UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 28, 2018~~March 29, 2019



☐	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 incorporation or organization)		(I.R.S. Employer 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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock, par value $.01 per share, outstanding at ~~November 5, 2018: 29,970,198~~April 29, 2019: 29,937,683

THE CHEFS’ WAREHOUSE, INC.

FORM 10-Q

Table of Contents



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (unaudited):	4

	Consolidated Balance Sheets at ~~September~~March 29, 2019 and December 28, 2018 ~~and December 29, 2017~~	4

	Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018 ~~and September 29, 2017~~	5

	~~Consolidated Statements of Operations and Comprehensive Income for the thirty-nine weeks ended September 28, 2018 and September 29, 2017~~	6

	Consolidated Statements of Changes in Stockholders’ Equity for the thirteen ~~and thirty-nine~~ weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018 ~~and September 29, 2017~~	76

	Consolidated Statements of Cash Flows for the ~~thirty-nine~~thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018 ~~and September 29, 2017~~	87

	Notes to Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2623

Item 4.	Controls and Procedures	2623

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2724

Item 1A.	Risk Factors	2724

Item 2.	Issuer Purchases of Equity Securities	2724

Item 3.	Defaults Upon Senior Securities	2724

Item 4.	Mine Safety Disclosures	2724

Item 5.	Other Information	2724

Item 6.	Exhibits	2825

	Signature	2825

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Statements in this report regarding the business of The Chefs’ Warehouse, Inc. (the “Company”) that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The risks and uncertainties which could impact these statements include, but are not limited to the ~~Company’s ability to successfully deploy its operational initiatives to achieve synergies from~~following: our ~~acquisitions; the Company’s and its customers current economic environment, changes in disposable income levels and consumer discretionary spending on food-away-from-home purchases; the Company’s~~ sensitivity to general economic conditions, including ~~vulnerability~~disposable income levels and changes in consumer discretionary spending; 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, 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, 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; because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, including adverse weather conditions, in the geographic markets in which it operates; the risks of supply chain interruptions due to lack of long-term contracts, severe weather or more prolonged climate change, work stoppages or otherwise; the risks of loss of revenue or reductions in operating margins in the Company’s center-of-the-plate category as a result of competitive pressures; changes in the availability or cost of the Company’s specialty food products; the ability to effectively price the Company’s specialty food products and reduce the Company’s expenses; the relatively low margins of the foodservice distribution industry and the Company’s sensitivity to inflationary and deflationary pressures; the Company’s ability to successfully identify, obtain financing for and complete acquisitions of other foodservice distributors and to integrate and realize expected synergies from those acquisitions; increasedthese areas; fuel cost volatility ~~and expectations regarding the use~~may have a material adverse effect on our business, financial condition or results of ~~fuel surcharges; fluctuations~~operations; our ability to raise capital in the ~~wholesale prices of beef, poultry~~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; our business operations and ~~seafood, including increases in these prices as a result of increases in the cost of feeding and caring for livestock; the loss of~~future development could be significantly disrupted if we lose key members of ~~the Company’s~~our management ~~team and the Company’s ability to replace such personnel; the strain on the Company’s infrastructure and resources caused by its growth;~~team; and other risks and uncertainties included under the heading Risk Factors in our Annual Report on Form 10-K filed on March ~~9, 2018~~1, 2019 with the Securities and Exchange Commission (the “SEC”).

PART I FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

THE CHEFS’ WAREHOUSE, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)


	September 28, 2018 (unaudited)			December 29, 2017			March 29, 2019 (unaudited)			December 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	49,857		$	41,504		$	17,317		$	42,410
Accounts receivable, net of allowance of $8,748 in 2018 and $8,026 in 2017	146,760			142,170
Accounts receivable, net of allowance of $7,461 in 2019 and $7,460 in 2018							152,123			161,758
Inventories, net	110,073			102,083			113,540			112,614
Prepaid expenses and other current assets	11,530			11,083			12,216			11,953
Total current assets	318,220			296,840			295,196			328,735
Equipment and leasehold improvements, net	64,552			68,378
Software costs, net	13,686			6,034
Equipment, leasehold improvements and software, net							88,549			85,276
Operating lease right-of-use assets							118,792			—
Goodwill	181,991			173,202			195,546			184,280
Intangible assets, net	132,761			140,320			145,242			130,033
Other assets	4,093			2,975			3,787			4,074
Total assets	$	715,303		$	687,749		$	847,112		$	732,398
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	83,105		$	70,019		$	78,120		$	87,799
Accrued liabilities	22,300			21,871			22,872			24,810
Short-term operating lease liabilities							16,499			—
Accrued compensation	11,937			12,556			8,536			12,872
Current portion of long-term debt	30			3,827			1,804			61
Total current liabilities	117,372			108,273			127,831			125,542
Long-term debt, net of current portion	280,216			313,995			281,675			278,169
Operating lease liabilities							111,140			—
Deferred taxes, net	7,800			6,015			9,952			9,601
Other liabilities and deferred credits	11,770			10,865			8,091			10,410
Total liabilities	417,158			439,148			538,689			423,722
Commitments and contingencies	—			—			—			—
Stockholders’ equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding September 28, 2018 and December 29, 2017	—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized, 29,970,198 and 28,442,208 shares issued and outstanding at September 28, 2018 and December 29, 2017, respectively	300			284
Preferred Stock, $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding March 29, 2019 and December 28, 2018							—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized, 29,941,184 and 29,968,483 shares issued and outstanding at March 29, 2019 and December 28, 2018, respectively							300			300
Additional paid-in capital	206,304			166,997			207,911			207,326
Accumulated other comprehensive loss	(2,848		)	(1,549		)	(2,166		)	(2,221		)
Retained earnings	94,389			82,869			102,378			103,271
Stockholders’ equity	298,145			248,601			308,423			308,676
Total liabilities and stockholders’ equity	$	715,303		$	687,749		$	847,112		$	732,398

See accompanying notes to consolidated financial statements.

THE CHEFS’ WAREHOUSE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(Amounts in thousands, except share and per share amounts)


	Thirteen Weeks Ended					Thirteen Weeks Ended
	September 28, 2018			September 29, 2017		March 29, 2019		March 30, 2018
Net sales	$	361,496		$	325,076	$	357,027	$	318,615
Cost of sales	269,503			244,171		266,838		239,093
Gross profit	91,993			80,905		90,189		79,522
Operating expenses	81,725			70,411		84,039		73,782
Operating income	10,268			10,494		6,150		5,740
Interest expense	4,676			5,593		4,551		4,979
Loss on asset disposal	—			10		34		—
Income before income taxes	5,592			4,891		1,565		761
Provision for income tax expense	1,435			2,040		431		217
Net income	$	4,157		$	2,851	$	1,134	$	544
Other comprehensive income (loss):
Foreign currency translation adjustments	(96		)	369		55		(922		)
Comprehensive income	$	4,061		$	3,220
Comprehensive income (loss)						$	1,189	$	(378	)
Net income per share:
Basic	$	0.14		$	0.11	$	0.04	$	0.02
Diluted	$	0.14		$	0.11	$	0.04	$	0.02
Weighted average common shares outstanding:
Basic	29,080,929			26,092,387		29,457,257		28,122,723
Diluted	29,743,851			27,387,619		29,840,979		28,197,247

See accompanying notes to consolidated financial statements.

~~THE CHEFS’ WAREHOUSE, INC.~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share amounts)~~

Thirty-nine Weeks Ended
September 28, 2018 September 29, 2017
Net sales $ 1,050,553
$ 944,422
Cost of sales 785,798
707,017
Gross profit 264,755
237,405
Operating expenses 233,799
211,627
Operating income 30,956
25,778
Interest expense 15,036
17,406
Loss on asset disposal 30
10
Income before income taxes 15,890
8,362
Provision for income tax expense 4,370
3,479
Net income $ 11,520
$ 4,883
Other comprehensive income (loss):

Foreign currency translation adjustments (1,299 ) 605
Comprehensive income $ 10,221
$ 5,488
Net income per share:

Basic $ 0.40
$ 0.19
Diluted $ 0.40
$ 0.19
Weighted average common shares outstanding:

Basic 28,458,972
26,011,913
Diluted 29,619,703
26,063,655

~~See accompanying notes to consolidated financial statements.~~

THE CHEFS’ WAREHOUSE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands, except share data)


	Common Stock				Additional Paid in Capital				Accumulated Other Comprehensive Loss			Retained Earnings				Total			Common Stock				Additional Paid in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
	Shares		Amount					Shares				Retained Earnings			Amount								Additional Paid in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance December 29, 2017	28,442,208		$	284	Additional Paid in Capital			$	Accumulated Other Comprehensive Loss	166,997		$	(1,549	)		Total		$	82,869		$	248,601
Balance December 28, 2018																			29,968,483		$	300	$	207,326		$	(2,221	)	$	103,271		$	308,676
Cumulative effect adjustment due to adoption of new accounting standard																			—		—		—			—			(2,027		)	(2,027		)
Net income	—		—		—				—			544				544			—		—		—			—			1,134			1,134
Stock compensation	284,618		3		834				—			—				837			(23,680	)	—		915			—			—			915
Exercise of stock options																			20,383		—		412			—			—			412
Cumulative translation adjustment	—		—		—				(922		)	—				(922		)	—		—		—			55			—			55
Shares surrendered to pay withholding taxes	(20,100	)	—		(472		)		—			—				(472		)	(24,002	)	—		(742		)	—			—			(742		)
Balance March 30, 2018	28,706,726		$	287	$	167,359			$	(2,471	)	$	83,413			$	248,588
Net income	—		—		—				—			6,819				6,819
Stock compensation	23,547		—		1,072				—			—				1,072
Cumulative translation adjustment	—		—		—				(281		)	—				(281		)
Shares surrendered to pay withholding taxes	(4,200	)			(99		)		—			—				(99		)
Balance June 29, 2018	28,726,073		$	287	$	168,332			$	(2,752	)	$	90,232			$	256,099
Net income	—		—		—				—			4,157				4,157
Stock compensation	2,000		—		1,090				—			—				1,090
Conversion of subordinated notes	1,246,272		13		37,002				—			—				37,015
Cumulative translation adjustment	—		—		—				(96		)	—				(96		)
Shares surrendered to pay withholding taxes	(4,147	)	—		(120		)		—			—				(120		)
Balance September 28, 2018	29,970,198		$	300	$	206,304			$	(2,848	)	$	94,389			$	298,145
Balance March 29, 2019																			29,941,184		$	300	$	207,911		$	(2,166	)	$	102,378		$	308,423


Balance December 30, 2016	26,280,469		$	263	$	127,180		$	(2,186	)	$	68,503		$	193,760
Balance December 29, 2017																	28,442,208		$	284	$	166,997		$	(1,549	)	$	82,869	$	248,601
Net income	—		—		—			—			(1,642		)	(1,642		)	—		—		—			—			544		544
Stock compensation	106,558		1		742			—			—			743			284,618		3		834			—			—		837
Cumulative translation adjustment	—		—		—			1			—			1			—		—		—			(922		)	—		(922		)
Shares surrendered to pay withholding taxes	(16,155	)	—		(239		)	—			—			(239		)	(20,100	)	—		(472		)	—			—		(472		)
Balance March 31, 2017	26,370,872		$	264	$	127,683		$	(2,185	)	$	66,861		$	192,623
Net income	—		—		—			—			3,674			3,674
Stock compensation	2,863		—		869			—			—			869
Cumulative translation adjustment	—		—		—			235			—			235
Shares surrendered to pay withholding taxes	(5,800	)	—		(79		)	—			—			(79		)
Balance June 30, 2017	26,367,935		$	264	$	128,473		$	(1,950	)	$	70,535		$	197,322
Net income	—		—		—			—			2,851			2,851
Stock compensation	20,579		—		770			—			—			770
Shares issued for Fells Point acquisition	185,442		2		3,298			—			—			3,300
Cumulative translation adjustment	—		—		—			369			—			369
Shares surrendered to pay withholding taxes	(9,788	)	—		(136		)	—			—			(136		)
Balance September 29, 2017	26,564,168		$	266	$	132,405		$	(1,581	)	$	73,386		$	204,476
Balance March 30, 2018																	28,706,726		$	287	$	167,359		$	(2,471	)	$	83,413	$	248,588

See accompanying notes to consolidated financial statements.

THE CHEFS’ WAREHOUSE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)


	Thirty-nine Weeks Ended						Thirteen Weeks Ended
	September 28, 2018			September 29, 2017			March 29, 2019			March 30, 2018
Cash flows from operating activities:
Net income	$	11,520		$	4,883		$	1,134		$	544
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	7,234			6,322			2,881			2,316
Amortization	8,949			8,712			2,877			2,903
Provision for allowance for doubtful accounts	2,811			2,841			851			497
Deferred rent	454			254
Non-cash operating lease expense							537			312
Deferred taxes	561			1,755			1,131			340
Amortization of deferred financing fees	1,657			1,574			522			549
Stock compensation	2,999			2,384			915			837
Change in fair value of contingent earn-out liability	2,026			72			107			124
Loss on asset disposal	30			10			34			—
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(4,302		)	(5,760		)	13,778			6,497
Inventories	(4,336		)	(19,731		)	677			754
Prepaid expenses and other current assets	(148		)	1,668			(207		)	2,759
Accounts payable, accrued liabilities and accrued compensation	7,163			20,430			(18,010		)	(7,324		)
Other liabilities	(2,584		)	(1,997		)
Other assets	(528		)	(214		)
Other assets and liabilities							164			(568		)
Net cash provided by operating activities	33,506			23,203			7,391			10,540
Cash flows from investing activities:
Capital expenditures	(9,407		)	(9,860		)	(4,125		)	(2,903		)
Proceeds from asset disposals	30			—
Cash paid for acquisitions, net of cash received	(11,899		)	(29,722		)	(27,990		)	(2,377		)
Net cash used in investing activities	(21,276		)	(39,582		)	(32,115		)	(5,280		)
Cash flows from financing activities:
Payment of debt	(49,359		)	(11,641		)
Cash paid for deferred financing fees	(877		)	—
Payment of debt, finance lease and other financing obligations							(37		)	(1,179		)
Proceeds from exercise of stock options							412			—
Surrender of shares to pay withholding taxes	(691		)	(455		)	(742		)	(472		)
Cash paid for contingent earn-out liability	—			(500		)
Borrowings under asset based loan facility	47,100			—
Net cash used in financing activities	(3,827		)	(12,596		)	(367		)	(1,651		)
Effect of foreign currency translation on cash and cash equivalents	(50		)	184			(2		)	(39		)
Net increase (decrease) in cash and cash equivalents	8,353			(28,791		)	(25,093		)	3,570
Cash and cash equivalents-beginning of period	41,504			32,862			42,410			41,504
Cash and cash equivalents-end of period	$	49,857		$	4,071		$	17,317		$	45,074

See accompanying notes to consolidated financial statements.

THE CHEFS’ WAREHOUSE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share amounts and per share data)

Note 1 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 Company operates in one reportable segment, foodservice distribution, which is concentrated primarily ~~on the East and West Coasts of~~in 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.

Unaudited Interim Financial Statements

The accompanying unaudited consolidated financial statements and the related interim information contained within the notes to such unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules of the Securities and Exchange Commission (“SEC”) for interim information and quarterly reports on Form 10-Q. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. These unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December ~~29, 2017~~28, 2018 filed as part of the Company’s Annual Report on Form 10-K, as filed with the SEC on March ~~9, 2018.~~1, 2019.

The unaudited consolidated financial statements appearing in this Form 10-Q have been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March ~~9, 2018,~~1, 2019, and in the opinion of management, include all normal recurring adjustments that are necessary for the fair statement of the Company’s interim period results. The year-end consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. Due to seasonal fluctuations and other factors, the results of operations for the thirteen ~~and~~ ~~thirty-nine~~weeks ended ~~September 28, 2018~~March 29, 2019 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates.

Guidance Adopted in ~~2018~~2019

~~Clarifying the Definition of a Business:~~Leases: In ~~January 2017,~~February 2016, the ~~FASB~~Financial Accounting Standard Board (“FASB”) issued guidance ~~which clarifies whether transactions should be accounted for as acquisitions of~~(“ASC 842”) to increase the transparency and comparability among organizations by recognizing right-of-use assets ~~or businesses. The guidance requires an entity to determine if substantially all of~~(“ROU assets”) and lease liabilities on 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 inputbalance sheet and ~~substantive process that together significantly contribute to the ability to create outputs.~~disclosing key information about leasing arrangements. The Company adopted ASC 842 on December 29, 2018, using an optional transition method that allows entities to initially apply the new lease standard at the adoption date. Under this ~~guidance as~~approach, comparative periods are not restated. The Company adopted a package of ~~December 30, 2017.~~practical expedients that allowed the Company to:

~~Revenue from Contracts with Customers:~~ ~~In May 2014,~~apply hindsight in determining the ~~FASB issued guidance to clarify~~lease term of its leases;

not reassess whether any expired or existing contracts are or contain leases;

not reassess the ~~principles~~lease classification of any expired or existing leases; and

not reassess initial direct costs 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 entityany existing leases.

~~expects to be entitled~~The use of hindsight in exchange for those goods or services. The Company adopted this guidance as of December 30, 2017 using the modified retrospective approach. Under this approach, prior financial statements are not restated andassessing lease term resulted in a $2,027 cumulative effect adjustment ~~is recognized upon adoption. The cumulative effect adjustment was immaterial~~to opening retained earnings. Adoption had a material impact on the Company’s consolidated balance sheet as a result of recognizing ROU assets and lease liabilities for its operating leases of $118,031 and $126,309, respectively, but it did not materially impact the Company’s consolidated statements of operations or debt covenants. There has been no significant change to the ~~Company’s financial statements. In addition, the Company made an~~ accounting ~~policy election to adopt the permitted practical expedient that allows an entity to expense the incremental costs~~ of ~~acquiring a contract as incurred if the amortization period is one year or less.~~

~~Guidance Not Yet Adopted~~finance leases.

Comprehensive Income: In February 2018, the FASB issued guidance that permits a Company to reclassify the stranded tax effects in accumulated other comprehensive income resulting from the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), to retained earnings. The ~~guidance also requires companies~~Company elected to ~~disclose the accounting policy for releasing~~not reclassify such amounts to retained earnings. The Company releases disproportionate tax effects from accumulated other comprehensive ~~income.~~income as individual items are liquidated. The Company adopted this guidance on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements.

Implementation Costs Incurred in a Cloud Computing Arrangement Service Contract: In August 2018, the FASB issued guidance that aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred to obtain or develop internal-use software. The Company adopted this guidance prospectively on December 29, 2018 and adoption did not have a material impact on the Company’s consolidated financial statements.

Guidance Not Yet Adopted

Measurement of Credit Losses on Financial Instruments: In June 2016 and as further amended in November 2018, the FASB issued guidance which requires entities to use a forward-looking expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and other receivables, including information related to management’s estimate of credit allowances. The guidance is effective for fiscal years beginning after December 15, ~~2018. Early adoption is permitted.~~2019. The Company expects to adopt this guidance when effective and adoption is not expected to have a material ~~impact~~effect on the Company’s consolidated financial statements.

~~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. In July 2018, the FASB issued new guidance that provided for a new optional transition method that allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to opening retained earnings. Under this approach, comparative periods are not restated. The Company expects to adopt this guidance when effective using the optional transition method. The Company is implementing a software platform to facilitate compliance with the new standard and updating related business processes and controls. 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.

Note 2 Summary of Significant Accounting Policies

Revenue Recognition

Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts contain performance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within a day and customer payment terms are typically 20 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performance obligations. These costs are expensed as incurred and presented within operating expenses on the consolidated statements of operations. The Company offers certain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company does not expect a significant reversal in the amount of cumulative revenue 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.

The following table presents the Company’s net sales disaggregated by principal product category:


	Thirteen Weeks Ended								Thirty-nine Weeks Ended								Thirteen Weeks Ended
	September 28, 2018				September 29, 2017				September 28, 2018				September 29, 2017				March 29, 2019				March 30, 2018
Center-of-the-Plate	$	152,805	42.3	%	$	144,105	44.3	%	$	454,673	43.3	%	$	415,253	44.0	%	$	156,616	43.9	%	$	141,743	44.5	%
Dry Goods	65,269		18.1	%	56,442		17.4	%	185,243		17.6	%	164,023		17.4	%	63,754		17.9	%	54,673		17.2	%
Pastry	49,219		13.6	%	43,654		13.4	%	144,379		13.7	%	128,483		13.6	%	50,205		14.1	%	43,677		13.7	%
Cheese and Charcuterie	39,481		10.9	%	32,753		10.1	%	111,497		10.6	%	99,847		10.6	%	35,355		9.9	%	32,911		10.3	%
Dairy and Eggs	27,511		7.6	%	23,294		7.2	%	77,778		7.4	%	65,324		6.9	%	25,614		7.2	%	22,768		7.1	%
Oils and Vinegar	19,808		5.5	%	18,360		5.6	%	56,326		5.4	%	53,178		5.6	%	18,693		5.2	%	16,874		5.3	%
Kitchen Supplies	7,403		2.0	%	6,468		2.0	%	20,657		2.0	%	18,314		1.9	%	6,790		1.8	%	5,969		1.9	%
Total	$	361,496	100	%	$	325,076	100	%	$	1,050,553	100	%	$	944,422	100	%	$	357,027	100	%	$	318,615	100	%

The Company determines its product category classification based on how the Company currently markets its products to its customers. The Company’s definition of its principal product categories may differ from the way in which other companies present similar information.

Deferred Revenue

Certain customer arrangements in the Company’s direct-to-consumer business, ~~including~~prepaid gift plans and gift card purchases, result in deferred revenues when cash payments are received in advance of performance. The Company recognizes revenue on its prepaid gift plans when control of each product is transferred to the customer. Performance obligations under the Company’s prepaid gift plans are satisfied within a period of twelve months or less. Gift cards issued by the Company do not have expiration dates. The Company records a liability for unredeemed gift cards at the time gift cards are sold and the liability is reduced when the card is redeemed, the value of the card is escheated to the appropriate government agency, or through breakage. Gift card breakage is estimated based on the Company’s historical redemption experience and expected trends in redemption patterns. Amounts recognized through breakage represent the portion of the gift card liability that is not subject to unclaimed property laws and for which the likelihood of redemption is remote.

The ~~following table presents the changes in~~Company recorded deferred ~~revenue,~~revenues, reflected as accrued liabilities on the Company’s consolidated balance ~~sheets:~~sheets, of $1,362 and $1,496 as of March 29, 2019 and December 28, 2018, respectively.

Balance as of December 29, 2017 $ 1,283
Cash payments received 11,046
Net sales recognized (11,476 )
Balance as of September 28, 2018 $ 853

Right of Return

The Company’s standard terms and conditions provide customers with a right of return if the goods received are not merchantable. Customers are either issued a replacement order at no cost, or are issued a credit for the returned goods. The Company recorded a refund liability of $288 as of ~~September 28, 2018.~~March 29, 2019. Refund liabilities are reflected as accrued liabilities on the consolidated balance sheets. The Company recognized a corresponding asset of $181 as of ~~September 28, 2018~~March 29, 2019 for its right to recover products from customers on settling its refund liabilities. This asset is reflected as inventories, net on the consolidated balance sheets.

Contract Costs

Sales commissions are expensed when incurred because the amortization period is one year or less. These costs are presented within operating expenses on the Company’s consolidated statements of operations.

Leases

The Company leases various distribution centers, office facilities, vehicles and equipment. The Company determines if an arrangement contains a lease at contract inception. An arrangement is or contains a lease if the agreement identifies an asset, implicitly or explicitly, that the Company has the right to use over a period of time. If an arrangement contains a lease, the Company classifies the lease as either an operating lease or as a finance lease based on the five criteria defined in ASC 842.

Lease liabilities are recognized at commencement date based on the present value of the remaining lease payments over the lease term. The corresponding ROU asset is recognized for the same amount as the lease liability adjusted for any payments made at or before the commencement date, any lease incentives received, and any initial direct costs. The Company’s lease agreements may include options to renew, extend or terminate the lease. These clauses are included in the initial measurement of the lease liability when at lease commencement the Company is reasonably certain that it will exercise such options. The discount rate used is based on the Company’s incremental borrowing rate since the implicit rate in the Company’s leases is not readily determinable.

Operating lease expense is recognized on a straight-line basis over the lease term and presented within operating expenses on the Company’s consolidated statements of operations. Finance lease right-of-use assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented within interest expense on the Company’s consolidated statements of operations. Variable rent payments related to both operating and finance leases are expensed as incurred. The Company’s variable lease payments primarily consists of real estate taxes, maintenance and usage charges. The Company made an accounting policy election to combine lease and non-lease components (maintenance, taxes and insurance) when measuring lease liabilities for vehicle and equipment leases.

The Company has elected to exclude short-term leases from the recognition requirements of ASC 842. A lease is short-term if, at the commencement date, it has a term of less than or equal to one year. Lease expense related to short-term leases is recognized on a straight-line basis over the lease term.

Note 3 Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share:

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017
Net income per share:
Basic $ 0.14
$ 0.11
$ 0.40
$ 0.19
Diluted $ 0.14
$ 0.11
$ 0.40
$ 0.19
Weighted average common shares:

Basic 29,080,929
26,092,387
28,458,972
26,011,913
Diluted 29,743,851
27,387,619
29,619,703
26,063,655



	Thirteen Weeks Ended
	March 29, 2019		March 30, 2018
Net income per share:
Basic	$	0.04	$	0.02
Diluted	$	0.04	$	0.02
Weighted average common shares:
Basic	29,457,257		28,122,723
Diluted	29,840,979		28,197,247

Reconciliation of net income per common share:


	Thirteen Weeks Ended				Thirty-nine Weeks Ended				Thirteen Weeks Ended
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017		March 29, 2019		March 30, 2018
Numerator:
Net income	$	4,157	$	2,851	$	11,520	$	4,883	$	1,134	$	544
Add effect of dilutive securities:
Interest on convertible notes, net of tax	26		134		358		—
Net income available to common shareholders	$	4,183	$	2,985	$	11,878	$	4,883
Denominator:
Weighted average basic common shares outstanding	29,080,929		26,092,387		28,458,972		26,011,913		29,457,257		28,122,723
Dilutive effect of unvested common shares	313,229		57,858		221,411		51,742		383,722		74,524
Dilutive effect of convertible notes	349,693		1,237,374		939,320		—
Weighted average diluted common shares outstanding	29,743,851		27,387,619		29,619,703		26,063,655		29,840,979		28,197,247

The following table presents potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive:


	Thirteen Weeks Ended		Thirty-nine Weeks Ended		Thirteen Weeks Ended
	September 28, 2018	September 29, 2017	September 28, 2018	September 29, 2017	March 29, 2019	March 30, 2018
Restricted share awards (RSAs)	—	104,053	388	309,922	—	81,218
Stock options	—	201,878	—	209,071	—	191,808
Convertible subordinated notes	—	—	—	1,237,374
Convertible notes					91,053	1,237,374

Note 4 Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The Company’s contingent earn-out liabilities are measured at fair value. These liabilities were estimated using Level 3 inputs. Long-term earn-out liabilities were ~~$4,440~~$5,960 and ~~$5,228~~$2,792 as of ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ respectively, and are reflected as other liabilities and deferred credits on the consolidated balance sheets. The remaining short-term earn-out liabilities are reflected as accrued liabilities on the consolidated balance sheets. 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. Changes in the fair value of contingent earn-out liabilities are reflected in operating expenses on the consolidated statements of operations.

The following table presents the changes in Level 3 contingent earn-out liabilities:


	Del Monte		Fells Point		Other Acquisitions		Total		Fells Point		Bassian		Other Acquisitions		Total
Balance December 29, 2017	$	649	$	4,579	$	—	$	5,228
Balance December 28, 2018									$	3,649	$	—	$	1,441	$	5,090
Acquisition	—		—		767		767		—		4,080		—		4,080
Changes in fair value	30		1,989		7		2,026		79		—		28		107
Balance September 28, 2018	$	679	$	6,568	$	774	$	8,021
Balance March 29, 2019									$	3,728	$	4,080	$	1,469	$	9,277

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 asset based loan facility and term loans approximated their book values as of September 28, 2018 and December 29, 2017, as these instruments had variable interest rates that reflected current market rates available to the Company.

The following table presents the carrying value and fair value of the Company’s convertible ~~subordinated notes.~~unsecured note. In estimating the fair value of ~~these convertible subordinated notes,~~the Note, 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~~risk-free interest rate in calculating the fair value estimate. ~~On July 25, 2018, these notes were converted into 1,246,272 shares of the Company’s common stock.~~

December 29, 2017
Carrying Value Fair Value
Convertible subordinated notes $ 36,750
$ 38,091



	March 29, 2019
	Carrying Value		Fair Value
Convertible unsecured note	$	4,000	$	4,029

Note 5 Acquisitions

~~Fells Point~~Bassian

On ~~August~~February 25, ~~2017, the Company entered into~~2019, pursuant to an asset purchase agreement, ~~to acquire~~the Company acquired substantially all of the assets of ~~Fells Point Wholesale Meats,~~Bassian Farms, Inc. and certain affiliated entities (“~~Fells Point”~~Bassian”), a specialty protein manufacturer and distributor based in ~~the metro Baltimore and Washington DC area.~~northern California. The ~~final~~aggregate purchase price for the transaction at acquisition date was approximately ~~$34,124, including $29,722 paid in cash at closing, $3,300 consisting of 185,442 shares of the Company’s common stock~~$31,990 and ~~$1,102 paid upon settlement of~~is subject to a ~~net~~customary working capital true-up. The acquisition was funded with $27,990 in cash and the issuance of a $4,000 unsecured convertible note.

~~During~~The Company will also pay additional contingent consideration, if earned, in the ~~first quarter~~form of ~~2018,~~an earn-out amount which could total $9,000 over a four year period. The payment of the earn-out liability is subject to the successful achievement of certain gross profit targets. At March 29, 2019 and February 25, 2019, the Company ~~finalized~~estimated the fair value of this contingent earn-out liability to be $4,080. The Company is in the process of finalizing a valuation of the earn-out liability, and tangible and intangible assets of ~~Fells Point~~Bassian as of the acquisition date. ~~As a result, the Company recorded a measurement period adjustment that increased goodwill by $2,300 and decreased customer relationships and trademarks by $1,500 and $800, respectively.~~ These assets ~~are~~will be valued at fair value using Level 3 inputs. ~~Customer relationships and trademarks are being amortized over 15 and 20 years, respectively.~~ Goodwill ~~is being~~for the Bassian 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 center-of-the-plate~~Company's protein business in the ~~Northeast and Mid-Atlantic regions,~~West Coast region, as well as any intangible assets that do not qualify for separate recognition.

The Company recognized professional fees of $178 in ~~On August 25, 2017,~~operating expenses related to the Bassian acquisition. For the thirteen weeks ended March 29, 2019, the Company ~~entered into a five-year lease~~reflected net sales of $5,527 for ~~a warehouse facility located~~Bassian in ~~Baltimore, MD that is owned by the former owners~~its consolidated statement of ~~Fells Point, some of whom are current employees.~~operations. The Company ~~paid rent~~has determined that separate disclosure of ~~$65 and $194 during~~Bassian earnings is impracticable due to the ~~thirteen and~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018, respectively.~~commencement of integration of the Bassian business into the Company's operations in the San Francisco market.

The table below sets forth the purchase price allocation of the ~~Fells Point~~Bassian acquisition:


	Fells Point			Bassian
Current assets (includes cash acquired)	$	6,971		$	6,659
Customer relationships	13,600			11,984
Trademarks	7,300			6,071
Non-compete agreement	400
Goodwill	9,035			11,247
Fixed assets	2,459			1,159
Other assets				10
Current liabilities	(1,196		)	(1,060		)
Earn-out liability	(4,445		)	(4,080		)
Total consideration	$	34,124		$	31,990

~~During the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018, the Company paid approximately $11,399 on several small strategic acquisitions.~~

Note 6 Inventories

Inventories consist primarily of finished product. Our different entities record inventories using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. Inventories are reflected net of ~~reserves~~adjustments for shrinkage, excess and obsolescence totaling ~~$1,911~~$2,044 and ~~$1,934~~$1,921 at ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ respectively.

Note 7 Equipment, ~~and~~ Leasehold Improvements and Software

Equipment, ~~and~~ leasehold improvements and software as of ~~September~~March 29, 2019 and December 28, 2018 ~~and December 29, 2017~~ consisted of the following:


	Useful Lives	September 28, 2018			December 29, 2017			Useful Lives	March 29, 2019			December 28, 2018
Land	Indefinite	$	1,170		$	1,170		Indefinite	$	1,170		$	1,170
Buildings	20 years	1,489			1,292			20 years	1,292			1,292
Machinery and equipment	5-10 years	17,672			16,183			5-10 years	18,467			17,837
Computers, data processing and other equipment	3-7 years	10,672			9,924			3-7 years	11,962			11,244
Software								3-7 years	22,779			22,779
Leasehold improvements	7-22 years	57,655			53,653			7-22 years	60,580			60,565
Furniture and fixtures	7 years	3,287			3,100			7 years	3,277			3,268
Vehicles	5-7 years	3,082			2,570			5-7 years	3,227			2,769
Other	7 years	95			95			7 years	95			95
Construction-in-process		9,299			15,030				19,887			15,757
		104,421			103,017				142,736			136,776
Less: accumulated depreciation and amortization		(39,869		)	(34,639		)		(54,187		)	(51,500		)
Equipment and leasehold improvements, net		$	64,552		$	68,378
Equipment, leasehold improvements and software, net									$	88,549		$	85,276

Construction-in-process at ~~September~~March 29, 2019 and December 28, 2018 related primarily to the implementation of the Company’s Enterprise Resource Planning (“ERP”) system and the buildout of the Company’s distribution centers in Union City, CA and Toronto, Canada. Construction-in-process at December 29, 2017 related primarily to the implementation of the Company’s ERP system and the buildout of the Company’s headquarters in Ridgefield, CT and distribution center in ~~Union City CA.~~Dallas, TX. The buildout of the Company’s ~~Union City distribution center was completed during the first quarter of fiscal 2018~~headquarters and ~~the Toronto~~ distribution center is expected to be completed during ~~the fourth quarter of~~ fiscal ~~2018.~~2019. The rollout of its ERP system will continue through fiscal ~~2019.~~2020.

~~At September~~The net book value of equipment financed under finance leases at March 29, 2019 and December 28, 2018 was $910 and ~~December 29, 2017, the Company had $530 of equipment and vehicles financed by capital leases.~~$52, respectively. The Company recorded depreciation ~~on equipment under capital leases~~ of ~~$16~~$43 and ~~$15~~$16 on these assets during the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $48 and $45 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively.

Depreciation expense, excluding ~~capital~~finance leases, was ~~$1,710~~$1,930 and ~~$1,678~~$1,827 for the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $5,245 and $4,970 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively.

~~Capitalized software has an estimated useful life of three to seven years.~~ Amortization expense on software was ~~$1,008~~$908 and ~~$402~~$473 for the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $1,941 and $1,307 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively.

Note 8 Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are presented as follows:

Carrying amount as of December 29, 2017 $ 173,202
Goodwill adjustments 3,303
Acquisitions 5,502
Foreign currency translation (16 )
Carrying amount as of September 28, 2018 $ 181,991



Carrying amount as of December 28, 2018	$	184,280
Acquisitions	11,247
Foreign currency translation	19
Carrying amount as of March 29, 2019	$	195,546

~~The goodwill adjustment relates to the Fells Point 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 ~~September~~March 29, 2019 and December 28, 2018 ~~and December 29, 2017~~ consisted of the following:


September 28, 2018:	Gross Carrying Amount		Accumulated Amortization			Net Amount
March 29, 2019:								Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	$	119,211	$	(34,020	)	$	85,191	$	131,476	$	(38,334	)	$	93,142
Non-compete agreements	7,579		(7,232		)	347		7,579		(7,269		)	310
Trademarks	59,906		(12,683		)	47,223		65,960		(14,170		)	51,790
Total	$	186,696	$	(53,935	)	$	132,761	$	205,015	$	(59,773	)	$	145,242

December 29, 2017:

Customer relationships $ 117,006
$ (27,704 ) $ 89,302
Non-compete agreements 7,566
(6,946 ) 620
Trademarks 60,734
(10,336 ) 50,398
Total $ 185,306
$ (44,986 ) $ 140,320

The Company occasionally makes small, strategic acquisitions that are immaterial, both individually and in the aggregate. Therefore, increases in goodwill and gross intangible assets per the above tables may not agree to the increases of these assets as shown in Note 5 “Acquisitions.”



December 28, 2018:
Customer relationships	$	119,488	$	(36,185	)	$	83,303
Non-compete agreements	7,579		(7,251		)	328
Trademarks	59,862		(13,460		)	46,402
Total	$	186,929	$	(56,896	)	$	130,033

Amortization expense for other intangibles was ~~$2,966~~$2,877 and ~~$2,981~~$2,903 for the ~~thirteen weeks ended September 28, 2018 and September 29, 2017, respectively, and $8,949 and $8,712 during the~~ ~~thirty-nine~~thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017,~~ respectively.

Estimated amortization expense for other intangibles for the remainder of the fiscal year ending December ~~28, 2018~~27, 2019 and each of the next ~~five~~four fiscal years and thereafter is as follows:


2018	$	2,945
2019	11,409		$	10,394
2020	11,136		12,230
2021	11,132		12,204
2022	10,352		11,340
2023	9,323		10,380
Thereafter	76,464		88,694
Total	$	132,761	$	145,242

Note 9 Debt Obligations

Debt obligations as of ~~September~~March 29, 2019 and December 28, 2018 ~~and December 29, 2017~~ consisted of the following:

September 28, 2018 December 29, 2017
Senior secured term loan $ 239,745
$ 288,435
Convertible subordinated notes —
36,750
Asset based loan facility 47,100
—
Capital leases and financed software 55
664
Deferred finance fees and original issue discount (6,654 ) (8,027 )
Total debt obligations 280,246
317,822
Less: current installments (30 ) (3,827 )
Total debt obligations excluding current installments $ 280,216
$ 313,995



	March 29, 2019			December 28, 2018
Senior secured term loan	$	239,745		$	239,745
Convertible unsecured note	4,000			—
Asset based loan facility	44,185			44,185
Finance leases and other financing obligations	1,021			193
Deferred finance fees and original issue discount	(5,472		)	(5,893		)
Total debt obligations	283,479			278,230
Less: current installments	(1,804		)	(61		)
Total debt obligations excluding current installments	$	281,675		$	278,169

Convertible ~~Subordinated Notes~~Unsecured Note

On ~~April 6, 2015, Del Monte Capital Meat Company, LLC, a wholly-owned subsidiary of~~February 25, 2019, the Company issued ~~$36,750 principal amount of~~a $4,000 convertible ~~subordinated notes with a six-year maturity bearing interest at 2.5% and a conversion price of $29.70 per share~~unsecured note (the “Note”), maturing on June 29, 2023, to ~~certain entities~~Bassian Farms, Inc. (the “Holder”) as partial consideration in the ~~Del Monte~~Bassian acquisition. ~~On July 25, 2018,~~The interest rate charged on the ~~holders converted these notes~~Note is 4.5% per annum and ~~related accrued interest~~increases to 5.0% after the two-year anniversary of ~~$265~~the closing date. The Company may, in certain instances beginning eighteen months after issuance of the Note, redeem the Note in whole or in part for cash or convert the Note into ~~1,246,272~~ shares of the Company’s common ~~stock.~~

~~Asset Based Loan Facility~~

~~On June 29, 2018,~~stock at the ~~Company entered~~conversion price of $43.93 per share. After the two-year anniversary of the closing date, the Holder may convert the Note into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which BMO Harris Bank, N.A. acts as administrative agent. The ABL Credit Agreement replaces the Company’s prior asset based loan facility (the “Prior ABL”). The ABL Credit Agreement provides for an asset based loan facility (the “ABL Facility”) in the aggregate amount of up to $150,000, up from $75,000 under the Prior ABL. Availability under the ABL Facility will be limited to a borrowing base equal to 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. 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 the earlier of June 29, 2023 and 90 days prior to the maturity dateshares of the Company’s ~~senior secured term loan.~~common stock at the conversion price. Upon a

~~The interest rates per annum applicable to loans, other than swingline loans, under~~

change of control event, the ~~ABL Credit Facility will be,~~Holder may convert the Note into shares of the Company’s common stock at the ~~co-borrowers’ option, equal to either a base rate~~conversion price or ~~an adjusted LIBOR rate~~redeem the Note 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 $10,000 or 10% of the borrowing base. 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. The Company incurred transaction costs of $877 which were capitalized as deferred financing fees to be amortized over the term of the ABL Facility. On July 6, 2018, the Company borrowed $47,100 under the ABL Facility and made an equivalent prepayment on its senior secured term loan. There was $47,100 outstanding under the ABL Facility as of September 28, 2018.cash.

As of ~~September 28, 2018,~~March 29, 2019, the Company was in compliance with all debt covenants and the Company had reserved $15,800 of the asset based loan facility (“ABL ~~Facility~~Facility”) for the issuance of letters of credit. As of ~~September 28, 2018,~~March 29, 2019, funds totaling ~~$87,100~~$90,015 were available for borrowing under the ABL Facility. The interest rates on the Company’s senior secured term loan and ABL Facility were ~~6.3%~~6.0% and ~~3.5%~~4.0%, respectively, at ~~September 28, 2018.~~March 29, 2019.

Note 10 Leases

The components of net lease cost were as follows:



	March 29, 2019
Operating lease cost	$	6,632
Finance lease cost
Amortization of right-of-use asset	43
Interest expense on lease liabilities	17
Total finance lease cost	$	60
Short-term lease cost	411
Variable lease cost	651
Sublease income	(180		)
Total lease cost, net	$	7,574

Supplemental balance sheet information related to finance leases was as follows:



	Balance Sheet Location	March 29, 2019
Short-term finance lease liabilities	Current portion of long-term debt	$	179
Long-term finance lease liabilities	Long-term debt, net of current portion	$	824

The maturities of the Company’s operating and finance lease liabilities for the remainder of the fiscal year ending December 27, 2019 and each of the next four fiscal years and thereafter were as follows:



	Operating Leases									Finance Leases
	Related Party Real Estate		Third Party Real Estate		Vehicles and Equipment		Total			Vehicles and Equipment
2019	$	388	$	7,489	$	10,048	$	17,925		$	181
2020	365		11,172		11,621		23,158			242
2021	—		10,685		9,338		20,023			236
2022	—		10,657		7,293		17,950			227
2023	—		10,120		4,797		14,917			171
Thereafter	—		84,439		2,354		86,793			151
Total	$	753	$	134,562	$	45,451	$	180,766		$	1,208
Less interest							(53,127		)	(205		)
Present value							$	127,639		$	1,003

At March 29, 2019, the weighted-average lease term for operating and finance leases was 10.4 years and 5.3 years, respectively. At March 29, 2019, the weighted-average discount rate for operating and finance leases was 6.6% and 5.7%, respectively.

As of March 29, 2019, the Company is contractually obligated to make payments of approximately $23,500, related to a lease for a distribution center and for several vehicle and equipment leases that have not commenced. Accordingly, the Company has not recognized ROU assets or lease liabilities associated with these leases.

The Company’s future minimum lease payments as of December 28, 2018, in accordance with legacy lease accounting standards, under non-cancelable operating and finance lease agreements were as follows:



	Operating Leases		Finance Leases
2019	$	24,666	$	56
2020	23,047		55
2021	19,918		50
2022	17,838		42
2023	14,876		4
Thereafter	47,330		—
Total minimum lease payments	$	147,675	207
Less interest			(49		)
Present value of capital lease obligations			$	158

Note 1011 Stockholders’ Equity

The following table reflects the activity of RSAs during the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018:~~March 29, 2019:


	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Unvested at December 29, 2017	329,761		$	16.69
Unvested at December 28, 2018					526,730		$	20.60
Granted	311,671		23.61		—		—
Vested	(106,730	)	17.76		(67,610	)	19.99
Forfeited	(1,506	)	17.13		(23,680	)	18.30
Unvested at September 28, 2018	533,196		$	20.52
Unvested at March 29, 2019					435,440		$	20.81

~~The Company granted 311,671 RSAs to its employees and directors at a weighted average grant date fair value of $23.61 each during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018. These awards are a mix of time and performance based grants which will vest over periods of 3 months to 4 years.~~ The Company recognized expense totaling ~~$940~~$801 and ~~$612~~$687 on its RSAs during the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $2,548 and $1,928 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively.

At ~~September 28, 2018,~~March 29, 2019, the total unrecognized compensation cost for unvested RSAs was ~~$6,061~~$3,993 and the weighted-average remaining useful life was approximately ~~2.1~~1.8 years. Of this total, ~~$3,324~~$2,059 related to RSAs with time-based vesting provisions and ~~$2,737~~$1,934 related to RSAs with performance-based vesting provisions. At ~~September 28, 2018,~~March 29, 2019, the weighted-average remaining

useful lives for time-based vesting and performance-based vesting RSAs were approximately ~~2.0~~1.9 years and ~~2.2~~1.7 years, respectively.

The following table summarizes stock option activity during the thirteen weeks ended March 29, 2019:



	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted-Average Remaining Contractual Term (in years)
Outstanding December 28, 2018	191,808		$	20.23	$	2,129	7.2
Granted	—		—
Exercised	(20,383	)	20.23
Canceled/Forfeited	—		—
Outstanding and vested at March 29, 2019	171,425		$	20.23	$	1,855	6.9
Exercisable at March 29, 2019	171,425		$	20.23	$	1,855	6.9

The Company recognized expense of ~~$150~~$114 and ~~$158~~$150 on stock options during the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $451 and $456 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively. ~~At September 28, 2018, the total unrecognized compensation cost for these options was $264 to be recognized over a weighted-average period of approximately 0.4 years.~~

As of ~~September 28, 2018,~~March 29, 2019, there were ~~243,543~~266,937 shares available for grant under the Company’s 2011 Omnibus Equity Incentive Plan. No share-based compensation expense has been capitalized.

Note 1112 Related Parties

The Chefs’ Warehouse Mid-Atlantic, LLC, a subsidiary of the Company, leases a distribution facility that is 100% owned by entities controlled by Christopher Pappas, the Company’s chairman, president and chief executive officer, and John Pappas, the Company’s vice chairman and one of its directors, and are deemed to be affiliates of these individuals. Expense related to this facility totaled ~~$134~~$108 and $133 during the thirteen weeks ended ~~September 28, 2018~~March 29, 2019 and ~~September 29, 2017, and $400~~March 30, 2018. This lease was amended during the ~~thirty-nine~~ ~~weeks ended September 28, 2018~~first quarter of fiscal 2019 and ~~September 29, 2017. This lease~~ expires on September 30, ~~2019.~~

The Company purchases products from ConAgra Foods, Inc. of which Steve Goldstone, a Director of the Company, was a member of the board of directors through September 20, 2018. The Company purchased approximately $176 and $191 worth of products from ConAgra Foods, Inc. during the thirteen weeks ended September 28, 2018 and September 29, 2017, respectively, and $662 and $545 during the ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017, respectively.~~

John DeBenedetti is a prior owner of Del Monte and served on the Company’s board of directors through April 20, 2018 at which point he ceased to be a related party. Mr. J. DeBenedetti, indirectly through TJ Investments, LLC, owned an 8.33% ownership interest in Old World Provisions, which supplies products to the Company since the Del Monte acquisition. The Company purchased approximately $474 of products during the sixteen weeks ended April 20, 2018, and $208 and $636 of products during the thirteen weeks ended September 29, 2017 and ~~thirty-nine~~ ~~weeks ended September 29, 2017, respectively. Mr. J. DeBenedetti was not involved in the day-to-day management of Old World Provisions.~~2020.

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 ~~$113~~$436 and ~~$99~~$427 in total compensation for the thirteen weeks ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017, respectively, and $643 and $494 during the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017,~~ respectively. John Pappas did not receive any compensation during the ~~thirty-nine~~thirteen weeks ended ~~September 28,~~March 29, 2019 or March 30, 2018 ~~or September 29, 2017~~ for his service on the Company’s Board of Directors.

John Pappas’s brother-in-law, Constantine Papataros, is one of the Company’s employees. The Company paid him approximately $49 and $48 in total compensation for the thirteen weeks ended September 28, 2018 and September 29, 2017, respectively, and $134 and $140 during the ~~thirty-nine~~ ~~weeks ended September 28, 2018 and September 29, 2017, respectively.~~

Note 1213 Supplemental Disclosures of Cash Flow Information

Thirty-nine Weeks Ended
September 28, 2018 September 29, 2017
Supplemental cash flow disclosures:

Cash paid for income taxes, net of cash received $ 3,905
$ 500
Cash paid for interest $ 13,928
$ 14,664
Non cash financing activities:
Sinking funds used to retire debt $ —
$ 2,939
Conversion of subordinated notes and accrued interest into common stock $ 37,015
$ —
Non-cash investing activity:

Contingent earn-out liabilities for acquisitions $ 767
$ 4,500
Common stock issued for acquisitions $ —
$ 3,300



	Thirteen Weeks Ended
	March 29, 2019		March 30, 2018
Supplemental cash flow disclosures:
Cash paid for income taxes, net of cash received	$	964	$	(585	)
Cash paid for interest	$	5,271	$	4,035
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating expenses	$	5,890	$	—
Operating cash flows from finance leases	$	17	$	—
ROU assets obtained in exchange for lease liabilities:
Operating leases	$	131,819	$	—
Finance leases	$	854	$	—
Other non cash investing and financing activities:
Convertible notes issued for acquisitions	$	4,000	$	—
Contingent earn-out liabilities for acquisitions	$	4,080	$	—

~~Note 13 Subsequent Events~~

~~On October 2, 2018, the Company paid $3,000 to the former owners of Fells Point related to their successful attainment of the targeted EBITDA in their earn-out agreement.~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to the accompanying consolidated financial statements and footnotes to help provide an understanding of our financial condition, changes in our financial condition and results of operations. The following discussion should be read in conjunction with information included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March ~~9, 2018.~~1, 2019. Unless otherwise indicated, the terms ~~Company, Chefs’ Warehouse, we, us~~“Company”, “Chefs’ Warehouse”, “we”, “us” and ~~our~~“our” refer to The Chefs’ Warehouse, Inc. and its subsidiaries.

OVERVIEW

We are a premier distributor of specialty foods in eight of the leading culinary markets in the United States. We offer more than ~~48,000~~55,000 SKUs, ranging from high-quality specialty foods and ingredients to basic ingredients and staples and center-of-the-plate proteins. We serve more than ~~30,000~~34,000 customer locations, primarily located in our 1516 geographic markets across the United States and Canada, and the majority of our customers are independent restaurants and fine dining establishments. As a result of our acquisition of Allen Brothers, Inc. (“Allen Brothers”) we also sell certain of our center-of-the-plate products directly to consumers.

We believe several key differentiating factors of our business model have enabled us to execute our strategy consistently and profitably across our expanding customer base. These factors consist of a portfolio of distinctive and hard-to-find specialty food products, an extensive selection of center-of-the-plate proteins, a highly trained and motivated sales force, strong sourcing capabilities, a fully integrated warehouse management system, a highly sophisticated distribution and logistics platform and a focused, seasoned management team.

In recent years, our sales to existing and new customers have increased through the continued growth in demand for specialty food products and center-of-the-plate products in general; increased market share driven by our large percentage of sophisticated and experienced sales professionals, our high-quality customer service and our extensive breadth and depth of product offerings; the acquisition of other specialty food and center-of-the-plate distributors; the expansion of our existing distribution centers; our entry into new distribution centers; and the import and sale of our proprietary brands. Through these efforts, we believe that we have been able to expand our customer base, enhance and diversify our product selections, broaden our geographic penetration and increase our market share.

RECENT ACQUISITIONS

On ~~August~~February 25, ~~2017, we entered into~~2019, pursuant to an asset purchase agreement, ~~to acquire~~we acquired substantially all of the assets of ~~Fells Point,~~Bassian Farms, Inc. and certain affiliated entities (“Bassian”), a specialty protein manufacturer and distributor based in ~~the metro Baltimore and Washington DC area.~~northern California. The ~~final~~aggregate purchase price for the transaction at acquisition date was approximately ~~$34.1~~$32.0 million ~~including $29.7~~and is subject to a customary working capital true-up. The acquisition was funded with $28.0 million ~~paid~~ in cash ~~at closing, $3.3 million consisting of 185,442 shares of~~and the ~~Company’s common stock and $1.1 million paid upon settlement~~issuance of a ~~net working capital true-up.~~

~~During the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018, we paid approximately $11.4~~$4.0 million ~~to acquire several small foodservice distribution businesses.~~unsecured convertible note.

Our Growth Strategies and Outlook

We continue to invest in our people, facilities and technology in an effort to achieve the following objectives and maintain our premier position within the specialty foodservice distribution market:

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.

Our growth has allowed us to improve upon our organization’s infrastructure, open new distribution facilities and pursue selective acquisitions. Over the last several years, we have increased our distribution capacity to approximately ~~1.4~~1.6 million square feet in 2729 distribution facilities at ~~September 28, 2018~~March 29, 2019 and have invested significantly in acquisitions, infrastructure and management.

Key Factors Affecting Our Performance

Due to our focus on menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores, our results of operations are materially impacted by the success of the food-away-from-home industry in the United States and Canada, which is materially impacted by general economic conditions, weather, discretionary spending levels and consumer confidence. When economic conditions deteriorate, our ~~customers~~customers’ businesses are negatively impacted as fewer people eat away-from-home and those who do spend less money. As economic conditions begin to improve, our customers’ businesses historically have likewise improved, which contributes to improvements in our business. Likewise, the direct-to-consumer business of our Allen Brothers subsidiary is significantly dependent on consumers’ discretionary spending habits, and weakness or uncertainty in the economy could lead to consumers buying less from Allen Brothers.

Volatile food costs may have a direct impact upon our profitability. Prolonged periods of product cost inflation may have a negative impact on our profit margins and results of operations to the extent we are unable to pass on all or a portion of such product cost increases to our customers. In addition, product cost inflation may negatively impact consumer discretionary spending decisions within our customers’ establishments, which could adversely impact our sales. Conversely, our profit levels may be negatively impacted during periods of product cost deflation even though our gross profit as a percentage of sales may remain relatively constant. However, some of our products, particularly certain of our center-of-the-plate items, are priced on a ~~cost plus a dollar~~“cost plus” markup, which helps mitigate the negative impact of deflation.

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, the shift in product mix resulting from acquisitions, as well as the continued growth in item penetration on higher velocity items such as dairy products.

The foodservice distribution industry is fragmented but consolidating, and we have supplemented our internal growth through selective strategic acquisitions. We believe that the consolidation trends in the foodservice distribution industry will continue to present acquisition opportunities for us, which may allow us to grow our business at a faster pace than we would otherwise be able to grow the business organically.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, certain income and expense items expressed as a percentage of net sales:


	Thirteen Weeks Ended				Thirty-nine Weeks Ended				Thirteen Weeks Ended
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017		March 29, 2019		March 30, 2018
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	74.6	%	75.1	%	74.8	%	74.9	%	74.7	%	75.0	%
Gross profit	25.4	%	24.9	%	25.2	%	25.1	%	25.3	%	25.0	%
Operating expenses	22.6	%	21.7	%	22.3	%	22.4	%	23.5	%	23.2	%
Operating income	2.8	%	3.2	%	2.9	%	2.7	%	1.8	%	1.8	%
Other expense	1.3	%	1.7	%	1.4	%	1.8	%	1.3	%	1.6	%
Income before income tax expense	1.5	%	1.5	%	1.5	%	0.9	%	0.5	%	0.2	%
Provision for income taxes	0.4	%	0.6	%	0.4	%	0.4	%	0.1	%	0.1	%
Net income	1.1	%	0.9	%	1.1	%	0.5	%	0.4	%	0.1	%

Management evaluates the results of operations and cash flows using a variety of key performance indicators, including net sales compared to prior periods and internal forecasts, costs of our products and results of our cost-control initiatives, and use of operating cash. These indicators are discussed throughout the ~~Results~~“Results of ~~Operations~~Operations” and ~~Liquidity~~“Liquidity and Capital ~~Resources~~Resources” sections of this MD&A.

Thirteen Weeks Ended ~~September 28, 2018~~March 29, 2019 Compared to Thirteen Weeks Ended ~~September 29, 2017~~March 30, 2018

Net Sales

Our net sales for the thirteen weeks ended ~~September 28, 2018~~March 29, 2019 increased approximately ~~11.2%~~12.1%, or ~~$36.4~~$38.4 million, to ~~$361.5~~$357.0 million from ~~$325.1~~$318.6 million for the thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. Organic growth contributed ~~$13.1~~$17.9 million, or ~~4.0%~~5.6% to sales growth in the quarter. The remaining sales growth of ~~$23.3~~$20.5 million, or ~~7.2%~~6.5%, resulted from ~~the acquisition of Fells Point Wholesale Meats Inc. (“Fells Point”) on August 25, 2017 and other~~ acquisitions. Organic case count grew approximately ~~6.0%~~5.2%, in our specialty category ~~and growth in~~with unique customers and placements ~~grew 5.7%~~growth at 6.2% and ~~4.8%~~5.2%, respectively, compared to the prior year quarter. ~~Excluding the impact of the Fells Point acquisition, pounds~~Pounds sold in our center-of-the-plate category increased ~~4.3%~~3.1% compared to the prior year quarter. Estimated inflation was ~~1.8%~~1.4% in our specialty category and ~~estimated deflation was 2.6%~~1.3% in our center-of-the-plate category compared to the prior year quarter.

Gross Profit

Gross profit increased approximately ~~13.7%~~13.4%, or ~~$11.1~~$10.7 million, to ~~$92.0~~$90.2 million for the thirteen weeks ended ~~September 28, 2018,~~March 29, 2019, from ~~$80.9~~$79.5 million for the thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. Gross profit margin increased approximately 5630 basis points to ~~25.4%~~25.3% from ~~24.9%, due in large part to the impact of deflation in certain center-of-the-plate categories.~~25.0%. Gross margins in the Company’s specialty category decreased 3239 basis points and increased ~~139~~106 basis points in the Company’s center-of-the-plate category compared to the prior year quarter.

Operating Expenses

Total operating expenses increased by approximately ~~16.1%~~13.9%, or ~~$11.3~~$10.3 million, to ~~$81.7~~$84.0 million for the thirteen weeks ended ~~September 28, 2018~~March 29, 2019 from ~~$70.4~~$73.8 million for the thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. The increase in operating expense relates primarily to certain corporate related costs and facilities costs as a result of growth. As a percentage of net sales, operating expenses were ~~22.6%~~23.5% in the ~~third~~first quarter of ~~2018~~2019 compared to ~~21.7%~~23.2% in the ~~third~~first quarter of 2017. The increase in operating expenses relates primarily to the increased sales volumes and includes a $1.8 million non-cash charge recorded in the third quarter for the change in the fair value of the Fells Point earn-out liability. The increase in operating expense as a percentage of net sales is primarily driven by the earn-out adjustment and the impact of deflation and product mix on the percentage of sales ratio as compared to the third quarter of 2017.2018.

Operating Income

Operating income for the thirteen weeks ended ~~September 28, 2018~~March 29, 2019 was ~~$10.3~~$6.2 million compared to ~~$10.5~~$5.7 million for the thirteen weeks ended September 29, 2017. As a percentage of net sales, operating income was 2.8% for the thirteen weeks ended September 28, 2018 compared to 3.2% for the thirteen weeks ended September 29, 2017. The decrease in operating income was driven primarily by higher operating expenses, as discussed above, offset in part by increased gross profit. The decrease in the operating income to sales ratio was primarily caused by the $1.8 million earn-out adjustment in the third quarter ofMarch 30, 2018.

~~Interest Expense~~

Total interest expense decreased to $4.7 million for the thirteen weeks ended September 28, 2018 compared to $5.6 million for the thirteen weeks ended September 29, 2017 due to lower effective interest rates charged on the Company’s outstanding debt and the conversion of the convertible subordinated notes on July 25, 2018.

~~Provision for Income Taxes~~

For the thirteen weeks ended September 28, 2018, we recorded an effective income tax rate of 25.7%. For the thirteen weeks ended September 29, 2017, our effective income tax rate was 41.7%. The reduction in effective tax rate is primarily a result of the enactment H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), on December 22, 2017. Among other changes to the U.S. Internal Revenue Code, the Tax Act reduced the U.S. federal corporate top tax rate from 35.0% to 21.0%.

~~Net Income~~

Reflecting the factors described above, net income was $4.2 million for the thirteen weeks ended September 28, 2018, compared to net income of $2.9 million for the thirteen weeks ended September 29, 2017.

~~Thirty-nine Weeks Ended September 28, 2018 Compared to Thirty-nine Weeks Ended September 29, 2017~~

~~Net Sales~~

~~Our net sales for the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 increased approximately 11.2%, or $106.1 million, to $1,050.6 million from $944.4 million for the~~ ~~thirty-nine~~ weeks ended September 29, 2017. Organic growth contributed $42.7 million or 4.5% to sales growth in the period. The remaining sales growth of $63.4 million, or 6.7% resulted from the acquisition of Fells Point on August 25, 2017 and other specialty-related acquisitions. Organic case count grew approximately 6.0%, in our specialty category. In addition, growth in unique customers and placements grew 4.8% and 4.2%, respectively, compared to the prior year period. Excluding the impact of the Fells Point acquisition, pounds sold in our center-of-the-plate category increased 1.8% compared to the prior year period. Estimated inflation was 2.6% in our specialty category and estimated deflation was 1.3% in our center-of-the-plate category compared to the prior year period.

~~Gross Profit~~

~~Gross profit increased approximately 11.5%, or $27.4 million, to $264.8 million for the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018, from $237.4 million for the~~ ~~thirty-nine~~ weeks ended September 29, 2017. Gross profit margin increased approximately 6 basis points to 25.2% from 25.1%, due in large part to the impact of inflation in certain center-of-the-plate categories. Gross margins in the Company’s specialty category decreased 34 basis points and increased 48 basis points in the Company’s center-of-the-plate category compared to the prior year period.

~~Operating Expenses~~

~~Total operating expenses increased by approximately 10.5%, or $22.2 million, to $233.8 million for the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 from $211.6 million for the~~ ~~thirty-nine~~ weeks ended September 29, 2017. As a percentage of net sales, operating expenses were 22.3% in the current period compared to 22.4% in the prior year period. The 15 basis point decrease in the Company’s operating expense ratio is net of a $1.8 million non-cash charge recorded in the third quarter for the change in the fair value of the Fells Point earn-out liability.

~~Operating Income~~

~~Operating income for the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 was $31.0 million compared to $25.8 million for the~~ ~~thirty-nine~~ ~~weeks ended September 29, 2017. As a percentage of net sales, operating income was 2.9% for the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018 compared to 2.7% for the~~ ~~thirty-nine~~ ~~weeks ended September 29, 2017.~~ The increase in operating income was driven primarily by increased gross profit, offset in part by higher operating expenses, as discussed above. As a percentage of net sales, operating income was 1.8% for the thirteen weeks ended March 29, 2019 and March 30, 2018.

Interest Expense and Other Expense

~~Total interest~~Interest and other expense decreased to ~~$15.0~~$4.6 million for the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018~~March 29, 2019 compared to ~~$17.4~~$5.0 million for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017~~March 30, 2018 due to lower effective interest rates charged on the Company’s outstanding debt and the conversion of the $36.8 million of convertible subordinated notes ~~on July 25,~~during the third quarter of 2018.

Provision for Income Taxes

For the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018,~~March 29, 2019, we recorded an effective income tax rate of 27.5%. For the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017,~~March 30, 2018, our effective income tax rate was 41.6% The reduction in effective tax rate is a result of the enactment of the Tax Act, on December 22, 2017. Among other changes to the U.S. Internal Revenue Code, the Tax Act reduced the U.S. federal corporate top tax rate from 35.0% to 21.0%28.5%.

Net Income

Reflecting the factors described above, net income was ~~$11.5~~$1.1 million for the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018,~~March 29, 2019, compared to net income of ~~$4.9~~$0.5 million for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017.~~

March 30, 2018.

LIQUIDITY AND CAPITAL RESOURCES

We finance our day-to-day operations and growth primarily with cash flows from operations, borrowings under our senior secured credit facilities and other indebtedness, equity financing, operating leases, and trade payables.

Senior Secured Term Loan Credit Facility

On June 22, 2016, Chefs’ Warehouse Parent, LLC (“CW Parent”) and Dairyland USA Corporation (“Dairyland”), as co-borrowers, and The Chefs’ Warehouse, Inc. (the “Company”) and certain other subsidiaries of the Company, as guarantors, entered 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 Term Loan Credit Agreement provides for a senior secured term loan B facility (the “Term Loan Facility”) in an aggregate amount of $305.0 million with a $50.0 million six-month delayed draw term loan facility (the “DDTL”; the loans outstanding under the Term Loan Facility (including the DDTL), the “Term Loans”). On June 27, 2016, the Company drew $14.0 million from the DDTL to help pay fund the acquisition of M.T. Food Service, Inc. 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 $25.0 million of the outstanding balance of 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 $50.0 million (less the aggregate amount of certain indebtedness incurred to finance acquisitions) plus an unlimited amount subject to the ~~Company's~~Company’s consolidated 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 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 $0.8 million which were capitalized as deferred financing charges. On July 6, 2018, the Company made a $47.1 million prepayment and is no longer required to make quarterly amortization payments on the Term Loan Facility. ~~The interest rate on this facility at September 28,~~On November 16, 2018, ~~was 6.3% and~~ the ~~final maturity~~Company completed a repricing of the Term Loan Facility ~~is June 22, 2022.~~to reduce the Applicable Rate from 400 basis points to 350 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $0.6 million which were capitalized as deferred financing charges. The Company wrote off unamortized deferred financing fees of $1.1 million as a result of this repricing.

The interest rates per annum applicable to Term ~~Loan Facility,~~Loans, will be, at the co-borrowers’ option, equal to either a base rate or an adjusted ~~LIBO~~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 interest rate on this facility at March 29, 2019 was 6.0% and the final maturity of the Term Loan Facility is June 22, 2022.

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 ~~September 28, 2018,~~March 29, 2019, the Company was in compliance with all debt covenants under the Term Loan Facility.

Asset Based Loan Facility

On June 29, 2018, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which BMO Harris Bank, N.A. acts as administrative agent. The ABL Credit Agreement ~~replaces the Company’s prior asset based loan facility (the “Prior ABL”). The ABL Credit Agreement~~ provides for an asset based loan facility (the “ABL Facility”) in the aggregate amount of up to $150.0 ~~million, up from $75.0 million under the Prior ABL.~~million. Availability under the ABL Facility will be limited to a borrowing base equal to 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. 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 $25.0 million. The ABL Facility matures on the earlier of June 29, 2023 and 90 days prior to the maturity date of the Company’s Term Loan Facility.

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~~

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 the greater of $10.0 million or 10% of the borrowing base. 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. On July 6, 2018, the Company borrowed $47.1 million under the ABL Facility and made an equivalent prepayment on its senior secured term loan. There was ~~$47.1~~$44.2 million outstanding under the ABL Facility as of ~~September 28, 2018~~March 29, 2019, bearing an interest rate of ~~3.5%~~4.0%.

As of ~~September 28, 2018,~~March 29, 2019, the Company was in compliance with all debt covenants under the ABL Facility and the Company had reserved $15.8 million of the ABL ~~facility~~Facility for the issuance of letters of credit. As of ~~September 28, 2018,~~March 29, 2019, funds totaling ~~$87.1~~$90.0 million were available for borrowing under the ABL ~~facility.~~Facility.

Convertible ~~Subordinated Notes~~Unsecured Note

On ~~April 6, 2015, Del Monte Capital Meat Company, LLC, a wholly-owned subsidiary of~~February 25, 2019, the Company issued ~~$36.8~~a $4.0 million ~~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~~unsecured note (the “Note”), maturing on June 29, 2023, to ~~certain entities~~Bassian Farms, Inc. (the “Holder”) as partial consideration in the ~~Del Monte~~Bassian acquisition. ~~On July 25, 2018,~~The interest rate charged on the ~~holders converted these notes~~Note is 4.5% per annum and ~~related accrued interest~~increases to 5.0% after the two-year anniversary of ~~$0.3 million~~the closing date. The Company may, in certain instances beginning eighteen months after issuance of the Note, redeem the Note in whole or in part for cash or convert the Note into ~~1,246,272~~ shares of the Company’s common ~~stock.~~stock at the conversion price of $43.93 per share. After the two-year anniversary of the closing date, the Holder may convert the Note into shares of the Company’s common stock at the conversion price. Upon a change of control event, the Holder may convert the Note into shares of the Company’s common stock at the conversion price or redeem the Note for cash.

Liquidity

We believe our capital expenditures, excluding cash paid for acquisitions, for fiscal ~~2018~~2019 will be in the range of ~~$16.0~~$24.0 million to ~~$18.0~~$26.0 million. The increase in projected capital expenditures in fiscal ~~2018~~2019 as compared to fiscal ~~2017~~2018 is the result of planned expansions of several of our distribution facilities and renovations to our corporate headquarters. Recurring capital expenditures will be financed with cash generated from operations and borrowings under our ABL Facility. Our planned capital projects will provide both new and expanded facilities and improvements to our technology that we believe will produce increased efficiency and the capacity to continue to support the growth of our customer base. Future investments and acquisitions will be financed through either internally generated cash flow, borrowings under our senior secured credit facilities in place at the time of the potential investment or acquisition or through the issuance of equity or debt securities, including, but not limited to, longer-term, fixed-rate debt securities and shares of our common stock.

~~During the~~ ~~thirty-nine~~ ~~weeks ended September 28, 2018, we paid approximately $11.4 million on small strategic acquisitions.~~

On July 6, 2018, we borrowed $47.1 million under our ABL Facility which has a lower fixed interest rate spread than the Prior ABL. The funds were used to make an equivalent prepayment on our Term Loan Facility which, prospectively, decreases the effective interest rates charged on our outstanding debt.

~~On July 25, 2018, the holders of the convertible subordinated notes converted these notes and related accrued interest into 1,246,272 shares of our common stock.~~

~~On October 2, 2018, we paid $3.0 million to the former owners of Fells Point related to their successful attainment of the targeted EBITDA in their earn-out agreement.~~

Net cash provided by operations was ~~$33.5~~$7.4 million for the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018, an increase~~March 29, 2019, a decrease of ~~$10.3~~$3.1 million from the ~~$23.2~~$10.5 million provided by operations for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. The primary reasons for the ~~increase~~decrease was a decrease in cash from working capital changes, partially offset by increased cash generated through net ~~income and working capital changes.~~income. The primary cause for the increase in net income was an increase in operating income and ~~a reduction in~~lower interest ~~expense as a result of our Term Loan repricing on December 13, 2017.~~expense. The ~~increase~~decrease in cash provided by changes in working capital was primarily due to a decrease in cash ~~used in inventory~~from accounts payable changes and ~~accounts receivable~~prepaid expenses and other current assets changes of ~~$15.4~~$10.7 million and ~~$1.5~~$3.0 million, respectively, partially offset by ~~an increase~~increases in cash ~~used in~~ from accounts ~~payable changes, prepaid expenses and other current assets changes and other liabilities~~receivable changes of ~~$13.3 million, $1.8 million and $0.6 million, respectively.~~$7.3 million.

Net cash used in investing activities was ~~$21.3~~$32.1 million for the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018, a decrease~~March 29, 2019, an increase of ~~$18.3~~$26.8 million from the net cash used in investing activities of ~~$39.6~~$5.3 million for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. The ~~decrease~~increase in net cash used was primarily due ~~less~~to more cash paid for acquisitions and ~~a decrease in~~ capital ~~expenditures of $0.5 million.~~expenditures.

Net cash used in financing activities was ~~$3.8~~$0.4 million for the ~~thirty-nine~~thirteen weeks ended ~~September 28, 2018,~~March 29, 2019, a cash ~~decrease~~increase of ~~$8.8~~$1.3 million from the ~~$12.6~~$1.7 million used in financing activities for the ~~thirty-nine~~thirteen weeks ended ~~September 29, 2017.~~March 30, 2018. This ~~decrease~~increase was ~~mainly~~primarily due to the repayment of the New Markets Tax Credit Loan in the second quarter of 2017. On July 6, 2018, we drew $47.1 million under the ABL Facility and made a $47.1 million prepayment on the Term Loan. As of a result of the prepayment,fact we are no longer required to make quarterly amortization payments on our Term Loan as a result of the ~~Term Loan.~~$47.1 million prepayment we made in the second quarter of 2018.

Seasonality

Excluding our direct-to-consumer business, we generally do not experience any material seasonality. However, our sales and operating results may vary from quarter to quarter due to factors such as changes in our operating expenses, management’s ability to execute our operating and growth strategies, personnel changes, demand for our products, supply shortages, weather patterns and general economic conditions.

Our direct-to-consumer business is subject to seasonal fluctuations, with direct-to-consumer center-of-the-plate protein sales typically higher during the holiday season in our fourth quarter; accordingly, a disproportionate amount of operating cash flows from this portion of our business is generated by our direct-to-consumer business in the fourth quarter of our fiscal year. Despite a significant portion of these sales occurring in the fourth quarter, there are operating expenses, principally advertising and promotional expenses, throughout the year.

Inflation

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our customers. The impact of inflation and deflation on food, labor, energy and occupancy costs can significantly affect the profitability of our operations.

Off-Balance Sheet Arrangements

As of ~~September 28, 2018,~~March 29, 2019, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of the Company’s financial condition and results and require its most difficult, complex or subjective judgments or estimates. Based on this definition, we believe our critical accounting policies include the following: (i) determining ~~the~~our allowance for doubtful accounts, (ii) inventory valuation, with regard to determining ~~the reserve~~inventory balance adjustments for excess and obsolete inventory, (iii) valuing goodwill and intangible assets, (iv) vendor rebates and other promotional incentives, (v) self-insurance reserves, and (vi) accounting for income taxes and (vii) contingent earn-out liabilities. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form 10-K filed with the SEC on March ~~9, 2018.~~1, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of ~~September 28, 2018,~~March 29, 2019, we had ~~$286.8~~an aggregate of $283.9 million of indebtedness outstanding under the Term Loan and ABL Facility that bore interest at variable rates. A 100 basis point increase in market interest rates would decrease our after tax earnings by approximately $2.1 million per annum, holding other variables constant.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of ~~September 28, 2018.~~March 29, 2019.

Changes in Internal Control over Financial Reporting

We have implemented new internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new accounting standard related to leases on our financial statements as a result of its adoptionon December 29, 2018. There were no other changes in our internal control over financial reporting during the ~~most recent fiscal period~~quarter ended March 29, 2019 that ~~may~~ have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in legal proceedings, claims and litigation arising out of the ordinary conduct of our business. Although we cannot assure the outcome, management presently believes that the result of such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our consolidated financial statements, and no material amounts have been accrued in our consolidated financial statements with respect to these matters.

ITEM 1A. RISK FACTORS

There has been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March ~~9, 2018.~~1, 2019.

ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES

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
June 30, 2018 to July 27, 2018 181
$ 30.35
—
—
July 28, 2018 to August 24, 2018 3,712
$ 28.65
—
—
August 25, 2018 to September 28, 2018 254
$ 32.20
—
—
Total 4,147
$ 28.94
—
—



	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
December 30, 2018 to January 25, 2019	—	$	—	—	—
January 26, 2019 to February 22, 2019	—	$	—	—	—
February 23, 2019 to March 29, 2019	24,002	$	30.85	—	—
Total	24,002	$	30.85	—	—


(1)	During the thirteen weeks ended ~~September 28, 2018,~~March 29, 2019, we withheld ~~4,147~~24,002 shares to satisfy tax withholding requirements upon the vesting of restricted shares of our common stock awarded to our officers and key employees.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



Exhibit No.			Description

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~November 6, 2018.~~May 1, 2019.



			THE CHEFS’ WAREHOUSE, INC.
			(Registrant)

Date: ~~November 6, 2018~~May 1, 2019			/s/ James Leddy
			James Leddy
			Chief Financial Officer
			(Principal Financial Officer)

Date: ~~November 6, 2018~~May 1, 2019			/s/ Timothy McCauley
			Timothy McCauley
			Chief Accounting Officer
			(Principal Accounting Officer)

2825



Balance as of December 29, 2017	$	1,283
Cash payments received	11,046
Net sales recognized	(11,476		)
Balance as of September 28, 2018	$	853



Carrying amount as of December 29, 2017	$	173,202
Goodwill adjustments	3,303
Acquisitions	5,502
Foreign currency translation	(16		)
Carrying amount as of September 28, 2018	$	181,991



December 29, 2017:
Customer relationships	$	117,006	$	(27,704	)	$	89,302
Non-compete agreements	7,566		(6,946		)	620
Trademarks	60,734		(10,336		)	50,398
Total	$	185,306	$	(44,986	)	$	140,320