | Sacramento | 2015 |
Fiscal 2016 | Fiscal 2017 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||||
Center-of-the-Plate | 48.4 | % | 50.0 | % | 43.4 | % | 45.8 | % | 46.1 | % | 47.3 | % | 46.5 | % | 48.0 | % | ||||||||
Dry Goods | 17.1 | % | 16.8 | % | 18.1 | % | 17.4 | % | 17.3 | % | 17.4 | % | 17.4 | % | 16.9 | % | ||||||||
Pastries and other Bakery Products | 13.5 | % | 12.5 | % | 14.7 | % | 15.0 | % | 14.2 | % | 13.2 | % | 13.4 | % | 13.5 | % | ||||||||
Cheeses | 7.8 | % | 7.8 | % | 9.1 | % | 8.2 | % | 8.0 | % | 7.8 | % | 7.9 | % | 7.4 | % | ||||||||
Dairy Products | 5.2 | % | 5.3 | % | 8.0 | % | 7.7 | % | 6.8 | % | 6.8 | % | 7.2 | % | 7.1 | % | ||||||||
Oils and Vinegars | 6.4 | % | 5.9 | % | 4.9 | % | 4.2 | % | 5.7 | % | 5.6 | % | 5.6 | % | 5.3 | % | ||||||||
Kitchen Supplies | 1.6 | % | 1.7 | % | 1.8 | % | 1.7 | % | 1.9 | % | 1.9 | % | 2.0 | % | 1.8 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
• | Outside Sales Associates: Responsible for identifying sales opportunities, educating customers and acting as our public representatives. |
• | Inside Sales Associates: Responsible for processing customer orders and arranging for delivery and payment. |
• | Product Specialists: Responsible for maintaining specialized product knowledge and educating our outside sales associates and customers regarding new products and general developments in several specific categories, including protein, seafood, pastry and cheese. |
Name & Position | Age | Business Experience | ||
Christopher Pappas President, Chief Executive Officer and Chairman of the Board of Directors | 58 | Christopher Pappas is our founder and has served as our chief executive officer since 1985 and has been a director on our board and our board chairman since our IPO, and he also served as a director and the chairman of the board of our predecessor company, Chefs’ Warehouse Holdings, LLC. He has been our president since April 11, 2009 and before that was our president from our formation to January 1, 2007. Prior to founding our company, Mr. C. Pappas played basketball professionally in Europe for several years following his graduation from Adelphi University in 1981 with a Bachelor of Arts degree in Business Administration. Mr. C. Pappas currently oversees all of our business activities, with a focus on product procurement, sales, marketing, strategy development, business development and operations. | ||
John Pappas Vice Chairman and Director | 54 | John Pappas is a founder of our company and currently serves as our vice chairman, a position he has held since March 1, 2011. From our founding in 1985 to March 1, 2011, he served as our chief operating officer. Mr. J. Pappas has been a director on our board since our IPO, and he also served as a director on the board of our predecessor company, Chefs’ Warehouse Holdings, LLC. He has over 30 years of experience in logistics, facility management and global procurement and oversees our network of distribution centers nationwide. Mr. J. Pappas is also active in the development of our corporate strategy. | ||
James Leddy Chief Financial Officer | 54 | James“Jim” Leddy is our chief financial officer and assistant secretary, since his appointment as of November 11, 2017. Prior to his appointment, Mr. Leddy served as our executive vice president of finance since joining the Company in September 2017. Mr. Leddy previously served as interim chief financial officer at JetBlue Airways from November 2016 to February 2017 and served as senior vice president and treasurer from 2012 to November 2016. Prior to joining JetBlue, Mr. Leddy served as senior vice president, treasury and cash management at NBCUniversal from 2008 until 2012, and as a senior technical advisor at General Electric from 2003 until 2008. Previously, Mr. Leddy held corporate risk and treasury management positions at First Union National Bank and Dai-ichi Kangyo Bank. Mr. Leddy holds an M.B.A. in Finance and Management of Technology from the University of Connecticut and a B.A. in Economics from Fordham University. |
Alexandros Aldous General Counsel, Corporate Secretary & Chief Government Relations Officer | 37 | Alexandros Aldous is our general counsel, corporate secretary & chief government relations officer, positions he has held since joining us in March 2011, our IPO on July 27, 2011, and March 8, 2017, respectively. Mr. Aldous's prior work experience includes working as an attorney with Barclays Capital, the investment banking division of Barclays Bank PLC, in London, where he focused primarily on mergers and acquisitions and capital markets, and prior to that, working as an attorney with Shearman & Sterling LLP, in New York, where he focused primarily on mergers and acquisitions. Mr. Aldous is a member of both the General Counsel Committee and the Government Relations Leadership Committee of the International Foodservice Distributors Association, a member of the Global Alumni Advisory Board of the American College of Greece, as well as a member of the Dean's Counsel of American University's School of International Service. Mr. Aldous earned a B.A. in Classics and Government from Colby College, a Juris Doctor and M.A. from American University and an LL.M. from the London School of Economics and Political Science. Mr. Aldous is licensed to practice law in the State of New York, District of Columbia, and England and Wales. | ||
Timothy McCauley Chief Accounting Officer | 53 | Timothy McCauley is our chief accounting officer, as of February 16, 2018 and previously served as our controller since joining the Company in May 2015. Mr. McCauley has over 30 years of experience in accounting and finance roles across a variety of industries. Mr. McCauley’s prior work experience includes serving as vice president – finance at MacDermid Inc., corporate controller at Northern Tier Energy LP, director of financial reporting and investor relations at Presstek, Inc. and finance director at Eastman Kodak Company. Prior to joining Eastman Kodak Company, Mr. McCauley worked with PricewaterhouseCoopers for eleven years in their assurance and business advisory practice. Mr. McCauley holds a Bachelor of Science degree in Business - Accounting from the University of Connecticut and is a certified public accountant in the state of Connecticut. | ||
Patricia Lecouras Chief Human Resources Officer | 62 | Patricia Lecouras is our chief human resources officer, a position she has held since March 5, 2007. Ms. Lecouras joined our company from GE Capital Commercial Finance where she was vice president, human resources from 2001 to 2007. Prior to her time with GE Capital Commercial Finance, Ms. Lecouras was with Nine West Shoes (f/k/a Fischer Camuto Corporation) and Xerox. Ms. Lecouras’s professional experience is multidisciplinary and includes prior experience working in finance and tax-related functions. She also has earned a six sigma master black belt certification. Ms. Lecouras holds a Bachelor of Arts degree in Psychology and Social Work from Skidmore College. |
• | maintaining the existing customer and supplier base and personnel; |
• | optimizing delivery routes; |
• | coordinating administrative, distribution and finance functions; and |
• | integrating management information systems and personnel. |
• | requires us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, development activity and other general corporate purposes; |
• | increases our vulnerability to adverse general economic or industry conditions; |
• | limits our flexibility in planning for, or reacting to, changes in our business or the industries in which we operate; |
• | makes us more vulnerable to increases in interest rates, as borrowings under our Term Loan Facility and ABL Facility (together the “Credit Facilities”) are at variable rates; |
• | limits our ability to obtain additional financing in the future for working capital or other purposes, including to finance acquisitions; |
• | in the case of the convertible subordinated notes, could result in the issuance of additional shares of our common stock that would result in the dilution of our then-existing stockholders; and |
• | places us at a competitive disadvantage compared to our competitors that have less indebtedness. |
• | the products we distribute in the United States are subject to regulation and inspection by the FDA and the USDA, and the products we distribute in Canada are subject to regulation by Health Canada and the Canadian Food Inspection Agency; |
• | our warehouse, distribution facilities, repackaging activities and other operations also are subject to regulation and inspection, as applicable, by the FDA, the USDA, Health Canada, the Canadian Food Inspection Agency and state and provincial health authorities; and |
• | our U.S. and Canadian trucking operations are subject to regulation by, as applicable, the U.S. Department of Transportation, the U.S. Federal Highway Administration, Transport Canada, the Surface Transportation Board and provincial transportation authorities. |
• | our quarterly or annual earnings or those of other companies in our industry; |
• | changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business; |
• | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | additions or departures of our senior management personnel; |
• | sales of common stock by our directors and executive officers; |
• | adverse market reaction to any indebtedness we may incur or securities we may issue in the future; |
• | actions by stockholders; |
• | the level and quality of research analyst coverage for our common stock, changes in financial estimates or investment recommendations by securities analysts following our business or failure to meet such estimates; |
• | the financial disclosure we may provide to the public, any changes in such disclosure or our failure to meet projections included in our public disclosure; |
• | various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our distributors or suppliers or our competitors; |
• | introductions of new products or new pricing policies by us or by our competitors; |
• | acquisitions or strategic alliances by us or our competitors; |
• | short sales, hedging and other derivative transactions in our common stock; |
• | the operating and stock price performance of other companies that investors may deem comparable to us; and |
• | other events or factors, including changes in general conditions in the United States and global economies or financial markets (including those resulting from acts of God, war, incidents of terrorism or responses to such events). |
• | authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; |
• | prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; |
• | eliminating the ability of stockholders to call a special meeting of stockholders; and |
• | establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. |
Name/Location | Owned/Leased | Purpose | Approximate Size (Sq. Feet) | ||||
Bronx, NY | Leased | Distribution Center | 231,100 | ||||
Chicago, IL | Leased | Distribution Center | 127,800 | ||||
Union City, CA | Leased | Distribution Center | 117,400 | ||||
City of Industry, CA | Leased | Distribution Center | 81,600 | ||||
Las Vegas, NV | Leased | Distribution Center | 74,000 | ||||
Columbus, OH | Leased | Processing Facility/Distribution Center | 60,900 | ||||
Cincinnati, OH | Owned | Distribution Center | 59,500 | ||||
Hanover, MD | Leased | Distribution Center | 55,600 | ||||
Portland, OR | Leased | Distribution Center | 55,500 | ||||
Brisbane, CA | Leased | Processing Facility/Distribution Center | 50,000 | ||||
Baltimore, MD | Leased | Distribution Center | 50,000 | ||||
Downey, CA | Subleased (1) | Distribution Center | 40,300 | ||||
Hayward, CA | Subleased (1) | Distribution Center | 40,000 | ||||
West Sacramento, CA | Leased | Processing Facility/Distribution Center | 37,900 | ||||
Hollywood, FL | Leased | Distribution Center | 27,900 | ||||
Toronto, ON | Leased | Distribution Center | 25,500 | ||||
Richmond, BC | Leased | Distribution Center | 24,900 | ||||
American Canyon, CA | Leased | Processing Facility/Distribution Center | 24,000 | ||||
San Francisco, CA | Leased | Processing Facility/Distribution Center | 23,700 | ||||
Marina, CA | Leased | Processing Facility/Distribution Center | 21,000 | ||||
Ridgefield, CT | Leased | Corporate Headquarters | 20,000 | ||||
West Sacramento, CA | Leased | Maintenance Building | 12,000 | ||||
Kent, WA | Leased | Distribution Center | 10,500 | ||||
Chicago, IL | Owned | Processing Facility | 10,000 | ||||
Edmonton, AB | Leased | Distribution Center | 9,600 | ||||
Pembroke Park, FL | Leased | Distribution Center | 6,700 | ||||
Tempe, AZ | Leased | Distribution Center | 3,500 | ||||
West Bridgewater, MA | Leased | Distribution Center | 1,400 | ||||
Total Square Feet | 1,302,300 |
(1) | These are former distribution centers that are under non-cancelable operating leases that expire in fiscal 2019. We no longer conduct any of our operations out of these sites and we have entered into third-party sublease arrangements for each of them. |
Common Stock Price | ||||||||
High | Low | |||||||
Fiscal Year Ended December 29, 2017 | ||||||||
First Quarter | $ | 16.90 | $ | 13.60 | ||||
Second Quarter | $ | 16.05 | $ | 13.00 | ||||
Third Quarter | $ | 19.80 | $ | 12.00 | ||||
Fourth Quarter | $ | 21.23 | $ | 16.60 | ||||
Fiscal Year Ended December 30, 2016 | ||||||||
First Quarter | $ | 20.23 | $ | 12.90 | ||||
Second Quarter | $ | 20.34 | $ | 14.82 | ||||
Third Quarter | $ | 16.72 | $ | 10.49 | ||||
Fourth Quarter | $ | 16.15 | $ | 10.80 |
December 28, 2012 | December 27, 2013 | December 26, 2014 | December 25, 2015 | December 30, 2016 | December 29, 2017 | |||||||||||||||||||
The Chefs’ Warehouse, Inc. | $ | 100.00 | $ | 163.16 | $ | 123.35 | $ | 97.26 | $ | 90.43 | $ | 114.78 | ||||||||||||
NASDAQ Composite Index | $ | 100.00 | $ | 159.55 | $ | 184.51 | $ | 193.79 | $ | 208.51 | $ | 264.99 | ||||||||||||
S&P Smallcap Food Distributor Index | $ | 100.00 | $ | 207.30 | $ | 205.72 | $ | 140.35 | $ | 220.60 | $ | 151.93 |
Total Number of Shares Repurchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||
September 30, 2017 to October 27, 2017 | 90 | $ | 20.35 | — | — | ||||||||
October 28, 2017 to November 24, 2017 | 1,109 | 18.35 | — | — | |||||||||
November 25, 2017 to December 29, 2017 | 1,092 | 20.60 | — | — | |||||||||
Total | 2,291 | $ | 19.50 | — | — |
(1) | During the thirteen weeks ended December 29, 2017, we withheld 2,291 shares of our common stock to satisfy tax withholding requirements upon the vesting of restricted shares of our common stock awarded to certain of our officers and key employees. |
For the Fiscal Years Ended | ||||||||||||||||||||
Statement of Operations Data: | December 29, 2017 | December 30, 2016 | December 25, 2015 | December 26, 2014 | December 27, 2013 | |||||||||||||||
Net sales | $ | 1,301,520 | $ | 1,192,866 | $ | 1,046,878 | $ | 832,709 | $ | 673,545 | ||||||||||
Cost of sales | 972,142 | 891,649 | 778,167 | 627,551 | 501,181 | |||||||||||||||
Gross profit | 329,378 | 301,217 | 268,711 | 205,158 | 172,364 | |||||||||||||||
Operating expenses (1) | 288,251 | 253,978 | 228,311 | 172,148 | 135,783 | |||||||||||||||
Operating income | 41,127 | 47,239 | 40,400 | 33,010 | 36,581 | |||||||||||||||
Interest expense, net (2) | 22,709 | 41,632 | 12,984 | 8,167 | 7,775 | |||||||||||||||
Loss (gain) on sale of assets | 10 | (69 | ) | (295 | ) | (5 | ) | 8 | ||||||||||||
Income before income taxes | 18,408 | 5,676 | 27,711 | 24,848 | 28,798 | |||||||||||||||
Provision for income taxes (3) | 4,042 | 2,653 | 11,502 | 10,633 | 11,808 | |||||||||||||||
Net income | $ | 14,366 | $ | 3,023 | $ | 16,209 | $ | 14,215 | $ | 16,990 | ||||||||||
Basic net income per share | $ | 0.55 | $ | 0.12 | $ | 0.63 | $ | 0.58 | $ | 0.78 | ||||||||||
Diluted net income per share | $ | 0.54 | $ | 0.12 | $ | 0.63 | $ | 0.57 | $ | 0.77 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 26,118 | 25,919 | 25,532 | 24,638 | 21,767 | |||||||||||||||
Diluted | 27,425 | 26,030 | 26,509 | 24,845 | 21,995 | |||||||||||||||
Balance Sheet Data (at end of period) | ||||||||||||||||||||
Cash and cash equivalents | $ | 41,504 | $ | 32,862 | $ | 2,454 | $ | 3,328 | $ | 20,014 | ||||||||||
Working capital | $ | 188,567 | $ | 157,117 | $ | 125,371 | $ | 111,947 | $ | 117,504 | ||||||||||
Total assets | $ | 687,749 | $ | 633,538 | $ | 579,803 | $ | 374,266 | $ | 351,971 | ||||||||||
Long-term debt, net of current portion | $ | 313,995 | $ | 317,725 | $ | 267,349 | $ | 135,800 | $ | 140,847 | ||||||||||
Total liabilities | $ | 439,148 | $ | 439,778 | $ | 391,839 | $ | 227,472 | $ | 219,906 | ||||||||||
Total stockholders’ equity | $ | 248,601 | $ | 193,760 | $ | 187,964 | $ | 146,794 | $ | 132,065 |
(1) | Fiscal year 2016 includes income of $8,347 related to the revaluation of the Del Monte earn-out liabilities. |
(2) | Fiscal year 2016 includes the impact of our debt restructuring resulting in a loss on extinguishment of debt of $22,310. |
(3) | Fiscal year 2017 includes a tax benefit of $3,573 related to the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”). |
• | $123.9 million in cash, which was funded with cash-on-hand, borrowings under the revolving credit facility portion of our senior secured credit facilities and the issuance of $25.0 million of additional senior secured notes that bear interest at 5.80% per annum due on October 17, 2020; |
• | approximately 1.1 million shares of our common stock (valued at $22.17 per share); |
• | $36.8 million in convertible subordinated notes issued to certain entities affiliated with Del Monte with a six-year maturity bearing interest at 2.50% with a conversion price of $29.70 per share; and |
• | $1.3 million offset received as an adjustment to the purchase price. |
• | sales and service territory expansion; |
• | operational excellence and high customer service levels; |
• | expanded purchasing programs and improved buying power; |
• | product innovation and new product category introduction; |
• | operational efficiencies through system enhancements; and |
• | operating expense reduction through the centralization of general and administrative functions. |
• | Net sales growth. Our net sales growth is driven principally by changes in volume and, to a lesser degree, changes in price related to the impact of inflation in commodity prices and product mix. In particular, product cost inflation and deflation impacts our results of operations and, depending on the amount of inflation or deflation, such impact may be material. For example, inflation may increase the dollar value of our sales, and deflation may cause the dollar value of our sales to fall despite our unit sales remaining constant or growing. |
• | Gross profit and gross profit margin. Our gross profit and gross profit as a percentage of net sales, or gross profit margin, are driven principally by changes in volume and fluctuations in food and commodity prices and our ability to pass on any price increases to our customers in an inflationary environment and maintain or increase gross profit margin when our costs decline. Our gross profit margin is also a function of the product mix of our net sales in any period. Given our wide selection of product categories, as well as the continuous introduction of new products, we can experience shifts in product sales mix that have an impact on net sales and gross profit margins. This mix shift is most significantly impacted by the introduction of new categories of products in markets that we have more recently entered, impact of product mix from acquisitions, as well as the continued growth in item penetration on higher velocity items such as dairy products. |
• | Net sales. Net sales consist primarily of sales of specialty products, center-of-the-plate proteins and other food products to independently-owned restaurants and other high-end foodservice customers, which we report net of certain group discounts and customer sales incentives. Net sales also include sales by our Allen Brothers subsidiary that are direct-to-consumers. |
• | Cost of sales. Cost of sales include the net purchase price paid for products sold, plus the cost of transportation necessary to bring the product to our distribution facilities. Our cost of sales may not be comparable to other similar companies within our industry that include all costs related to their distribution network and protein processing costs in their costs of sales rather than as operating expenses. |
• | Operating expenses. Our operating expenses include warehousing, processing and distribution expenses (which include salaries and wages, employee benefits, facility and distribution fleet rental costs and other expenses related to warehousing, processing and delivery) and selling, general and administrative expenses (which include selling, insurance, administrative, wage and benefit expenses, share-based compensation expense and changes in the fair value of our contingent earn-out liabilities). |
• | Interest expense. Interest expense consists primarily of interest on our outstanding indebtedness and, as applicable, the amortization or write-off of deferred financing fees. |
Fiscal Year Ended | |||||||||
December 29, 2017 | December 30, 2016 | December 25, 2015 | |||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of sales | 74.7 | % | 74.7 | % | 74.3 | % | |||
Gross profit | 25.3 | % | 25.3 | % | 25.7 | % | |||
Operating expenses | 22.1 | % | 21.3 | % | 21.8 | % | |||
Operating income | 3.2 | % | 4.0 | % | 3.9 | % | |||
Other expense | 1.7 | % | 3.5 | % | 1.2 | % | |||
Income before income taxes | 1.4 | % | 0.5 | % | 2.6 | % | |||
Provision for income taxes | 0.3 | % | 0.2 | % | 1.1 | % | |||
Net income | 1.1 | % | 0.3 | % | 1.5 | % |
• | $123.9 million in cash, which was funded with cash-on-hand, borrowings under the revolving credit facility portion of our senior secured credit facilities and the issuance of $25.0 million of additional senior secured notes that bear interest at 5.80% per annum due on October 17, 2020; |
• | approximately 1.1 million shares of our common stock (valued at $22.17 per share); |
• | $36.8 million in convertible subordinated notes issued to certain entities affiliated with Del Monte with a six-year maturity bearing interest at 2.50% with a conversion price of $29.70 per share; and |
• | $1.3 million offset received as an adjustment to the purchase price. |
Payments Due by Period (1) | ||||||||||||||||||||
Total | Less than One Year | 1-3 Years | 4-5 Years | Thereafter | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Inventory purchase commitments | $ | 37,929 | $ | 37,929 | $ | — | $ | — | $ | — | ||||||||||
Indebtedness | $ | 325,185 | $ | 3,179 | $ | 6,358 | $ | 315,648 | $ | — | ||||||||||
Capital lease obligations and software financing | $ | 664 | $ | 647 | $ | 10 | $ | 7 | $ | — | ||||||||||
Pension exit liabilities | $ | 2,438 | $ | 130 | $ | 288 | $ | 329 | $ | 1,691 | ||||||||||
Long-term operating leases | $ | 125,118 | $ | 20,831 | $ | 35,379 | $ | 26,988 | $ | 41,920 | ||||||||||
Total | $ | 491,334 | $ | 62,716 | $ | 42,035 | $ | 342,972 | $ | 43,611 |
(1) | Interest on our various outstanding debt instruments is included in the above table, except for our senior secured credit facility, which has a variable interest rate. At December 29, 2017, we had borrowings of $288.4 million under our senior secured credit facility. During the fiscal year ended December 29, 2017, the weighted average interest rate on our senior secured credit facility was 6.45% and we incurred interest expense of $19.0 million. See Note 9 “Debt Obligations” to our consolidated financial statements for further information. |
Index to the Consolidated Financial Statements | Page |
December 29, 2017 | December 30, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 41,504 | $ | 32,862 | |||
Accounts receivable, net of allowance of $8,026 in 2017 and $6,848 in 2016 | 142,170 | 128,030 | |||||
Inventories, net | 102,083 | 87,498 | |||||
Prepaid expenses and other current assets | 11,083 | 16,101 | |||||
Total current assets | 296,840 | 264,491 | |||||
Equipment and leasehold improvements, net | 68,378 | 62,183 | |||||
Software costs, net | 6,034 | 5,927 | |||||
Goodwill | 173,202 | 163,784 | |||||
Intangible assets, net | 140,320 | 131,131 | |||||
Other assets | 2,975 | 6,022 | |||||
Total assets | $ | 687,749 | $ | 633,538 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 70,019 | $ | 65,514 | |||
Accrued liabilities | 21,871 | 17,546 | |||||
Accrued compensation | 12,556 | 9,519 | |||||
Current portion of long-term debt | 3,827 | 14,795 | |||||
Total current liabilities | 108,273 | 107,374 | |||||
Long-term debt, net of current portion | 313,995 | 317,725 | |||||
Deferred taxes, net | 6,015 | 6,958 | |||||
Other liabilities and deferred credits | 10,865 | 7,721 | |||||
Total liabilities | 439,148 | 439,778 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 29, 2017 and December 30, 2016 | — | — | |||||
Common Stock - $0.01 par value, 100,000,000 shares authorized, 28,442,208 and 26,280,469 shares issued and outstanding at December 29, 2017 and December 30, 2016, respectively | 284 | 263 | |||||
Additional paid in capital | 166,997 | 127,180 | |||||
Accumulated other comprehensive loss | (1,549 | ) | (2,186 | ) | |||
Retained earnings | 82,869 | 68,503 | |||||
Total stockholders’ equity | 248,601 | 193,760 | |||||
Total liabilities and stockholders’ equity | $ | 687,749 | $ | 633,538 |
Fiscal Years Ended | |||||||||||
December 29, 2017 | December 30, 2016 | December 25, 2015 | |||||||||
Net sales | $ | 1,301,520 | $ | 1,192,866 | $ | 1,046,878 | |||||
Cost of sales | 972,142 | 891,649 | 778,167 | ||||||||
Gross profit | 329,378 | 301,217 | 268,711 | ||||||||
Operating expenses | 288,251 | 253,978 | 228,311 | ||||||||
Operating income | 41,127 | 47,239 | 40,400 | ||||||||
Interest expense | 22,709 | 41,632 | 12,984 | ||||||||
Loss (gain) on sale of assets | 10 | (69 | ) | (295 | ) | ||||||
Income before income taxes | 18,408 | 5,676 | 27,711 | ||||||||
Provision for income taxes | 4,042 | 2,653 | 11,502 | ||||||||
Net income | $ | 14,366 | $ | 3,023 | $ | 16,209 | |||||
Other comprehensive income: | |||||||||||
Foreign currency translation adjustments | 637 | 763 | (2,256 | ) | |||||||
Comprehensive income | $ | 15,003 | $ | 3,786 | $ | 13,953 | |||||
Net income per share: | |||||||||||
Basic | $ | 0.55 | $ | 0.12 | $ | 0.63 | |||||
Diluted | $ | 0.54 | $ | 0.12 | $ | 0.63 | |||||
Weighted average common shares outstanding: | |||||||||||
Basic | 26,118,482 | 25,919,480 | 25,532,172 | ||||||||
Diluted | 27,424,526 | 26,029,609 | 26,508,994 |
Common Stock | ||||||||||||||||||||||
Shares | Amount | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | |||||||||||||||||
Balance December 26, 2014 | 25,031,267 | $ | 250 | $ | 97,966 | $ | (693 | ) | $ | 49,271 | $ | 146,794 | ||||||||||
Net income | — | — | — | — | 16,209 | 16,209 | ||||||||||||||||
Shares issued for Del Monte acquisition | 1,113,636 | 11 | 24,678 | — | — | 24,689 | ||||||||||||||||
Stock compensation | 196,950 | 2 | 3,537 | — | — | 3,539 | ||||||||||||||||
Excess tax benefits on stock compensation | — | — | 81 | — | — | 81 | ||||||||||||||||
Cumulative translation adjustment | — | — | — | (2,256 | ) | — | (2,256 | ) | ||||||||||||||
Shares surrendered to pay withholding taxes | (51,178 | ) | — | (1,092 | ) | — | — | (1,092 | ) | |||||||||||||
Balance December 25, 2015 | 26,290,675 | $ | 263 | $ | 125,170 | $ | (2,949 | ) | $ | 65,480 | $ | 187,964 | ||||||||||
Net income | — | — | — | — | 3,023 | 3,023 | ||||||||||||||||
Stock compensation | 25,895 | — | 2,579 | — | — | 2,579 | ||||||||||||||||
Cumulative translation adjustment | — | — | — | 763 | — | 763 | ||||||||||||||||
Shares surrendered to pay withholding taxes | (36,101 | ) | — | (569 | ) | — | — | (569 | ) | |||||||||||||
Balance December 30, 2016 | 26,280,469 | $ | 263 | $ | 127,180 | $ | (2,186 | ) | $ | 68,503 | $ | 193,760 | ||||||||||
Net income | — | — | — | — | 14,366 | 14,366 | ||||||||||||||||
Stock compensation | 110,331 | — | 3,018 | — | — | 3,018 | ||||||||||||||||
Public offering of common stock | 1,900,000 | 19 | 34,001 | 34,020 | ||||||||||||||||||
Shares issued for Fells Point acquisition | 185,442 | 2 | 3,298 | — | — | 3,300 | ||||||||||||||||
Cumulative translation adjustment | — | — | — | 637 | — | 637 | ||||||||||||||||
Shares surrendered to pay withholding taxes | (34,034 | ) | — | (500 | ) | — | — | (500 | ) | |||||||||||||
Balance December 29, 2017 | 28,442,208 | $ | 284 | $ | 166,997 | $ | (1,549 | ) | $ | 82,869 | $ | 248,601 |
December 29, 2017 | December 30, 2016 | December 25, 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 14,366 | $ | 3,023 | $ | 16,209 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 8,516 | 7,082 | 5,960 | ||||||||
Amortization of intangible assets | 12,033 | 11,433 | 9,453 | ||||||||
Provision for allowance for doubtful accounts | 4,061 | 3,224 | 2,909 | ||||||||
Deferred rent | 285 | 1,568 | 850 | ||||||||
Deferred taxes | (703 | ) | 2,991 | (809 | ) | ||||||
Amortization of deferred financing fees | 2,084 | 1,807 | 1,228 | ||||||||
Loss on debt extinguishment | — | 22,310 | — | ||||||||
Stock compensation | 3,018 | 2,579 | 3,539 | ||||||||
Change in fair value of earn-outs | (579 | ) | (10,031 | ) | 558 | ||||||
Gain on asset disposal | 10 | (69 | ) | (295 | ) | ||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Accounts receivable | (13,611 | ) | (2,503 | ) | (11,055 | ) | |||||
Inventories | (11,783 | ) | 7,038 | (6,109 | ) | ||||||
Prepaid expenses and other current assets | 4,762 | (7,168 | ) | 1,314 | |||||||
Accounts payable and accrued liabilities | 10,406 | (941 | ) | 15,351 | |||||||
Other liabilities | (1,130 | ) | (2,314 | ) | (471 | ) | |||||
Other assets | (238 | ) | (1,115 | ) | (905 | ) | |||||
Net cash provided by operating activities | 31,497 | 38,914 | 37,727 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (12,311 | ) | (16,623 | ) | (21,656 | ) | |||||
Cash paid for acquisitions, net of cash received | (30,095 | ) | (19,742 | ) | (123,831 | ) | |||||
Proceeds from asset disposals | — | 550 | 16,187 | ||||||||
Net cash used in investing activities | (42,406 | ) | (35,815 | ) | (129,300 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from the issuance of common stock, net of issuance costs | 34,020 | — | — | ||||||||
Proceeds from senior secured notes | — | 315,810 | 25,000 | ||||||||
Payment of debt and capital lease obligations | (12,830 | ) | (158,880 | ) | (23,893 | ) | |||||
Payment for debt extinguishment | — | (21,219 | ) | — | |||||||
Borrowing under revolving credit line | 24,000 | 33,200 | 209,982 | ||||||||
Payments under revolving credit line | (24,000 | ) | (126,582 | ) | (116,600 | ) | |||||
Payment of deferred financing fees | (761 | ) | (7,782 | ) | (1,012 | ) | |||||
Cash paid for contingent earn-out obligation | (500 | ) | (6,743 | ) | (1,420 | ) | |||||
Surrender of shares to pay withholding taxes | (500 | ) | (569 | ) | (1,092 | ) | |||||
Excess tax benefits on stock compensation | — | — | 81 | ||||||||
Net cash provided by financing activities | 19,429 | 27,235 | 91,046 | ||||||||
Effect of foreign currency on cash and cash equivalents | 122 | 74 | (347 | ) | |||||||
Net change in cash and cash equivalents | 8,642 | 30,408 | (874 | ) | |||||||
Cash and cash equivalents at beginning of year | 32,862 | 2,454 | 3,328 | ||||||||
Cash and cash equivalents at end of year | $ | 41,504 | $ | 32,862 | $ | 2,454 |
a) | quoted prices for similar assets in active markets; |
b) | quoted prices for identical or similar assets in inactive markets; |
c) | inputs other than quoted prices that are observable for the asset; and |
d) | inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
Fiscal Year Ended | |||||||||||
December 29, 2017 | December 30, 2016 | December 25, 2015 | |||||||||
Net income per share: | |||||||||||
Basic | $ | 0.55 | $ | 0.12 | $ | 0.63 | |||||
Diluted | $ | 0.54 | $ | 0.12 | $ | 0.63 | |||||
Weighted average common shares: | |||||||||||
Basic | 26,118,482 | 25,919,480 | 25,532,172 | ||||||||
Diluted | 27,424,526 | 26,029,609 | 26,508,994 |
Fiscal Year Ended | |||||||||||
December 29, 2017 | December 30, 2016 | December 25, 2015 | |||||||||
Numerator: | |||||||||||
Net income | $ | 14,366 | $ | 3,023 | $ | 16,209 | |||||
Add effect of dilutive securities | |||||||||||
Interest on convertible notes, net of tax | 536 | — | 403 | ||||||||
Adjusted net income | $ | 14,902 | $ | 3,023 | $ | 16,612 | |||||
Denominator: | |||||||||||
Weighted average basic common shares outstanding | 26,118,482 | 25,919,480 | 25,532,172 | ||||||||
Dilutive effect of unvested common shares | 68,670 | 110,129 | 79,385 | ||||||||
Dilutive effect of convertible notes | 1,237,374 | — | 897,437 | ||||||||
Weighted average diluted common shares outstanding | 27,424,526 | 26,029,609 | 26,508,994 |
Fiscal Year Ended | ||||||||
December 29, 2017 | December 30, 2016 | December 25, 2015 | ||||||
Restricted Share Awards (RSAs) | 84,511 | 92,812 | 34,526 | |||||
Stock options | 201,799 | 209,071 | — | |||||
Convertible subordinated notes | — | 1,237,374 | — |
Allen Brothers | Del Monte | MT Food | Fells Point | Total | |||||||||||||||
Balance December 25, 2015 | $ | 4,344 | $ | 13,792 | $ | — | $ | — | $ | 18,136 | |||||||||
Opening liability | — | — | 500 | — | 500 | ||||||||||||||
Gain on settlement | (1,684 | ) | — | — | — | (1,684 | ) | ||||||||||||
Payments | (2,660 | ) | (4,083 | ) | — | — | (6,743 | ) | |||||||||||
Changes in fair value | — | (8,347 | ) | — | — | (8,347 | ) | ||||||||||||
Balance December 30, 2016 | — | 1,362 | 500 | — | 1,862 | ||||||||||||||
Opening liability | — | — | — | 4,445 | 4,445 | ||||||||||||||
Payments | — | — | (500 | ) | — | (500 | ) | ||||||||||||
Changes in fair value | — | (713 | ) | — | 134 | (579 | ) | ||||||||||||
Balance December 29, 2017 | $ | — | $ | 649 | $ | — | $ | 4,579 | $ | 5,228 |
December 29, 2017 | December 30, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Convertible Secured Notes | $ | 36,750 | $ | 38,091 | $ | 36,750 | $ | 35,557 |
Fiscal Year Ended (unaudited) | ||||||||
December 29, 2017 | December 30, 2016 | |||||||
Net sales | $ | 1,340,820 | $ | 1,252,293 | ||||
Income before income taxes | 20,130 | 9,492 |
Fells Point | MT Food | |||||||
Current assets (includes cash acquired) | $ | 6,971 | $ | 6,132 | ||||
Customer relationships | 15,100 | 7,600 | ||||||
Trademarks | 8,100 | — | ||||||
Non-compete agreement | 400 | — | ||||||
Goodwill | 5,732 | 11,976 | ||||||
Fixed assets | 2,459 | 261 | ||||||
Current liabilities | (1,295 | ) | (3,969 | ) | ||||
Earn-out liability | (4,445 | ) | (500 | ) | ||||
Total consideration | $ | 33,022 | $ | 21,500 |
Useful Lives | December 29, 2017 | December 30, 2016 | ||||||||
Land | Indefinite | $ | 1,170 | $ | 1,170 | |||||
Buildings | 20 years | 1,292 | 1,292 | |||||||
Machinery and equipment | 5-10 years | 16,183 | 13,404 | |||||||
Computers, data processing and other equipment | 3-7 years | 9,924 | 9,367 | |||||||
Leasehold improvements | 7-22 years | 53,653 | 47,971 | |||||||
Furniture and fixtures | 7 years | 3,100 | 3,011 | |||||||
Vehicles | 5-7 years | 2,570 | 2,445 | |||||||
Other | 7 years | 95 | 95 | |||||||
Construction-in-process | 15,030 | 11,359 | ||||||||
103,017 | 90,114 | |||||||||
Less: accumulated depreciation and amortization | (34,639 | ) | (27,931 | ) | ||||||
Equipment and leasehold improvements, net | $ | 68,378 | $ | 62,183 |
Carrying amount as of December 25, 2015 | $ | 155,816 | |
Goodwill adjustments | (614 | ) | |
Business combination | 8,559 | ||
Foreign currency translation | 23 | ||
Carrying amount as of December 30, 2016 | 163,784 | ||
Goodwill adjustments | 3,418 |
Business combinations | 5,946 | ||
Foreign currency translation | 54 | ||
Carrying amount as of December 29, 2017 | $ | 173,202 |
Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Amount | |||||||||||
December 29, 2017 | ||||||||||||||
Customer relationships | 145 months | $ | 117,006 | $ | (27,704 | ) | $ | 89,302 | ||||||
Non-compete agreements | 43 months | 7,566 | (6,946 | ) | 620 | |||||||||
Trademarks | 221 months | 60,734 | (10,336 | ) | 50,398 | |||||||||
Total | $ | 185,306 | $ | (44,986 | ) | $ | 140,320 | |||||||
December 30, 2016 | ||||||||||||||
Customer relationships | 151 months | $ | 104,381 | $ | (19,981 | ) | $ | 84,400 | ||||||
Non-compete agreements | 14 months | 7,166 | (5,587 | ) | 1,579 | |||||||||
Trademarks | 231 months | 52,574 | (7,422 | ) | 45,152 | |||||||||
Total | $ | 164,121 | $ | (32,990 | ) | $ | 131,131 |
2018 | $ | 11,938 | |
2019 | 11,300 | ||
2020 | 11,027 | ||
2021 | 11,027 | ||
2022 | 10,247 | ||
Thereafter | 84,781 | ||
Total | $ | 140,320 |
December 29, 2017 | December 30, 2016 | |||||||
Senior secured term loan | $ | 288,435 | $ | 291,613 | ||||
Convertible notes | 36,750 | 36,750 | ||||||
New Markets Tax Credit loan | — | 11,000 | ||||||
Capital leases and financed software | 664 | 2,136 | ||||||
Deferred finance fees and original issue discount | (8,027 | ) | (8,979 | ) | ||||
Total debt obligations | 317,822 | 332,520 | ||||||
Less: current installments | (3,827 | ) | (14,795 | ) | ||||
Total debt obligations excluding current installments | $ | 313,995 | $ | 317,725 |
2018 | $ | 3,827 | |
2019 | 3,184 | ||
2020 | 3,184 | ||
2021 | 39,934 | ||
2022 | 275,720 | ||
Thereafter | — | ||
Total | $ | 325,849 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Unvested at December 25, 2015 | 418,604 | $ | 18.54 | ||||
Granted | 214,274 | 17.75 | |||||
Vested | (108,400 | ) | 18.00 | ||||
Forfeited | (190,425 | ) | 16.82 | ||||
Unvested at December 30, 2016 | 334,053 | $ | 18.69 | ||||
Granted | 207,871 | 14.84 | |||||
Vested | (116,442 | ) | 18.36 | ||||
Forfeited | (95,721 | ) | 17.73 | ||||
Unvested at December 29, 2017 | 329,761 | $ | 16.69 |
Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Term (in years) | ||||||||||
Outstanding December 25, 2015 | — | $ | — | $ | — | 0 | |||||||
Granted | 259,577 | 20.23 | |||||||||||
Exercised | — | — | |||||||||||
Forfeited | (50,506 | ) | 20.23 | ||||||||||
Outstanding December 30, 2016 | 209,071 | $ | 20.23 | $ | — | 9.2 | |||||||
Granted | — | — | |||||||||||
Exercised | — | — | |||||||||||
Forfeited | (17,263 | ) | 20.23 | ||||||||||
Outstanding December 29, 2017 | 191,808 | $ | 20.23 | $ | 33 | 8.2 | |||||||
Exercisable at December 29, 2017 | — | — | $ | — | 0 |
2016 Market Stock Options | |||
Expected volatility of common stock (based on our historical stock price) | 42.8 | % | |
Risk-free interest rate (based on U.S. Treasury yields on the date of grant) | 1.91 | % | |
Expected term (median years until the simulated stock price exceeds target) | 1.38 |
Related Party Real Estate | Third Party Real Estate | Third Party Vehicles | Third Party Other | Total | ||||||||||||||||
2018 | $ | 1,230 | $ | 7,812 | $ | 10,312 | $ | 1,477 | $ | 20,831 | ||||||||||
2019 | 1,250 | 6,885 | 9,283 | 1,110 | 18,528 | |||||||||||||||
2020 | 1,270 | 7,271 | 7,843 | 467 | 16,851 | |||||||||||||||
2021 | 1,290 | 6,834 | 6,169 | 251 | 14,544 | |||||||||||||||
2022 | 1,224 | 6,504 | 4,632 | 84 | 12,444 | |||||||||||||||
Thereafter | 2,153 | 36,822 | 2,945 | — | 41,920 | |||||||||||||||
Total minimum lease payments | $ | 8,417 | $ | 72,128 | $ | 41,184 | $ | 3,389 | $ | 125,118 |
December 29, 2017 | December 30, 2016 | December 25, 2015 | ||||||||||
Current income tax expense (benefit): | ||||||||||||
Federal | $ | 3,342 | $ | (491 | ) | $ | 9,538 | |||||
State | 1,403 | 153 | 2,773 | |||||||||
Total current income tax expense (benefit) | 4,745 | (338 | ) | 12,311 | ||||||||
Deferred income tax expense (benefit): | ||||||||||||
Federal | (1,059 | ) | 2,441 | (725 | ) | |||||||
Foreign | 215 | 49 | 19 | |||||||||
State | 141 | 501 | (103 | ) | ||||||||
Total deferred income tax expense (benefit) | (703 | ) | 2,991 | (809 | ) | |||||||
Total income tax expense | $ | 4,042 | $ | 2,653 | $ | 11,502 |
December 29, 2017 | December 30, 2016 | December 25, 2015 | ||||||||||
Statutory U.S. Federal tax | $ | 6,443 | $ | 1,987 | $ | 9,700 | ||||||
Differences due to: | ||||||||||||
State and local taxes, net of federal benefit | 1,112 | 470 | 1,728 | |||||||||
Foreign tax rate differential | (82 | ) | (168 | ) | (63 | ) | ||||||
Impact of the Tax Act | (3,573 | ) | — | — | ||||||||
Other | 142 | 364 | 137 | |||||||||
Income tax expense | $ | 4,042 | $ | 2,653 | $ | 11,502 |
December 29, 2017 | December 30, 2016 | |||||||
Deferred tax assets: | ||||||||
Receivables and inventory | $ | 3,969 | $ | 5,230 | ||||
Accrued expenses | 1,542 | 2,122 | ||||||
Self-insurance reserves | 2,179 | 2,515 | ||||||
Net operating loss carryforwards | 1,191 | 2,498 | ||||||
Stock compensation | 1,017 | 1,122 | ||||||
Other | 1,696 | 1,213 | ||||||
Total deferred tax assets | 11,594 | 14,700 | ||||||
Deferred tax liabilities: | ||||||||
Property & equipment | (1,701 | ) | (1,759 | ) | ||||
Intangible assets | (10,784 | ) | (12,962 | ) | ||||
Contingent earn-out liabilities | (3,646 | ) | (5,020 | ) | ||||
Prepaid expenses and other | (1,189 | ) | (1,917 | ) | ||||
Total deferred tax liabilities | (17,320 | ) | (21,658 | ) | ||||
Valuation allowance | (289 | ) | — | |||||
Total net deferred tax liability | $ | (6,015 | ) | $ | (6,958 | ) |
December 29, 2017 | December 30, 2016 | December 25, 2015 | ||||||||||
Cash paid for income taxes, net of cash received | $ | 333 | $ | 6,368 | $ | 11,047 | ||||||
Cash paid for interest, net of loss on debt extinguishment | $ | 20,796 | $ | 17,790 | $ | 11,462 | ||||||
Non-cash financing activity: | ||||||||||||
Sinking funds used to retire debt | $ | 2,939 | $ | — | $ | — | ||||||
Non-cash investing activity: | ||||||||||||
Common stock issued for acquisitions | $ | 3,300 | $ | — | $ | 24,689 | ||||||
Convertible notes issued for acquisitions | $ | — | $ | — | $ | 36,750 | ||||||
Acquisition purchase price payable | $ | — | $ | 500 | $ | — | ||||||
Contingent earn-out liabilities for acquisitions | $ | 4,445 | $ | 500 | $ | 13,139 |
Balance at Beginning of Period | Additions Charged to Expense | Deductions | Balance at End of Period | |||||||||||||
Allowance for doubtful accounts | ||||||||||||||||
December 29, 2017 | $ | 6,848 | $ | 4,061 | $ | (2,883 | ) | $ | 8,026 | |||||||
December 30, 2016 | 5,803 | 3,224 | (2,179 | ) | 6,848 | |||||||||||
December 25, 2015 | 4,675 | 2,909 | (1,781 | ) | 5,803 |
Inventory valuation reserve | ||||||||||||||||
December 29, 2017 | $ | 2,122 | $ | 2,996 | $ | (3,184 | ) | $ | 1,934 | |||||||
December 30, 2016 | 1,956 | 3,043 | (2,877 | ) | 2,122 | |||||||||||
December 25, 2015 | 1,130 | 3,288 | (2,462 | ) | 1,956 |
Allowance for deferred tax assets | ||||||||||||||||
December 29, 2017 | $ | — | $ | 289 | $ | — | $ | 289 | ||||||||
December 30, 2016 | — | — | — | — | ||||||||||||
December 25, 2015 | — | — | — | — |
Fiscal 2017 | ||||||||||||||||
Q1 | Q2 | Q3 (1) | Q4 (2) | |||||||||||||
Net sales | $ | 287,690 | $ | 331,656 | $ | 325,076 | $ | 357,098 | ||||||||
Gross profit | 73,904 | 82,596 | 80,905 | 91,973 | ||||||||||||
Operating profit | 3,121 | 12,163 | 10,494 | 15,349 | ||||||||||||
Income before income taxes | (2,812 | ) | 6,283 | 4,891 | 10,046 | |||||||||||
Net income | (1,642 | ) | 3,674 | 2,851 | 9,483 | |||||||||||
Basic net income per share | (0.06 | ) | 0.14 | 0.11 | 0.36 | |||||||||||
Diluted net income per share | (0.06 | ) | 0.14 | 0.11 | 0.35 |
Fiscal 2016 | ||||||||||||||||
Q1 | Q2 (3) | Q3 (4) | Q4 (5) | |||||||||||||
Net sales | $ | 260,836 | $ | 291,209 | $ | 297,917 | $ | 342,904 | ||||||||
Gross profit | 65,958 | 71,803 | 74,392 | 89,064 | ||||||||||||
Operating profit | 5,360 | 11,188 | 8,286 | 22,404 | ||||||||||||
Income before income taxes | 1,701 | (14,479 | ) | 2,299 | 16,155 | |||||||||||
Net income | 993 | (8,455 | ) | 1,343 | 9,142 | |||||||||||
Basic net income per share | 0.04 | (0.33 | ) | 0.05 | 0.35 | |||||||||||
Diluted net income per share | 0.04 | (0.33 | ) | 0.05 | 0.34 |
(3) | The Company refinanced its debt structure by entering into a new senior secured term loan. Proceeds were used to pay off its revolving credit facility and previous term loan resulting in a loss on extinguishment of debt of $22,310. |
Item 9A. | CONTROLS AND PROCEDURES |
Item 9B. | OTHER INFORMATION |
Item 11. | EXECUTIVE COMPENSATION |
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column) | ||||||
Plans approved by stockholders | 191,808 | $ | 20.33 | 361,900 | |||||
Plans not approved by stockholders | — | — | — | ||||||
Total | 191,808 | $ | 20.33 | 361,900 |
1. | Financial Statements – See Index to the Consolidated Financial Statements at Item 8 of this Annual Report on Form 10-K. |
2. | Financial Statement Schedules - Supplemental schedules are not provided because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. |
3. | Exhibits – The exhibits listed in the accompanying Index of Exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K. |
Item 16. | FORM 10-K SUMMARY |
Exhibit No. | Description | |
2.1 | ||
2.2 | ||
2.3 | ||
2.4 | ||
2.5 | ||
2.6 | ||
2.7 | ||
2.8 | ||
2.9 | ||
3.1 | ||
3.2 | ||
4.1 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9* | ||
10.10* |
10.11* | ||
10.12* | ||
10.13* | ||
10.14* | ||
10.15* | ||
10.16 | ||
10.17* | ||
10.18* | ||
10.19* | ||
10.20* | ||
10.21† | ||
10.22* | ||
10.23* | ||
10.24(a)* | ||
10.24(b)† | ||
10.25† | ||
10.26* | ||
10.27(a)* | ||
10.27(b)† | ||
10.28 | ||
10.29 | ||
10.30+ | ||
10.31 | ||
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 |
10.37 | ||
10.38† | ||
10.39† | ||
10.40+ | ||
10.41+ | ||
10.42 | ||
10.43 | ||
10.44 | ||
10.45 | ||
10.46 | ||
10.47 | ||
10.48† | ||
10.49† | ||
10.50 | ||
10.51 | ||
10.52+ | ||
10.53 | ||
10.54 | ||
10.55 | ||
10.56* | ||
14.1 | ||
23.1† | ||
21† | ||
31.1† | ||
31.2† | ||
32.1† | ||
32.2† | ||
101.INS† | XBRL Instance Document | |
101.SCH† | XBRL Schema Document | |
101.CAL† | XBRL Calculation Linkbase Document | |
101.DEF† | XBRL Definition Linkbase Document | |
101.LAB† | XBRL Label Linkbase Document | |
101.PRE† | XBRL Presentation Linkbase Document |
* | Management Contract or Compensatory Plan or Arrangement | |
† | Filed herewith | |
+ | Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text. This exhibit has been filed separately with the Securities and Exchange Commission accompanied by a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. |
THE CHEFS’ WAREHOUSE, INC. | |
March 9, 2018 | /s/ Christopher Pappas |
Christopher Pappas | |
Chairman, President and Chief Executive Officer | |
Signature | Capacity | Date | |||||
/s/ Christopher Pappas | Chairman, President and | March 9, 2018 | |||||
Christopher Pappas | Chief Executive Officer (Principal Executive Officer) | ||||||
/s/ James Leddy | Chief Financial Officer | March 9, 2018 | |||||
James Leddy | (Principal Financial Officer) | ||||||
/s/ Timothy McCauley | Chief Accounting Officer | March 9, 2018 | |||||
Timothy McCauley | (Principal Accounting Officer) | ||||||
/s/ John Pappas | Director and Vice Chairman | March 9, 2018 | |||||
John Pappas | |||||||
/s/ Alan Guarino | Director | March 9, 2018 | |||||
Alan Guarino | |||||||
/s/ John A. Couri | Director | March 9, 2018 | |||||
John A. Couri | |||||||
/s/ Dominick C. Cerbone | Director | March 9, 2018 | |||||
Dominick C. Cerbone | |||||||
/s/ Joseph Cugine | Director | March 9, 2018 | |||||
Joseph Cugine | |||||||
/s/ Stephen Hanson | Director | March 9, 2018 | |||||
Stephen Hanson | |||||||
/s/ John DeBenedetti | Director | March 9, 2018 | |||||
John DeBenedetti | |||||||
/s/ Katherine Oliver | Director | March 9, 2018 | |||||
Katherine Oliver | |||||||
/s/ Steven F. Goldstone | Director | March 9, 2018 | |||||
Steven F. Goldstone |
Entity Name | State of Organization | |||||||
Dairyland USA Corporation | New York | |||||||
Dairyland HP LLC (1) | Delaware | |||||||
Bel Canto Foods, LLC (1) | New York | |||||||
Chefs’ Warehouse Transportation, LLC (2) | Delaware | |||||||
Chefs’ Warehouse Parent, LLC | Delaware | |||||||
The Chefs’ Warehouse Mid-Atlantic, LLC (3) | Delaware | |||||||
The Chefs’ Warehouse West Coast, LLC (3) | Delaware | |||||||
The Chefs’ Warehouse of Florida, LLC (3) | Delaware | |||||||
The Chefs’ Warehouse Midwest, LLC (3) | Delaware | |||||||
Michael’s Finer Meats Holdings, LLC (3) | Delaware | |||||||
Michael’s Finer Meats, LLC (4) | Delaware | |||||||
The Chefs’ Warehouse Pastry Division, Inc. (3) | Delaware | |||||||
The Chefs’ Warehouse Pastry Division Canada ULC (5) | British Columbia, Canada | |||||||
QZ Acquisition (USA), Inc. (3) | Delaware | |||||||
Qzina Specialty Foods North America (USA), Inc. (6) | Delaware | |||||||
Qzina Specialty Foods, Inc. (7) | Florida | |||||||
Qzina Specialty Foods, Inc. (7) | Washington | |||||||
Qzina Specialty Foods (Ambassador), Inc. (7) | California | |||||||
CW LV Real Estate LLC (8) | Delaware | |||||||
Allen Brothers 1893, LLC (9) | Delaware | |||||||
Del Monte Capitol Meat Company Holdings, LLC (3) | Delaware | |||||||
Del Monte Capitol Meat Company, LLC (10) | Delaware | |||||||
The Great Steakhouse Steaks, LLC (11) | Delaware | |||||||
Fells Point Holdings, LLC (3) | Delaware | |||||||
Fells Point, LLC (12) | Delaware |
(1) | Dairyland HP LLC and Bel Canto Foods, LLC are wholly-owned by Dairyland USA Corporation, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(2) | Chefs’ Warehouse Transportation, LLC is wholly-owned by The Chefs’ Warehouse, Inc. |
(3) | The Chefs’ Warehouse Mid-Atlantic, LLC, The Chefs’ Warehouse West Coast, LLC,The Chefs’ Warehouse of Florida, LLC, The Chefs’ Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, The Chefs’ Warehouse Pastry Division, Inc., QZ Acquisition (USA), Inc., Del Monte Capitol Meat Company Holdings, LLC and Fells Point Holdings, LLC are wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(4) | Michael’s Finer Meats, LLC is wholly-owned by Michael’s Finer Meats Holdings, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(5) | The Chefs’ Warehouse Pastry Division Canada ULC is wholly-owned by The Chefs’ Warehouse Pastry Division, Inc., which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(6) | Qzina Specialty Foods North America (USA), Inc. is wholly-owned by QZ Acquisition (USA), Inc., which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(7) | Qzina Specialty Foods, Inc. (a Florida corporation), Qzina Specialty Foods, Inc. (a Washington corporation) and Qzina Specialty Foods (Ambassador), Inc. are wholly-owned by Qzina Specialty Foods North America (USA), Inc., which is wholly-owned by QZ Acquisition (USA), Inc., which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(8) | CW LV Real Estate LLC is wholly-owned by The Chefs’ Warehouse West Coast, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(9) | Allen Brothers 1893, LLC is wholly-owned by The Chefs’ Warehouse Midwest, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(10) | Del Monte Capitol Meat Company, LLC is wholly-owned by Del Monte Meat Company Holdings, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(11) | The Great Steakhouse Steaks, LLC is wholly owned by Allen Brothers 1893, LLC, which is wholly-owned by The Chefs’ Warehouse Midwest, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
(12) | Fells Point, LLC is wholly owned by Fells Point Holdings, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. |
1. | I have reviewed this annual report on Form 10-K of The Chefs’ Warehouse, Inc.; |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f)) for the registrant and have: |
(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 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 |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(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. |
Dated: March 9, 2018 | /s/ Christopher Pappas | |
By: | Christopher Pappas | |
Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this annual report on Form 10-K of The Chefs’ Warehouse, Inc.; |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f)) for the registrant and have: |
(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 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 |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(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. |
Dated: March 9, 2018 | /s/ James Leddy | |
By: | James Leddy | |
Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 9, 2018 | By: | /s/ Christopher Pappas |
Christopher Pappas | ||
Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 9, 2018 | By: | /s/ James Leddy |
James Leddy | ||
Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Mar. 05, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Chefs' Warehouse, Inc. | ||
Entity Central Index Key | 0001517175 | ||
Current Fiscal Year End Date | --12-29 | ||
Document Period End Date | Dec. 29, 2017 | ||
Document Type | 10-K | ||
Trading Symbol | CHEF | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Amendment Flag | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 28,441,253 | ||
Entity Public Float | $ 269,159,670 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2017 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 8,026 | $ 6,848 |
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, issued (in shares) | 0 | 0 |
Preferred Stock, outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, issued (in shares) | 28,442,208 | 26,280,469 |
Common Stock, outstanding (in shares) | 28,442,208 | 26,280,469 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Income Statement [Abstract] | |||
Net sales | $ 1,301,520 | $ 1,192,866 | $ 1,046,878 |
Cost of sales | 972,142 | 891,649 | 778,167 |
Gross profit | 329,378 | 301,217 | 268,711 |
Operating expenses | 288,251 | 253,978 | 228,311 |
Operating income | 41,127 | 47,239 | 40,400 |
Interest expense | 22,709 | 41,632 | 12,984 |
Loss (gain) on sale of assets | 10 | (69) | (295) |
Income before income taxes | 18,408 | 5,676 | 27,711 |
Provision for income taxes | 4,042 | 2,653 | 11,502 |
Net income | 14,366 | 3,023 | 16,209 |
Other comprehensive income: | |||
Foreign currency translation adjustments | 637 | 763 | (2,256) |
Comprehensive income | $ 15,003 | $ 3,786 | $ 13,953 |
Net income per share: | |||
Basic (in dollars per share) | $ 0.55 | $ 0.12 | $ 0.63 |
Diluted (in dollars per share) | $ 0.54 | $ 0.12 | $ 0.63 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 26,118,482 | 25,919,480 | 25,532,172 |
Diluted (in shares) | 27,424,526 | 26,029,609 | 26,508,994 |
Operations and Basis of Presentation |
12 Months Ended |
---|---|
Dec. 29, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Basis of Presentation | Operations and Basis of Presentation Description of Business and Basis of Presentation The financial statements include the consolidated accounts of The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries. The Company’s quarterly periods end on the thirteenth Friday of each quarter. Every six to seven years the Company will add a fourteenth week to its fourth quarter to more closely align its year end to the calendar year. The consolidated statement of operations for the fiscal year ended December 30, 2016 contained a 53rd week while all other years presented contained 52 weeks. The Company operates in one reportable segment, food product distribution, which is concentrated on the East and West Coasts of the United States. The Company’s customer base consists primarily of menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. Consolidation The consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Guidance Adopted in 2017 Subsequent Measurement of Inventory: In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the subsequent measurement of inventory. This guidance requires that inventory be measured at the lower of cost or net realizable value. The Company adopted this guidance prospectively. Adoption of this guidance did not impact the Company's consolidated financial statements. Improvements to Employee Share-Based Payment Accounting: In March 2016, the FASB issued guidance to simplify the accounting for employee share-based payments. The main provisions are to recognize excess tax benefits in the income statement rather than to additional paid-in capital, allow an entity to account for forfeitures as they occur, allow an entity to withhold employee shares up to the individual's maximum statutory tax rate without triggering liability classification of the award, present excess tax benefits as an operating cash flow and to present cash payments for employee tax withholding on vested stock awards as a financing cash flow. The guidance also requires that any unrecognized tax benefits that were not previously recognized be recorded through a cumulative-effect adjustment to retained earnings in the period in which the guidance is adopted. Upon adoption, the Company made an accounting policy election to account for forfeitures as they occur and began recognizing any excess tax benefits through current year earnings. There were no previously unrecognized tax benefits that required a cumulative-effect adjustment to retained earnings. Adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Restricted Cash: In November 2016, the FASB issued guidance which includes guidance to clarify how companies present and classify restricted cash or restricted cash equivalents in the statement of cash flows. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Adoption of this guidance did not impact the consolidated financial statements as the Company does not have restricted cash. Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued guidance which simplifies goodwill impairment testing by removing Step 2 from the goodwill impairment test which required companies to assign the fair value of a reporting unit to its underlying assets and liabilities. Instead, an entity should recognize an impairment charge for the amount by which the carry amount of a reporting unit exceeds its fair value. Adoption of this guidance did not impact the Company's consolidated financial statements. Scope of Modification Accounting: In May 2017, the FASB issued guidance which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. Adoption of this guidance did not impact the consolidated financial statements as the Company did not have any share-based payment award modifications. Guidance Not Yet Adopted Revenue from Contracts with Customers: In May 2014, the FASB issued guidance to clarify the principles for recognizing revenue. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On August 12, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption is permitted but not before the original effective date (annual periods beginning after December 15, 2016). The Company has completed its analysis on the impact this guidance has on its customer contracts, sales incentive programs, gift card programs, information systems, business processes, and financial statement disclosures. The new revenue recognition model provides guidance on the identification of multiple performance obligations embedded within customer contracts. The Company's customer contracts include performance obligations which are satisfied as each product is delivered to the customer. Thus revenues will be recognized at a point in time. Under the new standard such performance obligations are satisfied at the point at which the Company transfers control to the customer. This is consistent with the Company's current practice of recognizing revenue upon delivery to the customer, with the exception of the Company's current practice of recognizing revenue at shipping point on direct-to-consumer sales. The impact of the change in revenue recognition timing of its direct-to-consumer sales is immaterial. The new standard includes the concept of variable consideration and requires companies to include variable consideration in the transaction price to the extent it is probable that there will not be a significant reversal in the amount of cumulative revenue recognized when the uncertainty is resolved. Although the Company's sales incentive programs fall under the scope of this new guidance, it will not have a significant impact on the amount or timing of revenue recognition. The new standard addresses current diversity in practice in regards to the derecognition of unredeemed gift card liabilities that are not subject to unclaimed property laws. The new guidance requires companies to recognize revenue on such liabilities through breakage or when the likelihood of customer redemption becomes remote. This is consistent with the Company's existing method of recognizing breakage revenue on these liabilities. The Company expects to adopt this guidance when effective using the modified retrospective approach. Under this approach, prior financial statements would not be restated and a cumulative effect adjustment, if any, will be recorded as an adjustment to retained earnings. The cumulative effect adjustment is immaterial to our financial statements. Adoption will result in expanded disclosures on revenue recognition policies, disaggregated revenues and contract liabilities. Leases: In February 2016, the FASB issued guidance to increase the transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Current GAAP does not require lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This new guidance is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company expects to adopt this guidance when effective and is in the early stages of implementation. Adoption will have a material impact on the Company's consolidated financial statements, primarily to the consolidated balance sheets and related disclosures, as a result of recognizing right-of-use assets and lease liabilities arising from its operating leases. Clarifying the Definition of a Business: In January 2017, the FASB issued guidance which clarifies whether transactions should be accounted for as acquisitions of assets or businesses. The guidance requires an entity to determine if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the new guidance would define this as an asset acquisition. Furthermore, the guidance requires a business to include, at a minimum, an input and substantive process that together significantly contribute to the ability to create outputs. The guidance is effective for fiscal years beginning after December 15, 2017. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on its financial statements. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles requires it to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Estimates are used in determining, among other items, the allowance for doubtful accounts, reserves for inventories, self-insurance reserves for group medical insurance, workers’ compensation insurance and automobile liability insurance, future cash flows associated with impairment testing for intangible assets (including goodwill) and long-lived assets, useful lives for intangible assets, stock-based compensation, contingent earn-out liabilities and tax reserves. Actual results could differ from estimates. |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Revenue Recognition Revenue from the sale of a product is recognized at the point at which the product is delivered to the customer. The Company grants certain customers sales incentives, such as rebates or discounts and treats these as a reduction of sales at the time the sale is recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized. Cost of Sales The Company records cost of sales based upon the net purchase price paid for a product, including applicable freight charges incurred to deliver the product to the Company’s warehouse. Operating Expenses Operating expenses include the costs of facilities, product shipping and handling costs, warehousing costs, protein processing costs, selling and general administrative activities. Shipping and handling costs included in operating expenses were $70,108, $62,062 and $54,172 for fiscal 2017, 2016 and 2015, respectively. Protein processing costs included in operating expenses were $18,660, $17,320 and $14,626 for fiscal 2017, 2016 and 2015, respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of less than three months to be cash equivalents. The Company periodically maintains balances at financial institutions which may exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. Accounts Receivable Accounts receivable consist of trade receivables from customers and are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is determined based upon a number of specific criteria, such as whether a customer has filed for or been placed into bankruptcy, has had accounts referred to outside parties for collections or has had accounts significantly past due. The allowance also covers short paid invoices the Company deems to be uncollectable as well as a portion of trade accounts receivable balances projected to become uncollectable based upon historic patterns. Inventories Inventories consist primarily of finished goods, food and related food products held for resale and are valued at the lower of cost or market. Our different entities record inventory using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. The Company maintains reserves for slow-moving and obsolete inventories. Purchase Incentives The Company receives consideration and product purchase credits from certain vendors that the Company accounts for as a reduction of cost of sales. There are several types of cash consideration received from vendors. The purchase incentive is primarily in the form of a specified amount per pound or per case, or an amount for year-over-year growth. For the years ended December 29, 2017, December 30, 2016 and December 25, 2015, the recorded purchase incentives totaled approximately $17,265, $13,670 and $11,109, respectively. Concentrations of Credit Risks Financial instruments that subject the Company to concentrations of credit risk consist of cash, temporary cash investments and trade receivables. The Company’s policy is to deposit its cash and temporary cash investments with major financial institutions. The Company distributes its food and related products to a customer base that consists primarily of leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. To reduce credit risk, the Company performs ongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral. However, the Company, in certain instances, has obtained personal guarantees from certain customers. There is no significant balance with any individual customer. Equipment and Leasehold Improvements The Company records equipment and leasehold improvements at cost. Equipment that has been financed through capital leases is recorded at the present value of the minimum lease payments, which approximates cost. Equipment and leasehold improvements, including capital lease assets, are depreciated on a straight-line basis based upon estimated useful life. Software Costs The Company capitalizes certain computer software licenses and software implementation costs that are included in software costs in its consolidated balance sheets. These costs were incurred in connection with developing or obtaining computer software for internal use if it has a useful life in excess of one year, in accordance with Accounting Standards Codification (ASC) 350-40 “Internal-Use Software.” Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task that it previously did not perform. Internal use software is amortized on a straight-line basis over a three to seven year period. Capitalized costs include direct acquisitions as well as software and software development acquired under capitalized leases and internal labor where appropriate. Capitalized software purchases and related development costs, net of accumulated amortization, were $6,034 at December 29, 2017 and $5,927 at December 30, 2016. Impairment of Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment in accordance with ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets” which only requires testing whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If any indicators are present, a recoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If the net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), an additional step is performed that determines the fair value of the asset and the Company records an impairment, if any. The Company has not recorded any impairment of long-lived assets in fiscal 2017, 2016 or 2015. Debt Issuance Costs Certain up-front costs associated with the Company's revolving credit facilities are capitalized and included in other non-current assets in the consolidated balance sheets. The Company had $1,284 and $1,632 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. Costs associated with the issuance of other debt instruments are capitalized and presented as a direct deduction from the carrying amount of the underlying debt liability. The Company had $8,027 and $8,979 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. These costs are amortized over the terms of the related debt instruments by the effective interest rate method. Amortization of debt issuance costs was $2,084 for the fiscal year ended December 29, 2017, $1,807 for the fiscal year ended December 30, 2016 and $1,228 for the fiscal year ended December 25, 2015. Intangible Assets The intangible assets recorded by the Company consist of customer relationships, covenants not to compete and trademarks which are amortized over their useful lives on a schedule that approximates the pattern in which economic benefits of the intangible assets are consumed. Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If any indicators are present, a recoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. Undiscounted cash flows expected to be generated by the related assets are estimated over the assets’ useful lives based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow model. There have been no events or changes in circumstances during fiscal 2017, 2016 or 2015 indicating that the carrying value of our finite-lived intangible assets are not recoverable. Goodwill Goodwill is the excess of the acquisition cost of businesses over the fair value of identifiable net assets acquired in accordance with ASC 350, “Intangibles-Goodwill and Other.” The Company has two reporting units – Protein and Specialty. For the fiscal years ended December 29, 2017 and December 30, 2016, the Company tested goodwill for impairment using a quantitative analysis. The quantitative analysis consists of a comparison of the carrying value of the Company’s reporting units, including goodwill, to the estimated fair value of the reporting units that was determined using a discounted cash flow methodology. A goodwill impairment loss, if any, would be recognized for the amount by which the reporting unit's carrying value exceeded its fair value. There have been no events or changes in circumstances during fiscal 2017, 2016 or 2015 indicating that goodwill may be impaired. The Company’s use of a discounted cash flow methodology includes estimates of future revenue based upon budget projections and growth rates which take into account estimated inflation rates. The Company also develops estimates for future levels of gross and operating profits and projected capital expenditures. This methodology also includes the use of estimated discount rates based upon industry and competitor analysis as well as other factors. The estimates that the Company uses in its discounted cash flow methodology involve many assumptions by management that are based upon future growth projections. Employee Benefit Programs The Company sponsors a defined contribution plan covering substantially all full-time employees (the “401(k) Plan”). The Company recognized expense related to the 401(k) Plan totaling $1,172, $1,049 and $858, respectively, for fiscal 2017, 2016 and 2015. Income Taxes The Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” Deferred tax assets or liabilities are recorded to reflect the future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts are adjusted, as appropriate, to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse. The Company follows certain provisions of ASC 740, “Income Taxes” which established a single model to address accounting for uncertain tax positions and clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the tax authorities. The Company records uncertain tax positions when it is estimable and probable that such liabilities have been incurred. The Company, when required, will accrue interest and penalties related to income tax matters in income tax expense. On December 22, 2017, the President enacted H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”). Among other changes to the U.S. Internal Revenue Code, the Tax Act reduces the U.S. federal corporate top tax rate from 35 percent to 21 percent. The Company must remeasure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. The effect of the remeasurement is reflected entirely in the interim period that includes the enactment date and is allocated directly to income tax expense from continuing operations. Commitments and Contingencies The Company is subject to various claims and contingencies related to lawsuits, taxes and environmental matters, as well as commitments under contractual and other commercial obligations. The Company recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonably estimated. Contingent Earn-out Liabilities The Company accounts for contingent consideration relating to business combinations as a liability and an increase to goodwill at the date of the acquisition and continually remeasures the liability at each balance sheet date by recording changes in the fair value through the Consolidated Statements of Operations. The Company determines the fair value of contingent consideration based on future operating projections under various potential scenarios and weighs the probability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to business combinations may be for amounts which are materially different from the amounts initially recorded and may cause volatility in the Company’s results of operations. Stock-Based Compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. Restricted stock awards and performance share units are valued based on the fair value of the stock on the grant date. The related compensation expense is recognized over the service period on a straight-line basis. Compensation expense on performance share units reflects the estimated probable outcome at the end of the performance period. The fair value of stock options with market conditions is determined based on a Monte-Carlo simulation in order to simulate a range of possible future stock prices for the Company's s stock. For awards subject to graded vesting, the Company ensures that the compensation expense recognized is at least equal to the vested portion of the award. Self-Insurance Reserves The Company maintains a self-insured group medical program. The program contains individual stop loss thresholds of $175 per incident and aggregate stop loss thresholds based upon the average number of employees enrolled in the program throughout the year. The amount in excess of the self-insured levels is fully insured by third party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and medical cost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. The Company maintains an insurance program for its automobile liability and workers' compensation insurance subject to deductibles or self-insured retentions of $350 for workers' compensation and $250 for automobile liability per occurrence. The amounts in excess of the deductibles are fully insured by third party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and cost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. Assets and Liabilities Measured at Fair Value The Company accounts for certain assets and liabilities at fair value. The Company categorizes each of its fair value measurements in one of the following three levels based on the lowest level input that is significant to the fair value measurement in its entirety: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities include the following:
If the asset has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset. Level 3 - Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure. |
Net Income per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Share | Net Income per Share The following table sets forth the computation of basic and diluted earnings per share:
Reconciliation of net income per common share:
Potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive are as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Assets and Liabilities Measured at Fair Value The Company's contingent earn-out liabilities are measured at fair value. These liabilities are reflected as accrued liabilities and other liabilities and deferred credits on the balance sheet. The fair value of contingent consideration was determined based on a probability-based approach which includes projected results, percentage probability of occurrence and the application of a discount rate to present value the payments. A significant change in projected results, discount rate, or probabilities of occurrence could result in a significantly higher or lower fair value measurement. The following table presents the changes in Level 3 contingent earn-out liabilities:
Changes in fair value and gain on settlement are included in operating expenses within our consolidated statements of operations. Fair Value of Financial Instruments The carrying amounts reported in the Company’s consolidated balance sheets for accounts receivable and accounts payable approximate fair value, due to the immediate to short-term nature of these financial instruments. The fair values of the revolving credit facility and term loan approximated their book values as of December 29, 2017 and December 30, 2016 as these instruments had variable interest rates that reflected current market rates available to the Company. The fair value of these debt instruments were estimated using Level 3 inputs. The following tables presents the carrying value and fair value of the Company’s convertible subordinated notes (more fully described in Note 9). In estimating the fair value of these convertible secured notes, the Company utilized Level 3 inputs including, prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk free interest rate in calculating the fair value estimate.
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions The Company accounts for acquisitions in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed are recorded in the accompanying consolidated balance sheets at their estimated fair values, as of the acquisition date. Results of operations are included in the Company’s financial statements from the date of acquisition. For the acquisitions noted below, the Company used the income approach to determine the fair value of the customer relationships, the relief from royalty method to determine the fair value of trademarks and the comparison of economic income using the with/without approach to determine the fair value of non-compete agreements. The Company used Level 3 inputs to determine the fair value of all these intangible assets. Fells Point On August 25, 2017, the Company entered into an asset purchase agreement to acquire substantially all of the assets of Fells Point, a specialty protein manufacturer and distributor based in the metro Baltimore and Washington DC area. The aggregate purchase price for the transaction at acquisition date was approximately $33,022, including the impact of an initial net working capital adjustment which is subject to a post-closing working capital adjustment true up. Approximately $29,722 was paid in cash at closing and the remaining $3,300 consisted of 185,442 shares of the Company's common stock. The Company will also pay additional contingent consideration, if earned, in the form of an earn-out amount which could total approximately $12,000. The payment of the earn-out liability is subject to the successful achievement of annual Adjusted EBITDA targets for the Fells Point business over a period of four years following closing. At December 29, 2017 and August 25, 2017, the Company estimated the fair value of this contingent earn-out liability to be $4,579 and $4,445, respectively. The Company is in the process of finalizing a valuation of the tangible and intangible assets of Fells Point as of the acquisition date. These assets will be valued at fair value using Level 3 inputs. Customer lists, trademarks, and non-compete agreements are expected to be amortized over 15, 20 and 6 years, respectively. Goodwill for the Fells Point acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established meat processor to grow the Company's protein business in the Northeast and Mid Atlantic regions, as well as any intangible assets that do not qualify for separate recognition. During the fiscal year ended December 29, 2017, the Company recognized professional fees of $168 in operating expenses related to the Fells Point acquisition. On August 25, 2017, the Company entered into a five-year lease for a warehouse facility located in Baltimore, MD that is owned by the former owners of Fells Point, some of whom are current employees. The Company paid rent of $86 during the year ended December 29, 2017. For the year ended December 29, 2017, the Company reflected net sales and income before taxes of $22,583 and $1,604, respectively, for Fells Point in its consolidated statement of operations. The table below presents unaudited pro forma consolidated income statement information of the Company for the year ended December 29, 2017 and December 30, 2016 as if Fells Point acquisition had occurred at December 26, 2015. The pro forma results were prepared from financial information obtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisition. The pro forma information is not necessarily indicative of the Company’s results of operations had the Fells Point acquisition been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the Fells Point acquisition, any incremental costs for Fells Point transitioning to become a public company, and also does not reflect additional revenue opportunities following the acquisition. The pro forma information reflects amortization and depreciation of the Fells Point acquisition at their respective fair values based on available information and the estimated change in the fair value of the earn-out liability due to accretion.
MT Food On June 27, 2016, the Company acquired substantially all of the assets of MT Food, based in Chicago, Illinois. Founded in the mid 1990's, MT Food is a wholesale distributor of dairy, produce, specialty and grocery items in the metro Chicago area. The purchase price for the transaction was $21,500, of which, $21,000 was paid in cash at closing with an additional $500 payable eighteen months after the closing date. The aggregate purchase price paid by the Company was paid through cash-on-hand and the proceeds from a draw down on its delayed draw term loan facility. During the second quarter of fiscal 2017, the Company paid an earn-out of $500 to the former owners. During the second quarter of 2017, the Company obtained additional information related to the fair value of intangible assets, deferred taxes, inventories, accounts receivable acquired and liabilities owed. As a result, the Company recorded a measurement period adjustment resulting in a net increase in goodwill of $3,418 and a decrease in customer relationships of $2,700. The Company has finalized a valuation of the tangible and intangible assets of MT Food as of the acquisition date. These assets are valued at fair value using Level 3 inputs. Customer relationships are being amortized over 15 years. Goodwill for the MT Food acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established distributor to leverage the Company’s existing products and distribution center in the markets served by MT Food, as well as any intangible assets that do not qualify for separate recognition. The table below sets forth the purchase price allocation of the Fells Point and MT Food acquisitions:
The Company occasionally makes small tuck-in acquisitions that are immaterial, both individually and in the aggregate. Therefore, the gross increases in goodwill and intangible assets per the above table may not agree to the gross increases of these assets as shown in Note 8 “Goodwill and Other Intangible Assets.” |
Inventories |
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Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of finished product. Our different entities record inventory using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. Inventory is reflected net of reserves for shrinkage and obsolescence totaling $1,934 and $2,122 at December 29, 2017 and December 30, 2016, respectively. |
Equipment and Leasehold Improvements |
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Equipment and Leasehold Improvements | Equipment and Leasehold Improvements Equipment and leasehold improvements as of December 29, 2017 and December 30, 2016 consisted of the following:
Construction-in-process at December 29, 2017 consists primarily of the implementation of the Company’s Enterprise Resource Planning (“ERP”) system and the build out of the Company's distribution center in Union City, CA. The build out of the Company's Union City distribution center is expected to be completed during the first quarter of fiscal 2018 and the roll-out of the ERP system is expected to continue through 2019. The Company expects the cost to complete these projects to be approximately $3,200. Construction-in-process at December 30, 2016 related primarily to the implementation of the Company’s ERP system. The Company had $530 and $506 of equipment and vehicles financed by capital leases at December 29, 2017 and December 30, 2016, respectively. The Company recorded depreciation of $64, $71 and $96 on these assets for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. Depreciation expense, excluding capital leases, was $6,644, $5,679 and $4,536 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. Amortization expense on software was $1,808, $1,332 and $1,328 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. During the years ended December 29, 2017, December 30, 2016 and December 25, 2015, the Company incurred interest expense of $22,709, $41,632 and $12,984, respectively. The Company capitalized interest expense of $0, $0 and $739, respectively, during the same periods. Capitalized interest is related to the build outs of the new distribution facilities in Bronx, NY and Las Vegas, NV. On September 26, 2016, the Company sold a parcel of land it owned in Las Vegas, for total cash consideration of $550. The Company recognized a pre-tax gain of $113 on the sale. On June 30, 2015, the Company closed on a sale-leaseback transaction of its new Las Vegas, NV distribution facility. The property was sold for $14,645, which approximated its cost. The related ongoing lease will be accounted for as an operating lease by the Company. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are presented as follows:
The goodwill adjustments during the fiscal year ended December 29, 2017 relate to the MT Food acquisition (see Note 5). Other intangible assets consist of customer relationships being amortized over a period ranging from four to twenty years, trademarks being amortized over a period of one to forty years, and non-compete agreements being amortized over a period of two to six years. Other intangible assets as of December 29, 2017 and December 30, 2016 consisted of the following:
Amortization expense for other intangibles was $12,033, $11,433 and $9,453 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. As of December 29, 2017, estimated amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows:
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Debt Obligations |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations Debt obligations as of December 29, 2017 and December 30, 2016 consisted of the following:
Maturities of the Company’s debt for each of the next five years and thereafter at December 29, 2017 is as follows:
Senior Secured Term Loan Credit Facility On June 22, 2016, the Company refinanced its debt structure by entering into a credit agreement (the “Term Loan Credit Agreement”) with a group of lenders for which Jefferies Finance LLC (“Jefferies”) acts as administrative agent and collateral agent. The Company used the proceeds to pay off its revolving credit facility, its previous term loan, and its senior secured notes. The Term Loan Credit Agreement provides for a senior secured term loan B facility (the “Term Loan Facility”) in an aggregate amount of $305,000 with a $50,000 six-month delayed draw term loan facility (the “DDTL”; the loans outstanding under the Term Loan Facility (including the DDTL), the “Term Loans”). Additionally, the Term Loan Facility includes an accordion which permits the Company to request that the lenders extend additional Term Loans in an aggregate principal amount of up to $50,000 (less the aggregate amount of certain indebtedness incurred to finance acquisitions) plus an unlimited amount subject to the Company’s Total Leverage Ratio not exceeding 4.90:1.00 on a pro forma basis. Borrowings under the Term Loan Facility were used to repay the Company’s senior secured notes, as well as the prior term loan and revolving credit facility. Remaining funds will be used for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. On June 27, 2016, the Company drew $14,000 from the DDTL to help pay for the MT Food acquisition. On September 14, 2016, the Company entered into an amendment to the Term Loan Credit Agreement under which the remaining portion of the DDTL was terminated, the Company’s interest rate schedule was modified and the Company repaid $25,000 of the outstanding balance of the Term Loans. On December 13, 2017, the Company completed a repricing of the Term Loan Facility to reduce the Applicable Rate (as defined in the Term Loan Credit Agreement) from 475 basis points to 400 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $761 which were capitalized as deferred financing charges. The interest rate on this facility at December 29, 2017 was 5.57%. The final maturity of the Term Loan Facility is June 22, 2022. Subject to adjustment for prepayments, the Company is required to make quarterly amortization payments on the Term Loans in an amount equal to 0.25% of the aggregate principal amount of the Term Loans. The interest rates per annum applicable to Term Loans, will be, at the co-borrowers’ option, equal to either a base rate or an adjusted LIBOR rate for one, two, three, six or (if consented to by the lenders) twelve-month interest periods chosen by the Company, in each case plus an applicable margin percentage. The Term Loan Facility contains customary affirmative covenants, negative covenants (including restrictions, subject to customary exceptions, on incurring debt or liens, paying dividends, repaying payment subordinated and junior lien debt, disposing assets, and making investments and acquisitions), and events of default for a term loan B facility of this type, as more particularly described in the Term Loan Credit Agreement. As of December 29, 2017, the Company was in compliance with all debt covenants under the Term Loan Facility. Asset Based Loan Facility On June 22, 2016, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which JPMorgan Chase Bank, N.A., acts as administrative agent and collateral agent. The ABL Credit Agreement provides for an asset based loan facility (the “ABL Facility”) in the aggregate amount of up to $75,000. Availability under the ABL Facility will be limited to a borrowing base consisting of the difference of (a) the lesser of: (i) the aggregate amount of commitments or (ii) the sum of specified percentages of eligible receivables and eligible inventory, minus certain availability reserves minus (b) outstanding borrowings. The co-borrowers under the ABL Facility are entitled on one or more occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the ABL Facility in an aggregate principal amount of up to $25,000. The ABL Facility matures on June 22, 2021. The interest rates per annum applicable to loans, other than swingline loans, under the ABL Credit Facility will be, at the co-borrowers’ option, equal to either a base rate or an adjusted LIBOR rate for one, two, three, six or (if consented to by the lenders) twelve-month, interest periods chosen by the Company, in each case plus an applicable margin percentage. The Company will pay certain recurring fees with respect to the ABL Facility, including fees on the unused commitments of the lenders. The ABL Facility contains customary affirmative covenants, negative covenants and events of default as more particularly described in the ABL Credit Agreement. The ABL Facility will require compliance with a minimum consolidated fixed charge coverage ratio of 1:1 if the amount of availability under the ABL Facility falls below a specified dollar amount or percentage of the borrowing base. There were no outstanding balances under the ABL Facility as of December 29, 2017. Borrowings under the ABL Facility will be used, and are expected to be used, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. As of December 29, 2017, the Company was in compliance with all debt covenants and the Company had reserved $10,195 of the ABL facility for the issuance of letters of credit. As of December 29, 2017, funds totaling $64,805 were available for borrowing under the ABL facility. New Markets Tax Credit Loan On April 26, 2012, Dairyland HP LLC (“DHP”), an indirectly wholly-owned subsidiary of the Company, entered into a financing arrangement under the New Markets Tax Credit (“NMTC”) program under the Internal Revenue Code of 1986, as amended, pursuant to which a subsidiary of Chase, provided to DHP an $11,000 construction loan (the “NMTC Loan”) to help fund DHPs expansion and build-out of the Bronx, New York facility and the rail shed located at that facility, which construction is required under the facility lease agreement. Borrowings under the NMTC Loan are secured by a first priority secured lien on DHPs leasehold interest in the Bronx, New York facility, including all improvements made on the premises, as well as, among other things, a lien on all fixtures incorporated into the project improvements. Under the NMTC Loan, DHP is obligated to pay (i) monthly interest payments on the principal balance then outstanding and (ii) the entire unpaid principal balance then due and owing on April 26, 2017. So long as DHP is not in default, interest accrues on borrowings at 1.00% per annum. The Company may prepay the NMTC Loan, in whole or in part, in $100 increments. DHP was in compliance with all debt covenants under the NMTC Loan during all periods presented. The loan matured on April 26, 2017 and was repaid in full, including all accrued interest, for $11,009, of which, $8,070 was paid in cash and $2,939 was paid from the associated sinking fund. Convertible Subordinated Notes On April 6, 2015, the Company issued $36,750 principal amount of convertible subordinated notes with a six-year maturity bearing interest at 2.5% and a conversion price of $29.70 per share (the “Convertible Subordinated Notes”) to certain of the Del Monte entities as partial consideration in the Del Monte acquisition. The holders of the Convertible Subordinated Notes may, in certain instances beginning one year after issuance, redeem the Convertible Subordinated Notes for cash or shares of the Company’s common stock. Moreover, the Company may pay the outstanding principal amount due and owing under the Convertible Subordinated Notes at maturity in either cash or shares of the Company’s common stock. The Convertible Subordinated Notes, which are subordinate to the Company’s and its subsidiaries’ senior debt, are convertible into shares of the Company’s common stock by the holders at any time at a conversion price of $29.70. The Company incurred interest expense of $919 during the years ended December 29, 2017 and December 30, 2016. |
Stockholders' Equity |
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Stockholders' Equity | Stockholders’ Equity On December 19, 2017, we completed a public offering of 1,900,000 shares of our common stock which resulted in net proceeds to us of approximately $34,020 after deducting underwriters’ fees, commissions and transaction expenses. Equity Incentive Plan The Company has adopted the 2011 Omnibus Equity Incentive Plan (the “Equity Plan”). The purpose of the Equity Plan is to promote the interests of the Company and its stockholders by (i) attracting and retaining key officers, employees and directors; (ii) motivating such individuals by means of performance related incentives to achieve long-range performance goals; (iii) enabling such individuals to participate in the long-term growth and financial success of the Company; (iv) encouraging ownership of stock in the Company by such individuals; and (v) linking their compensation to the long-term interests of the Company and its stockholders. The Equity Plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors and allows for the issuance of stock options, stock appreciation rights (“SARs”), restricted share awards (“RSAs”), restricted share units, performance awards, or other stock-based awards. Stock option exercise prices are fixed by the Committee but shall not be less than the fair market value of a common share on the date of the grant of the option, except in the case of substitute awards. Similarly, the grant price of an SAR may not be less than the fair market value of a common share on the date of the grant. The Committee will determine the expiration date of each stock option and SAR, but in no case shall the stock option or SAR be exercisable after the expiration of ten years from the date of the grant. The Company plans to issue new shares upon exercise of any stock options. The Equity Plan provided 1,750,000 shares available for grant, of which no more than 1,000,000 could be for Incentive Stock Options. As of December 29, 2017, there were 553,708 shares available for grant. Stock compensation expense was $3,018, $2,579 and $3,539 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. The related tax benefit for stock-based compensation was $1,283, $1,469 and $588 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. The following table reflects the activity of RSAs during the fiscal years ended December 29, 2017 and December 30, 2016:
The fair value of RSAs vested during the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, were $1,703, $1,779 and $3,110, respectively. At December 29, 2017, the Company had 329,761 of unvested RSAs outstanding. At December 29, 2017, the total unrecognized compensation cost for these unvested RSAs was $3,823 to be recognized over a weighted-average period of approximately 25 months. Of this total, $2,646 related to RSAs with time-based vesting provisions and $1,177 related to RSAs with performance-based vesting provisions. At December 29, 2017, unrecognized compensation cost was to be recognized over a weighted-average period of approximately 26 months for time-based vesting RSAs and 24 months for the performance-based vesting RSAs. The following table summarizes stock option activity during the fiscal years ended December 29, 2017 and December 30, 2016:
During March 2016, the Company granted 259,577 non-qualified stock options with market condition provisions to its employees at an exercise price of $20.23 and a weighted average grant date fair value of $9.44 using the following key assumptions:
These awards vest over a period of three years and require the Company’s stock to trade at or above $30 per share for twenty consecutive days within four years of issuance to meet the market condition threshold. The Company recognized expense of $557 and $559 on these options during fiscal year ended December 29, 2017 and December 30, 2016, respectively. At December 29, 2017, the total unrecognized compensation cost for these options was $715 to be recognized over a weighted-average period of approximately 14 months. The Company has not granted stock options prior to fiscal 2016. No compensation expense related to the Company’s RSAs or stock options has been capitalized. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases various warehouse and office facilities and certain vehicles and equipment under long-term operating lease agreements that expire at various dates, with related parties and with others. See Note 15 for additional discussion of related party transactions. The Company records operating lease costs, including any determinable rent increases, on a straight-line basis over the lease term. As of December 29, 2017, the Company is obligated under non-cancelable operating lease agreements to make future minimum lease payments as follows:
Total rent expense for operating leases for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015 was $26,678, $24,202 and $20,199, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The provision for income taxes consists of the following for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015:
Income tax expense for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015 differed from amounts computed using the statutory federal income tax rate due to the following reasons:
Deferred tax assets and liabilities at December 29, 2017 and December 30, 2016 consist of the following:
As of December 29, 2017, the Company completed its accounting for the impacts of the Tax Act and recognized an income tax benefit of $3,573 in the fiscal quarter ended December 29, 2017 due to the remeasurement of the Company's deferred tax assets and liabilities. The Company's effective income tax rate for fiscal 2017 would have been 41.4% exclusive of the impact of the Tax Act. The Company's actual effective income tax rate for fiscal 2017 was 22.0%. The deferred tax provision results from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company files income tax returns in the U.S. Federal and various state and local jurisdictions as well as the Canadian Federal and provincial districts. For Federal income tax purposes, the 2014 through 2017 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations and the fact that we have not yet filed our tax return for 2017. For state tax purposes, the 2013 through 2017 tax years remain open for examination by the tax authorities under a four-year statute of limitations. The Company records interest and penalties, if any, in income tax expense. At December 29, 2017, the Company recognized a valuation allowance of $289 which consisted of a full valuation allowance on its Canada net operating loss carryforward of $593 because it is not expected to be realizable in the future offset by a reduction in deferred tax liabilities related to finite-lived intangible assets acquired from Qzina in 2013. For financial reporting purposes, net loss from operations before income taxes for our foreign subsidiaries was $691, $154 and $209 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. We had no foreign operations prior to fiscal 2013. It is our intention to indefinitely reinvest any earnings, therefore no U.S. taxes have been provided for these amounts. The amount of foreign accumulated earnings that have been permanently reinvested is immaterial. As of December 29, 2017 and December 30, 2016, the Company did not have any uncertain tax positions. |
Supplemental Disclosures of Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information | Supplemental Disclosures of Cash Flow Information
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Employee Benefit Plans |
12 Months Ended |
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Dec. 29, 2017 | |
Defined Contribution Plan [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Employee Tax-Deferred Savings Plan The Company offers a 401(k) Plan to all full-time employees that provides for tax-deferred salary deductions for eligible employees. Employees may choose to make voluntary contributions of their annual compensation to the 401(k) Plan, limited to an annual maximum amount as set periodically by the Internal Revenue Service. Beginning in 2013, the Company provided discretionary matching contributions equal to 50 percent of the employee’s contribution amount, up to a maximum of six percent of the employee’s annual salary, capped at $2.5 per associate per year. Matching contributions begin vesting after two years and are fully vested after six. Employee contributions are fully vested when made. Under the 401(k) Plan there is no option available to the employee to receive or purchase the Company’s common stock. Matching contributions under the 401(k) Plan were $1,172 for fiscal 2017, $1,049 for fiscal 2016 and $858 for fiscal 2015. |
Related Parties |
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Dec. 29, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties The Company previously leased two warehouse facilities that are 100% owned by entities controlled by Christopher Pappas, the Company’s chairman, president and chief executive officer, John Pappas, the Company’s vice chairman and one of its directors, and Dean Facatselis, a former non-employee director of the Company and the brother-in-law of Messrs. Pappas, and are deemed to be affiliates of these individuals. Expense related to the above facilities was $533, $616 and $1,406 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. One of the facilities is a distribution facility leased by Chefs’ Warehouse Mid-Atlantic, LLC with a lease expiration date of September 30, 2019. The other facility is a distribution facility which one of the Company’s subsidiaries, Dairyland, sublet from TCW Leasing Co., LLC (“TCW”), an entity controlled by the Company's founders. The Company exited this facility on February 29, 2016 and is no longer required to pay rent. Each of Christopher Pappas, John Pappas and Dean Facatselis owns 8.33% of a New York City-based restaurant customer of the Company and its subsidiaries that purchased an aggregate of approximately $121, $109 and $117 of products from the Company during fiscal 2017, fiscal 2016 and fiscal 2015, respectively. Messrs. Pappas and Facatselis have no other interest in the restaurant other than these equal interests and are not involved in the day-to-day operation or management of this restaurant. The Company paid $137, $315 and $827 to Architexture Studios, Inc. for interior decorating and design including the purchase of furniture and leasehold improvements primarily for our Las Vegas, San Francisco and Chicago facilities during fiscal years 2017, 2016 and 2015, respectively. This entity is owned by Julie Hardridge, the sister-in-law of Christopher Pappas. The Company purchases products from ConAgra Foods, Inc. of which Steve Goldstone, a Director of the Company, is the Chairman. Mr. Goldstone became a director of the Company on March 7, 2016. The Company purchased approximately $701 and $722 worth of products from ConAgra Foods, Inc. for the fiscal years ended December 29, 2017 and December 30, 2016. With the acquisition of Del Monte, the Company leased two warehouse facilities that the Company leases from certain prior owners of Del Monte. Two of the owners were current employees as of December 29, 2017, one of whom, John DeBenedetti, serves on the Company’s board of directors. The first property is located in American Canyon, CA and is owned by TJ Management Co. LLC, an entity owned 50% by John DeBenedetti. The Company paid rent on this facility totaling $219, $210 and $156 during fiscal years 2017, 2016 and 2015, respectively. The second property is located in West Sacramento, CA and is owned by David DeBenedetti and Victoria DeBenedetti, the parents of John DeBenedetti. The Company paid rent on this facility totaling $234, $225 and $167 during fiscal years 2017, 2016 and 2015, respectively. John DeBenedetti and Victoria DeBenedetti were employees of a subsidiary of the Company as of December 29, 2017. John DeBenedetti, indirectly through TJ Investments, LLC, owns an 8.33% ownership interest in Old World Provisions, which supplies products to the Company following the Del Monte acquisition. The Company purchased approximately $1,713, $1,269 and $963 of products from Old World Provisions during fiscal years 2017, 2016 and 2015, respectively. Mr. J. DeBenedetti is not involved in the day-to-day management of Old World Provisions. John Pappas’s brother-in-law, Constantine Papataros, is one of the Company’s employees. The Company paid him approximately $188, $194 and $169 in total compensation during fiscal 2017, fiscal 2016 and fiscal 2015, respectively. Christopher Pappas’s brother, John Pappas, is one of the Company’s employees and a member of the Company’s Board of Directors. The Company paid John Pappas approximately $593, $597 and $882 in total compensation for fiscal 2017, fiscal 2016 and fiscal 2015, respectively. John Pappas did not receive any compensation in fiscal 2017, fiscal 2016 or fiscal 2015 for his service on the Company’s Board of Directors. Tara Brennan, the domestic partner of John DeBennedetti, was an employee of the Company as of December 29, 2017 and was paid approximately $180 and $184 in fiscal 2017 and 2016, respectively. An entity owned 50% by John Couri, a director of the Company, and of which Messrs. C. Pappas and S. Hanson (also directors of the Company) previously held ownership interests, owns an interest in an aircraft that the Company used for business purposes in the course of its operations. Mr. Couri paid for his ownership interest in the aircraft himself and bears his share of all operating, personnel and maintenance costs associated with the operation of this aircraft. All payments were paid directly to an entity that manages the aircraft in which Mr. Couri has a de minimis indirect ownership interest. This related party relationship ended during the fourth quarter of fiscal 2016. The Company made payments of $36 in fiscal 2017 for use of such aircraft in the fourth quarter of fiscal 2016. The Company made payments of $21 and $182 in fiscal 2016 and 2015, respectively, for use of such aircraft. |
Commitments and Contingencies |
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Dec. 29, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Contingencies The Company is involved in various legal proceedings. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where the Company believes an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. The Company does not believe that there is a reasonable possibility of material loss or loss in excess of the amount that the Company has accrued. The Company recognizes legal fees related to any ongoing legal proceeding as incurred. Tax Audits The Company is involved in various tax matters, with respect to some of which the outcome is uncertain. These audits may result in the assessment of additional taxes that are subsequently resolved with authorities or potentially through the courts. Risk Management Programs The Company’s self-insurance reserves for its medical program totaled $858 and $773 at December 29, 2017 and December 30, 2016, respectively. The Company’s self-insurance reserves for its automobile liability program totaled $1,078 and $1,068 at December 29, 2017 and December 30, 2016, respectively. Self-insurance reserves for workers' compensation totaled $9,594 and $7,280 at December 29, 2017 and December 30, 2016, respectively. Workforce (unaudited) As of December 29, 2017, approximately 9.9% of the Company’s employees are represented by unions, all of whom are operating under a collective bargaining agreement which expires on August 3, 2020. |
Valuation Reserves |
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Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation Reserves | Valuation Reserves The following tables summarize the activity in our valuation accounts during the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015:
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Quarterly Results (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (unaudited) | Quarterly Results (unaudited) The quarterly results of the Company for the fiscal years ended December 29, 2017 and December 30, 2016 are as follows:
(1)Beginning in the third quarter of 2017 the Company began to reflect the results of the Fells Point acquisition. (2)The fourth quarter of 2017 includes a tax benefit of $3,573 related to the enactment of the Tax Act.
(4)Beginning in the third quarter of 2016 the Company began to reflect the results of the MT Food acquisition. (5)The Company recorded income of $8,347 related to the revaluation of the Del Monte earn-out liabilities. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Consolidation | Consolidation The consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
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Guidance Adopted and Not Yet Adopted | Guidance Adopted in 2017 Subsequent Measurement of Inventory: In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the subsequent measurement of inventory. This guidance requires that inventory be measured at the lower of cost or net realizable value. The Company adopted this guidance prospectively. Adoption of this guidance did not impact the Company's consolidated financial statements. Improvements to Employee Share-Based Payment Accounting: In March 2016, the FASB issued guidance to simplify the accounting for employee share-based payments. The main provisions are to recognize excess tax benefits in the income statement rather than to additional paid-in capital, allow an entity to account for forfeitures as they occur, allow an entity to withhold employee shares up to the individual's maximum statutory tax rate without triggering liability classification of the award, present excess tax benefits as an operating cash flow and to present cash payments for employee tax withholding on vested stock awards as a financing cash flow. The guidance also requires that any unrecognized tax benefits that were not previously recognized be recorded through a cumulative-effect adjustment to retained earnings in the period in which the guidance is adopted. Upon adoption, the Company made an accounting policy election to account for forfeitures as they occur and began recognizing any excess tax benefits through current year earnings. There were no previously unrecognized tax benefits that required a cumulative-effect adjustment to retained earnings. Adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Restricted Cash: In November 2016, the FASB issued guidance which includes guidance to clarify how companies present and classify restricted cash or restricted cash equivalents in the statement of cash flows. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Adoption of this guidance did not impact the consolidated financial statements as the Company does not have restricted cash. Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued guidance which simplifies goodwill impairment testing by removing Step 2 from the goodwill impairment test which required companies to assign the fair value of a reporting unit to its underlying assets and liabilities. Instead, an entity should recognize an impairment charge for the amount by which the carry amount of a reporting unit exceeds its fair value. Adoption of this guidance did not impact the Company's consolidated financial statements. Scope of Modification Accounting: In May 2017, the FASB issued guidance which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. Adoption of this guidance did not impact the consolidated financial statements as the Company did not have any share-based payment award modifications. Guidance Not Yet Adopted Revenue from Contracts with Customers: In May 2014, the FASB issued guidance to clarify the principles for recognizing revenue. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On August 12, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption is permitted but not before the original effective date (annual periods beginning after December 15, 2016). The Company has completed its analysis on the impact this guidance has on its customer contracts, sales incentive programs, gift card programs, information systems, business processes, and financial statement disclosures. The new revenue recognition model provides guidance on the identification of multiple performance obligations embedded within customer contracts. The Company's customer contracts include performance obligations which are satisfied as each product is delivered to the customer. Thus revenues will be recognized at a point in time. Under the new standard such performance obligations are satisfied at the point at which the Company transfers control to the customer. This is consistent with the Company's current practice of recognizing revenue upon delivery to the customer, with the exception of the Company's current practice of recognizing revenue at shipping point on direct-to-consumer sales. The impact of the change in revenue recognition timing of its direct-to-consumer sales is immaterial. The new standard includes the concept of variable consideration and requires companies to include variable consideration in the transaction price to the extent it is probable that there will not be a significant reversal in the amount of cumulative revenue recognized when the uncertainty is resolved. Although the Company's sales incentive programs fall under the scope of this new guidance, it will not have a significant impact on the amount or timing of revenue recognition. The new standard addresses current diversity in practice in regards to the derecognition of unredeemed gift card liabilities that are not subject to unclaimed property laws. The new guidance requires companies to recognize revenue on such liabilities through breakage or when the likelihood of customer redemption becomes remote. This is consistent with the Company's existing method of recognizing breakage revenue on these liabilities. The Company expects to adopt this guidance when effective using the modified retrospective approach. Under this approach, prior financial statements would not be restated and a cumulative effect adjustment, if any, will be recorded as an adjustment to retained earnings. The cumulative effect adjustment is immaterial to our financial statements. Adoption will result in expanded disclosures on revenue recognition policies, disaggregated revenues and contract liabilities. Leases: In February 2016, the FASB issued guidance to increase the transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Current GAAP does not require lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This new guidance is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company expects to adopt this guidance when effective and is in the early stages of implementation. Adoption will have a material impact on the Company's consolidated financial statements, primarily to the consolidated balance sheets and related disclosures, as a result of recognizing right-of-use assets and lease liabilities arising from its operating leases. Clarifying the Definition of a Business: In January 2017, the FASB issued guidance which clarifies whether transactions should be accounted for as acquisitions of assets or businesses. The guidance requires an entity to determine if substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the new guidance would define this as an asset acquisition. Furthermore, the guidance requires a business to include, at a minimum, an input and substantive process that together significantly contribute to the ability to create outputs. The guidance is effective for fiscal years beginning after December 15, 2017. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on its financial statements. |
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Use of estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles requires it to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Estimates are used in determining, among other items, the allowance for doubtful accounts, reserves for inventories, self-insurance reserves for group medical insurance, workers’ compensation insurance and automobile liability insurance, future cash flows associated with impairment testing for intangible assets (including goodwill) and long-lived assets, useful lives for intangible assets, stock-based compensation, contingent earn-out liabilities and tax reserves. Actual results could differ from estimates. |
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Revenue recognition | Revenue Recognition Revenue from the sale of a product is recognized at the point at which the product is delivered to the customer. The Company grants certain customers sales incentives, such as rebates or discounts and treats these as a reduction of sales at the time the sale is recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized. |
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Cost of sales | Cost of Sales The Company records cost of sales based upon the net purchase price paid for a product, including applicable freight charges incurred to deliver the product to the Company’s warehouse. |
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Operating expenses | Operating Expenses Operating expenses include the costs of facilities, product shipping and handling costs, warehousing costs, protein processing costs, selling and general administrative activities. Shipping and handling costs included in operating expenses were $70,108, $62,062 and $54,172 for fiscal 2017, 2016 and 2015, respectively. Protein processing costs included in operating expenses were $18,660, $17,320 and $14,626 for fiscal 2017, 2016 and 2015, respectively. |
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Cash and cash equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of less than three months to be cash equivalents. The Company periodically maintains balances at financial institutions which may exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. |
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Accounts receivable | Accounts Receivable Accounts receivable consist of trade receivables from customers and are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is determined based upon a number of specific criteria, such as whether a customer has filed for or been placed into bankruptcy, has had accounts referred to outside parties for collections or has had accounts significantly past due. The allowance also covers short paid invoices the Company deems to be uncollectable as well as a portion of trade accounts receivable balances projected to become uncollectable based upon historic patterns. |
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Inventories | Inventories Inventories consist primarily of finished goods, food and related food products held for resale and are valued at the lower of cost or market. Our different entities record inventory using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. The Company maintains reserves for slow-moving and obsolete inventories. |
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Purchase incentives | Purchase Incentives The Company receives consideration and product purchase credits from certain vendors that the Company accounts for as a reduction of cost of sales. There are several types of cash consideration received from vendors. The purchase incentive is primarily in the form of a specified amount per pound or per case, or an amount for year-over-year growth. |
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Concentrations of credit risks | Concentrations of Credit Risks Financial instruments that subject the Company to concentrations of credit risk consist of cash, temporary cash investments and trade receivables. The Company’s policy is to deposit its cash and temporary cash investments with major financial institutions. The Company distributes its food and related products to a customer base that consists primarily of leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. To reduce credit risk, the Company performs ongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral. However, the Company, in certain instances, has obtained personal guarantees from certain customers. There is no significant balance with any individual customer. |
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Equipment and leasehold improvements | Equipment and Leasehold Improvements The Company records equipment and leasehold improvements at cost. Equipment that has been financed through capital leases is recorded at the present value of the minimum lease payments, which approximates cost. Equipment and leasehold improvements, including capital lease assets, are depreciated on a straight-line basis based upon estimated useful lif |
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Software costs | Software Costs The Company capitalizes certain computer software licenses and software implementation costs that are included in software costs in its consolidated balance sheets. These costs were incurred in connection with developing or obtaining computer software for internal use if it has a useful life in excess of one year, in accordance with Accounting Standards Codification (ASC) 350-40 “Internal-Use Software.” Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task that it previously did not perform. Internal use software is amortized on a straight-line basis over a three to seven year period. Capitalized costs include direct acquisitions as well as software and software development acquired under capitalized leases and internal labor where appropriate. |
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Impairment of long-lived assets | Impairment of Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment in accordance with ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets” which only requires testing whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If any indicators are present, a recoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If the net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), an additional step is performed that determines the fair value of the asset and the Company records an impairment, if any. |
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Debt issuance costs | Debt Issuance Costs Certain up-front costs associated with the Company's revolving credit facilities are capitalized and included in other non-current assets in the consolidated balance sheets. The Company had $1,284 and $1,632 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. Costs associated with the issuance of other debt instruments are capitalized and presented as a direct deduction from the carrying amount of the underlying debt liability. The Company had $8,027 and $8,979 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. These costs are amortized over the terms of the related debt instruments by the effective interest rate method. |
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Intangible assets | Intangible Assets The intangible assets recorded by the Company consist of customer relationships, covenants not to compete and trademarks which are amortized over their useful lives on a schedule that approximates the pattern in which economic benefits of the intangible assets are consumed. Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If any indicators are present, a recoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. Undiscounted cash flows expected to be generated by the related assets are estimated over the assets’ useful lives based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow model. |
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Goodwill | The Company’s use of a discounted cash flow methodology includes estimates of future revenue based upon budget projections and growth rates which take into account estimated inflation rates. The Company also develops estimates for future levels of gross and operating profits and projected capital expenditures. This methodology also includes the use of estimated discount rates based upon industry and competitor analysis as well as other factors. The estimates that the Company uses in its discounted cash flow methodology involve many assumptions by management that are based upon future growth projections. Goodwill Goodwill is the excess of the acquisition cost of businesses over the fair value of identifiable net assets acquired in accordance with ASC 350, “Intangibles-Goodwill and Other.” The Company has two reporting units – Protein and Specialty. For the fiscal years ended December 29, 2017 and December 30, 2016, the Company tested goodwill for impairment using a quantitative analysis. The quantitative analysis consists of a comparison of the carrying value of the Company’s reporting units, including goodwill, to the estimated fair value of the reporting units that was determined using a discounted cash flow methodology. A goodwill impairment loss, if any, would be recognized for the amount by which the reporting unit's carrying value exceeded its fair value. |
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Employee benefit programs | Employee Benefit Programs The Company sponsors a defined contribution plan covering substantially all full-time employees (the “401(k) Plan”). |
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Income taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” Deferred tax assets or liabilities are recorded to reflect the future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts are adjusted, as appropriate, to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse. The Company follows certain provisions of ASC 740, “Income Taxes” which established a single model to address accounting for uncertain tax positions and clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the tax authorities. The Company records uncertain tax positions when it is estimable and probable that such liabilities have been incurred. The Company, when required, will accrue interest and penalties related to income tax matters in income tax expense. On December 22, 2017, the President enacted H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”). Among other changes to the U.S. Internal Revenue Code, the Tax Act reduces the U.S. federal corporate top tax rate from 35 percent to 21 percent. The Company must remeasure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. The effect of the remeasurement is reflected entirely in the interim period that includes the enactment date and is allocated directly to income tax expense from continuing operations. |
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Commitments and contingencies | Commitments and Contingencies The Company is subject to various claims and contingencies related to lawsuits, taxes and environmental matters, as well as commitments under contractual and other commercial obligations. The Company recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonably estimated. |
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Contingent earn-out liabilities | Contingent Earn-out Liabilities The Company accounts for contingent consideration relating to business combinations as a liability and an increase to goodwill at the date of the acquisition and continually remeasures the liability at each balance sheet date by recording changes in the fair value through the Consolidated Statements of Operations. The Company determines the fair value of contingent consideration based on future operating projections under various potential scenarios and weighs the probability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to business combinations may be for amounts which are materially different from the amounts initially recorded and may cause volatility in the Company’s results of operations. |
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Stock-based compensation | Stock-Based Compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. Restricted stock awards and performance share units are valued based on the fair value of the stock on the grant date. The related compensation expense is recognized over the service period on a straight-line basis. Compensation expense on performance share units reflects the estimated probable outcome at the end of the performance period. The fair value of stock options with market conditions is determined based on a Monte-Carlo simulation in order to simulate a range of possible future stock prices for the Company's s stock. For awards subject to graded vesting, the Company ensures that the compensation expense recognized is at least equal to the vested portion of the award. |
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Self-insurance reserves | Self-Insurance Reserves The Company maintains a self-insured group medical program. The program contains individual stop loss thresholds of $175 per incident and aggregate stop loss thresholds based upon the average number of employees enrolled in the program throughout the year. The amount in excess of the self-insured levels is fully insured by third party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and medical cost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. The Company maintains an insurance program for its automobile liability and workers' compensation insurance subject to deductibles or self-insured retentions of $350 for workers' compensation and $250 for automobile liability per occurrence. The amounts in excess of the deductibles are fully insured by third party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and cost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. |
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Assets and liabilities measured at fair value | Assets and Liabilities Measured at Fair Value The Company accounts for certain assets and liabilities at fair value. The Company categorizes each of its fair value measurements in one of the following three levels based on the lowest level input that is significant to the fair value measurement in its entirety: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities include the following:
If the asset has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset. Level 3 - Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure. |
Net Income per Share (Tables) |
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Dec. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following table sets forth the computation of basic and diluted earnings per share:
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Schedule of reconciliation of earnings per share | Reconciliation of net income per common share:
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Schedule of dilutive securities that have been excluded from the calculation of diluted net income | Potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive are as follows:
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Fair Value Measurements (Tables) |
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Dec. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in Level 3 contingent consideration liability | The following table presents the changes in Level 3 contingent earn-out liabilities:
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Schedule of carrying value and fair value of the Company's convertible subordinated notes | The following tables presents the carrying value and fair value of the Company’s convertible subordinated notes (more fully described in Note 9). In estimating the fair value of these convertible secured notes, the Company utilized Level 3 inputs including, prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk free interest rate in calculating the fair value estimate.
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Acquisitions (Tables) |
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Dec. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of unaudited pro forma consolidated income statement information | The table below presents unaudited pro forma consolidated income statement information of the Company for the year ended December 29, 2017 and December 30, 2016 as if Fells Point acquisition had occurred at December 26, 2015. The pro forma results were prepared from financial information obtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisition. The pro forma information is not necessarily indicative of the Company’s results of operations had the Fells Point acquisition been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the Fells Point acquisition, any incremental costs for Fells Point transitioning to become a public company, and also does not reflect additional revenue opportunities following the acquisition. The pro forma information reflects amortization and depreciation of the Fells Point acquisition at their respective fair values based on available information and the estimated change in the fair value of the earn-out liability due to accretion.
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Schedule of assets and liabilities acquired | The table below sets forth the purchase price allocation of the Fells Point and MT Food acquisitions:
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Equipment and Leasehold Improvements (Tables) |
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Dec. 29, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of plant, equipment and leasehold improvements | Equipment and leasehold improvements as of December 29, 2017 and December 30, 2016 consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The changes in the carrying amount of goodwill are presented as follows:
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Schedule of other intangible assets | Other intangible assets as of December 29, 2017 and December 30, 2016 consisted of the following:
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Schedule of estimated future amortization expense | As of December 29, 2017, estimated amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows:
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Debt Obligations (Tables) |
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Dec. 29, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt obligations | Debt obligations as of December 29, 2017 and December 30, 2016 consisted of the following:
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Schedule of maturities of the company's debt | Maturities of the Company’s debt for each of the next five years and thereafter at December 29, 2017 is as follows:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock activity | The following table reflects the activity of RSAs during the fiscal years ended December 29, 2017 and December 30, 2016:
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Summary of stock option activity | The following table summarizes stock option activity during the fiscal years ended December 29, 2017 and December 30, 2016:
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Key assumptions for weighted average grant date fair value of options | During March 2016, the Company granted 259,577 non-qualified stock options with market condition provisions to its employees at an exercise price of $20.23 and a weighted average grant date fair value of $9.44 using the following key assumptions:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease payments | As of December 29, 2017, the Company is obligated under non-cancelable operating lease agreements to make future minimum lease payments as follows:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of provision for income taxes | The provision for income taxes consists of the following for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015:
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Schedule of income tax reconciliation | December 29, 2017, December 30, 2016 and December 25, 2015 differed from amounts computed using the statutory federal income tax rate due to the following reasons:
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Schedule of deferred tax assets and liabilities | Deferred tax assets and liabilities at December 29, 2017 and December 30, 2016 consist of the following:
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Supplemental Disclosures of Cash Flow Information (Tables) |
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Dec. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental disclosures of cash flow information |
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Valuation Reserves (Tables) |
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Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance for doubtful accounts |
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Schedule of inventory valuation reserve |
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Schedule of allowance for deferred tax assets |
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Quarterly Results (unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly results | The quarterly results of the Company for the fiscal years ended December 29, 2017 and December 30, 2016 are as follows:
(1)Beginning in the third quarter of 2017 the Company began to reflect the results of the Fells Point acquisition. (2)The fourth quarter of 2017 includes a tax benefit of $3,573 related to the enactment of the Tax Act.
(4)Beginning in the third quarter of 2016 the Company began to reflect the results of the MT Food acquisition. (5)The Company recorded income of $8,347 related to the revaluation of the Del Monte earn-out liabilities. |
Operations and Basis of Presentation (Details) |
12 Months Ended |
---|---|
Dec. 29, 2017
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 1 |
Net Income per Share Schedule of earnings per share (Details) - $ / shares |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 30, 2016 |
Sep. 23, 2016 |
Jun. 24, 2016 |
Mar. 25, 2016 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Net income per share: | |||||||||||
Basic (in dollars per share) | $ 0.36 | $ 0.11 | $ 0.14 | $ (0.06) | $ 0.35 | $ 0.05 | $ (0.33) | $ 0.04 | $ 0.55 | $ 0.12 | $ 0.63 |
Diluted (in dollars per share) | $ 0.35 | $ 0.11 | $ 0.14 | $ (0.06) | $ 0.34 | $ 0.05 | $ (0.33) | $ 0.04 | $ 0.54 | $ 0.12 | $ 0.63 |
Weighted average common shares: | |||||||||||
Weighted average basic common shares outstanding (in shares) | 26,118,482 | 25,919,480 | 25,532,172 | ||||||||
Weighted average diluted common shares outstanding (in shares) | 27,424,526 | 26,029,609 | 26,508,994 |
Net Income per Share Schedule of reconciliation of earnings per share (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 30, 2016 |
Sep. 23, 2016 |
Jun. 24, 2016 |
Mar. 25, 2016 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Net Income (Loss) Available to Common Stockholders, Basic [Abstract] | |||||||||||
Net income | $ 9,483 | $ 2,851 | $ 3,674 | $ (1,642) | $ 9,142 | $ 1,343 | $ (8,455) | $ 993 | $ 14,366 | $ 3,023 | $ 16,209 |
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract] | |||||||||||
Interest on convertible notes, net of tax | 536 | 0 | 403 | ||||||||
Adjusted net income | $ 14,902 | $ 3,023 | $ 16,612 | ||||||||
Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract] | |||||||||||
Weighted average basic common shares outstanding (in shares) | 26,118,482 | 25,919,480 | 25,532,172 | ||||||||
Dilutive effect of unvested common shares (in shares) | 68,670 | 110,129 | 79,385 | ||||||||
Dilutive effect of convertible notes (in shares) | 1,237,374 | 0 | 897,437 | ||||||||
Weighted average diluted common shares outstanding (in shares) | 27,424,526 | 26,029,609 | 26,508,994 |
Net Income per Share Schedule of dilutive securities that have been excluded from the calculation of diluted net income (Details Narrative) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
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Restricted Share Awards (RSAs) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares | 84,511 | 92,812 | 34,526 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares | 201,799 | 209,071 | 0 |
Convertible subordinated notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive shares | 0 | 1,237,374 | 0 |
Fair Value Measurements Schedule of carrying value and fair value of the Company convertible subordinated notes (Details) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 317,822 | $ 332,520 |
Fair Value Inputs Level 3 | Reported Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible secured notes | 38,091 | 35,557 |
Convertible notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 36,750 | $ 36,750 |
Acquisitions Schedule of unaudited pro forma consolidated income statement information (Details) - Fells Point - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Business Acquisition [Line Items] | ||
Net sales | $ 1,340,820 | $ 1,252,293 |
Income before income taxes | $ 20,130 | $ 9,492 |
Inventories (Details Narrative) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Reserves for shrinkage and obsolescence | $ 1,934 | $ 2,122 |
Equipment and Leasehold Improvements (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Sep. 26, 2016 |
Jun. 30, 2015 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense, various assets | $ 8,516 | $ 7,082 | $ 5,960 | ||
Depreciation expense, excluding capital leases | 6,644 | 5,679 | 4,536 | ||
Interest expense | 22,709 | 41,632 | 12,984 | ||
Capitalized interest expense | 0 | 0 | 739 | ||
Cash consideration for parcel of land sold | $ 550 | 0 | 550 | 16,187 | |
Pre-tax gain on sale of parcel of land | $ 113 | ||||
Sale-leaseback transaction | $ 14,645 | ||||
Construction-in-process | |||||
Property, Plant and Equipment [Line Items] | |||||
ERP, expected cost remaining | 3,200 | ||||
Assets financed by capital leases | |||||
Property, Plant and Equipment [Line Items] | |||||
Assets financed by capital lease | 530 | 506 | |||
Depreciation expense, various assets | 64 | 71 | 96 | ||
Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense, various assets | $ 1,808 | $ 1,332 | $ 1,328 |
Goodwill and Other Intangible Assets Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 163,784 | $ 155,816 |
Goodwill adjustments | 3,418 | (614) |
Business combination | 5,946 | 8,559 |
Foreign currency translation | 54 | 23 |
Ending balance | $ 173,202 | $ 163,784 |
Goodwill and Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 12,033 | $ 11,433 | $ 9,453 |
Customer relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 4 years | ||
Customer relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 20 years | ||
Non-compete agreements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 2 years | ||
Non-compete agreements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 6 years | ||
Trademarks | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 1 year | ||
Trademarks | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 40 years |
Goodwill and Other Intangible Assets Future amortization (Details) $ in Thousands |
Dec. 29, 2017
USD ($)
|
---|---|
Estimated amortization in fiscal year: | |
2018 | $ 11,938 |
2019 | 11,300 |
2020 | 11,027 |
2021 | 11,027 |
2022 | 10,247 |
Thereafter | 84,781 |
Total | $ 140,320 |
Debt Obligations Schedule of debt obligations (Details) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Deferred finance fees and original issue discount | $ (8,027) | $ (8,979) |
Total debt obligations | 317,822 | 332,520 |
Less: current installments | (3,827) | (14,795) |
Total debt obligations excluding current installments | 313,995 | 317,725 |
Senior secured term loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | 288,435 | 291,613 |
Convertible notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 36,750 | 36,750 |
New Markets Tax Credit loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 11,000 |
Capital leases and financed software | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 664 | $ 2,136 |
Debt Obligations Schedule of maturities of the company's debt (Details) $ in Thousands |
Dec. 29, 2017
USD ($)
|
---|---|
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | |
2018 | $ 3,827 |
2019 | 3,184 |
2020 | 3,184 |
2021 | 39,934 |
2022 | 275,720 |
Thereafter | 0 |
Total | $ 325,849 |
Stockholders' Equity Schedule of restricted stock activity (Details) - Restricted Share Awards - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Number of Shares | ||
Unvested at beginning (in shares) | 334,053 | 418,604 |
Granted shares (in shares) | 207,871 | 214,274 |
Vested shares (in shares) | (116,442) | (108,400) |
Forfeited shares (in shares) | (95,721) | (190,425) |
Unvested at ending (in shares) | 329,761 | 334,053 |
Weighted Average Grant Date Fair Value | ||
Unvested at beginning (in dollars per share) | $ 18.69 | $ 18.54 |
Granted shares (in dollars per share) | 14.84 | 17.75 |
Vested shares (in dollars per share) | 18.36 | 18.00 |
Forfeited shares (in dollars per share) | 17.73 | 16.82 |
Unvested at ending (in dollars per share) | $ 16.69 | $ 18.69 |
Stockholders' Equity Summary of stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2016 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Shares | ||||
Outstanding (in shares) | 209,071 | 0 | ||
Granted (in shares) | 259,577 | 0 | 259,577 | |
Exercised (in shares) | 0 | 0 | ||
Forfeited (in shares) | (17,263) | (50,506) | ||
Outstanding (in shares) | 191,808 | 209,071 | ||
Exercisable (in shares) | 0 | |||
Weighted Average Exercise Price | ||||
Outstanding (in usd per share) | $ 20.23 | $ 0.00 | ||
Granted (in usd per share) | $ 20.23 | 0.00 | 20.23 | |
Exercised (in usd per share) | 0.00 | 0.00 | ||
Forfeited (in usd per share) | 20.23 | 20.23 | ||
Outstanding (in usd per share) | 20.23 | $ 20.23 | ||
Exercisable (in usd per share) | $ 0.00 | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 33 | $ 0 | $ 0 | |
Exercisable | $ 0 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Outstanding | 8 years 2 months 12 days | 9 years 2 months |
Stockholders' Equity Schedule of key assumptions for weighted average grant date fair value of options (Details) - Stock options |
12 Months Ended |
---|---|
Dec. 29, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility of common stock (based on our historical stock price) | 42.80% |
Risk-free interest rate | 1.91% |
Expected term (median years until the simulated stock price exceeds target) | 1 year 4 months 17 days |
Leases Schedule of future minimum lease payments (Details) $ in Thousands |
Dec. 29, 2017
USD ($)
|
---|---|
Property, Plant and Equipment [Line Items] | |
2018 | $ 20,831 |
2019 | 18,528 |
2020 | 16,851 |
2021 | 14,544 |
2022 | 12,444 |
Thereafter | 41,920 |
Total minimum lease payments | 125,118 |
Related Party Real Estate | Real Estate | |
Property, Plant and Equipment [Line Items] | |
2018 | 1,230 |
2019 | 1,250 |
2020 | 1,270 |
2021 | 1,290 |
2022 | 1,224 |
Thereafter | 2,153 |
Total minimum lease payments | 8,417 |
Third Party | Real Estate | |
Property, Plant and Equipment [Line Items] | |
2018 | 7,812 |
2019 | 6,885 |
2020 | 7,271 |
2021 | 6,834 |
2022 | 6,504 |
Thereafter | 36,822 |
Total minimum lease payments | 72,128 |
Third Party | Vehicles | |
Property, Plant and Equipment [Line Items] | |
2018 | 10,312 |
2019 | 9,283 |
2020 | 7,843 |
2021 | 6,169 |
2022 | 4,632 |
Thereafter | 2,945 |
Total minimum lease payments | 41,184 |
Third Party | Other | |
Property, Plant and Equipment [Line Items] | |
2018 | 1,477 |
2019 | 1,110 |
2020 | 467 |
2021 | 251 |
2022 | 84 |
Thereafter | 0 |
Total minimum lease payments | $ 3,389 |
Leases (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Leases [Abstract] | |||
Rent expense operating leases | $ 26,678 | $ 24,202 | $ 20,199 |
Income Taxes (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 29, 2017 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Operating Loss Carryforwards [Line Items] | ||||
Tax benefit related to enactment of the Tax Act | $ 3,573 | $ 3,573 | $ 0 | $ 0 |
Effective income tax rate | 22.00% | 41.40% | ||
Deferred tax assets, valuation allowance | 289 | $ 289 | $ 0 | |
Foreign income (loss) from continuing operations before income tax | (691) | $ (154) | $ (209) | |
Internal Revenue Service (IRS) | Qzina Specialty Foods North America Inc | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net loss carryforwards | $ 593 | $ 593 |
Income Taxes Schedule of provision of income taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Current income tax expense (benefit): | |||
Federal | $ 3,342 | $ (491) | $ 9,538 |
State | 1,403 | 153 | 2,773 |
Total current income tax expense (benefit) | 4,745 | (338) | 12,311 |
Deferred income tax expense (benefit): | |||
Federal | (1,059) | 2,441 | (725) |
Foreign | 215 | 49 | 19 |
State | 141 | 501 | (103) |
Total deferred income tax expense (benefit) | (703) | 2,991 | (809) |
Total income tax expense | $ 4,042 | $ 2,653 | $ 11,502 |
Income Taxes Schedule of income tax reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 29, 2017 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Statutory U.S. Federal tax | $ 6,443 | $ 1,987 | $ 9,700 | |
Differences due to: | ||||
State and local taxes, net of federal benefit | 1,112 | 470 | 1,728 | |
Foreign tax rate differential | (82) | (168) | (63) | |
Impact of the Tax Act | $ (3,573) | (3,573) | 0 | 0 |
Other | 142 | 364 | 137 | |
Total income tax expense | $ 4,042 | $ 2,653 | $ 11,502 |
Schedule of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Deferred tax assets: | ||
Receivables and inventory | $ 3,969 | $ 5,230 |
Accrued expenses | 1,542 | 2,122 |
Self-insurance reserves | 2,179 | 2,515 |
Net operating loss carryforwards | 1,191 | 2,498 |
Stock compensation | 1,017 | 1,122 |
Other | 1,696 | 1,213 |
Total deferred tax assets | 11,594 | 14,700 |
Deferred tax liabilities: | ||
Property & equipment | (1,701) | (1,759) |
Intangible assets | (10,784) | (12,962) |
Contingent earn-out liabilities | (3,646) | (5,020) |
Prepaid expenses and other | (1,189) | (1,917) |
Total deferred tax liabilities | (17,320) | (21,658) |
Valuation allowance | (289) | 0 |
Total net deferred tax liability | $ (6,015) | $ (6,958) |
Supplemental Disclosures of Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Cash paid for income taxes, net of cash received | $ 333 | $ 6,368 | $ 11,047 |
Cash paid for interest, net of loss on debt extinguishment | 20,796 | 17,790 | 11,462 |
Non-cash financing activity: | |||
Sinking fund, withdrawal | 2,939 | 0 | 0 |
Non-cash investing activity: | |||
Common stock issued for acquisitions | 3,300 | 0 | 24,689 |
Convertible notes issued for acquisitions | 0 | 0 | 36,750 |
Acquisition purchase price payable | 0 | 500 | 0 |
Contingent earn-out liabilities for acquisitions | $ 4,445 | $ 500 | $ 13,139 |
Employee Benefit Plans (Details Narrative) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Defined Contribution Plan [Abstract] | |||
Employers contribution to employees under 401k plan | 50.00% | ||
Maximum employees contribution under 401k plan | 6.00% | ||
Employers contribution, per associate | $ 2,500 | ||
Matching contribution under 401k plan begin vesting period | 2 years | ||
Matching contribution under 401k plan fully vested period | 6 years | ||
Matching contribution under 401k plan | $ 1,172,000 | $ 1,049,000 | $ 858,000 |
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|
Other Commitments [Line Items] | ||
Self insurance reserve | $ 858 | $ 773 |
Percentage of employees represented by unions | 9.90% | |
Automobiles | ||
Other Commitments [Line Items] | ||
Self insurance reserve | $ 1,078 | 1,068 |
Workers Compensation | ||
Other Commitments [Line Items] | ||
Self insurance reserve | $ 9,594 | $ 7,280 |
Valuation Reserves (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Allowance for doubtful accounts | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 6,848 | $ 5,803 | $ 4,675 |
Additions Charged to Expense | 4,061 | 3,224 | 2,909 |
Deductions | (2,883) | (2,179) | (1,781) |
Balance at End of Period | 8,026 | 6,848 | 5,803 |
Inventory valuation reserve | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 2,122 | 1,956 | 1,130 |
Additions Charged to Expense | 2,996 | 3,043 | 3,288 |
Deductions | (3,184) | (2,877) | (2,462) |
Balance at End of Period | 1,934 | 2,122 | 1,956 |
Allowance for deferred tax assets | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 0 | 0 | 0 |
Additions Charged to Expense | 289 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance at End of Period | $ 289 | $ 0 | $ 0 |
Quarterly Results (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 30, 2016 |
Sep. 23, 2016 |
Jun. 24, 2016 |
Mar. 25, 2016 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 25, 2015 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 357,098 | $ 325,076 | $ 331,656 | $ 287,690 | $ 342,904 | $ 297,917 | $ 291,209 | $ 260,836 | |||
Gross profit | 91,973 | 80,905 | 82,596 | 73,904 | 89,064 | 74,392 | 71,803 | 65,958 | $ 329,378 | $ 301,217 | $ 268,711 |
Operating profit | 15,349 | 10,494 | 12,163 | 3,121 | 22,404 | 8,286 | 11,188 | 5,360 | 41,127 | 47,239 | 40,400 |
Income before income taxes | 10,046 | 4,891 | 6,283 | (2,812) | 16,155 | 2,299 | (14,479) | 1,701 | 18,408 | 5,676 | 27,711 |
Net income | $ 9,483 | $ 2,851 | $ 3,674 | $ (1,642) | $ 9,142 | $ 1,343 | $ (8,455) | $ 993 | $ 14,366 | $ 3,023 | $ 16,209 |
Basic net income per share (in dollars per share) | $ 0.36 | $ 0.11 | $ 0.14 | $ (0.06) | $ 0.35 | $ 0.05 | $ (0.33) | $ 0.04 | $ 0.55 | $ 0.12 | $ 0.63 |
Diluted net income per share (in dollars per share) | $ 0.35 | $ 0.11 | $ 0.14 | $ (0.06) | $ 0.34 | $ 0.05 | $ (0.33) | $ 0.04 | $ 0.54 | $ 0.12 | $ 0.63 |
Business Acquisition [Line Items] | |||||||||||
Tax benefit related to enactment of the Tax Act | $ 3,573 | $ 3,573 | $ 0 | $ 0 | |||||||
Loss on debt extinguishment | $ 22,310 | $ 0 | $ 22,310 | $ 0 | |||||||
Del Monte | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Increase (decrease) in contingent consideration | $ (8,347) |
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