<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the year ended December 31, 1998
[ ] OR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 33-81011
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below.
U.S. Foodservice 401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
U.S. Foodservice
9755 Patuxent Woods Drive
Columbia, Maryland 21046
<PAGE>
EXHIBITS
Description of Exhibit
----------------------
1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
Filed herewith.
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
U.S. Foodservice
401(k) Retirement Savings Plan
By: JP Foodservice Distributors, Inc.
Plan Administrator
Dated: June 29, 1999 By: /s/ George T. Megas
---------------------------------------
George T. Megas
Senior Vice President and Chief
Financial Officer
2
<PAGE>
U.S. Foodservice
401(k) Retirement Savings Plan
Financial Statements and
Supplemental Schedules
December 31, 1998 and 1997
Index
Page
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits, with Fund
Information 2-3
Financial Statements:
Statement of Changes in Net Assets Available for Benefits, with
Fund Information 4-5
Notes to Financial Statements 6-11
Supplemental Schedules:
Schedule I - Schedule of Assets Held for Investment Purposes 12
Schedule II - Schedule of Reportable Transactions 13-14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the U.S. Foodservice 401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the U.S. Foodservice 401(k) Retirement Savings Plan (formerly JP Foodservice,
Inc. 401(k) Retirement Savings Plan) at December 31, 1998 and 1997, and the
changes in net assets available for benefits for the years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. These supplemental
schedules and Fund Information are the responsibility of the Plan's management.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
As discussed in Note 1, effective January 1, 1998, various plans affiliated with
the Company were merged into the Plan.
/s/ PricewaterhouseCoopers LLP
June 11, 1999
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998
Fund Information
----------------
Fidelity Fidelity
Charter Fidelity Advisor Advisor INVESCO
Guaranteed Advisor Growth Equity Industrial
Long-Term Balanced Opportunities Growth Income
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account $ 13,700,270
CIGNA Fidelity Advisor Balanced Fund $ 2,735,216
CIGNA Fidelity Advisor Growth Opportunities
Fund $ 12,453,371
CIGNA Fidelity Advisor Equity Growth Fund $ 11,206,515
CIGNA INVESCO Industrial Income Fund $ 7,775,836
CIGNA Founders Balanced Fund
CIGNA Warburg Pincus Advisor International
Equity Fund
U.S. Foodservice Common Stock
Participant notes receivable
Employer contributions receivable
Cash equivalents 3,824
------------ ------------ ------------ ------------ -----------
Net assets available for benefits $ 13,704,094 $ 2,735,216 $ 12,453,371 $ 11,206,515 $ 7,775,836
============ ============ ============ ============ ===========
<CAPTION>
Warburg
Pincus
Advisor U.S.
Founders International Foodservice Participant
Balanced Equity Common Notes
Fund Fund Stock Receivable Total
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account $ 13,700,270
CIGNA Fidelity Advisor Balanced Fund 2,735,216
CIGNA Fidelity Advisor Growth Opportunities
Fund 12,453,371
CIGNA Fidelity Advisor Equity Growth Fund 11,206,515
CIGNA INVESCO Industrial Income Fund 7,775,836
CIGNA Founders Balanced Fund $ 2,541,211 2,541,211
CIGNA Warburg Pincus Advisor International
Equity Fund $ 2,687,122 2,687,122
U.S. Foodservice Common Stock $ 16,782,642 16,782,642
Participant notes receivable $ 2,063,471 2,063,471
Employer contributions receivable 3,147,459 3,147,459
Cash equivalents 3,824
----------- ----------- ------------ ----------- ------------
Net assets available for benefits $ 2,541,211 $ 2,687,122 $ 19,930,101 $ 2,063,471 $ 75,096,937
=========== =========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
Fund Information
----------------
Fidelity Fidelity
Charter Fidelity Advisor Advisor INVESCO
Guaranteed Advisor Growth Equity Industrial
Long-Term Balanced Opportunities Growth Income
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account $9,552,751
CIGNA Fidelity Advisor Balanced Fund $1,563,963
CIGNA Fidelity Advisor Growth Opportunities Fund $6,685,791
CIGNA Fidelity Advisor Equity Growth Fund $5,117,687
CIGNA INVESCO Industrial Income Fund $5,866,946
CIGNA Founders Balanced Fund
CIGNA Warburg Pincus Advisor International
Equity Fund
JP Foodservice Common Stock
Participant notes receivable
Employer contributions receivable
---------- ---------- ---------- ---------- ----------
Net assets available for benefits $9,552,751 $1,563,963 $6,685,791 $5,117,687 $5,866,946
========== ========== ========== ========== ==========
<CAPTION>
Warburg
Pincus
Advisor JP
Founders International Foodservice Participant
Balanced Equity Common Notes
Fund Fund Stock Receivable Total
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
CIGNA Charter Guaranteed Long-Term Account $ 9,552,751
CIGNA Fidelity Advisor Balanced Fund 1,563,963
CIGNA Fidelity Advisor Growth Opportunities Fund 6,685,791
CIGNA Fidelity Advisor Equity Growth Fund 5,117,687
CIGNA INVESCO Industrial Income Fund 5,866,946
CIGNA Founders Balanced Fund $ 664,721 664,721
CIGNA Warburg Pincus Advisor International
Equity Fund $1,400,548 1,400,548
JP Foodservice Common Stock $11,538,638 11,538,638
Participant notes receivable $209,240 209,240
Employer contributions receivable 1,957,774 1,957,774
---------- ---------- ----------- -------- -----------
Net assets available for benefits $ 664,721 $1,400,548 $13,496,412 $209,240 $44,558,059
========== ========== =========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Fund Information
----------------
Charter Fidelity Fidelity Fidelity INVESCO Founders Warburg
Guaranteed Advisor Advisor Advisor Industrial Balanced Pincus
Long-Term Balanced Growth Equity Income Fund Advisor
Fund Fund Opportunities Growth Fund International
Fund Fund Equity
Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Interest $ 813,345
Net appreciation (depreciation) in
fair value of investments $ 315,368 $ 2,327,001 $ 3,036,761 $ 961,638 $ 299,799 $ 79,311
----------- ---------- ------------ ----------- ---------- ---------- -----------
813,345 315,368 2,327,001 3,036,761 961,638 299,799 79,311
----------- ---------- ------------ ----------- ---------- ---------- -----------
Contributions
Employer 96,742 4,161 86,860 84,250 9,143 47,179 50,860
Employee 1,628,682 489,618 1,646,587 1,392,840 893,752 462,471 520,205
----------- ---------- ------------ ----------- ---------- ---------- -----------
1,725,424 493,779 1,733,447 1,477,090 902,895 509,650 571,065
----------- ---------- ------------ ----------- ---------- ---------- -----------
Total additions 2,538,769 809,147 4,060,448 4,513,851 1,864,533 809,449 650,376
Deductions from net assets
attributed to:
Benefit payments 3,292,080 146,556 564,153 589,586 608,344 121,318 206,481
Transaction charge 36,914 1,218 11,963 3,890 3,224 1,505 1,909
Participant notes
receivable terminated
due to withdrawal of
participant
----------- ---------- ------------ ----------- ---------- ---------- -----------
Total deductions 3,328,994 147,774 576,116 593,476 611,568 122,823 208,390
Change in forfeiture reserve, net (49,625) (150) (3,576) (3,915) 1,390 (210) (118)
----------- ---------- ------------ ----------- ---------- ---------- -----------
Net (decrease) increase prior to
interfund transfers and plan mergers (839,850) 661,223 3,480,756 3,916,460 1,254,355 686,416 441,868
Interfund transfers, net (413,496) 285,000 (222,402) 97,469 (392,837) (122,863) (162,689)
Transfer of assets due to plan mergers 5,404,689 225,030 2,509,226 2,074,899 1,047,372 1,312,937 1,007,395
----------- ---------- ------------ ----------- ---------- ---------- -----------
Net increase (decrease) 4,151,343 1,171,253 5,767,580 6,088,828 1,908,890 1,876,490 1,286,574
Net assets available for
benefits at beginning of year 9,552,751 1,563,963 6,685,791 5,117,687 5,866,946 664,721 1,400,548
----------- ---------- ------------ ----------- ---------- ---------- -----------
Net assets available for
benefits at
end of year $13,704,094 $2,735,216 $ 12,453,371 $11,206,515 $7,775,836 $2,541,211 $ 2,687,122
----------- ---------- ------------ ----------- ---------- ---------- -----------
<CAPTION>
- -------------------------------------------------------------------------------
JP U.S. Participant Total
Foodservice Foodservice Notes
Common Common Receivable
Stock Stock
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest $ 103,573 $ 916,918
Net appreciation
(depreciation) in
fair value of investments $(1,741,872) $ 5,782,968 11,060,974
----------- ----------- ----------- -----------
(1,741,872) 5,782,968 103,573 11,977,892
----------- ----------- ----------- -----------
Contributions
Employer 1,063 3,149,362 3,529,620
Employee 346,576 426,811 7,807,542
----------- ----------- ----------- -----------
347,639 3,576,173 11,337,162
----------- ----------- ----------- -----------
Total additions (1,394,233) 9,359,141 103,573 23,315,054
Deductions from net assets attributed to:
Benefit payments 589,315 366,983 6,484,816
Transaction charge 11,764 13,070 85,457
Participant notes
receivable terminated
due to withdrawal of participant 141,995 141,995
----------- ----------- ----------- -----------
Total deductions 601,079 380,053 141,995 6,712,268
Change in forfeiture reserve, net (304,569) 8,723 (352,050)
----------- ----------- ----------- -----------
Net (decrease) increase prior to
interfund transfers and plan mergers (2,299,881) 8,987,811 (38,422) 16,250,736
Interfund transfers, net (11,223,991) 10,942,290 1,213,519 -
Transfer of assets due to plan mergers 27,460 679,134 14,288,142
----------- ----------- ----------- -----------
Net increase (decrease) (13,496,412) 19,930,101 1,854,231 30,538,878
Net assets available for
benefits at beginning of year 13,496,412 - 209,240 44,558,059
----------- ----------- ----------- -----------
Net assets available for
benefits at end of year $ - $19,930,101 $ 2,063,471 $75,096,937
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
U.S Foodservice
401(k) Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1997
Fund Information
----------------
Warburg
Fidelity Fidelity Pincus
Charter Fidelity Advisor Advisor INVESCO Advisor
Guaranteed Advisor Growth Equity Industrial Founders International
Long-Term Balanced Opportunities Growth Income Balanced Equity
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Interest $ 540,555
Net appreciation
(depreciation) in
fair value of
investments $ 269,464 $ 1,348,152 $ 897,496 $ 1,171,911 $ 72,660 $ (85,286)
----------- ----------- ----------- ----------- ----------- ---------- -----------
540,555 269,464 1,348,152 897,496 1,171,911 72,660 (85,286)
----------- ----------- ----------- ----------- ----------- ---------- -----------
Contributions
Employer
Employee 986,521 308,279 845,058 649,396 505,472 188,952 335,068
----------- ----------- ----------- ----------- ----------- ---------- -----------
986,521 308,279 845,058 649,396 505,472 188,952 335,068
----------- ----------- ----------- ----------- ----------- ---------- -----------
Total additions 1,527,076 577,743 2,193,210 1,546,892 1,677,383 261,612 249,782
Deductions from net assets
attributed to:
Benefit payments 904,621 103,755 249,058 339,387 322,334 7,554 112,150
Transaction charge 20,996 603 5,245 1,160 1,575 249 846
Participant notes
receivable terminated
due to withdrawal of
participant
----------- ----------- ----------- ----------- ----------- ---------- -----------
Total deductions 925,617 104,358 254,303 340,547 323,909 7,803 112,996
Change in forfeiture
reserve, net (30,342) (3,804) (13,559) (6,481) (20,984) (4,979)
----------- ----------- ----------- ----------- ----------- ---------- -----------
Net increase prior to
interfund transfers 571,117 469,581 1,925,348 1,199,864 1,332,490 253,809 131,807
Interfund transfers, net (501,496) (43,658) 276,331 211,667 25,731 97,570 (168,140)
----------- ----------- ----------- ----------- ----------- ---------- -----------
Net increase (decrease) 69,621 425,923 2,201,679 1,411,531 1,358,221 351,379 (36,333)
Net assets available for
benefits at
beginning of year 9,483,130 1,138,040 4,484,112 3,706,156 4,508,725 313,342 1,436,881
----------- ----------- ----------- ----------- ----------- ---------- -----------
Net assets available for
benefits at
end of year $ 9,552,751 $ 1,563,963 $ 6,685,791 $ 5,117,687 $ 5,866,946 $ 664,721 $ 1,400,548
=========== =========== =========== =========== =========== ========== ===========
<CAPTION>
JP
Foodservice Participant
Common Notes
Stock Receivable Total
<S> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Interest $ 6,988 $ 547,543
Net appreciation
(depreciation) in
fair value of
investments $ 2,792,504 6,466,901
----------- ----------- ------------
2,792,504 6,988 7,014,444
----------- ----------- ------------
Contributions
Employer 1,957,774 1,957,774
Employee 442,013 4,260,759
2,399,787 6,218,533
----------- ----------- ------------
Total additions 5,192,291 6,988 13,232,977
Deductions from net assets
attributed to:
Benefit payments 460,734 2,499,593
Transaction charge 15,702 46,376
Participant notes
receivable terminated
due to withdrawal of
participant 10,730 10,730
----------- ----------- ------------
Total deductions 476,436 10,730 2,556,699
Change in forfeiture
reserve, net (183,367) (263,516)
----------- ----------- ------------
Net increase prior to
interfund transfers 4,532,488 (3,742) 10,412,762
Interfund transfers, net (86,441) 188,436 -
----------- ----------- ------------
Net increase (decrease) 4,446,047 184,694 10,412,762
Net assets available for
benefits at
beginning of year 9,050,365 24,546 34,145,297
----------- ----------- ------------
Net assets available for
benefits at
end of year $13,496,412 $ 209,240 $ 44,558,059
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Description of Plan
The following description of the U.S. Foodservice 401(k) Retirement
Savings Plan (formerly JP Foodservice, Inc. 401(k) Retirement Savings
Plan) (the "Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan established effective September
1, 1989 and most recently amended and restated in its entirety on
December 31, 1998, retroactively effective January 1, 1998. Generally,
non-union employees of JP Foodservice Distributors, Inc. and subsidiaries
(collectively, the "Company") and any successor organization to such
Company which elects to continue the Plan become eligible to participate
the first day of the Plan year quarter, following their date of hire. The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Effective January 1, 1998, employees of Valley Industries, Squeri Food
Service, Inc., Arrow Paper and Supply Co., Inc. and Mazo-Lerch Company,
which were previously acquired, became eligible to participate in the
Plan, subject to Plan provisions. During 1998, Sorrento Food Service,
Inc. was acquired by JP Foodservice, Inc., at which time employees became
eligible to participate in the Plan subject to Plan provisions.
Contributions
Participants may contribute an amount equal to not less than 1 percent
nor more than 15 percent of their compensation for the contribution
period. For all employees other than those employed by E&H Distributing
Co., the Company will make a matching contribution in an amount equal to
$1.00 for each $1.00 contributed by an employee, up to a maximum of 2
percent of the participant's compensation. For employees of E&H
Distributing Co., the Company will make a matching contribution in an
amount equal to $.50 for each $1.00 contributed by an employee. The
Company may also make discretionary nonelective contributions, which were
$1,223,652 and $0 for the years ended December 31, 1998 and 1997,
respectively.
Participant Accounts
Each participant's account is credited with the participant's
contribution and allocation of the Company's contribution and Plan
earnings. Earnings are allocated by fund based on the ratio of a
participant's account invested in a particular fund to all participants'
investments in that fund. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's account.
6
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. The balance of vesting in the participants'
accounts is based on years of service. A participant becomes 100 percent
vested after five years of service. However, if an active participant
dies prior to attaining the normal retirement age, the participant's
account becomes 100 percent vested.
Investment Options
Upon enrollment in the Plan, a participant may currently direct
contributions among any of the following investment options:
X Charter Guaranteed Long-Term Fund - Funds are invested in the CIGNA
Charter Guaranteed Long-Term Account, which provides a guaranteed
rate of return reset semiannually.
X Fidelity Advisor Balanced Fund - Funds are invested solely in units
of the CIGNA Fidelity Advisor Balanced Fund, which in turn invests
solely in shares of the Fidelity Advisor Balanced Fund.
X Fidelity Advisor Growth Opportunities Fund - Funds are invested
solely in units of the CIGNA Fidelity Advisor Growth Opportunities
Fund, which in turn invests solely in shares of the Fidelity Advisor
Growth Opportunities Fund.
X Fidelity Advisor Equity Growth Fund - Funds are invested solely in
units of the CIGNA Fidelity Advisor Equity Growth Fund, which in turn
invests solely in shares of the Fidelity Advisor Equity Growth Fund.
X INVESCO Industrial Income Fund - Funds are invested solely in units
of the CIGNA INVESCO Industrial Income Fund, which in turn invests
solely in shares of the INVESCO Industrial Income Fund.
X Founders Balanced Fund - Funds are invested solely in units of the
CIGNA Founders Balanced Fund, which in turn invests solely in shares
of the Founders Balanced Fund.
X Warburg Pincus Advisor International Equity Fund - Funds are invested
solely in units of the CIGNA Warburg Pincus Advisor International
Equity Fund, which in turn invests solely in shares of the Warburg
Pincus Advisor International Equity Fund.
X U.S. Foodservice Common Stock (formerly "JP Foodservice Common
Stock") - Funds are invested solely in shares of U.S. Foodservice
common stock.
7
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Participants may change their investment options at any time with the
exception of participants' Company matching and nonelective
contributions, which will be invested in the U.S. Foodservice Common
Stock.
Payment of Benefits
On termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, a distribution
in the form of an annuity, or a combination of both. The participant's
vested Company match may also be distributed in the form of Company
stock. Distributions are subject to the applicable provisions of the Plan
agreement.
Participant Notes Receivable
Participants may borrow up to the lesser of $50,000 or 50 percent of the
vested portion of their account balance, subject to certain restrictions,
in accordance with interest rates and collateral requirements established
by the Company.
Cash Equivalents
Contributions received prior to year end awaiting investment in the
appropriate investment option at December 31, 1998 are invested in the
CIGNA Charter Guaranteed Short-Term Account, which is recorded at fair
value, and are included as cash equivalents within the fund in which
units are subsequently purchased.
2. Summary of Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting, and reflect management's estimates and assumptions, such as
those regarding fair value, that affect the recorded amounts. Significant
estimates used are discussed throughout the notes to financial
statements.
Investments
Investments in pooled separate accounts (CIGNA Fidelity Advisor Balanced
Fund, CIGNA Fidelity Advisor Growth Opportunities Fund, CIGNA Fidelity
Advisor Equity Growth Fund, CIGNA INVESCO Industrial Income Fund, CIGNA
Founders Balanced Fund and CIGNA Warburg Pincus Advisor International
Equity Fund) are recorded at fair value, as determined by the unit values
as reported by the Connecticut General Life Insurance Company ("CG
Life"). The investment in the CIGNA Charter Guaranteed Long-Term Account
is non-fully benefit responsive and is recorded at fair value.
Participant notes receivable are valued at cost which approximates fair
value. The U.S. Foodservice Common Stock is recorded at its quoted market
price.
8
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
Contributions
Employee contributions are recorded in the period during which the
Company makes payroll deductions from the participants' earnings. Most
Company matching contributions are recorded at year end. The Company
currently makes matching contributions and discretionary nonelective
contributions into the U.S. Foodservice Common Stock.
Benefits
Benefit claims are recorded as expenses when they have been approved for
payment and paid by the Plan.
3. Deposit With Insurance Company
The Plan participates in a contract with CG Life via an investment in the
CIGNA Charter Guaranteed Long-Term Account. CG Life commingles the assets
of the CIGNA Charter Guaranteed Long-Term Account with other assets. For
the Plan's investment in the CIGNA Charter Guaranteed Long-Term Account
the Plan is credited with interest at the rate specified in the contract
which was 5.80% and 5.95% for the years ended December 31, 1998 and 1997,
respectively, net of asset charges. CG Life prospectively guaranteed the
interest rates credited for the CIGNA Charter Guaranteed Long-Term
Account for six months. As discussed in Note 2, the CIGNA Charter
Guaranteed Long-Term Account is included in the financial statements at
fair value which, principally because of the periodic rate reset process,
approximates contract value.
9
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
4. Investments
Investments that represent 5 percent or more of the Plan's net assets are
separately identified below.
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
CIGNA Charter Guaranteed Long-Term Account $ 13,700,270 $9,552,751
interest rates, 5.80%; 5.95%
CIGNA Fidelity Advisor Growth Opportunities Fund 12,453,371 6,685,791
units, 162,577; 107,992
CIGNA Fidelity Advisor Equity Growth Fund 11,206,515 5,117,687
units, 135,377; 85,594
CIGNA INVESCO Industrial Income Fund 7,775,836 5,866,946
units, 314,302; 269,621
JP Foodservice Common Stock - 11,538,638
shares, -; 312,362
U.S. Foodservice Common Stock 16,782,642 -
shares, 342,503; -
</TABLE>
5. Participant Notes Receivable
Under the terms of the Plan, participants may borrow from their accounts
up to the lesser of $50,000 or 50 percent of their vested account
balance. Loan transactions are treated as a transfer to/from the
investment fund from/to Participant Notes Receivable. A loan is secured
by the balance in the participant's account and bears interest at a rate
commensurate with market rates for similar loans, as defined (7.00% to
10.00% for the years ended December 31, 1998 and 1997).
6. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100 percent vested in their
accounts.
10
<PAGE>
U.S. Foodservice
401(K) Retirement Savings Plan
Notes to Financial Statements
- --------------------------------------------------------------------------------
7. Income Taxes
The Internal Revenue Service has determined and informed the Company by a
letter dated November 8, 1995, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC"). The Plan has been amended since receiving the determination
letter. However, the Plan's administrator and tax counsel believe that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
Nondiscrimination testing in accordance with the IRC was not completed
for the 1998 plan year. Management is in process of performing the
testing. Management intends to take the appropriate steps to facilitate
the continued tax qualified status of the Plan.
8. Reconciliation of Plan Financial Statements to the Form 5500
Certain balances included on lines 31 and 32 of the Annual Return/Report
of Employee Benefit Plans (the "Form 5500") have been reclassified for
purposes of presentation in these financial statements to provide
additional disclosure.
9. Forfeitures
The net change in forfeiture reserve represents the net change in the
available forfeiture reserve balance from the prior year plus the current
year forfeitures generated. Forfeitures result from nonvested benefit
payments remaining in the Plan for all terminated employees. Upon
reaching the break-in-service requirement, as defined in the Plan
agreement, forfeitures generated are added to the forfeiture reserve
balance. The forfeiture reserve of $2,668 and $11,518 at December 31,
1998 and 1997, respectively, is included in the CIGNA Charter Guaranteed
Long-Term Account and is available to offset contributions, which would
be otherwise payable by the Company, in accordance with the Plan
agreement. In 1998 and 1997 Company cash contributions were offset by
$374,204 and $267,300, respectively, from forfeited nonvested accounts.
10. Subsequent Events
Effective January 1, 1999, the Rykoff-Sexton Value Plan and Trust
Agreement, the Lone Star Institutional Grocers 401(k) Plan, the U.S.
Foodservice Inc. 401(k) Retirement Savings Plan, and the Joseph Webb
Foods, Inc. 401(k) Plan were merged into the Plan. Also effective January
1, 1999, the Plan changed recordkeepers from CG Life to Fidelity
Investments. As a result, the Fidelity Investments Institutional Services
Company was appointed trustee of the Plan.
11
<PAGE>
U.S. Foodservice Supplemental Schedule
401(K) Retirement Savings Plan Schedule I
Line 27a Form 5500 - Schedule of Assets Held for Investment Purposes
<TABLE>
<CAPTION>
December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Identity of Issue, borrower, Description of investment including Cost Current value
lessor, or similar party maturity date, rate of interest,
collateral, par or maturity value
<S> <C> <C> <C> <C>
Connecticut General Life CIGNA Charter Guaranteed
* Insurance Company Long-Term Account
5.80% $13,700,270 $13,700,270
Connecticut General Life CIGNA Fidelity Advisor Balanced Fund
* Insurance Company $31.66/unit 2,129,357 2,735,216
Connecticut General Life CIGNA Fidelity Advisor Growth
* Insurance Company Opportunities Fund
$76.60/unit 8,172,255 12,453,371
Connecticut General Life CIGNA Fidelity Advisor Equity
* Insurance Company Growth Fund
$82.78/unit 7,084,922 11,206,515
Connecticut General Life CIGNA INVESCO Industrial Income Fund
* Insurance Company $24.74/unit 5,065,507 7,775,836
Connecticut General Life CIGNA Founders Balanced Fund
* Insurance Company $14.94/unit 2,236,340 2,541,211
Connecticut General Life CIGNA Warburg Pincus Advisor
* Insurance Company International Equity Fund
$23.12/unit 2,619,532 2,687,122
* Smith Barney U.S. Foodservice Common Stock
$49.00/share 11,146,824 16,782,642
Connecticut General Life Cash Equivalents (CIGNA Charter
* Insurance Company Guaranteed Short-Term Account) 3,824 3,824
* Participant Notes Receivable
7.00% - 10.00% 2,063,471 2,063,471
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
12
<PAGE>
U.S. Foodservice Supplemental Schedule
401(K) Retirement Savings Plan Schedule II
Line 27d Form 5500 - Schedule of Reportable Transactions
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Identity of party Description of asset Purchase Selling Lease Expense Cost of Current Net gain
involved (include interest rate price price rental incurred asset value or (loss)
and maturity in case with of asset on
of a loan) transaction transaction
date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut General Purchases into $ 9,191,752 N/A N/A N/A $9,191,752 $ 9,191,752 -
Life Insurance CIGNA Charter
Company Guaranteed
Long-Term Account
Connecticut General Sales from CIGNA N/A $ 5,879,732 N/A N/A 5,879,732 5,879,732 -
Life Insurance Charter
Company Guaranteed
Long-Term Account
Connecticut General Purchases into 5,001,898 N/A N/A N/A 5,001,898 5,001,898 -
Life Insurance CIGNA Fidelity
Company Advisor Growth
Opportunities Fund
Connecticut General Sales from CIGNA N/A 1,561,319 N/A N/A 1,110,564 1,561,319 $ 450,755
Life Insurance Fidelity Advisor
Company Growth
Opportunities Fund
Connecticut General Purchases into 4,650,557 N/A N/A N/A 4,650,557 4,650,557 -
Life Insurance CIGNA Fidelity
Company Advisor Equity
Growth Fund
Connecticut General Sales from CIGNA N/A 1,598,490 N/A N/A 1,128,026 1,598,490 470,464
Life Insurance Fidelity Advisor
Company Equity Growth Fund
Connecticut General Purchases into 2,178,984 N/A N/A N/A 2,178,984 2,178,984 -
Life Insurance CIGNA INVESCO
Company Industrial Income
Fund
Connecticut General Sales from CIGNA N/A 1,231,732 N/A N/A 819,182 1,231,732 412,550
Life Insurance INVESCO
Company Industrial Income
Fund
Connecticut General Purchases into 2,183,998 N/A N/A N/A 2,183,998 2,183,998 -
Life Insurance CIGNA Founders
Company Balanced Fund
Connecticut General Sales from CIGNA N/A 607,307 N/A N/A 559,902 607,307 47,405
Life Insurance Founders Balanced
Company Fund
</TABLE>
13
<PAGE>
U.S. Foodservice Supplemental Schedule
401(K) Retirement Savings Plan Schedule II
Line 27d Form 5500 - Schedule of Reportable Transactions
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Identity of party Description of asset Purchase Selling Lease Expense Cost of Current Net gain
involved (include interest rate price price rental incurred asset value or (loss)
and maturity in case with of asset on
of a loan) transaction transaction
date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut General Purchases into $ 1,888,280 N/A N/A N/A $ 1,888,280 $ 1,888,280 -
Life Insurance CIGNA Warburg
Company Pincus Advisor
International
Equity Fund
Connecticut General Sales from CIGNA N/A $ 681,017 N/A N/A 638,742 681,017 $ 42,275
Life Insurance Warburg Pincus
Company Advisor
International
Equity Fund
JP Foodservice, Inc. Purchases into 2,569,019 N/A N/A N/A 2,569,019 2,569,019 -
JP Foodservice
Common Stock
JP Foodservice, Inc. Sales from N/A 12,365,785 N/A N/A 8,703,605 12,365,785 3,662,180
JP Foodservice
Common Stock
Smith Barney Purchases into 11,804,068 N/A N/A N/A 11,804,068 11,804,068 -
U.S. Foodservice
Common Stock
Smith Barney Sales from N/A 804,394 N/A N/A 657,260 804,394 147,134
U.S. Foodservice
Common Stock
</TABLE>
14
<PAGE>
EXHIBIT 1
---------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-81011) of U.S. Foodservice, Inc. (formerly "JP
Foodservice, Inc.") of our report dated June 11, 1999 relating to the financial
statements of the U.S. Foodservice 401(k) Retirement Savings Plan (formerly "JP
Foodservice, Inc. 401(k) Retirement Savings Plan") which appears in this Form
11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
June 25, 1999
