10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

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

For the quarterly period ended September 28, 2019

OR

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

Commission File Number 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)

Delaware	74-1648137
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)

1390 Enclave Parkway, Houston, Texas 77077-2099

(Address of principal executive offices and zip code)

Registrant’s Telephone Number, Including Area Code:

(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $1.00 Par Value	SYY	New York Stock Exchange
1.25% Notes due June 2023	SYY 23	New York Stock Exchange

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 þ    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ    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	☐	Smaller Reporting Company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the 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 þ

510,226,830 shares of common stock were outstanding as of October 18, 2019.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	42
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
Signatures		46

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)

	Sep. 28, 2019			Jun. 29, 2019
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	455,482		$	513,460
Accounts and notes receivable, less allowances of $49,443 and $28,176	4,397,005			4,181,696
Inventories	3,386,808			3,216,034
Prepaid expenses and other current assets	235,014			210,582
Income tax receivable	9,855			19,733
Total current assets	8,484,164			8,141,505
Plant and equipment at cost, less accumulated depreciation	4,493,016			4,501,705
Other long-term assets
Goodwill	3,871,722			3,896,226
Intangibles, less amortization	825,287			857,301
Deferred income taxes	98,118			80,760
Operating lease right-of-use assets, net	626,580			—
Other assets	557,688			489,025
Total other long-term assets	5,979,395			5,323,312
Total assets	$	18,956,575		$	17,966,522
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable	$	3,433		$	3,957
Accounts payable	4,247,276			4,314,620
Accrued expenses	1,596,925			1,729,941
Accrued income taxes	96,932			17,343
Current operating lease liabilities	102,544			—
Current maturities of long-term debt	54,361			37,322
Total current liabilities	6,101,471			6,103,183
Long-term liabilities
Long-term debt	8,637,706			8,122,058
Deferred income taxes	178,719			172,232
Long-term operating lease liabilities	545,566			—
Other long-term liabilities	1,005,337			1,031,020
Total long-term liabilities	10,367,328			9,325,310
Noncontrolling interest	33,028			35,426
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—			—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175			765,175
Paid-in capital	1,490,661			1,457,419
Retained earnings	11,486,833			11,229,679
Accumulated other comprehensive loss	(1,675,430		)	(1,599,729		)
Treasury stock at cost, 254,310,626 and 252,297,926 shares	(9,612,491		)	(9,349,941		)
Total shareholders’ equity	2,454,748			2,502,603
Total liabilities and shareholders’ equity	$	18,956,575		$	17,966,522

Note: The June 29, 2019 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

1

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

(In thousands, except for share and per share data)

	13-Week Period Ended
	Sep. 28, 2019		Sep. 29, 2018
Sales	$	15,303,005	$	15,215,279
Cost of sales	12,359,635		12,311,494
Gross profit	2,943,370		2,903,785
Operating expenses	2,275,052		2,275,645
Operating income	668,318		628,140
Interest expense	83,335		89,016
Other (income) expense, net	3,112		1,132
Earnings before income taxes	581,871		537,992
Income taxes	128,090		106,950
Net earnings	$	453,781	$	431,042
Net earnings:
Basic earnings per share	$	0.88	$	0.83
Diluted earnings per share	0.87		0.81
Average shares outstanding	513,496,296		520,856,599
Diluted shares outstanding	518,761,456		529,034,470

See Notes to Consolidated Financial Statements

2

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Net earnings	$	453,781		$	431,042
Other comprehensive (loss) income:
Foreign currency translation adjustment	(126,159		)	(24,927		)
Items presented net of tax:
Amortization of cash flow hedges	2,155			2,155
Change in net investment hedges	30,000			8,588
Change in cash flow hedges	9,259			(3,008		)
Amortization of prior service cost	1,428			1,600
Amortization of actuarial loss	6,683			6,529
Actuarial (loss) gain	—			(32,511		)
Change in marketable securities	933			—
Total other comprehensive (loss) income	(75,701		)	(41,574		)
Comprehensive income	$	378,080		$	389,468

See Notes to Consolidated Financial Statements

3

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY

(In thousands, except for share data)

									Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings						Treasury Stock
	Shares	Amount										Shares		Amounts			Totals
Balance as of June 29, 2019	765,174,900	$	765,175	$	1,457,419	$	11,229,679		$	(1,599,729	)	252,297,926		$	(9,349,941	)	$	2,502,603
Net earnings						453,781											453,781
Foreign currency translation adjustment									(126,159		)						(126,159		)
Amortization of cash flow hedges, net of tax									2,155								2,155
Change in cash flow hedges, net of tax									9,259								9,259
Change in net investment hedges, net of tax									30,000								30,000
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax									8,111								8,111
Change in marketable securities, net of tax									933								933
Adoption of ASU 2016-02, Leases (Topic 842), net of tax						1,978											1,978
Dividends declared ($0.39 per common share)						(198,605		)									(198,605		)
Treasury stock purchases												4,587,397		(347,867		)	(347,867		)
Share-based compensation awards				33,242								(2,574,697	)	85,317			118,559
Balance as of September 28, 2019	765,174,900	$	765,175	$	1,490,661	$	11,486,833		$	(1,675,430	)	254,310,626		$	(9,612,491	)	$	2,454,748
									Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings						Treasury Stock
	Shares	Amount										Shares		Amounts			Totals
Balance as of June 30, 2018	765,174,900	$	765,175	$	1,383,619	$	10,348,628		$	(1,409,269	)	244,533,248		$	(8,581,196	)	$	2,506,957
Net earnings						431,042											431,042
Foreign currency translation adjustment									(24,927		)						(24,927		)
Amortization of cash flow hedges, net of tax									2,155								2,155
Change in cash flow hedges, net of tax									(3,008		)						(3,008		)
Change in net investment hedges, net of tax									8,588								8,588
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax									8,129								8,129
Pension funded status adjustment, net of tax									(32,511		)						(32,511		)
Dividends declared ($0.36 per common share)						(187,180		)									(187,180		)
Treasury stock purchases												2,911,677		(209,541		)	(209,541		)
Share-based compensation awards				54,478								(2,419,654	)	84,392			138,870
Balance as of September 29, 2018	765,174,900	$	765,175	$	1,438,097	$	10,592,490		$	(1,450,843	)	245,025,271		$	(8,706,345	)	$	2,638,574

See Notes to Consolidated Financial Statements

4

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)

	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Cash flows from operating activities:
Net earnings	$	453,781		$	431,042
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	21,386			29,193
Depreciation and amortization	187,405			187,627
Operating lease asset amortization	26,925			—
Amortization of debt issuance and other debt-related costs	4,920			6,170
Deferred income taxes	(25,494		)	(20,249		)
Provision for losses on receivables	18,712			10,464
Other non-cash items	2,295			(3,695		)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) in receivables	(236,136		)	(182,233		)
(Increase) in inventories	(186,331		)	(229,100		)
(Increase) in prepaid expenses and other current assets	(30,133		)	(23,540		)
(Decrease) increase in accounts payable	(38,894		)	78,112
(Decrease) in accrued expenses	(92,661		)	(111,309		)
(Decrease) in operating lease liabilities	(30,597		)	—
Increase in accrued income taxes	89,467			100,868
Decrease (increase) in other assets	3,141			(4,261		)
Increase in other long-term liabilities	3,793			2,056
Net cash provided by operating activities	171,579			271,145
Cash flows from investing activities:
Additions to plant and equipment	(175,728		)	(104,322		)
Proceeds from sales of plant and equipment	4,902			3,839
Acquisition of businesses, net of cash acquired	(74,814		)	—
Purchase of marketable securities	(4,002		)	—
Proceeds from sales of marketable securities	3,018			—
Other investing activities	—			912
Net cash used for investing activities	(246,624		)	(99,571		)
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments), net	533,400			—
Other debt borrowings	31,789			386,142
Other debt repayments	(16,139		)	(8,078		)
Proceeds from stock option exercises	85,317			84,393
Treasury stock purchases	(349,314		)	(204,640		)
Dividends paid	(200,037		)	(187,229		)
Other financing activities	(22,311		)	(2,200		)
Net cash provided by financing activities	62,705			68,388
Effect of exchange rates on cash, cash equivalents and restricted cash	(5,485		)	(2,435		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(17,825		)	237,527
Cash, cash equivalents and restricted cash at beginning of period	532,245			715,844
Cash, cash equivalents and restricted cash at end of period	$	514,420		$	953,371
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	84,407		$	81,392
Income taxes	70,013			70,675

See Notes to Consolidated Financial Statements

5

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or “the company” as used in this Form 10-Q refer to Sysco Corporation together with its consolidated subsidiaries and divisions.

1.  BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, changes in consolidated shareholders’ equity and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity for all periods presented have been made.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

Supplemental Cash Flow Information

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	Sep. 28, 2019		Sep. 29, 2018
	(In thousands)
Cash and cash equivalents	$	455,482	$	790,304
Restricted cash (1)	58,938		163,067
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	514,420	$	953,371

⁽¹⁾  Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within Other assets in each consolidated balance sheet.

2. CHANGES IN ACCOUNTING

Leases

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), specifying the accounting for leases, which supersedes the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount and timing of cash flows arising from a lease. The amended guidance requires the recognition of lease assets and lease liabilities on the balance sheet for those leases currently classified as operating leases. In addition, Topic 842 expands the disclosure requirements of lease arrangements. Sysco adopted this ASU and related amendments as of June 30, 2019, the first day of fiscal 2020, under the modified retrospective approach and elected certain practical expedients permitted under the transition guidance, including to retain the historical lease classification, as well as relief from separating and allocating consideration across all categories of leases to lease and non-lease components of an agreement. For leases subject to index or rate adjustments, the most current index or rate adjustments were included in the measurement of operating lease obligations at adoption.

The adoption of this ASU and related amendments resulted in Sysco recognizing $647.2 million and $657.9 million of operating lease right-of-use (ROU) assets and operating lease liabilities, respectively, as of June 30, 2019. There were no other significant impacts to the company’s consolidated financial statements. Updated accounting policies and additional lease disclosures as a result of the adoption of this ASU are described in Note 9, “Leases.”

6

3. REVENUE

The company recognizes revenues when its performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. After completion of Sysco’s performance obligations, the company has an unconditional right to consideration as outlined in its contracts with customers. Sysco’s customer receivables will generally be collected in less than 30 days in accordance with the underlying payment terms. Customer receivables, which are included in Accounts and notes receivable, less allowances in the consolidated balance sheet, were $4.1 billion and $3.9 billion as of September 28, 2019 and June 29, 2019, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in Other Assets and amortized over the life of the contract or the expected life of the relationship with the customer on a straight-line basis. As of September 28, 2019, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,075,300	$	412,155	$	381,377	$	—	$	2,868,832
Canned and dry products	1,898,889		586,625		37,190		—		2,522,704
Frozen fruits, vegetables, bakery and other	1,449,218		552,014		254,455		—		2,255,687
Dairy products	1,148,381		312,178		145,921		—		1,606,480
Poultry	1,090,106		218,600		204,269		—		1,512,975
Fresh produce	998,164		257,758		60,933		—		1,316,855
Paper and disposables	719,540		98,342		168,436		17,373		1,003,691
Seafood	685,410		149,590		24,855		—		859,855
Beverage products	290,785		132,852		143,679		24,329		591,645
Other (1)	302,840		192,274		25,879		243,288		764,281
Total Sales	$	10,658,633	$	2,912,388	$	1,446,994	$	284,990	$	15,303,005

⁽¹⁾  Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

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	13-Week Period Ended Sep. 29, 2018
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,121,517	$	420,456	$	372,334	$	—	$	2,914,307
Canned and dry products	1,852,168		611,470		77,621		—		2,541,259
Frozen fruits, vegetables, bakery and other	1,423,386		628,559		291,864		—		2,343,809
Dairy products	1,086,404		318,347		154,806		—		1,559,557
Poultry	1,026,936		215,582		272,061		—		1,514,579
Fresh produce	937,580		257,544		64,849		—		1,259,973
Paper and disposables	710,759		104,539		188,616		16,409		1,020,323
Seafood	661,687		188,436		25,385		—		875,508
Beverage products	290,571		52,069		147,294		23,180		513,114
Other (1)	288,403		123,948		26,627		233,872		672,850
Total Sales	$	10,399,411	$	2,920,950	$	1,621,457	$	273,461	$	15,215,279

⁽¹⁾  Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

4.  ACQUISITIONS

During the first 13 weeks of fiscal 2020, the company paid cash of $74.8 million for acquisitions. These acquisitions did not have a material effect on the company’s operating results, cash flows or financial position. Certain acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are achieved. As of September 28, 2019, aggregate contingent consideration outstanding was $28.3 million, of which $21.5 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 measurement.

5.  FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

• Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;

• Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

• Level 3 – Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

Sysco’s policy is to invest in only high-quality investments. Cash equivalents primarily include cash deposits, time deposits, certificates of deposit, commercial paper, high-quality money market funds and all highly liquid instruments with original maturities of three months or less.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value:

• Cash deposits included in cash equivalents are valued at amortized cost, which approximates fair value. These are included within cash equivalents as a Level 1 measurement in the tables below.

• Time deposits and commercial paper included in cash equivalents are valued at amortized cost, which approximates fair value. These are included within cash equivalents as a Level 2 measurement in the tables below.

8

• Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. These are included within cash equivalents as Level 1 measurements in the tables below.

• Fixed income securities are valued using evaluated bid prices based on a compilation of observable market information or a broker quote in a non-active market. Inputs used vary by type of security, but include spreads, yields, rate benchmarks, rate of prepayment, cash flows, rating changes and collateral performance and type.

• The interest rate swap agreements are valued using a swap valuation model that utilizes an income approach using observable market inputs including interest rates, LIBOR swap rates and credit default swap rates.

• The foreign currency swap agreements, including cross-currency swaps, are valued using a swap valuation model that utilizes an income approach applying observable market inputs including interest rates, LIBOR swap rates for U.S. dollars, Canadian dollars, pound sterling and euro currencies, and credit default swap rates.

• Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments.

• Fuel swap contracts are valued based on observable market transactions of forward commodity prices.

The fair value of the company’s marketable securities are all measured using inputs that are considered a Level 2 measurement, as they are actively traded and are valued using quoted market prices in active markets. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 6, “Marketable Securities.” The fair value of the company’s derivative instruments are all measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair value of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 7, “Derivative Financial Instruments.”

The following tables present the company’s assets measured at fair value on a recurring basis as of September 28, 2019 and June 29, 2019:

	Assets Measured at Fair Value as of Sep. 28, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	108,962	$	1,400	$	—	$	110,362
Other assets (1)	58,938		—		—		58,938
Total assets at fair value	$	167,900	$	1,400	$	—	$	169,300

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

	Assets Measured at Fair Value as of Jun. 29, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	72,824	$	200	$	—	$	73,024
Other assets (1)	18,785		—		—		18,785
Total assets at fair value	$	91,609	$	200	$	—	$	91,809

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt, and is considered a Level 2 measurement. The fair value of total debt was approximately $9.5 billion and $8.6 billion as of September 28, 2019 and June 29, 2019, respectively. The carrying value of total debt was $8.7 billion and $8.2 billion as of September 28, 2019 and June 29, 2019, respectively.

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6. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. The company includes fixed income securities maturing in less than twelve months within Prepaid expenses and other current assets and includes fixed income securities maturing in more than twelve months within Other assets in the accompanying Consolidated Balance Sheets. The company records the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period. Unrealized gains and losses on marketable securities are recorded in Accumulated other comprehensive loss. The following table presents the company’s available-for-sale marketable securities as of September 28, 2019 and June 29, 2019:

	September 28, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Fixed income securities:
Corporate bonds	$	88,505	$	2,067	$	(2	)	$	90,570	$	12,017	$	78,553
Government bonds	28,834		2,695		—			31,529		—		31,529
Total marketable securities	$	117,339	$	4,762	$	(2	)	$	122,099	$	12,017	$	110,082
	June 29, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Corporate bonds	$	87,540	$	1,734	$	—		$	89,274	$	12,006	$	77,268
Government bonds	28,900		1,845		—			30,745		—		30,745
Total marketable securities	$	116,440	$	3,579	$	—		$	120,019	$	12,006	$	108,013

The fixed income securities held at September 28, 2019 had effective maturities ranging from less than one year to approximately eleven years. There were no significant realized gains or losses in marketable securities in the first quarter of 2020.

7.  DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, the company does not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate risk, foreign currency risk and fuel price risk.

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates.

Hedging of foreign currency risk

Sysco enters into cross-currency swap contracts to hedge the foreign currency transaction risk of certain intercompany loans. There are no credit-risk related contingent features associated with these swaps, which have been designated as cash flow hedges. The company also uses cross-currency swap contracts and euro-bond denominated debt to hedge the foreign currency exposure of our net investment in certain foreign operations. Additionally, Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, Polish zloty and Danish krone. These inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. The company enters into foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

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Hedging of fuel price risk

Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel on anticipated future purchases. These swaps have been designated as cash flow hedges.

None of the company’s hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of September 28, 2019 are presented below:

Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk
October 2020	U.S. Dollar	750
July 2021	U.S. Dollar	500
June 2023	Euro	500
March 2025	U.S. Dollar	500
Hedging of foreign currency risk
Various (September 30, 2019 to January 2020)	Swedish Krona	280
Various (October 2019 to June 2020)	British Pound Sterling	23
June 2021	Canadian Dollar	187
July 2021	British Pound Sterling	234
August 2021	British Pound Sterling	466
June 2023	Euro	500
Hedging of fuel risk
Various (September 30, 2019 to September 2020)	Gallons	55

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of September 28, 2019 and June 29, 2019 are as follows:

		Derivative Fair Value
	Balance Sheet location	Sep. 28, 2019		Jun. 29, 2019
		(In thousands)
Fair Value Hedges:
Interest rate swaps	Other assets	$	44,407	$	37,396
Interest rate swaps	Other long-term liabilities	6,061		9,285
Cash Flow Hedges:
Fuel Swaps	Other current assets	$	16	$	154
Foreign currency forwards	Other current assets	275		624
Fuel swaps	Other assets	—		136
Cross currency swaps	Other assets	21,046		8,592
Fuel Swaps	Other current liabilities	6,262		6,537
Foreign currency forwards	Other current liabilities	591		162
Fuel swaps	Other long-term liabilities	28		239
Net Investment Hedges:
Foreign currency swaps	Other assets	$	28,171	$	18,614
Foreign currency swaps	Other long-term liabilities	—		9,973

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Gains or losses recognized in the consolidated results of operations for cash flow hedging relationships are not significant for each of the periods presented. The location and amount of gains or losses recognized in the consolidated results of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,359,635	$	2,275,052	$	83,335
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(24,736	)
Derivatives designated as hedging instruments	—		—		8,857

⁽¹⁾  The hedged total includes interest expense of $14.6 million and change in fair value of debt of $10.2 million.

	13-Week Period Ended Sep. 29, 2018
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,311,494	$	2,275,645	$	89,016
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(8,588	)
Derivatives designated as hedging instruments	—		—		(10,859		)

⁽¹⁾  The hedged total includes interest expense of $15.1 million and change in fair value of debt of $6.5 million.

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The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 13-week periods ended September 28, 2019 and September 29, 2018, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	344		Operating expense	$	(3,406	)
Foreign currency contracts	12,307			Cost of sales	2
Total	$	12,651			$	(3,404	)
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	20,852		N/A	$	—
Foreign denominated debt	21,450			N/A	—
Total	$	42,302			$	—
	13-Week Period Ended Sep. 29, 2018
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	1,026		Operating expense	$	4,353
Foreign currency contracts	(4,803		)	Cost of sales	483
Total	$	(3,777	)		$	4,836
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	7,228		N/A	$	—
Foreign denominated debt	3,950			N/A	—
Total	$	11,178			$	—

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The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 28, 2019 are as follows:

	Sep. 28, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,312,113	)	$	(38,795	)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2019 are as follows:

	Jun. 29, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,311,636	)	$	(28,616	)

8. DEBT

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. As of September 28, 2019, there were $665.4 million in commercial paper issuances outstanding. Any outstanding amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first 13 weeks of fiscal 2020, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from approximately $208.9 million to approximately $911.3 million.

9. LEASES

Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The company determines if an arrangement is a lease at inception and recognizes a finance or operating lease liability and ROU asset in the consolidated balance sheets if a lease exists. Lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. If the borrowing rate implicit in the lease is not readily determinable, Sysco uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

The lease term is defined as the noncancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the company will exercise one of these options. Leases with an initial term of 12 months or less are not recorded in Sysco’s consolidated balance sheets, and the company recognizes expense for these leases on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate, such as insurance and property taxes, are excluded from the measurement of the lease liability and are recognized as variable lease cost when the obligation for that payment is incurred. For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance. Sysco’s leases do not contain significant residual value guarantees and do not impose significant restrictions or covenants.

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The following table presents the location of the finance lease ROU assets and lease liabilities in the company’s Consolidated Balance Sheet at September 28, 2019:

	Consolidated Balance Sheet Location	September 28, 2019
		(In thousands)
Finance lease right-of-use assets	Plant and equipment at cost, less accumulated depreciation	$	92,052
Current finance lease liabilities	Current maturities of long-term debt	27,300
Long-term finance lease liabilities	Long-term debt	69,213

The following table presents lease costs for the 13-week period ended September 28, 2019:

	Consolidated Results of Operations Location	13-Week Period Ended Sep. 28, 2019
		(In thousands)
Operating lease cost	Operating expenses	$	30,425
Financing lease cost:
Amortization of right-of-use assets	Operating expenses	8,613
Interest on lease obligations	Interest expense	1,182
Variable lease cost	Operating expenses	468
Short-term lease cost	Operating expenses	2,896
Net lease cost		$	43,584

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of September 28, 2019 are as follows:

	Operating Leases			Finance Leases
	(In thousands)
Remainder of fiscal 2020	$	88,622		$	24,112
2021	109,589			27,829
2022	84,288			20,370
2023	68,088			14,046
2024	46,874			8,912
2025	43,721			5,742
Thereafter	322,335			6,378
Total undiscounted lease obligations	763,517			107,389
Less imputed interest	(115,407		)	(10,876		)
Present value of lease obligations	$	648,110		$	96,513

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Other information related to lease agreements was as follows:

	13-Week Period Ended Sep. 28, 2019
Cash Paid For Amounts Included In Measurement of Liabilities:	(Dollars in thousands)
Operating cash flows for operating leases	$	30,597
Operating cash flows for financing leases	1,182
Financing cash flows for financing leases	7,232
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations	$	5,781
Assets obtained in exchange for finance lease obligations	1,553
Lease Term and Discount Rate:
Weighted-average remaining lease term (years):
Operating leases	11.35 years
Financing leases	4.34 years
Weighted-average discount rate:
Operating leases	2.39		%
Financing leases	4.96		%

10.  EARNINGS PER SHARE

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

	13-Week Period Ended
	Sep. 28, 2019		Sep. 29, 2018
	(In thousands, except for share and per share data)
Numerator:
Net earnings	$	453,781	$	431,042
Denominator:
Weighted-average basic shares outstanding	513,496,296		520,856,599
Dilutive effect of share-based awards	5,265,160		8,177,871
Weighted-average diluted shares outstanding	518,761,456		529,034,470
Basic earnings per share	$	0.88	$	0.83
Diluted earnings per share	$	0.87	$	0.81

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 3,321,000 and 1,067,000 for the first quarter of fiscal 2020 and fiscal 2019, respectively.

11.  OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to cash flow hedging arrangements, certain amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $378.1 million and $389.5 million for the first quarter of fiscal 2020 and fiscal 2019, respectively.

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A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:

		13-Week Period Ended Sep. 28, 2019
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	1,905		$	477	$	1,428
Amortization of actuarial loss, net	Other expense, net	8,942			2,259		6,683
Total reclassification adjustments		10,847			2,736		8,111
Foreign currency translation:
Foreign currency translation adjustment	N/A	(126,159		)	—		(126,159		)
Marketable securities:
Change in marketable securities (1)	N/A	1,181			248		933
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (2)	12,651			3,392		9,259
Change in net investment hedges	N/A	42,302			12,302		30,000
Total other comprehensive income (loss) before reclassification adjustments		54,953			15,694		39,259
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,874			719		2,155
Total other comprehensive (loss) income		$	(56,304	)	$	19,397	$	(75,701	)

⁽¹⁾  Realized gains or losses on marketable securities are presented within Other (income) expense, net in the Consolidated Results of Operations; however, there were no significant gains or losses realized in the first quarter of 2020.

⁽²⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

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		13-Week Period Ended Sep. 29, 2018
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial (loss) gain, arising in the current year		$	(36,891	)	$	(4,380	)	$	(32,511	)
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	2,133			533			1,600
Amortization of actuarial loss (gain), net	Other expense, net	8,706			2,177			6,529
Total reclassification adjustments		10,839			2,710			8,129
Foreign currency translation:
Other comprehensive income (loss) before    reclassification adjustments:
Foreign currency translation adjustment	N/A	(24,927		)	—			(24,927		)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (1)	(3,777		)	(769		)	(3,008		)
Change in net investment hedges	N/A	11,178			2,590			8,588
Total other comprehensive income (loss) before reclassification adjustments		7,401			1,821			5,580
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,873			718			2,155
Total other comprehensive income (loss)		$	(40,705	)	$	869		$	(41,574	)

⁽¹⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Marketable Securities, net of tax		Total
	(In thousands)
Balance as of Jun. 29, 2019	$	(1,217,617	)	$	(290,169	)	$	(94,770	)	$	2,827	$	(1,599,729	)
Equity adjustment from foreign currency translation	—			(126,159		)	—			—		(126,159		)
Amortization of cash flow hedges	—			—			2,155			—		2,155
Change in net investment hedges	—			—			30,000			—		30,000
Change in cash flow hedge	—			—			9,259			—		9,259
Amortization of unrecognized prior service cost	1,428			—			—			—		1,428
Amortization of unrecognized net actuarial losses	6,683			—			—			—		6,683
Change in marketable securities	—			—			—			933		933
Balance as of Sep. 28, 2019	$	(1,209,506	)	$	(416,328	)	$	(53,356	)	$	3,760	$	(1,675,430	)

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	13-Week Period Ended Sep. 29, 2018
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Total
	(In thousands)
Balance as of Jun. 30, 2018	$	(1,095,059	)	$	(171,043	)	$	(143,167	)	$	(1,409,269	)
Equity adjustment from foreign currency translation	—			(24,927		)	—			(24,927		)
Amortization of cash flow hedges	—			—			2,155			2,155
Change in net investment hedges	—			—			8,588			8,588
Change in cash flow hedges	—			—			(3,008		)	(3,008		)
Net actuarial loss	(32,511		)	—			—			(32,511		)
Amortization of unrecognized prior service cost	1,600			—			—			1,600
Amortization of unrecognized net actuarial losses	6,529			—			—			6,529
Balance as of Sep. 29, 2018	$	(1,119,441	)	$	(195,970	)	$	(135,432	)	$	(1,450,843	)

12.  SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees under several share-based payment arrangements, including various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In the first quarter of fiscal 2020, options to purchase 2,291,085 shares were granted to employees. The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value per option granted during the first quarter of fiscal 2020 was $10.40.

In the first quarter of fiscal 2020, 512,765 performance share units (PSUs) were granted to employees. Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs granted without dividend equivalents, the fair value was reduced by the present value of expected dividends during the vesting period. The weighted average grant-date fair value per PSU granted during the first quarter of fiscal 2020 was $72.66. The PSUs will convert into shares of Sysco common stock at the end of the performance period based on financial performance targets consisting of Sysco’s adjusted earnings per share compound annual growth rate and adjusted return on invested capital.

Employee Stock Purchase Plan

Plan participants purchased 240,802 shares of common stock under the Sysco ESPP during the first quarter of fiscal 2020. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $10.61 during the first quarter of fiscal 2020. The fair value of each stock purchase right is estimated as the difference between the stock price at the date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $21.4 million and $29.2 million for the first quarter of fiscal 2020 and fiscal 2019, respectively.

As of September 28, 2019, there was $136.8 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.06 years.

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13.  INCOME TAXES

Effective Tax Rate

The effective tax rates for the first quarters of fiscal 2020 and 2019 were 22.01% and 19.88%, respectively. As compared to the company’s statutory tax rate, the lower effective tax rate for the first quarter of fiscal 2020 was primarily due to the favorable impact of excess tax benefits of equity-based compensation that totaled $15.7 million. The lower effective tax rate for the first quarter of 2019 was primarily due to the favorable impact of excess tax benefits of equity-based compensation that totaled $14.3 million and the release of certain tax contingencies due to the lapse of statutes of limitations.

Uncertain Tax Positions

As of September 28, 2019, the gross amount of unrecognized tax benefit and related accrued interest was $23.9 million and $3.8 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months. At this time, an estimate of the range of the reasonably possible change cannot be made.

Other

The determination of the company’s provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. The company’s provision for income taxes reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

14.  COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Although the final results of legal proceedings cannot be predicted with certainty, based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company.

15.  BUSINESS SEGMENT INFORMATION

The company has aggregated certain of its operating segments into three reportable segments. “Other” financial information is attributable to the company’s other operating segments that do not meet the quantitative disclosure thresholds.

• U.S. Foodservice Operations - primarily includes U.S. Broadline operations, which distribute a full line of food products including custom-cut meat, seafood, specialty produce, specialty imports and a wide variety of non-food products;

• International Foodservice Operations - primarily includes operations that the company has grouped into Canada, Latin America and Europe, which distribute a full line of food products and a wide variety of non-food products. Latin America primarily consists of operations in Bahamas, Mexico, Costa Rica and Panama, as well as our operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom, France, Ireland and Sweden;

• SYGMA - our U.S. customized distribution subsidiary; and

• Other - primarily our hotel supply operations and Sysco Labs, which includes our suite of technology solutions that help support the business needs of our customers and provide support for some of our business technology needs.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Corporate expenses generally include all expenses of the corporate office and Sysco’s shared services center. These expenses also include all share-based compensation costs.

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The following tables set forth certain financial information for Sysco’s reportable business segments. Sysco reclassified prior year amounts to conform to the current year presentation of net periodic pension and postretirement benefit costs in accordance with ASU 2017-07.

	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Sales:	(In thousands)
U.S. Foodservice Operations	$	10,658,633		$	10,399,411
International Foodservice Operations	2,912,388			2,920,950
SYGMA	1,446,994			1,621,457
Other	284,990			273,461
Total	$	15,303,005		$	15,215,279
	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Operating income:	(In thousands)
U.S. Foodservice Operations	$	861,406		$	815,758
International Foodservice Operations	54,800			66,772
SYGMA	7,570			2,431
Other	10,137			10,335
Total segments	933,913			895,296
Corporate	(265,595		)	(267,156		)
Total operating income	668,318			628,140
Interest expense	83,335			89,016
Other expense (income), net	3,112			1,132
Earnings before income taxes	$	581,871		$	537,992

16.  SUPPLEMENTAL GUARANTOR INFORMATION - SUBSIDIARY GUARANTEES

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation at that time entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. have also been guaranteed by these subsidiaries. As of September 28, 2019, Sysco had a total of $7.5 billion in senior notes and debentures that was covered by these guarantees.

All subsidiary guarantors are 100% owned by the parent company, all guarantees are full and unconditional, and all guarantees are joint and several, except that the guarantee of any subsidiary guarantor with respect to a series of senior notes or debentures may be released under certain customary circumstances. If we exercise our defeasance option with respect to the senior notes or debentures of any series, then any subsidiary guarantor effectively will be released with respect to that series. Further, each subsidiary guarantee will remain in full force and effect until the earliest to occur of the date, if any, on which (1) the applicable subsidiary guarantor shall consolidate with or merge into Sysco Corporation or any successor of Sysco Corporation or (2) Sysco Corporation or any successor of Sysco Corporation consolidates with or merges into the applicable subsidiary guarantor.

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The following condensed consolidating financial statements present separately the financial position, comprehensive income and cash flows of the parent issuer (Sysco Corporation), the guarantors (certain of the company’s U.S. Broadline subsidiaries), and all other non-guarantor subsidiaries of Sysco (Other Non-Guarantor Subsidiaries) on a combined basis with eliminating entries.

	Condensed Consolidated Balance Sheet
	Sep. 28, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	172,317	$	4,548,019	$	3,763,828	$	—		$	8,484,164
Intercompany receivables	6,517,293		148,589		3,229,688		(9,895,570		)	—
Investment in subsidiaries	5,305,887		—		1,255,862		(6,561,749		)	—
Plant and equipment, net	242,040		2,184,301		2,066,675		—			4,493,016
Other assets	817,530		729,136		4,974,095		(541,366		)	5,979,395
Total assets	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575
Current liabilities	$	443,234	$	1,061,795	$	4,596,442	$	—		$	6,101,471
Intercompany payables	1,307,665		3,261,317		5,326,588		(9,895,570		)	—
Long-term debt	8,192,123		10,747		434,836		—			8,637,706
Other liabilities	657,297		551,789		1,061,902		(541,366		)	1,729,622
Noncontrolling interest	—		—		33,028		—			33,028
Shareholders’ equity	2,454,748		2,724,397		3,837,352		(6,561,749		)	2,454,748
Total liabilities and shareholders’ equity	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575

	Condensed Consolidated Balance Sheet
	Jun. 29, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	121,993	$	4,195,543	$	3,823,969	$	—		$	8,141,505
Intercompany receivables	6,162,303		30,469		3,220,237		(9,413,009		)	—
Investment in subsidiaries	4,680,530		—		1,126,315		(5,806,845		)	—
Plant and equipment, net	252,101		2,162,668		2,086,936		—			4,501,705
Other assets	787,986		718,600		4,372,725		(555,999		)	5,323,312
Total assets	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522
Current liabilities	$	465,101	$	1,018,650	$	4,619,432	$	—		$	6,103,183
Intercompany payables	686,116		3,443,182		5,283,711		(9,413,009		)	—
Long-term debt	7,668,314		7,938		445,806		—			8,122,058
Other liabilities	682,779		545,391		531,081		(555,999		)	1,203,252
Noncontrolling interest	—		—		35,426		—			35,426
Shareholders’ equity	2,502,603		2,092,119		3,714,726		(5,806,845		)	2,502,603
Total liabilities and shareholders’ equity	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522

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	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,810,408		$	6,043,288		$	(550,691	)	$	15,303,005
Cost of sales	—			7,910,440			4,999,886			(550,691		)	12,359,635
Gross profit	—			1,899,968			1,043,402			—			2,943,370
Operating expenses	198,840			1,075,837			1,000,375			—			2,275,052
Operating income (loss)	(198,840		)	824,131			43,027			—			668,318
Interest expense (income) (1)	107,336			(20,528		)	(3,473		)	—			83,335
Other expense (income), net	7,053			(167		)	(3,774		)	—			3,112
Earnings (losses) before income taxes	(313,229		)	844,826			50,274			—			581,871
Income tax (benefit) provision	(98,500		)	212,546			14,044			—			128,090
Equity in earnings of subsidiaries	668,510			—			129,548			(798,058		)	—
Net earnings	453,781			632,280			165,778			(798,058		)	453,781
Other comprehensive income (loss)	(75,701		)	—			(126,159		)	126,159			(75,701		)
Comprehensive income	$	378,080		$	632,280		$	39,619		$	(671,899	)	$	378,080

 

⁽¹⁾  Interest expense (income) includes $20.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 28, 2019. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,479,806		$	6,234,158		$	(498,685	)	$	15,215,279
Cost of sales	—			7,660,101			5,150,078			(498,685		)	12,311,494
Gross profit	—			1,819,705			1,084,080			—			2,903,785
Operating expenses	220,281			1,052,350			1,003,014			—			2,275,645
Operating income (loss)	(220,281		)	767,355			81,066			—			628,140
Interest expense (income) (1)	41,413			(21,538		)	69,141			—			89,016
Other expense (income), net	6,600			(54		)	(5,414		)	—			1,132
Earnings (losses) before income taxes	(268,294		)	788,947			17,339			—			537,992
Income tax (benefit) provision	(93,587		)	196,445			4,092			—			106,950
Equity in earnings of subsidiaries	605,750			—			94,341			(700,091		)	—
Net earnings	431,043			592,502			107,588			(700,091		)	431,042
Other comprehensive income (loss)	(41,574		)	—			(24,927		)	24,927			(41,574		)
Comprehensive income	$	389,469		$	592,502		$	82,661		$	(675,164	)	$	389,468

⁽¹⁾  Interest expense (income) includes $21.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 29, 2018. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

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	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	11,776		$	69,098		$	90,705		$	—		$	171,579
Investing activities	(49,434		)	(85,903		)	(128,923		)	17,636			(246,624		)
Financing activities	109,226			742			(29,627		)	(17,636		)	62,705
Effect of exchange rates on cash	—			—			(5,485		)	—			(5,485		)
Net increase (decrease) in cash, cash equivalents and restricted cash	71,568			(16,063		)	(73,330		)	—			(17,825		)
Cash, cash equivalents and restricted cash at the beginning of period	29,868			117,643			384,734			—			532,245
Cash, cash equivalents and restricted cash at the end of period	$	101,436		$	101,580		$	311,404		$	—		$	514,420

⁽¹⁾  Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	167,767		$	69,459		$	33,919		$	—		$	271,145
Investing activities	361,777			(42,188		)	(12,229		)	(406,931		)	(99,571		)
Financing activities	(332,988		)	(1,581		)	(3,974		)	406,931			68,388
Effect of exchange rates on cash	—			—			(2,435		)	—			(2,435		)
Net increase (decrease) in cash, cash equivalents and restricted cash	196,556			25,690			15,281			—			237,527
Cash, cash equivalents and restricted cash at the beginning of period	29,144			111,843			574,857			—			715,844
Cash, cash equivalents and restricted cash at the end of period	$	225,700		$	137,533		$	590,138		$	—		$	953,371

⁽¹⁾  Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

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

This discussion should be read in conjunction with our consolidated financial statements as of June 29, 2019, and for the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019 (our 2019 Form 10-K), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

Sysco’s results of operations for the first quarter of fiscal 2020 and 2019 were impacted by restructuring and transformational project costs consisting of: (1) expenses associated with our various transformation initiatives; (2) severance and facility closure charges; and (3) restructuring charges. All acquisition-related costs in the first quarter of fiscal 2020 and 2019 that have been designated as Certain Items relate to the fiscal 2017 acquisition of Cucina Lux Investments Limited (the Brakes Acquisition). These include acquisition-related intangible amortization expense. In addition, first quarter 2019 results of operations were impacted by acquisition-related integration costs specific to the Brakes Acquisition. Sysco’s results of operations for the first quarter of fiscal 2020 were also impacted by changes in foreign statutory tax rates. These fiscal 2020 and fiscal 2019 items are collectively referred to as “Certain Items.” The results of our foreign operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our International Foodservice Operations results on a constant currency basis. Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures and exclude the impact from Certain Items, and certain metrics are stated on a constant currency basis.

More information on the rationale for the use of non-GAAP financial measures and reconciliations to the most directly comparable numbers calculated in accordance with U.S. generally accepted accounting principles (GAAP) can be found under “Non-GAAP Reconciliations.”

Highlights and Trends

Highlights

Our first quarter of fiscal 2020 performance reflects improved year-over-year performance, including operating income and net earnings growth in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, both including and excluding Certain Items.

Comparisons of results from the first quarter of fiscal 2020 to the first quarter of fiscal 2019:

• Sales:

◦ increased 0.6%, or $87.7 million, to $15.3 billion;

• Operating income:

◦ increased 6.4%, or $40.2 million, to $668.3 million;

◦ adjusted operating income increased 7.3%, or $50.3 million, to $741.9 million;

• Net earnings:

◦ increased 5.3%, or $22.7 million, to $453.8 million;

◦ adjusted net earnings increased 6.5%, or $31.1 million, to $510.3 million;

• Basic earnings per share:

◦ increased 6.0%, or $0.05, to $0.88 per share;

• Diluted earnings per share:

◦ increased 7.4%, or $0.06, to $0.87 per share; and

◦ adjusted diluted earnings per share increased 8.6%, or $0.08, to $0.98 per share.

See “Non-GAAP Reconciliations” below for an explanation of adjusted operating income, adjusted net earnings and adjusted diluted earnings per share, which are non-GAAP financial measures, and reconciliations to the most directly comparable GAAP financial measures.

Trends

The economic and industry trends in the U.S. were favorable in the first quarter of fiscal 2019, illustrated by gross domestic product (GDP) growth of 1.9% during the 2019 calendar third quarter and unemployment remaining at an all-time low. Consumer spending rose 2.9%, signaling that the economy is doing well, despite some broader global concerns; however, this amount is

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lower than the 4.6% rate that was applicable to the prior quarter. While some other economic indicators have recently been lower than expected, restaurant industry data has not been meaningfully impacted, and we continue to observe positive trends in the food-away-from-home market. During the calendar quarter, according to Black Box Intelligence, restaurant same-store sales rose slightly, driven by average guest check increases. Although traffic in the food industry remains mixed, market conditions are modestly favorable for foodservice operators in the U.S. Within the international markets, traffic and sales in the United Kingdom (U.K.) and Ireland continue to be soft, as uncertainties around Brexit, which appears to be delayed until 2020, affect foodservice and other economic activity. These trends, however, are relatively stable compared to conditions in the prior quarter. In Canada, GDP and consumer spending are stable and unemployment continues to decline, which is reflected in the positive broader restaurant industry performance. In France, GDP growth is expected to continue, household spending has increased and unemployment is trending lower, partially due to labor market reforms.

The beginning of the first quarter of fiscal 2020 had slower sales growth, which began to accelerate in the latter part of the quarter. We believe that this sales growth will continue into the second quarter. Our sales growth during the first quarter of fiscal 2020 was driven by continued growth with our local restaurant customers, partially offset by the continued transition of certain national customers including accounts that we exited during fiscal 2019 from both our U.S. Broadline operations and SYGMA, the divestiture of Iowa Premium, LLC (Iowa Premium) in the fourth quarter of fiscal 2019 and the negative impact of foreign exchange rates. We expect to continue to see the impact of certain customer transitions in the second quarter of fiscal 2020. Gross profit growth was driven by a continued shift in our customer mix, as we grew local cases at a faster pace than total case growth. Additionally, we experienced continued growth in penetration of our Sysco brand portfolio. Meanwhile, inflation is a factor that contributes to the level of sales and gross profit growth. We experienced inflation at a rate of 2.9% within our U.S. Broadline operations during the first quarter of fiscal 2020, primarily in the meat, produce, dairy products and poultry categories. Our sales growth has been stronger in our U.S. Broadline operations, with lower levels of growth experienced in our International businesses, with the exception of our Canadian and Latin American operations. A strengthening U.S. dollar negatively affected total Sysco sales growth by 0.6% and negatively impacted sales growth for our International Foodservice Operations by 3.3% for the first quarter of fiscal 2020, respectively, as we translated our foreign sales due to foreign currency exchange rate changes.

Total operating expenses were flat during the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019 due to effective expense management, including benefits from our transformation initiatives. Operating costs within our U.S. operations grew slightly due to higher labor and operational costs. Labor costs were slightly higher due to our decision to retain driver and warehouse personnel in a tight labor market; however, there are signs of improvement in the labor market. Effective expense management in our International Foodservice Operations segment provided continued benefits from integrations and other initiatives. Our business in France was adversely affected by operational and supply chain challenges arising from our integration efforts with regard to our France operations. We believe these challenges will continue to negatively impact our performance through the remainder of the fiscal year. Although we had strong expense reductions throughout the quarter, we continue to invest in areas of our business that will help facilitate future growth. We continue to make progress in areas that help us streamline work-flow efficiencies while better supporting our customers and helping to support their growth.

Sysco sold its interests in Iowa Premium in the fourth quarter of fiscal 2019, and, therefore, our operating results for the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, reflect decreases that relate to the divestiture of the business.

In the first quarter of fiscal 2020, we acquired, within our U.S. Foodservice Operations, J. Kings Food Service Professionals, a New York broadline distributor with approximately $150 million in annual sales.

Strategy

Fiscal 2020 is the third year in our current three-year plan that was established in fiscal 2018 and includes our strategic and financial objectives through fiscal 2020, which will enable us to continue transforming our business, while improving the customer experience of doing business with Sysco. Our target financial objectives include:

• reaching $600 million of adjusted operating income growth as compared to fiscal 2017;

• growing earnings per share faster than operating income; and

• achieving 16% in adjusted return on invested capital for existing businesses.

Our operating income goal was established on an adjusted basis given Certain Item charges that were applicable in fiscal 2018, which primarily were due to restructuring and Brakes-related acquisition costs. The business transformation initiatives we have in place will allow us to continue to grow our business and capitalize on our strong fundamentals.

See “Non-GAAP Reconciliations” below for an explanation of adjusted operating income and adjusted return on invested capital, which are non-GAAP financial measures.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:

	13-Week Period Ended
	Sep. 28, 2019		Sep. 29, 2018
Sales	100.0	%	100.0	%
Cost of sales	80.8		80.9
Gross profit	19.2		19.1
Operating expenses	14.9		15.0
Operating income	4.3		4.1
Interest expense	0.5		0.6
Other expense (income), net	—		—
Earnings before income taxes	3.8		3.5
Income taxes	0.8		0.7
Net earnings	3.0	%	2.8	%

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The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:

	13-Week Period Ended
	Sep. 28, 2019
Sales	0.6	%
Cost of sales	0.4
Gross profit	1.4
Operating expenses	—
Operating income	6.4
Interest expense	(6.4	)
Other expense (income), net (1)	174.9
Earnings before income taxes	8.2
Income taxes	19.8
Net earnings	5.3	%
Basic earnings per share	6.0	%
Diluted earnings per share	7.4
Average shares outstanding	(1.4	)
Diluted shares outstanding	(1.9	)

⁽¹⁾  Other expense (income), net was expense of $3.1 million in the first quarter of fiscal 2020 and income of $1.1 million in the first quarter of fiscal 2019.

The following represents our results by reportable segments:

	13-Week Period Ended Sep. 28, 2019
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Corporate			Consolidated Totals
	(In thousands)
Sales	$	10,658,633		$	2,912,388		$	1,446,994		$	284,990		$	—		$	15,303,005
Sales increase (decrease)	2.5		%	(0.3		)%	(10.8		)%	4.2		%				0.6		%
Percentage of total	69.7		%	19.0		%	9.5		%	1.8		%				100.0		%
Operating income	$	861,406		$	54,800		$	7,570		$	10,137		$	(265,595	)	$	668,318
Operating income increase (decrease)	5.6		%	(17.9		)%	211.4		%	(1.9		)%				6.4		%
Percentage of total segments	92.2		%	5.9		%	0.8		%	1.1		%				100.0		%
Operating income as a percentage of sales	8.1		%	1.9		%	0.5		%	3.6		%				4.3		%

	13-Week Period Ended Sep. 29, 2018
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Corporate			Consolidated Totals
	(In thousands)
Sales	$	10,399,411		$	2,920,950		$	1,621,457		$	273,461		$	—		$	15,215,279
Percentage of total	68.3		%	19.2		%	10.7		%	1.8		%				100.0		%
Operating income	$	815,758		$	66,772		$	2,431		$	10,335		$	(267,156	)	$	628,140
Percentage of total segments	91.1		%	7.5		%	0.3		%	1.1		%				100.0		%
Operating income as a percentage of sales	7.8		%	2.3		%	0.1		%	3.8		%				4.1		%

Based on information in Note 15, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I, in the first quarter of fiscal 2020, U.S. Foodservice Operations and International Foodservice Operations collectively represented approximately 87.5% of Sysco’s overall sales. In the first quarter of fiscal 2020, U.S. Foodservice

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Operations and International Foodservice Operations collectively represented approximately 98.6% of the total segment operating income. This illustrates that these segments represent the majority of our total segment results when compared to the other reportable segment.

Results of U.S. Foodservice Operations

The following table sets forth a summary of the components of operating income expressed as a percentage increase or decrease over the comparable period in the prior year:

	13-Week Period Ended Sep. 28, 2019		13-Week Period Ended Sep. 29, 2018		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	10,658,633	$	10,399,411	$	259,222	2.5	%
Gross profit	2,144,886		2,090,227		54,659		2.6
Operating expenses	1,283,480		1,274,469		9,011		0.7
Operating income	$	861,406	$	815,758	$	45,648	5.6	%
Gross profit	$	2,144,886	$	2,090,227	$	54,659	2.6	%
Adjusted operating expenses (Non-GAAP)	1,279,354		1,274,469		4,885		0.4
Adjusted operating income (Non-GAAP)	$	865,532	$	815,758	$	49,774	6.1	%

Sales

The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.

	Increase (Decrease)
	13-Week Period
	(Dollars in millions)
Cause of change	Percentage		Dollars
Case volume	0.5	%	$	47.1
Inflation	3.0		310.4
Acquisitions	0.1		5.6
Other (1)	(1.1	)	(103.9		)
Total sales increase	2.5	%	$	259.2

⁽¹⁾  Case volume excludes the volume impact from our custom-cut meat companies that do not measure volume in cases. Any impact in volumes from these operations is included within “Other.” Approximately $114 million of this decrease results from Sysco’s sale of its interest in Iowa Premium in the fourth fiscal quarter of 2019.

Sales for the first quarter of fiscal 2020 were 2.5% higher than the first quarter of fiscal 2019. The primary drivers of the increase were inflation and modest case volume growth in our U.S. Broadline operations. Case volumes from our U.S. Broadline operations, including acquisitions within the last 12 months, increased 0.5% in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, and included a 1.5% improvement in locally managed customer case growth, partially offset by a decrease of 0.7% in national customer case volume, reflecting the continued transition of certain national customers, including accounts that we exited during the second quarter of fiscal 2019. Sales from acquisitions within the last 12 months favorably impacted locally managed customer sales by 0.1% for the first quarter of fiscal 2020; therefore, organic local case volume, which excludes acquisitions, grew 1.4%. The increase in local case volume was partially offset by the loss of less profitable business and the divestiture of Iowa Premium in the fourth quarter of fiscal 2019.

Operating Income

Operating income increased 5.6% for the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019.

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Gross profit dollars increased 2.6% in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, driven primarily by higher inflation, growth in local cases, growth in Sysco-branded products, continued category management improvement and changes in our customer mix. The estimated change in product costs, an internal measure of inflation or deflation, for the first quarter of fiscal 2020 for our U.S. Broadline operations was inflation of 2.9%. For the first quarter of fiscal 2020, this change in product costs was primarily driven by inflation in the meat, produce, dairy products and poultry categories. Our Sysco brand sales to local customers and to all customers increased by approximately 20 basis points and 36 basis points for the first quarter of fiscal 2020, respectively. Gross margin, which is gross profit as a percentage of sales, was 20.12% in the first quarter of fiscal 2020, which was an increase of 2 basis points from the gross margin of 20.10% in the first quarter of fiscal 2019, primarily attributable to a continued shift in in our customer mix and continued growth in penetration of our Sysco brand portfolio.

Operating expenses for the first quarter of fiscal 2020 increased 0.7%, or $9.0 million, compared to the first quarter of fiscal 2019. Our operating expense growth is primarily driven by higher labor and operational costs due to our decision to retain driver and warehouse personnel in a tight labor market. An increase in bad debt expense, along with rising fuel costs, contributed to our operating expense growth. These increases were largely offset by the impact of transformational initiatives and by decreases in operating expenses associated with the divestiture of Iowa Premium in the fourth quarter of fiscal 2019.

Results of International Foodservice Operations

The following table sets forth a summary of the components of operating income and adjusted operating income expressed as a percentage increase or decrease over the comparable period in the prior year:

	13-Week Period Ended Sep. 28, 2019		13-Week Period Ended Sep. 29, 2018		Change in Dollars			% Change
	(Dollars in thousands)
Sales	$	2,912,388	$	2,920,950	$	(8,562	)	(0.3	)%
Gross profit	605,185		615,505		(10,320		)	(1.7	)
Operating expenses	550,385		548,733		1,652			0.3
Operating income	$	54,800	$	66,772	$	(11,972	)	(17.9	)%
Gross profit	$	605,185	$	615,505	$	(10,320	)	(1.7	)%
Adjusted operating expenses (Non-GAAP)	506,204		520,107		(13,903		)	(2.7	)
Adjusted operating income (Non-GAAP)	$	98,981	$	95,398	$	3,583		3.8	%
Sales on a constant currency basis (Non-GAAP)	$	3,009,537	$	2,920,950	$	88,587		3.0	%
Gross profit on a constant currency basis (Non-GAAP)	628,202		615,505		12,697			2.1
Adjusted operating expenses on a constant currency basis (Non-GAAP)	526,891		520,107		6,784			1.3
Adjusted operating income on a constant currency basis (Non-GAAP)	$	101,311	$	95,398	$	5,913		6.2	%

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Sales

The following table sets forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.

	Increase (Decrease)
	13-Week Period
	(Dollars in millions)
Cause of change	Percentage		Dollars
Inflation	1.8	%	$	52.5
Acquisitions	0.4		12.6
Foreign currency	(3.3	)	(96.8		)
Other (1)	0.8		23.1
Total sales increase	(0.3	)%	$	(8.6	)

⁽¹⁾  The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.

Sales for the first quarter of fiscal 2020 were 0.3% lower, as compared to the first quarter of fiscal 2019, primarily due to changes in foreign exchange rates used to translate our foreign sales into U.S. dollars, as noted in the tables above, partially offset by product cost inflation in Europe and Canada. Canada and Latin America experienced modestly improved performance in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, driven by positive business environments. Sales grew in the U.K. during the first quarter of fiscal 2020, and performance has been stable, despite continuing uncertainty regarding the outcome of Brexit.

Operating Income

Operating income decreased by $12.0 million, or 17.9%, for the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019. Our operating expenses increased during the first quarter of fiscal 2020 due to ongoing regionalization efforts in our Canadian operations. Our business in France was adversely affected by operational and supply chain challenges arising from our integration efforts with regard to our France operations. Restructuring and business transformation charges also negatively affected our U.K. operations. Operating income, on an adjusted basis, increased by $3.6 million, or 3.8%, for the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019. Foreign exchange rates negatively affected operating income by 2.4%, resulting in adjusted operating income increasing 6.2% on a constant currency basis.

Gross profit dollars decreased by 1.7% in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, primarily attributable to changes in foreign exchange rates that negatively affected gross profit by 3.7%, resulting in adjusted gross profit increasing 2.1% on a constant currency basis.

Operating expenses for the first quarter of fiscal 2020 increased 0.3%, or $1.7 million, as compared to the first quarter of fiscal 2019, due to $22.7 million of restructuring and business transformation charges in France and the U.K. during the first quarter of fiscal 2020. We incurred restructuring charges of $4.3 million primarily relating to the ongoing regionalization efforts in our Canadian operations during the first quarter of fiscal 2020. Operating expenses, on an adjusted basis, for the first quarter of fiscal 2020 decreased 2.7%, or $13.9 million, compared to the first quarter of fiscal 2019. Changes in foreign exchange rates used to translate our foreign operating expenses into U.S. dollars positively affected operating expenses by 4.0%, resulting in adjusted operating expenses increasing 1.3% on a constant currency basis.

Results of SYGMA and Other Segment

For SYGMA, sales were 10.8% lower in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, primarily from a decline in case volume due to the exit of certain customers during the quarter, as we remain disciplined and focused on improving the profitability of our portfolio of customers. Operating income increased by $5.1 million in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, due to improved gross margins, strong expense management and the closure of a distribution location.

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For the operations that are grouped within Other, operating income decreased 1.9%, or $0.2 million, in the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019. The decrease was primarily attributable to unfavorable results from our hotel supply operations, partially offset by improved results from Sysco Labs. Guest Supply gross profit decreased 0.6% in the first quarter of fiscal 2020, as the business was negatively impacted by changes in foreign exchange rates and continued cost challenges.

Corporate Expenses

Corporate expenses in the first quarter of fiscal 2020 decreased $3.1 million, or 1.2%, as compared to the first quarter of fiscal 2019, due primarily to a decrease in expenses related to our business technology initiatives, along with lower pay-related expenses, partly driven by our Corporate office expense initiatives. Corporate expenses, on an adjusted basis, increased $9.1 million, or 3.9%, as compared to the first quarter of fiscal 2019.

Included in corporate expenses are Certain Items that totaled $22.7 million in the first quarter of fiscal 2020, as compared to $34.9 million in the first quarter of fiscal 2019. Certain Items impacting the first quarter of fiscal 2020 and the first quarter of fiscal 2019 were primarily expenses associated with our various transformation initiatives. Certain Items in the first quarter of fiscal 2019 also included severance charges.

Interest Expense

Interest expense decreased $5.7 million for the first quarter of fiscal 2020, as compared to the first quarter of fiscal 2019, primarily due to a favorable comparison to the prior year attributable to lower floating interest rates and a lower average balance of fixed rate debt.

Net Earnings

Net earnings increased 5.3% in the first quarter of fiscal 2020, as compared to the first quarter of the prior year, due primarily to the items noted above for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 13, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I. Adjusted net earnings, excluding Certain Items, increased 6.5% in the first quarter of fiscal 2020, primarily due to gross profit growth and a decline in operating expense, partially offset by an unfavorable tax expense comparison to the prior year.

Earnings Per Share

Basic earnings per share in the first quarter of fiscal 2020 were $0.88, a 6.0% increase from the comparable prior year period amount of $0.83 per share. Diluted earnings per share in the first quarter of fiscal 2020 were $0.87, a 7.4% increase from the comparable prior year period amount of $0.81 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first quarter of fiscal 2020 were $0.98, an 8.6% increase from the comparable prior year period amount of $0.91 per share. These results were primarily attributable to the factors discussed above related to net earnings in the first quarter of fiscal 2020.

Non-GAAP Reconciliations

Sysco’s results of operations for fiscal 2020 and 2019 were impacted by restructuring and transformational project costs consisting of: (1) expenses associated with our various transformation initiatives; (2) severance and facility closure charges; and (3) restructuring charges. All acquisition-related costs in the first quarter of fiscal 2020 and 2019 that have been designated as Certain Items relate to the Brakes Acquisition. These include acquisition-related intangible amortization expense. In addition, first quarter 2019 results of operations were impacted by acquisition-related integration costs specific to the Brakes Acquisition. Sysco’s results of operations for the first quarter of fiscal 2020 were also impacted by changes in foreign statutory tax rates.

The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our International Foodservice Operations results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.

Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations,

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facilitating comparisons on a year-over-year basis and (2) removes those items that are difficult to predict and are often unanticipated and that, as a result, are difficult to include in analysts’ financial models and our investors’ expectations with any degree of specificity.

Although Sysco has a history of growth through acquisitions, the Brakes Group was significantly larger than the companies historically acquired by Sysco, with a proportionately greater impact on Sysco’s consolidated financial statements. Accordingly, Sysco is excluding from its non-GAAP financial measures for the relevant period solely those acquisition costs specific to the Brakes Acquisition. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2020 and fiscal 2019.

Set forth below is a reconciliation of sales, operating expenses, operating income, interest expense, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

	13-Week Period Ended Sep. 28, 2019			13-Week Period Ended Sep. 29, 2018			Change in Dollars			% Change
	(Dollars in thousands, except for per share data)
Operating expenses (GAAP)	$	2,275,052		$	2,275,645		$	(593	)	NM
Impact of restructuring and transformational project costs (1)	(56,722		)	(40,903		)	(15,819		)	38.7
Impact of acquisition-related costs (2)	(16,909		)	(22,636		)	5,727			(25.3	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	2,201,421		$	2,212,106		$	(10,685	)	(0.5	)%
Operating income (GAAP)	$	668,318		$	628,140		$	40,178		6.4	%
Impact of restructuring and transformational project costs (1)	56,722			40,903			15,819			38.7
Impact of acquisition-related costs (2)	16,909			22,636			(5,727		)	(25.3	)
Operating income adjusted for Certain Items (Non-GAAP)	$	741,949		$	691,679		$	50,270		7.3	%
Net earnings (GAAP)	$	453,781		$	431,042		$	22,739		5.3	%
Impact of restructuring and transformational project costs (1)	56,722			40,903			15,819			38.7
Impact of acquisition-related costs (2)	16,909			22,636			(5,727		)	(25.3	)
Tax impact of restructuring and transformational project costs (3)	(13,921		)	(10,674		)	(3,247		)	30.4
Tax impact of acquisition-related costs (3)	(4,149		)	(4,691		)	542			(11.6	)
Impact of French tax rate change	924			—			924			NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	510,266		$	479,216		$	31,050		6.5	%
Diluted earnings per share (GAAP)	$	0.87		$	0.81		$	0.06		7.4	%
Impact of restructuring and transformational project costs (1)	0.11			0.08			0.03			37.5
Impact of acquisition-related costs (2)	0.03			0.04			(0.01		)	(25.0	)
Tax impact of restructuring and transformational project costs (3)	(0.03		)	(0.02		)	(0.01		)	50.0
Tax impact of acquisition-related costs (3)	(0.01		)	(0.01		)	—			NM
Diluted EPS adjusted for Certain Items (Non-GAAP) (4)	$	0.98		$	0.91		$	0.08		8.6	%

 

⁽¹⁾  Fiscal 2020 includes $30 million related to restructuring, facility closure and severance charges and $27 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2019 includes $26 million related to various transformation initiative costs and $15 million related to severance, restructuring and facility closure charges.

⁽²⁾  Fiscal 2020 and fiscal 2019 include $17 million and $21 million, respectively, related to intangible amortization expense from the Brakes Acquisition, which is included in the results of Brakes. Fiscal 2019 includes $1 million in integration costs.

⁽³⁾  The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.

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⁽⁴⁾  Individual components of diluted earnings per share may not add to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

NM represents that the percentage change is not meaningful.

Set forth below is a reconciliation by segment of actual operating expenses and operating income to adjusted results for these measures for applicable segments and corporate for the periods presented (dollars in thousands):

	13-Week Period Ended Sep. 28, 2019			13-Week Period Ended Sep. 29, 2018			Change in Dollars			% Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)	$	1,283,480		$	1,274,469		$	9,011		0.7	%
Impact of restructuring and transformational project costs (1)	(4,126		)	—			(4,126		)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,279,354		$	1,274,469		$	4,885		0.4	%
Operating income (GAAP)	$	861,406		$	815,758		$	45,648		5.6	%
Impact of restructuring and transformational project costs (1)	4,126			—			4,126			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	865,532		$	815,758		$	49,774		6.1	%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	2,912,388		$	2,920,950		$	(8,562	)	(0.3	)%
Unfavorable impact of currency fluctuations (2)	97,149			—			97,149			3.3
Comparable sales using a constant currency basis (Non-GAAP)	$	3,009,537		$	2,920,950		$	88,587		3.0	%
Gross Profit (GAAP)	$	605,185		$	615,505		$	(10,320	)	(1.7	)%
Unfavorable impact of currency fluctuations (2)	23,017			—			23,017			3.7
Comparable gross profit using a constant currency basis (Non-GAAP)	$	628,202		$	615,505		$	12,697		2.1	%
Operating expenses (GAAP)	$	550,385		$	548,733		$	1,652		0.3	%
Impact of restructuring and transformational project costs (3)	(27,272		)	(6,727		)	(20,545		)	NM
Impact of acquisition-related costs (4)	(16,909		)	(21,899		)	4,990			(22.8	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	506,204		$	520,107		$	(13,903	)	(2.7	)%
Favorable impact of currency fluctuations (2)	20,687			—			20,687			4.0
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	526,891		$	520,107		$	6,784		1.3	%
Operating income (GAAP)	$	54,800		$	66,772		$	(11,972	)	(17.9	)%
Impact of restructuring and transformational project costs (3)	27,272			6,727			20,545			NM
Impact of acquisition related costs (4)	16,909			21,899			(4,990		)	(22.8	)
Operating income adjusted for Certain Items (Non-GAAP)	$	98,981		$	95,398		$	3,583		3.8	%
Unfavorable impact of currency fluctuations (2)	2,330			—			2,330			2.4
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	101,311		$	95,398		$	5,913		6.2	%
SYGMA
Operating expenses (GAAP)	$	118,348		$	126,895		$	(8,547	)	(6.7	)%
Impact of restructuring and transformational project costs (5)	(2,585		)	—			(2,585		)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	115,763		$	126,895		$	(11,132	)	(8.8	)%
Operating income (GAAP)	$	7,570		$	2,431		$	5,139		NM

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Impact of restructuring and transformational project costs (5)	2,585			—			2,585			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	10,155		$	2,431		$	7,724		NM
CORPORATE
Operating expenses (GAAP)	$	261,232		$	264,348		$	(3,116	)	(1.2	)%
Impact of restructuring and transformational project costs (6)	(22,739		)	(34,176		)	11,437			(33.5	)
Impact of acquisition-related costs (7)	—			(737		)	737			NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	238,493		$	229,435		$	9,058		3.9	%
Operating income (GAAP)	$	(265,595	)	$	(267,156	)	$	1,561		(0.6	)%
Impact of restructuring and transformational project costs (6)	22,739			34,176			(11,437		)	(33.5	)
Impact of acquisition-related costs (7)	—			737			(737		)	NM
Operating income adjusted for Certain Items (Non-GAAP)	$	(242,856	)	$	(232,243	)	$	(10,613	)	4.6	%

⁽¹⁾  Includes charges related to business transformation projects.

⁽²⁾  Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.

⁽³⁾  Includes restructuring, facility closure and severance costs primarily in Europe and Canada.

⁽⁴⁾  Fiscal 2020 and fiscal 2019 include $17 million and $21 million, respectively, related to intangible amortization expense from the Brakes Acquisition.

⁽⁵⁾  Includes charges related to facility closures and other restructuring charges.

⁽⁶⁾  Fiscal 2020 and fiscal 2019 include various transformation initiative costs, primarily consisting of changes to our business technology strategy and severance charges related to restructuring.

⁽⁷⁾  Fiscal 2019 included $1 million in integration costs from the Brakes Acquisition.

NM represents that the percentage change is not meaningful.

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Three-Year Financial Targets

Sysco management considers adjusted return on invested capital (ROIC) to be a measure that provides useful information to management and investors in evaluating the efficiency and effectiveness of the company’s long-term capital investments. In addition, we have targets and expectations that are based on adjusted results, including an adjusted ROIC target of 16% under our three-year plan. We cannot predict with certainty whether or when we will achieve these results or whether the calculation of our ROIC in such future periods will be on an adjusted basis due to the effect of Certain Items, which would be excluded from such calculation. Due to these uncertainties, to the extent our future calculation of ROIC is on an adjusted basis excluding Certain Items, we cannot provide a quantitative reconciliation of this non-GAAP measure to the most directly comparable GAAP measure without unreasonable effort. However, we would expect to calculate adjusted ROIC, if applicable, in the same manner as we have historically calculated this measure. All components of our adjusted ROIC calculation would be impacted by Certain Items. We calculate adjusted ROIC as adjusted net earnings divided by (i) stockholders’ equity, computed as the average of adjusted stockholders’ equity at the beginning of the year and at the end of each fiscal quarter during the year; and (ii) long-term debt, computed as the average of the long-term debt at the beginning of the year and at the end of each fiscal quarter during the year.

Form of calculation:

Net earnings (GAAP)

Impact of Certain Items on net earnings

Adjusted net earnings (Non-GAAP)

Invested Capital (GAAP)

Adjustments to invested capital

Adjusted Invested capital (Non-GAAP)

Return on invested capital (GAAP)

Return on invested capital (Non-GAAP)

Additional targets and expectations include our adjusted operating income target that we expect to achieve by the end of fiscal 2020 under our three-year plan. Our three-year plan further includes target amounts for adjusted net earnings and adjusted diluted earnings per share. Due to uncertainties in projecting Certain Items, we cannot provide a quantitative reconciliation of these non-GAAP measures to the most directly comparable GAAP measures without unreasonable effort. However, we would expect to calculate these adjusted results, if applicable, in the same manner as the reconciliations provided for historical periods presented herein. The impact of future Certain Items could cause projected non-GAAP amounts to differ significantly from our GAAP results.

Liquidity and Capital Resources

Highlights

Below are comparisons of the cash flows from the first quarter of fiscal 2020 to the first quarter of fiscal 2019:

• Cash flows from operations were $171.6 million in fiscal 2020, compared to $271.1 million in fiscal 2019;

• Net capital expenditures totaled $170.8 million in fiscal 2020, compared to $100.5 million in fiscal 2019;

• Free cash flow was $0.8 million in fiscal 2020, compared to free cash flow of $170.7 million in fiscal 2019 (see below under the heading “Free Cash Flow” for an explanation of this non-GAAP financial measure);

• There were $533.4 million of commercial paper issuances and net bank borrowings in fiscal 2020, compared to no commercial paper issuances and net bank borrowings in fiscal 2019;

• Dividends paid were $200.0 million in fiscal 2020, compared to $187.2 million in fiscal 2019; and

• Cash paid for treasury stock repurchases was $349.3 million in fiscal 2020, compared to $204.6 million in fiscal 2019.

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Sources and Uses of Cash

Sysco’s strategic objectives include continuous investment in our business; these investments are funded by a combination of cash from operations and access to capital from financial markets. Our operations historically have produced significant cash flow. Cash generated from operations is generally allocated to:

• working capital requirements;

• investments in facilities, systems, fleet, other equipment and technology;

• cash dividends;

• acquisitions compatible with our overall growth strategy;

• contributions to our various retirement plans; and

• debt repayments and share repurchases.

Any remaining cash generated from operations may be invested in high-quality, short-term instruments. As a part of our ongoing strategic analysis, we regularly evaluate business opportunities, including potential acquisitions and sales of assets and businesses, and our overall capital structure. Any transactions resulting from these evaluations may materially impact our liquidity, borrowing capacity, leverage ratios and capital availability.

We continue to generate substantial cash flows from operations and remain in a strong financial position; however, our liquidity and capital resources can be influenced by economic trends and conditions that impact our results of operations. We believe our mechanisms to manage working capital, such as credit monitoring, optimizing inventory levels and maximizing payment terms with vendors, and our mechanisms to manage the items impacting our gross profits have been sufficient to limit a significant unfavorable impact on our cash flows from operations. We believe these mechanisms will continue to prevent a significant unfavorable impact on our cash flows from operations. Seasonal trends also impact our cash flows from operations and free cash flow, as we use more cash earlier in the fiscal year and then see larger, sequential quarterly increases throughout the remainder of the year.

As of September 28, 2019, we had $455.5 million in cash and cash equivalents, approximately 40% of which was held by our international subsidiaries and generated from our earnings of international operations. If these earnings were transferred among countries or repatriated to the U.S., such amounts may be subject to withholding and additional foreign tax obligations. Additionally, Sysco Corporation has provided intercompany loans to certain of its international subsidiaries, and when interest and principal payments are made, some of this cash will move to the U.S.

Our wholly owned captive insurance subsidiary (the Captive), must maintain a sufficient level of liquidity to fund future reserve payments. As of September 28, 2019, the Captive held $122.1 million of fixed income marketable securities and $58.9 million of restricted cash and restricted cash equivalents in a restricted investment portfolio in order to meet solvency requirements. We purchased $4.0 million in marketable securities in fiscal 2020 and received $3.0 million in proceeds from the sale of marketable securities in fiscal 2020.

We believe the following sources will be sufficient to meet our anticipated cash requirements for the next twelve months, while maintaining sufficient liquidity for normal operating purposes:

• our cash flows from operations;

• the availability of additional capital under our existing commercial paper programs, supported by our revolving credit facility and bank line of credit; and

• our ability to access capital from financial markets, including issuances of debt securities, either privately or under our shelf registration statement filed with the Securities and Exchange Commission.

Due to our strong financial position, we believe that we will continue to be able to effectively access the commercial paper market and long-term capital markets, if necessary.

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Cash Flows

Operating Activities

We generated $171.6 million in cash flows from operations in the first quarter of fiscal 2020, compared to cash flows of $271.1 million in the first quarter of fiscal 2019. These amounts include year-over-year unfavorable comparisons on working capital, partially offset by higher operating results.

Changes in working capital, specifically accounts payable and accounts receivable, had a negative impact of $128.1 million on cash flow from operations period-over-period. There was an unfavorable comparison on accounts payable and accounts receivable, which was partially offset by a favorable comparison on inventory. During the first quarter of fiscal 2020, working capital was primarily impacted by an increase in receivables.

Seasonal trends also impact our cash flows from operating activities, as we typically use more cash earlier in the fiscal year and then see larger, sequential quarterly increases throughout the remainder of the year. Normally, our U.S. tax payments are greater in the second quarter of each fiscal year. In fiscal 2020, due to relief provided in connection with the impact of Tropical Storm Imelda, our tax payments will not be made until our third quarter of fiscal 2020, resulting in a one quarter deferral of approximately $200 million to $250 million.

Investing Activities

Our capital expenditures in the first quarter of fiscal 2020 primarily consisted of fleet, technology equipment, warehouse equipment and facility replacements and expansions. Our capital expenditures in the first quarter of fiscal 2020 were higher by $71.4 million, as compared to the first quarter of fiscal 2019, primarily due to timing of capital spend in the first quarter of fiscal 2019.

During the first quarter of fiscal 2020, we paid $74.8 million, net of cash acquired, for acquisitions. There were no such acquisitions made in the first quarter of fiscal 2019.

Free Cash Flow

Free cash flow represents net cash provided from operating activities, less purchases of plant and equipment, plus proceeds from sales of plant and equipment. Sysco considers free cash flow to be a non-GAAP liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash, including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures, as it may be necessary that we use it to make mandatory debt service or other payments. Our free cash flow for the first quarter of fiscal 2020 decreased by $169.9 million, to $0.8 million, as compared to the first quarter of fiscal 2019, principally as a result of a year-over-year decrease in cash flows from operations and increased capital expenditures.

Free cash flow should not be used as a substitute for the most comparable GAAP measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities.

	13-Week Period Ended Sep. 28, 2019			13-Week Period Ended Sep. 29, 2018
	(In thousands)
Net cash provided by operating activities (GAAP)	$	171,579		$	271,145
Additions to plant and equipment	(175,728		)	(104,322		)
Proceeds from sales of plant and equipment	4,902			3,839
Free Cash Flow (Non-GAAP)	$	753		$	170,662

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Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $85.3 million in the first quarter of fiscal 2020, as compared to $84.4 million in the first quarter of fiscal 2019. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

We routinely engage in share repurchase programs to allow Sysco to continue offsetting dilution resulting from shares issued under the company’s benefit plans and to make opportunistic repurchases. In November 2017, our Board of Directors approved a repurchase program to authorize the repurchase of the company’s common stock not to exceed $1.5 billion through the end of fiscal 2020. In August 2019, our Board of Directors approved a separate repurchase program to authorize the repurchase of the company’s common stock not to exceed $2.5 billion through the end of fiscal 2021. We repurchased 4.6 million shares for $349.3 million during the first quarter of fiscal 2020, compared to 2.8 million shares repurchased in the first quarter of fiscal 2019 for $204.6 million. We repurchased approximately 1.1 million additional shares for $83.9 million through October 18, 2019, resulting in a remaining authorization of approximately $2.6 billion. The number of shares we repurchase during the remainder of fiscal 2020 will be dependent on many factors, including the level of future stock option exercises, as well as competing uses for available cash.

Dividends paid in the first quarter of fiscal 2020 were $200.0 million, or $0.39 per share, as compared to $187.2 million, or $0.36 per share, in the first quarter of fiscal 2019. In July 2019, we declared our regular quarterly dividend for the first quarter of fiscal 2020 of $0.39 per share, which was paid in October 2019.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, and our borrowing availability is described in Note 8, “Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I. Our outstanding borrowings at September 28, 2019, and repayment activity since the close of the first quarter of fiscal 2020, are disclosed within that note. Updated amounts through October 18, 2019, include:

• $820.2 million outstanding from our commercial paper program; and

• No amounts outstanding from the credit facility supporting the company’s U.S. commercial paper program.

During the first quarter of fiscal 2020 and 2019, our aggregate commercial paper issuances and short-term bank borrowings had weighted average interest rates of 2.31% and 2.17%, respectively.

Contractual Obligations

Our 2019 Form 10-K contains a table that summarizes our obligations and commitments to make specified contractual future cash payments as of June 29, 2019. Since June 29, 2019, there have been no material changes to our specified contractual obligations.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to the portrayal of our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical accounting policies and estimates and this related disclosure. Our most critical accounting policies and estimates pertain to goodwill and intangible assets, the company-sponsored pension plans, income taxes and share-based compensation, which are described in Item 7 of our 2019 Form 10-K.

Forward-Looking Statements

Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,”

38

“projected,” “continues,” “continuously,” variations of such terms, and similar terms and phrases denoting anticipated or expected occurrences or results. Examples of forward-looking statements include, but are not limited to, statements about:

• our expectations regarding improved operating income performance;

• our expectations regarding multiple transformation initiatives, including (i) the Finance Transformation Roadmap and our expectation that we will receive financial benefits from this initiative, (ii) Smart Spending and our expectation that this initiative will provide unprecedented visibility, ownership and performance management in all areas of our business, (iii) Canadian Regionalization and our expectation that this initiative will contribute to increased cost savings and (iv) Administrative Expenses and our expectation that this initiative will drive costs out of the business to drive growth, and our expectation that we will receive financial benefits from these initiatives through the end of fiscal 2020;

• our expectations regarding our ability to effectively centralize and standardize our business, including leveraging technology and strengthening Sysco overall;

• our expectations that our four strategic priorities, which include the customer experience, delivering operational excellence, optimizing the business and activating the power of our people, will accelerate our current growth and guide us into the future;

• projections of future performance under our three-year strategic financial plan, including, but not limited to, our expectation that we will reach approximately $600 million of adjusted operating income growth as compared to fiscal 2017, our goal of growing earnings per share faster than operating income, and achieving 16% in adjusted return on invested capital improvement for existing businesses

• our expectations regarding the accelerated investments we are making related to our long-term strategic growth plans in Europe, and our expectations that such investments will enrich the customer experience and position us well in the European market;

• the impact of seasonal trends on our free cash flow;

• our expectations regarding the use of remaining cash generated from operations;

• estimates regarding our capital expenditures;

• our expectations regarding the impact of potential acquisitions and sales of assets on our liquidity, borrowing capacity, leverage ratios and capital availability;

• our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;

• our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;

• the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of these mechanisms;

• our ability to meet future cash requirements, including the ability to access financial markets effectively, including issuances of debt securities, and maintain sufficient liquidity;

• our ability to effectively access the commercial paper market and long-term capital markets;

• our intention to repay our long-term debt with cash on hand, cash flow from operations, issuances of commercial paper, issuances of senior notes, or a combination thereof; and

• our expectations regarding share repurchases.

39

These statements are based on management’s current expectations and estimates; actual results may differ materially due in part to the risk factors set forth below, those within Part II, Item 1A of this document and those discussed in Item 1A of our 2019 Form 10-K:

• the risk that if sales from our locally managed customers do not grow at the same rate as sales from regional and national customers, or if we are unable to continue to accelerate local case growth, our gross margins may decline;

• the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit;

• periods of significant or prolonged inflation or deflation and their impact on our product costs and profitability generally;

• the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs may be unsuccessful;

• the risk that we may not be able to accelerate and/or identify additional administrative cost savings in order to compensate for any gross profit or supply chain cost leverage challenges;

• risks related to unfavorable conditions in North America and Europe and the impact on our results of operations and financial condition;

• the risks related to our efforts to meet our long-term strategic objectives, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove costlier than expected; the risk that the actual costs of any initiatives may be greater or less than currently expected; and the risk of adverse effects to us if past and future undertakings and the associated changes to our business do not prove to be cost effective or do not result in the level of cost savings and other benefits that we anticipated;

• the impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;

• the risk that the actual costs of any business initiatives may be greater or less than currently expected;

• the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;

• the risk that our relationships with long-term customers may be materially diminished or terminated;

• the risk that changes in consumer eating habits could materially and adversely affect our business, financial condition, or results of operations;

• the risk that changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;

• the risk that we may not be able to fully compensate for increases in fuel costs, and forward purchase commitments intended to contain fuel costs could result in above market fuel costs;

• the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;

• the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;

• risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;

• the risk that we may not realize anticipated benefits from our operating cost reduction efforts;

• difficulties in successfully expanding into international markets and complimentary lines of business;

• the potential impact of product liability claims;

• the risk that we fail to comply with requirements imposed by applicable law or government regulations;

• risks related to our ability to effectively finance and integrate acquired businesses;

40

• risks related to our access to borrowed funds in order to grow and any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;

• our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position;

• the risk that the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

• the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;

• the risk that the U.K.’s anticipated exit from the European Union (EU), commonly referred to as Brexit, may adversely impact our operations in the U.K., including those of the Brakes Group;

• the risk that future labor disruptions or disputes could disrupt the integration of Brake France and Davigel into Sysco France and our operations in France and the EU generally;

• the risk that factors beyond management’s control, including fluctuations in the stock market, as well as management’s future subjective evaluation of the company’s needs, would impact the timing of share repurchases;

• due to our reliance on technology, any technology disruption or delay in implementing new technology could have a material negative impact on our business;

• the risk that a cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with customers;

• the potential requirement to pay material amounts under our multiemployer defined benefit pension plans;

• our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines;

• labor issues, including the renegotiation of union contracts and shortage of qualified labor;

• capital expenditures may vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending; and

• the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to stockholders.

For a more detailed discussion of factors that could cause actual results to differ from those contained in the forward-looking statements, see the risk factors discussion contained in Item 1A of our 2019 Form 10-K and the risk factor discussion contained in Part II, Item 1A of this document.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk, foreign currency exchange rate risk, fuel price risk and investment risk. For a discussion on our exposure to market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risks” in our 2019 Form 10-K. There have been no significant changes to our market risks since June 29, 2019, except as noted below.

Interest Rate Risk

At September 28, 2019, there was $665.4 million in aggregate commercial paper issuances outstanding. Total debt as of September 28, 2019 was $8.7 billion, of which approximately 65% was at fixed rates of interest, including the impact of our interest rate swap agreements.

Fuel Price Risk

Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel fluctuates due to changes in production, seasonality and other market factors generally outside of our control. Increased fuel costs may have a negative impact on our results of operations in three areas. First, the high cost of fuel can negatively impact consumer confidence and discretionary spending and thus reduce the frequency and amount spent by consumers for food-away-

41

from-home purchases. Second, the high cost of fuel can increase the price we pay for product purchases and we may not be able to pass these costs fully to our customers. Third, increased fuel costs impact the costs we incur to deliver product to our customers. Fuel costs related to outbound deliveries represented approximately 0.5% of sales during the first quarter of fiscal 2020 and fiscal 2019.

Our activities to mitigate fuel costs include routing optimization with the goal of reducing miles driven, improving fleet utilization by adjusting idling time and maximum speeds and using fuel surcharges that primarily track with the change in market prices of fuel. We use diesel fuel swap contracts to fix the price of a portion of our projected monthly diesel fuel requirements. As of September 28, 2019, we had diesel fuel swaps with a total notional amount of approximately 55 million gallons through September 2020. These swaps are expected to lock in the price of approximately 65% of our projected fuel purchase needs for fiscal 2020. Additional swaps have been entered into for hedging activity in fiscal 2021. As of September 28, 2019, we had diesel fuel swaps with a total notional amount of approximately 17 million gallons specific to fiscal 2021. Our remaining fuel purchase needs will occur at market rates unless contracted for a fixed price or hedged at a later date.

Item 4.  Controls and Procedures

Sysco’s management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 28, 2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Sysco’s disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of September 28, 2019, our chief executive officer and chief financial officer concluded that, as of such date, Sysco’s disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended September 28, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

None

Item 1A.  Risk Factors

The information set forth in this report should be read in conjunction with the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 29, 2019 and as set forth below.

Economic and political instability and potential unfavorable changes in laws and regulations in international markets could adversely affect our results of operations and financial condition.

Our international operations subject us to certain risks, including economic and political instability and potential unfavorable changes in laws and regulations in international markets in which we operate. For example, the U.K.’s anticipated exit from the EU (commonly referred to as “Brexit”) and the resulting significant change to the U.K.’s relationship with the EU and with countries outside the EU (and the laws, regulations and trade deals impacting business conducted between them) could disrupt the overall economic growth or stability of the U.K. and the EU and otherwise negatively impact our European operations.

The U.K. is currently negotiating the terms of Brexit. In November 2018, the U.K. and the EU agreed upon a draft Withdrawal Agreement that set out the terms governing the U.K.’s departure, including, among other things, a transition period to allow for a future trade deal to be agreed upon. After the U.K. Parliament rejected the draft Withdrawal Agreement multiple times during the third quarter of fiscal 2019, the EU agreed to an extension of the exit date to October 31, 2019. In October 2019, after the U.K. Parliament failed to ratify a renegotiated draft Withdrawal Agreement, the U.K. Government requested, and the EU agreed to, a further extension of the exit date to January 31, 2020. Meanwhile, U.K. Prime Minister Boris Johnson has called a general election for December 12, 2019, in an effort to obtain a Parliamentary majority that would ratify the renegotiated draft Withdrawal Agreement. Some smaller political parties continue to push for Brexit to be abandoned, however. The further extension is a so-called “flex-tension”, meaning that if the Prime Minister is able to secure agreement to a Withdrawal Agreement before the end of December 2019 (and the Withdrawal Agreement is ratified by the European Parliament within this time), the U.K. could leave the EU before January 31, 2020. As a result, there continues to be significant uncertainty about the terms and timing under which the U.K. will leave the EU. It is possible that Brexit will result in our U.K. and EU operations becoming subject to materially different, and potentially conflicting, laws, regulations or tariffs which could require costly new compliance initiatives or changes to legal entity structures or operating practices. Furthermore, if the U.K. were to leave the EU without an agreement (a “hard Brexit”), there may be additional adverse impacts on immigration and trade between the U.K. and the EU or countries outside the EU. Such impacts may directly increase our costs or could decrease demand for our goods and services by adversely impacting the business of restaurants or other customers in the foodservice distribution industry.

The completion of Brexit could also adversely affect the value of our euro- and pound-denominated assets and obligations. Exchange rates related to the British pound sterling have been more volatile since the U.K. announced it would exit the EU and such volatility may continue in the future. Future fluctuations in the exchange rate between the British pound sterling and the local currencies of our suppliers may have the effect of increasing our cost of goods sold in the U.K., which increases we may not be able to pass on to our customers. Uncertainty surrounding Brexit has contributed to recent fluctuations in the U.K. economy, which contracted in the second quarter of 2019 and could experience future disruptions. In addition, Brexit could cause financial and capital markets within and outside the U.K. or the EU to constrict, thereby negatively impacting our ability to finance our business, and could cause a substantial dip in consumer confidence and spending that could negatively impact the foodservice distribution industry. Any one of these impacts could have an adverse effect on our results of operations and financial condition.

Additionally, the “yellow vest” protests in France against a fuel tax increase and the French government have negatively impacted our sales in France and may continue to do so. Similarly, future labor disruptions or disputes could disrupt the integration of Brake France and Davigel into Sysco France and our operations in France and the EU generally. In addition, if changes occur in laws and regulations impacting the flow of goods, services and workers in either the U.K or France or in other parts of the EU, with respect to Brexit or otherwise, our European operations could also be negatively impacted.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None

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Issuer Purchases of Equity Securities

We made the following share repurchases during the first quarter of fiscal 2020:

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1
June 30 – July 27	21,788	$	70.55	20,549	—
Month #2
July 28 – August 24	699,282	73.09		697,912	—
Month #3
August 25 – September 28	3,897,225	76.33		3,889,484	—
Totals	4,618,295	$	75.81	4,607,945	—

⁽¹⁾  The total number of shares purchased includes 1,239, 1,370 and 7,741 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.

We routinely engage in share repurchase programs. In November 2017, our Board of Directors approved a repurchase program to authorize the repurchase of the company’s common stock not to exceed $1.5 billion through the end of fiscal 2020. In August 2019, our Board of Directors approved a separate repurchase program to authorize the repurchase of the company’s common stock not to exceed $2.5 billion through the end of fiscal 2021. These repurchase programs are intended to allow Sysco to continue offsetting dilution resulting from shares issued under the company’s benefit plans and to make opportunistic repurchases. The share repurchase programs were approved using a dollar value limit and, therefore, are not included in the table above for “Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs.”

We repurchased 4.6 million shares during the first quarter of fiscal 2020 and purchased approximately 1.1 million additional shares under these authorizations through October 18, 2019, resulting in a remaining authorization under these programs of approximately $2.6 billion. The number of shares we repurchase during the remainder of fiscal 2020 will be dependent on many factors, including the level of future stock option exercises, as well as competing uses for available cash.

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

Not applicable

Item 5.  Other Information

None

Item 6.  Exhibits

The exhibits listed on the Exhibit Index below are filed as a part of this Quarterly Report on Form 10-Q.

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EXHIBIT INDEX

3.1	—	Restated Certificate of Incorporation, incorporated by reference to Exhibit 3(a) to Form 10-K for the year ended June 28, 1997 (File No. 1-6544).
3.2	—	Certificate of Amendment to Restated Certificate of Incorporation increasing authorized shares, incorporated by reference to Exhibit 3(e) to Form 10-Q for the quarter ended December 27, 2003 (File No. 1-6544).
3.3	—	Form of Amended Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(c) to Form 10-K for the year ended June 29, 1996 (File No. 1-6544).
3.4	—	Amended and Restated Bylaws of Sysco Corporation dated August 26, 2016, incorporated by reference to Exhibit 3.2 to Form 8-K filed on August 31, 2016 (File No. 1-6544).
10.1†#	—	Sysco Corporation Fiscal 2020 Management Incentive Program (MIP) For Corporate MIP Bonus-eligible Positions adopted effective August 19, 2019.
10.2†	—	Form of Stock Option Grant Agreement (Fiscal Year 2020) for executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan, incorporated by reference to Exhibit 10.41 to Form 10-K for the year ended June 29, 2019 (File No. 1-6544).
10.3†	—	Form of Performance Share Unit Grant Agreement (Fiscal Year 2020) for executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan., incorporated by reference to Exhibit 10.42 to Form 10-K for the year ended June 29, 2019 (File No. 1-6544).
10.4†	—	Summary of Named Executive Officer Compensation, incorporated by reference to the section entitled “Executive Compensation” in the Sysco Corporation Proxy Statement filed on October 2, 2019 (File No. 1-6544).
31.1#	—	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2#	—	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#	—	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#	—	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH#	—	Inline XBRL Taxonomy Extension Schema Document
101.CAL#	—	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF#	—	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB#	—	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE#	—	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________

† Executive Compensation Arrangement pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K

# Filed herewith

45

SIGNATURES

Pursuant to the requirements 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.

		Sysco Corporation
		(Registrant)
Date: November 4, 2019	By:	/s/ THOMAS L. BENÉ
		Thomas L. Bené
		Chairman, President and Chief Executive Officer
Date: November 4, 2019	By:	/s/ JOEL T. GRADE
		Joel T. Grade
		Executive Vice President and
		Chief Financial Officer
Date: November 4, 2019	By:	/s/ ANITA A. ZIELINSKI
		Anita A. Zielinski
		Senior Vice President and
		Chief Accounting Officer

46

EX-10.1

EXHIBIT 10.1

Certain information identified by bracketed asterisks ([***]) has been omitted because it is both not material and would be competitively harmful if disclosed.

Fiscal 2020 Management Incentive Program (MIP)

For Corporate MIP Bonus-eligible Positions

Adopted August 19, 2019

This SYSCO CORPORATION FISCAL 2020 MANAGEMENT INCENTIVE PROGRAM FOR CORPORATE MIP BONUS-ELIGIBLE PARTICIPANTS (the “Program”) was adopted pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan (the “Plan”) by the Committee (as defined in the Plan) of Sysco Corporation (the “Company”) on July 25, 2019, and shall be effective for the Company’s fiscal year ending June 27, 2020 (the “Program Year”). Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan.

1.    Participants. For purposes of this Program, “Senior Officer” shall mean the Company’s President and Chief Executive Officer, the Company’s Chief Financial Officer or an Executive Vice-President of the Company. The Participants in this Program are grouped as follows:

(A)    Corporate MIP Bonus-eligible Participants: Those persons who serve in a Corporate MIP Bonus-eligible position and are designated by a Senior Officer as eligible to participate in the Program.

(B)    Senior Executive Participants: Corporate MIP Bonus-eligible Participants who are “covered employees” of the Company within the meaning of Code Section 162(m) and Treasury Regulation 1.162-27(c)(2) (or any successor statute, any regulatory section, or any administrative interpretation thereof) for the Program Year. If it is determined that a Participant is a Senior Executive Participant for the Program Year, such Participant’s bonus shall be calculated subject to any and all restrictions applicable to Senior Executive Participants under the Plan and this Program for the Program Year.

Once a person is designated as a Participant in this Program, the Committee may remove the Participant as a Participant in this Program with or without cause at any time during the Program Year, and the Participant shall not be entitled to any bonus under this Program for the Program Year regardless of when during the Program Year such Participant is removed.

2.    Definitions.

(A)     For calculation of a performance bonus the applicable metrics are defined as follows:

(i)    Operating Income: Means the Operating Income expressed as a dollar value, as it may be adjusted pursuant to Section 3(B), for the Program Year.

(ii)    Gross Profit Dollars Growth and US Broadline and Canadian Broadline Total Case Growth: Means Gross Profit Dollars Growth and US and Canadian Broadline Case Growth expressed as a percentage and computed by comparing gross profit dollars and total cases for US Broadline and Canadian Broadline, as they may be adjusted pursuant to Section 3(B), for the Program Year to target gross profit dollars

and the target total cases for US Broadline and Canadian Broadline in the Fiscal 2019 Profit Plan, as they may be adjusted pursuant to Section 3(B).

(iii)    Strategic Bonus Objectives: Means key goals for the Program Year, as established by the Committee and as set forth in the Participant’s performance objectsives.

(iv)    Operating Income Bonus Percentage: Means the percentage determined from Appendix B - Operating Income, which is computed by comparing Operating Income for the Program Year to the target Operating Income for the Program Year in the the Fiscal 2019 Profit Plan.

(v)    Gross Profit Dollar Growth and US Broadline and Canadian Broadline Case Growth Bonus Percentage: Means the percentage determined from Table A – Gross Profit Dollar Growth and USBL+CABL Case Growth, attached hereto, which is computed by comparing the Gross Profit Dollar Growth for the Program Year and the US Broadline and Canadian Broadline Total Cases Growth for the Program Year to the target Gross Profit Dollar Growth for the Program Year and the target US Broadline and Canadian Broadline Cases Growth from the Fiscal 2019 Profit Plan.

(vi)    Strategic Bonus Objective Bonus Percentage: Means the percentage determined from Appendix B – Strategic Bonus Objectives, attached hereto, which coincides with Participant’s achievement of Strategic Bonus Objectives for the Program Year.

(B)    Corporate MIP Bonus-eligible Position: Means (i) positions held by the Senior Officers and (ii) other positions with the Company or its affiliates, as deemed appropriate by a Senior Officer.

(C)    Bonus Target Amount: Means a Participant’s Target Bonus Percentage for the Program Year multiplied by the Participant’s base salary as of the end of the relevant Program Year.

(D)    Bonus for a Corporate MIP Bonus-eligible Position: Means the sum of the Company Performance Bonus for a MIP Bonus-eligible Position and the SBO Performance Bonus for a Corporate MIP Bonus-eligible Position.

(E)    Performance Bonus for a Corporate MIP Bonus-eligible Position: As defined in Section 3(A)(i) hereof.

(G)    GAAP Change Year: As defined in Section 3(C)(i) hereof.

(G)    SBO Performance Bonus for a Corporate MIP Bonus-eligible Position: As defined in Section 3(A)(ii) hereof.

(H)    Rate Change Year: As defined in Section 3(C)(iii) hereof.

(I)    Target Bonus Percentage: The percentage set forth in the Participant’s bonus letter for the Program Year.

3.    Calculation of Bonus.

(A)     Bonus Formula. The Bonus for a Corporate MIP Bonus-eligible Position for the Program Year shall be based 75% on financial performance of the Company and 25% on an individual Participant’s performance with respect to Strategic Bonus Objectives, and shall be equal to the sum of the (i) and (ii), calculated as follows:

(i)    Performance Bonus for a Corporate MIP Bonus-eligible Position. The Company Performance Bonus for a MIP Bonus-eligible Position shall be equal to the sum of the following:

(AA)    Operating Income Bonus –

Participant’s Bonus Target Amount X Operating Income Bonus Percentage X 50% = Operating Income Bonus

(BB) Gross Profit Dollars Growth and US Broadline and Canadian Broadline Total Case Growth Bonus –

Participant’s Bonus Target Amount X Gross Profit Dollars Growth and US Broadline and Canadian Broadline Cases Growth Bonus Percentage X 25% = Gross Profit Dollars Growth and US Broadline and Canadian Broadline Cases Growth Bonus

(ii)    SBO Performance Bonus for a MIP Bonus-eligible Position. The SBO Performance Bonus for a MIP Bonus-eligible Position shall be determined based on the Participant’s achievement of the specified SBOs, and shall be equal to the sum of the following:

(CC)     Strategic Bonus Objective Bonus –

Participant’s Bonus Target Amount X SBO Bonus Percentage X 25% = SBO Bonus

Each of the above components of the Bonus for a MIP Bonus-eligible Position shall be calculated and awarded independently, unless otherwise indicated in Appendix A, attached to this Program. Each metric based on financial performance has a possible payout between 0% and 200%, depending on actual performance relative to established targets. SBO Performance Bonus has a possible payout of between 0% and 150%, depending on actual performance relative to established targets. If performance for the Program Year with respect to a component does not meet Threshold, a Participant will not receive any bonus with respect to that component. If performance for the Program Year is between Threshold and Maximum, the amount of bonus earned with respect to that component will be determined as set forth on the applicable Appendix B attached to this Program. Prior to the date that is ninety (90) days after the beginning of the Program Year, the Committee shall determine the Threshold, Target and Maximum performance metrics and the respective payout percentages to be set forth on Appendix B for the Company.

(B)    Performance Metric Adjustments. Certain items of revenue, expense, gain, losses or other adjustments resulting from extraordinary or non-recurring items, will be taken into account in the application of the relevant performance metrics used to determine the Participants’ bonuses under this Program in accordance with the following:

(i)    Multi-Employer Pension Adjustments. Adjustments resulting from the Company’s or an Operating Company’s complete or partial withdrawal from a multi-employer pension plan sponsored by a third party in which the Company or an Operating Company participates (“Pension Adjustments”). The amount of any such adjustment shall be determined in accordance with GAAP. Pension Adjustments shall initially be excluded from the calculation of the performance metrics used to determine Participants’ bonuses under this Program; provided however, the Committee may include all or any portion of such Pension Adjustments in the determination of a Participant’s bonus hereunder in its discretion, provided such inclusion shall not apply to a Senior Executive Participant unless the Committee determines that the inclusion of all or any portion of such Pension Adjustments will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under this Program under Section 162(m) of the Code.

(ii)    Restructuring Charges Adjustment. Adjustments resulting from the Company’s or an Operating Company’s costs including, but not limited to, severance, facility closures and consolidations and asset write downs. The foregoing notwithstanding, the following items will not be eligible for adjustment under this provision: ERB, COLI, Fuel and Tax.

(iii)     Acquisitions and Divestitures. All or any portion of operating results, acquisition and divestiture expenses (including any applicable break up fees), acquisition debt, if any, and any gains or losses relating to or resulting from (AA) an acquisition by the Company of stock (or other equity interest) or substantially all of the assets of a corporation, partnership, limited liability company or other entity for a purchase price in excess of $100 million; and (BB) a divestiture of an Operating Company or operating division of the Company (or substantially all of the assets thereof) for a sale price in excess of $100 million may be excluded from the determination of the Company Performance Bonus under this Program; provided however, such exclusion shall not apply to a Senior Executive Participant unless the Committee determines that the exclusion of all or any portion of such adjustments will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under this Program under Section 162(m) of the Code.

(iii)    Foreign Exchange Rate Fluctuations. Variance of actual foreign exchange rates during the Program Year versus projected foreign exchange rate assumptions used in the development of operational targets in the Fiscal 2018 Profit Plan.

(iv)    Certain Other Events. Notwithstanding the foregoing, the Committee may include or exclude from the determination of a Participant’s bonus hereunder the results of certain other extraordinary or non-recurring items not otherwise contemplated by this Section (B), and expenses related to acquisitions by, or restructuring of, the Company and its subsidiaries (whether or not such expenses are extraordinary or non-recurring).

(C)    General Rules Regarding Bonus Calculation.

(i)    Consistent Accounting. In determining whether or not the results of operations for a given fiscal year result in a bonus, Company accounting practices and, except as otherwise modified in this Program, GAAP shall be applied on a basis consistent with prior periods, and such determination shall be based on the calculations made by the Company, approved (in the case of Senior Executive Participants) by the Committee and binding on each Participant. Notwithstanding the foregoing, if there is any material change in GAAP during a Program Year that results in a material change in accounting for the revenues or expenses of the Company, the calculations of the MIP bonus for such Program Year (the “GAAP Change Year”) shall be made as if such change in GAAP had not occurred during the GAAP Change Year. In determining the MIP bonus for the year following a GAAP Change Year, the calculation shall be made after taking into account such change in GAAP.

(ii)    Maximum Bonus. Subject to Section 6 as to Senior Executive Participants, and notwithstanding any other provision in this Program to the contrary, in no event shall any Participant be entitled to a bonus under this Program in excess of 281.25% of such Participant’s base salary in effect as of the end of the Program Year.

(iii)    Tax Law Changes. If the Internal Revenue Code is amended during the Program Year and, as a result of such amendment(s), the effective tax rate applicable to the earnings of the Company (as described in the “Summary of Accounting Policies” section of the Company’s annual report to the Securities and Exchange Commission on Form 10-K) changes during the Program Year, the determination of the Participant’s Company Performance Bonus for the Program Year (the “Rate Change Year”) shall be made as if such rate change had not occurred during the Rate Change Year. In determining the Company Performance Bonus in the year following the Rate Change Year, the calculation shall be made after taking into account such rate change.

4.    Payment. Within ninety (90) days following the end of the Program Year, the Company shall determine, and, in the case of Senior Executive Participants, the Committee shall approve, the amount of any bonus earned by each Participant under this Program. Such bonus shall be payable in the manner, at the times and in the amounts provided in the Plan.

5.    Clawback of Bonus. In accordance with the Company’s incentive payment clawback policy, in the event of a restatement of financial results (other than a restatement due to a change in accounting policy) within thirty-six (36) months of the payment of a bonus under this Program, if the Committee or the Company determines in its sole and absolute discretion, that the bonus paid to a Participant under the Program for the Program Year would have been lower had it been calculated based on such restated results (the “Adjusted MIP Bonus”), then the Committee or the Company shall, subject to applicable governing law, recoup from such Participant, in such form and at such time as the Committee or the Company determines in its sole and absolute discretion, the difference between the amount previously paid to such Participant pursuant to this Program (without regard to amounts deferred by such Participant under the Company’s executive benefit plans) and the Adjusted MIP Bonus.

6.    Overall Limitation upon Payments under the Plan to Senior Executive Participants.     Notwithstanding any other provision in this Program to the contrary, in no event shall any Senior Executive Participant be granted a Cash-Based Award in excess of one percent (1%) of the Company’s earnings before income taxes as publicly disclosed in the “Consolidated Results of Operations” section of the Company’s Annual Report on Form 10-k filed with the Securities and Exchange Commission for the fiscal year ended immediately before the date the applicable Cash-Based Awards are paid.

7.    Confidentiality. The target performance levels and other information set forth on Appendix B constitute confidential information of the Company, subject to the prohibition on disclosure of confidential information under Sysco’s Code of Conduct. Any disclosure of the target performance levels by a Participant prior to the time such target performance levels are disclosed to the public, as determined by the Committee, will result in a forfeiture (which may include a clawback) of such Participant’s Bonus for the Program Year.

8.    Treatment Upon Change in Control.

(A)    Notwithstanding anything to the contrary contained herein, and in lieu of any other payments due hereunder other than pursuant to this Section 8, within ninety (90) days following the date on which a Change in Control (as defined in Section 1.2(f) of the Plan) has occurred, each person who was a Participant at the time of the Change in Control shall be paid a cash bonus hereunder, equal to the following (subject to reduction in the case of certain severance payments, as set forth below): the product of (i) a fraction equal to the number of days in the Performance Period in which the Change in Control occurs up to and including the date of the Change in Control divided by 365, and (ii) the bonus that would have been paid under this Plan, calculated using a Performance Goal equal to the product of (i) performance through and including the end of the most recently completed fiscal quarter occurring prior to and in the same Performance Period as the Change in Control (the “Measurement Date”), calculated in accordance with generally accepted accounting principles, if applicable, and (b) a fraction, the numerator of which is 365 and the denominator of which is the number of days in such Performance Period up to and including the Measurement Date.

(B)    In addition to any bonus paid or payable pursuant to Section 8(A), any Participant who remains in the employ of the Company or any Affiliated Company on the last day of the Performance Period in which a Change in Control occurs shall be entitled to receive, in cash, within ninety (90) days after the end of the Performance Period, an amount equal to the positive difference, if any, between (a) the bonus that would have been paid to the Participant for such Performance Period under the Plan as in effect on the date of the Change in Control, using the actual performance for the entire Performance Period, and (b) the amount paid pursuant to Section 8(A).

(C)    Notwithstanding the foregoing, with respect to any Participant who is a party to the Company’s a severance agreement with the Company or an Affliated Company, the bonus paid pursuant to this Section 8 shall be reduced, but to not less than zero, by the amount of any payment pursuant to such Participant’s severance agreement that is determined or calculated with respect to payments received or to be received under this Plan or any predecessor or successor thereof.

9.    Delegation of Authority. Pursuant to Section 2.3 of the Plan, the Committee hereby delegates discretionary authority granted to the Committee under this Program as well as under the Plan, including but not limited to the authority to determine the target, minimum and maximum performance levels applicable to Participants and the Company and the related payout percentages subject to the maximum bonus levels set forth in Section 3(c)(ii) of this Program, to the Senior Officers and each of them individually, except as to Senior Executive Participants.

APPENDIX A

This Appendix A includes alternative terms and conditions that govern the performance bonus opportunity under the Program for an individual that is a Senior Officer (as defined in the Sysco Corporation Compensation and Leadership Development Committee Charter, but for whom bonus opportunity and achievement under the Program are measured, in part, on financial performance of a Foodservice Operations of a specific jurisdiction of the Company.

For such an individual, Section 3(a)(i) and Section 3(a)(ii) of the Program shall be replaced as follows:

(i)    Performance Bonus for a Business Unit MIP Bonus-eligible Position. The Company Performance Bonus for a MIP Bonus-eligible Position shall be equal to the sum of the following:

(AA)    Operating Income Bonus of Company –

Participant’s Bonus Target Amount X Operating Income Bonus Percentage X 25% = Company Operating Income Bonus

(BB)    Operating Income Bonus of Business Unit –

Participant’s Bonus Target Amount X Business Unit Operating Income Bonus Percentage X 35% = Business Unit Operating Income Bonus

(CC) Gross Profit Dollars Growth and US Broadline Total Case Growth Bonus

Participant’s Bonus Target Amount X Gross Profit Dollars Growth and US Broadline Local Cases Growth Bonus Percentage X 15% = Gross Profit Dollars Growth and US Broadline Local Cases Growth Bonus

(ii)    SBO Performance Bonus for a MIP Bonus-eligible Position. The SBO Performance Bonus for a MIP Bonus-eligible Position shall be determined based on the Participant’s achievement of the specified SBOs, and shall be equal to the sum of the following:

(CC)     Strategic Bonus Objective Bonus –

Participant’s Bonus Target Amount X SBO Bonus Percentage X 25% = SBO Bonus

Each of the above components of the Bonus for a MIP Bonus-eligible Position shall be calculated and awarded independently. Each metric based on financial performance has a possible payout between 0% and 200%, depending on actual performance relative to established targets. SBO Performance Bonus has a possible payout of between 0% and 150%, depending on actual performance relative to established targets. If performance for the Program Year with respect to a component does not meet Threshold, a Participant will not receive any bonus with respect to that component. If performance for the Program Year is between Threshold and Maximum, the amount of bonus earned with respect to that component will be determined as set forth on the applicable Appendix B attached to this Program. Prior to the date that is ninety (90) days after the beginning of the Program Year, the Committee shall determine the Threshold, Target and Maximum performance metrics and the respective payout percentages to be set forth on Appendix B for the Company.

APPENDIX B

[***]

This Appendix B has been omitted pursuant to Item 601(a)(5) of Regulation S-K. We agree to furnish supplementally to the Securities and Exchange Commission a copy of Appendix B upon request, subject to our right to request confidential treatment thereof.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas L. Bené, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sysco Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2019

/s/ THOMAS L. BENÉ

Thomas L. Bené

Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Joel T. Grade, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sysco Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2019

/s/ JOEL T. GRADE

Joel T. Grade

Executive Vice President andChief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Thomas L. Bené, Chairman, President and Chief Executive Officer, of Sysco Corporation (the “company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2019 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. All of the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: November 4, 2019

/s/ THOMAS L. BENÉ

Thomas L. Bené

Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Joel T. Grade, Executive Vice President andChief Financial Officer, of Sysco Corporation (the “company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1. The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2019 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. All of the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: November 4, 2019

/s/ JOEL T. GRADE

Joel T. Grade

Executive Vice President andChief Financial Officer

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Earnings Per Share

3 Months Ended

Sep. 28, 2019

Earnings Per Share, Basic [Abstract]

Earnings Per Share

EARNINGS PER SHARE

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

	13-Week Period Ended
	Sep. 28, 2019		Sep. 29, 2018
	(In thousands, except for share and per share data)
Numerator:
Net earnings	$	453,781	$	431,042
Denominator:
Weighted-average basic shares outstanding	513,496,296		520,856,599
Dilutive effect of share-based awards	5,265,160		8,177,871
Weighted-average diluted shares outstanding	518,761,456		529,034,470
Basic earnings per share	$	0.88	$	0.83
Diluted earnings per share	$	0.87	$	0.81

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 3,321,000 and 1,067,000 for the first quarter of fiscal 2020 and fiscal 2019, respectively.

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Marketable Securities

3 Months Ended

Sep. 28, 2019

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. The company includes fixed income securities maturing in less than twelve months within Prepaid expenses and other current assets and includes fixed income securities maturing in more than twelve months within Other assets in the accompanying Consolidated Balance Sheets. The company records the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period. Unrealized gains and losses on marketable securities are recorded in Accumulated other comprehensive loss. The following table presents the company’s available-for-sale marketable securities as of September 28, 2019 and June 29, 2019:

	September 28, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Fixed income securities:
Corporate bonds	$	88,505	$	2,067	$	(2	)	$	90,570	$	12,017	$	78,553
Government bonds	28,834		2,695		—			31,529		—		31,529
Total marketable securities	$	117,339	$	4,762	$	(2	)	$	122,099	$	12,017	$	110,082
	June 29, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Corporate bonds	$	87,540	$	1,734	$	—		$	89,274	$	12,006	$	77,268
Government bonds	28,900		1,845		—			30,745		—		30,745
Total marketable securities	$	116,440	$	3,579	$	—		$	120,019	$	12,006	$	108,013

The fixed income securities held at September 28, 2019 had effective maturities ranging from less than one year to approximately eleven years. There were no significant realized gains or losses in marketable securities in the first quarter of 2020.

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Changes in Accounting

3 Months Ended

Sep. 28, 2019

Accounting Changes and Error Corrections [Abstract]

Changes in Accounting

CHANGES IN ACCOUNTING

Leases

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), specifying the accounting for leases, which supersedes the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount and timing of cash flows arising from a lease. The amended guidance requires the recognition of lease assets and lease liabilities on the balance sheet for those leases currently classified as operating leases. In addition, Topic 842 expands the disclosure requirements of lease arrangements. Sysco adopted this ASU and related amendments as of June 30, 2019, the first day of fiscal 2020, under the modified retrospective approach and elected certain practical expedients permitted under the transition guidance, including to retain the historical lease classification, as well as relief from separating and allocating consideration across all categories of leases to lease and non-lease components of an agreement. For leases subject to index or rate adjustments, the most current index or rate adjustments were included in the measurement of operating lease obligations at adoption.

The adoption of this ASU and related amendments resulted in Sysco recognizing $647.2 million and $657.9 million of operating lease right-of-use (ROU) assets and operating lease liabilities, respectively, as of June 30, 2019. There were no other significant impacts to the company’s consolidated financial statements. Updated accounting policies and additional lease disclosures as a result of the adoption of this ASU are described in Note 9, “Leases.”

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Other Comprehensive Income (Tables)

3 Months Ended

Sep. 28, 2019

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Summary of components of other comprehensive (loss) income and related tax effects

A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:

		13-Week Period Ended Sep. 28, 2019
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	1,905		$	477	$	1,428
Amortization of actuarial loss, net	Other expense, net	8,942			2,259		6,683
Total reclassification adjustments		10,847			2,736		8,111
Foreign currency translation:
Foreign currency translation adjustment	N/A	(126,159		)	—		(126,159		)
Marketable securities:
Change in marketable securities (1)	N/A	1,181			248		933
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (2)	12,651			3,392		9,259
Change in net investment hedges	N/A	42,302			12,302		30,000
Total other comprehensive income (loss) before reclassification adjustments		54,953			15,694		39,259
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,874			719		2,155
Total other comprehensive (loss) income		$	(56,304	)	$	19,397	$	(75,701	)

⁽¹⁾  Realized gains or losses on marketable securities are presented within Other (income) expense, net in the Consolidated Results of Operations; however, there were no significant gains or losses realized in the first quarter of 2020.

⁽²⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

		13-Week Period Ended Sep. 29, 2018
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial (loss) gain, arising in the current year		$	(36,891	)	$	(4,380	)	$	(32,511	)
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	2,133			533			1,600
Amortization of actuarial loss (gain), net	Other expense, net	8,706			2,177			6,529
Total reclassification adjustments		10,839			2,710			8,129
Foreign currency translation:
Other comprehensive income (loss) before    reclassification adjustments:
Foreign currency translation adjustment	N/A	(24,927		)	—			(24,927		)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (1)	(3,777		)	(769		)	(3,008		)
Change in net investment hedges	N/A	11,178			2,590			8,588
Total other comprehensive income (loss) before reclassification adjustments		7,401			1,821			5,580
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,873			718			2,155
Total other comprehensive income (loss)		$	(40,705	)	$	869		$	(41,574	)

⁽¹⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

Rollforward of accumulated other comprehensive (loss) income

The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Marketable Securities, net of tax		Total
	(In thousands)
Balance as of Jun. 29, 2019	$	(1,217,617	)	$	(290,169	)	$	(94,770	)	$	2,827	$	(1,599,729	)
Equity adjustment from foreign currency translation	—			(126,159		)	—			—		(126,159		)
Amortization of cash flow hedges	—			—			2,155			—		2,155
Change in net investment hedges	—			—			30,000			—		30,000
Change in cash flow hedge	—			—			9,259			—		9,259
Amortization of unrecognized prior service cost	1,428			—			—			—		1,428
Amortization of unrecognized net actuarial losses	6,683			—			—			—		6,683
Change in marketable securities	—			—			—			933		933
Balance as of Sep. 28, 2019	$	(1,209,506	)	$	(416,328	)	$	(53,356	)	$	3,760	$	(1,675,430	)

	13-Week Period Ended Sep. 29, 2018
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Total
	(In thousands)
Balance as of Jun. 30, 2018	$	(1,095,059	)	$	(171,043	)	$	(143,167	)	$	(1,409,269	)
Equity adjustment from foreign currency translation	—			(24,927		)	—			(24,927		)
Amortization of cash flow hedges	—			—			2,155			2,155
Change in net investment hedges	—			—			8,588			8,588
Change in cash flow hedges	—			—			(3,008		)	(3,008		)
Net actuarial loss	(32,511		)	—			—			(32,511		)
Amortization of unrecognized prior service cost	1,600			—			—			1,600
Amortization of unrecognized net actuarial losses	6,529			—			—			6,529
Balance as of Sep. 29, 2018	$	(1,119,441	)	$	(195,970	)	$	(135,432	)	$	(1,450,843	)

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 49,443	$ 28,176
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, authorized (in shares)	1,500,000	1,500,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	2,000,000,000	2,000,000,000
Common stock, issued (in shares)	765,174,900	765,174,900
Treasury stock (in shares)	254,310,626	252,297,926

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Changes in Consolidated Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Statement of Stockholders' Equity [Abstract]
Dividends declared per common share (in dollars per share)	$ 0.39	$ 0.36

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Changes in Accounting (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 30, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets, net	$ 626,580
Present value of lease obligations	$ 648,110
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets, net		$ 647,200
Present value of lease obligations		$ 657,900

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	22.01%	19.88%
Effective income tax expense (benefit) attributable to the pension plan	$ (15.7)
Excess tax benefits of equity-based compensation and tax law changes in foreign jurisdictions		$ 14.3
Unrecognized tax benefits	23.9
Liability recorded for interest and penalties related to unrecognized tax benefits	$ 3.8

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Numerator:
Net earnings	$ 453,781	$ 431,042
Denominator:
Weighted-average basic shares outstanding (in shares)	513,496,296	520,856,599
Dilutive effect of share-based awards (in shares)	5,265,160	8,177,871
Weighted-average diluted shares outstanding (in shares)	518,761,456	529,034,470
Basic earnings per share (in dollars per share)	$ 0.88	$ 0.83
Diluted earnings per share (in dollars per share)	$ 0.87	$ 0.81
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded (in shares)	3,321,000	1,067,000

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Derivative Financial Instruments - Balance Sheet Disclosures (Details) - Hedging Instrument - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019
Fair Value Hedging | Interest rate swap agreements | Other assets
Derivative [Line Items]
Fair value of derivative assets	$ 44,407	$ 37,396
Fair Value Hedging | Interest rate swap agreements | Other long-term liabilities
Derivative [Line Items]
Fair value of derivative liabilities	6,061	9,285
Cash flow hedging | Fuel swaps | Other assets
Derivative [Line Items]
Fair value of derivative assets	0	136
Cash flow hedging | Fuel swaps | Other current liabilities
Derivative [Line Items]
Fair value of derivative liabilities	6,262	6,537
Cash flow hedging | Fuel swaps | Other long-term liabilities
Derivative [Line Items]
Fair value of derivative liabilities	28	239
Cash flow hedging | Fuel swaps | Other current assets
Derivative [Line Items]
Fair value of derivative assets	16	154
Cash flow hedging | Foreign currency forwards | Other current liabilities
Derivative [Line Items]
Fair value of derivative liabilities	591	162
Cash flow hedging | Foreign currency forwards | Other current assets
Derivative [Line Items]
Fair value of derivative assets	275	624
Cash flow hedging | Cross-currency swaps | Other assets
Derivative [Line Items]
Fair value of derivative assets	21,046	8,592
Net investment hedging | Foreign currency swaps | Other assets
Derivative [Line Items]
Fair value of derivative assets	28,171	18,614
Net investment hedging | Foreign currency swaps | Other long-term liabilities
Derivative [Line Items]
Fair value of derivative liabilities	$ 0	$ 9,973

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Debt (Details)	3 Months Ended
	Sep. 28, 2019 USD ($)
Debt [Line Items]
Maximum board-authorized aggregate commercial paper limit	$ 2,000,000,000.0
Aggregate outstanding commercial paper and short-term debt minimum amount outstanding during period	208,900,000
Maximum amount outstanding	911,300,000
Commercial paper
Debt [Line Items]
Carrying value of total debt	$ 665,400,000

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Supplemental Guarantor Information - Subsidiary Guarantees - Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Supplemental Guarantor Information [Line Items]
Sales	$ 15,303,005	$ 15,215,279
Cost of sales	12,359,635	12,311,494
Gross profit	2,943,370	2,903,785
Operating expenses	2,275,052	2,275,645
Operating income	668,318	628,140
Interest expense (income)	83,335	89,016
Other (income) expense, net	3,112	1,132
Earnings before income taxes	581,871	537,992
Income tax (benefit) provision	128,090	106,950
Equity in earnings of subsidiaries	0	0
Net earnings	453,781	431,042
Other comprehensive income (loss)	(75,701)	(41,574)
Comprehensive income	378,080	389,468
Reportable Legal Entities | Sysco
Supplemental Guarantor Information [Line Items]
Sales	0	0
Cost of sales	0	0
Gross profit	0	0
Operating expenses	198,840	220,281
Operating income	(198,840)	(220,281)
Interest expense (income)	107,336	41,413
Other (income) expense, net	7,053	6,600
Earnings before income taxes	(313,229)	(268,294)
Income tax (benefit) provision	(98,500)	(93,587)
Equity in earnings of subsidiaries	668,510	605,750
Net earnings	453,781	431,043
Other comprehensive income (loss)	(75,701)	(41,574)
Comprehensive income	378,080	389,469
Reportable Legal Entities | Certain U.S. Broadline Subsidiaries
Supplemental Guarantor Information [Line Items]
Sales	9,810,408	9,479,806
Cost of sales	7,910,440	7,660,101
Gross profit	1,899,968	1,819,705
Operating expenses	1,075,837	1,052,350
Operating income	824,131	767,355
Interest expense (income)	(20,528)	(21,538)
Other (income) expense, net	(167)	(54)
Earnings before income taxes	844,826	788,947
Income tax (benefit) provision	212,546	196,445
Equity in earnings of subsidiaries	0	0
Net earnings	632,280	592,502
Other comprehensive income (loss)	0	0
Comprehensive income	632,280	592,502
Reportable Legal Entities | Other Non-Guarantor Subsidiaries
Supplemental Guarantor Information [Line Items]
Sales	6,043,288	6,234,158
Cost of sales	4,999,886	5,150,078
Gross profit	1,043,402	1,084,080
Operating expenses	1,000,375	1,003,014
Operating income	43,027	81,066
Interest expense (income)	(3,473)	69,141
Other (income) expense, net	(3,774)	(5,414)
Earnings before income taxes	50,274	17,339
Income tax (benefit) provision	14,044	4,092
Equity in earnings of subsidiaries	129,548	94,341
Net earnings	165,778	107,588
Other comprehensive income (loss)	(126,159)	(24,927)
Comprehensive income	39,619	82,661
Eliminations
Supplemental Guarantor Information [Line Items]
Sales	(550,691)	(498,685)
Cost of sales	(550,691)	(498,685)
Gross profit	0	0
Operating expenses	0	0
Operating income	0	0
Interest expense (income)	0	0
Other (income) expense, net	0	0
Earnings before income taxes	0	0
Income tax (benefit) provision	0	0
Equity in earnings of subsidiaries	(798,058)	(700,091)
Net earnings	(798,058)	(700,091)
Other comprehensive income (loss)	126,159	24,927
Comprehensive income	(671,899)	(675,164)
Eliminations | Other Non-Guarantor Subsidiaries
Supplemental Guarantor Information [Line Items]
Interest expense (income)	$ 0	$ 0

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Basis of Presentation (Tables)

3 Months Ended

Sep. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of reconciliation of cash, cash equivalents and restricted cash

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	Sep. 28, 2019		Sep. 29, 2018
	(In thousands)
Cash and cash equivalents	$	455,482	$	790,304
Restricted cash (1)	58,938		163,067
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	514,420	$	953,371

⁽¹⁾ 

Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within Other assets in each consolidated balance sheet.

Restrictions on cash and cash equivalents

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	Sep. 28, 2019		Sep. 29, 2018
	(In thousands)
Cash and cash equivalents	$	455,482	$	790,304
Restricted cash (1)	58,938		163,067
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	514,420	$	953,371

⁽¹⁾  Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within Other assets in each consolidated balance sheet.

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Commitments and Contingencies

3 Months Ended

Sep. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Although the final results of legal proceedings cannot be predicted with certainty, based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company.

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Derivative Financial Instruments - Hedging of Debt Portfolio (Details) - 3 months ended Sep. 28, 2019 € in Millions, £ in Millions, kr in Millions, gal in Millions, $ in Millions, $ in Millions	GBP (£) gal	EUR (€)	CAD ($)	USD ($)	SEK (kr)
Interest rate swap, October 2020
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value				$ 750
Interest rate swap, July 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value				500
Interest rate swaps, June 2023
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value | €		€ 500
Interest rate swap, March 2025
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value				$ 500
Foreign Currency Interest Rate, Various Maturity Dates
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value	£ 23				kr 280
Hedging of foreign currency risk, CAD, June 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value			$ 187
Hedging of foreign currency risk, GBP, July 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value | £	234
Hedging of foreign currency risk, GBP, August 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value | £	£ 466
Hedging of foreign currency risk, Euro, June 2023
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value | €		€ 500
Fuel swaps
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount (in gallons) | gal	55

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Derivative Financial Instruments - Location of Hedged Liabilities (Details) - Long-term debt - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019
Derivative [Line Items]
Carrying Amount of Hedged Assets (Liabilities)	$ (2,312,113)	$ (2,311,636)
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)	$ (38,795)	$ (28,616)

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Supplemental Guarantor Information - Subsidiary Guarantees - Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash flows provided by (used for):
Operating activities	$ 171,579	$ 271,145
Investing activities	(246,624)	(99,571)
Financing activities	62,705	68,388
Effect of exchange rates on cash, cash equivalents and restricted cash	(5,485)	(2,435)
Net (decrease) increase in cash, cash equivalents and restricted cash	(17,825)	237,527
Cash, cash equivalents and restricted cash at beginning of period	532,245	715,844
Cash, cash equivalents and restricted cash at end of period	514,420	953,371
Reportable Legal Entities | Sysco
Cash flows provided by (used for):
Operating activities	11,776	167,767
Investing activities	(49,434)	361,777
Financing activities	109,226	(332,988)
Effect of exchange rates on cash, cash equivalents and restricted cash	0	0
Net (decrease) increase in cash, cash equivalents and restricted cash	71,568	196,556
Cash, cash equivalents and restricted cash at beginning of period	29,868	29,144
Cash, cash equivalents and restricted cash at end of period	101,436	225,700
Reportable Legal Entities | Certain U.S. Broadline Subsidiaries
Cash flows provided by (used for):
Operating activities	69,098	69,459
Investing activities	(85,903)	(42,188)
Financing activities	742	(1,581)
Effect of exchange rates on cash, cash equivalents and restricted cash	0	0
Net (decrease) increase in cash, cash equivalents and restricted cash	(16,063)	25,690
Cash, cash equivalents and restricted cash at beginning of period	117,643	111,843
Cash, cash equivalents and restricted cash at end of period	101,580	137,533
Reportable Legal Entities | Other Non-Guarantor Subsidiaries
Cash flows provided by (used for):
Operating activities	90,705	33,919
Investing activities	(128,923)	(12,229)
Financing activities	(29,627)	(3,974)
Effect of exchange rates on cash, cash equivalents and restricted cash	(5,485)	(2,435)
Net (decrease) increase in cash, cash equivalents and restricted cash	(73,330)	15,281
Cash, cash equivalents and restricted cash at beginning of period	384,734	574,857
Cash, cash equivalents and restricted cash at end of period	311,404	590,138
Eliminations
Cash flows provided by (used for):
Operating activities	0	0
Investing activities	17,636	(406,931)
Financing activities	(17,636)	406,931
Effect of exchange rates on cash, cash equivalents and restricted cash	0	0
Net (decrease) increase in cash, cash equivalents and restricted cash	0	0
Cash, cash equivalents and restricted cash at beginning of period	0	0
Cash, cash equivalents and restricted cash at end of period	$ 0	$ 0

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Revenue (Tables)

3 Months Ended

Sep. 28, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,075,300	$	412,155	$	381,377	$	—	$	2,868,832
Canned and dry products	1,898,889		586,625		37,190		—		2,522,704
Frozen fruits, vegetables, bakery and other	1,449,218		552,014		254,455		—		2,255,687
Dairy products	1,148,381		312,178		145,921		—		1,606,480
Poultry	1,090,106		218,600		204,269		—		1,512,975
Fresh produce	998,164		257,758		60,933		—		1,316,855
Paper and disposables	719,540		98,342		168,436		17,373		1,003,691
Seafood	685,410		149,590		24,855		—		859,855
Beverage products	290,785		132,852		143,679		24,329		591,645
Other (1)	302,840		192,274		25,879		243,288		764,281
Total Sales	$	10,658,633	$	2,912,388	$	1,446,994	$	284,990	$	15,303,005

⁽¹⁾  Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

	13-Week Period Ended Sep. 29, 2018
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,121,517	$	420,456	$	372,334	$	—	$	2,914,307
Canned and dry products	1,852,168		611,470		77,621		—		2,541,259
Frozen fruits, vegetables, bakery and other	1,423,386		628,559		291,864		—		2,343,809
Dairy products	1,086,404		318,347		154,806		—		1,559,557
Poultry	1,026,936		215,582		272,061		—		1,514,579
Fresh produce	937,580		257,544		64,849		—		1,259,973
Paper and disposables	710,759		104,539		188,616		16,409		1,020,323
Seafood	661,687		188,436		25,385		—		875,508
Beverage products	290,571		52,069		147,294		23,180		513,114
Other (1)	288,403		123,948		26,627		233,872		672,850
Total Sales	$	10,399,411	$	2,920,950	$	1,621,457	$	273,461	$	15,215,279

⁽¹⁾  Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

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Business Segment Information

3 Months Ended

Sep. 28, 2019

Segment Reporting [Abstract]

Business Segment Information

BUSINESS SEGMENT INFORMATION

The company has aggregated certain of its operating segments into three reportable segments. “Other” financial information is attributable to the company’s other operating segments that do not meet the quantitative disclosure thresholds.

• U.S. Foodservice Operations - primarily includes U.S. Broadline operations, which distribute a full line of food products including custom-cut meat, seafood, specialty produce, specialty imports and a wide variety of non-food products;

• International Foodservice Operations - primarily includes operations that the company has grouped into Canada, Latin America and Europe, which distribute a full line of food products and a wide variety of non-food products. Latin America primarily consists of operations in Bahamas, Mexico, Costa Rica and Panama, as well as our operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom, France, Ireland and Sweden;

• SYGMA - our U.S. customized distribution subsidiary; and

• Other - primarily our hotel supply operations and Sysco Labs, which includes our suite of technology solutions that help support the business needs of our customers and provide support for some of our business technology needs.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Corporate expenses generally include all expenses of the corporate office and Sysco’s shared services center. These expenses also include all share-based compensation costs.

The following tables set forth certain financial information for Sysco’s reportable business segments. Sysco reclassified prior year amounts to conform to the current year presentation of net periodic pension and postretirement benefit costs in accordance with ASU 2017-07.

	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Sales:	(In thousands)
U.S. Foodservice Operations	$	10,658,633		$	10,399,411
International Foodservice Operations	2,912,388			2,920,950
SYGMA	1,446,994			1,621,457
Other	284,990			273,461
Total	$	15,303,005		$	15,215,279
	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Operating income:	(In thousands)
U.S. Foodservice Operations	$	861,406		$	815,758
International Foodservice Operations	54,800			66,772
SYGMA	7,570			2,431
Other	10,137			10,335
Total segments	933,913			895,296
Corporate	(265,595		)	(267,156		)
Total operating income	668,318			628,140
Interest expense	83,335			89,016
Other expense (income), net	3,112			1,132
Earnings before income taxes	$	581,871		$	537,992

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Derivative Financial Instruments

3 Months Ended

Sep. 28, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, the company does not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate risk, foreign currency risk and fuel price risk.

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates.

Hedging of foreign currency risk

Sysco enters into cross-currency swap contracts to hedge the foreign currency transaction risk of certain intercompany loans. There are no credit-risk related contingent features associated with these swaps, which have been designated as cash flow hedges. The company also uses cross-currency swap contracts and euro-bond denominated debt to hedge the foreign currency exposure of our net investment in certain foreign operations. Additionally, Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, Polish zloty and Danish krone. These inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. The company enters into foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

Hedging of fuel price risk

Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel on anticipated future purchases. These swaps have been designated as cash flow hedges.

None of the company’s hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of September 28, 2019 are presented below:

Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk
October 2020	U.S. Dollar	750
July 2021	U.S. Dollar	500
June 2023	Euro	500
March 2025	U.S. Dollar	500
Hedging of foreign currency risk
Various (September 30, 2019 to January 2020)	Swedish Krona	280
Various (October 2019 to June 2020)	British Pound Sterling	23
June 2021	Canadian Dollar	187
July 2021	British Pound Sterling	234
August 2021	British Pound Sterling	466
June 2023	Euro	500
Hedging of fuel risk
Various (September 30, 2019 to September 2020)	Gallons	55

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of September 28, 2019 and June 29, 2019 are as follows:

		Derivative Fair Value
	Balance Sheet location	Sep. 28, 2019		Jun. 29, 2019
		(In thousands)
Fair Value Hedges:
Interest rate swaps	Other assets	$	44,407	$	37,396
Interest rate swaps	Other long-term liabilities	6,061		9,285
Cash Flow Hedges:
Fuel Swaps	Other current assets	$	16	$	154
Foreign currency forwards	Other current assets	275		624
Fuel swaps	Other assets	—		136
Cross currency swaps	Other assets	21,046		8,592
Fuel Swaps	Other current liabilities	6,262		6,537
Foreign currency forwards	Other current liabilities	591		162
Fuel swaps	Other long-term liabilities	28		239
Net Investment Hedges:
Foreign currency swaps	Other assets	$	28,171	$	18,614
Foreign currency swaps	Other long-term liabilities	—		9,973

Gains or losses recognized in the consolidated results of operations for cash flow hedging relationships are not significant for each of the periods presented. The location and amount of gains or losses recognized in the consolidated results of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,359,635	$	2,275,052	$	83,335
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(24,736	)
Derivatives designated as hedging instruments	—		—		8,857

⁽¹⁾  The hedged total includes interest expense of $14.6 million and change in fair value of debt of $10.2 million.

	13-Week Period Ended Sep. 29, 2018
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,311,494	$	2,275,645	$	89,016
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(8,588	)
Derivatives designated as hedging instruments	—		—		(10,859		)

⁽¹⁾  The hedged total includes interest expense of $15.1 million and change in fair value of debt of $6.5 million.

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 13-week periods ended September 28, 2019 and September 29, 2018, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	344		Operating expense	$	(3,406	)
Foreign currency contracts	12,307			Cost of sales	2
Total	$	12,651			$	(3,404	)
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	20,852		N/A	$	—
Foreign denominated debt	21,450			N/A	—
Total	$	42,302			$	—
	13-Week Period Ended Sep. 29, 2018
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	1,026		Operating expense	$	4,353
Foreign currency contracts	(4,803		)	Cost of sales	483
Total	$	(3,777	)		$	4,836
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	7,228		N/A	$	—
Foreign denominated debt	3,950			N/A	—
Total	$	11,178			$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 28, 2019 are as follows:

	Sep. 28, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,312,113	)	$	(38,795	)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2019 are as follows:

	Jun. 29, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,311,636	)	$	(28,616	)

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Revenue

3 Months Ended

Sep. 28, 2019

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

The company recognizes revenues when its performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. After completion of Sysco’s performance obligations, the company has an unconditional right to consideration as outlined in its contracts with customers. Sysco’s customer receivables will generally be collected in less than 30 days in accordance with the underlying payment terms. Customer receivables, which are included in Accounts and notes receivable, less allowances in the consolidated balance sheet, were $4.1 billion and $3.9 billion as of September 28, 2019 and June 29, 2019, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in Other Assets and amortized over the life of the contract or the expected life of the relationship with the customer on a straight-line basis. As of September 28, 2019, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,075,300	$	412,155	$	381,377	$	—	$	2,868,832
Canned and dry products	1,898,889		586,625		37,190		—		2,522,704
Frozen fruits, vegetables, bakery and other	1,449,218		552,014		254,455		—		2,255,687
Dairy products	1,148,381		312,178		145,921		—		1,606,480
Poultry	1,090,106		218,600		204,269		—		1,512,975
Fresh produce	998,164		257,758		60,933		—		1,316,855
Paper and disposables	719,540		98,342		168,436		17,373		1,003,691
Seafood	685,410		149,590		24,855		—		859,855
Beverage products	290,785		132,852		143,679		24,329		591,645
Other (1)	302,840		192,274		25,879		243,288		764,281
Total Sales	$	10,658,633	$	2,912,388	$	1,446,994	$	284,990	$	15,303,005

⁽¹⁾  Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

	13-Week Period Ended Sep. 29, 2018
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,121,517	$	420,456	$	372,334	$	—	$	2,914,307
Canned and dry products	1,852,168		611,470		77,621		—		2,541,259
Frozen fruits, vegetables, bakery and other	1,423,386		628,559		291,864		—		2,343,809
Dairy products	1,086,404		318,347		154,806		—		1,559,557
Poultry	1,026,936		215,582		272,061		—		1,514,579
Fresh produce	937,580		257,544		64,849		—		1,259,973
Paper and disposables	710,759		104,539		188,616		16,409		1,020,323
Seafood	661,687		188,436		25,385		—		875,508
Beverage products	290,571		52,069		147,294		23,180		513,114
Other (1)	288,403		123,948		26,627		233,872		672,850
Total Sales	$	10,399,411	$	2,920,950	$	1,621,457	$	273,461	$	15,215,279

⁽¹⁾ 

Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our Sysco Labs business, and other janitorial products, medical supplies and smallwares.

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Other Comprehensive Income

3 Months Ended

Sep. 28, 2019

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other Comprehensive Income

OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to cash flow hedging arrangements, certain amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $378.1 million and $389.5 million for the first quarter of fiscal 2020 and fiscal 2019, respectively.

A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:

		13-Week Period Ended Sep. 28, 2019
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	1,905		$	477	$	1,428
Amortization of actuarial loss, net	Other expense, net	8,942			2,259		6,683
Total reclassification adjustments		10,847			2,736		8,111
Foreign currency translation:
Foreign currency translation adjustment	N/A	(126,159		)	—		(126,159		)
Marketable securities:
Change in marketable securities (1)	N/A	1,181			248		933
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (2)	12,651			3,392		9,259
Change in net investment hedges	N/A	42,302			12,302		30,000
Total other comprehensive income (loss) before reclassification adjustments		54,953			15,694		39,259
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,874			719		2,155
Total other comprehensive (loss) income		$	(56,304	)	$	19,397	$	(75,701	)

⁽¹⁾  Realized gains or losses on marketable securities are presented within Other (income) expense, net in the Consolidated Results of Operations; however, there were no significant gains or losses realized in the first quarter of 2020.

⁽²⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

		13-Week Period Ended Sep. 29, 2018
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial (loss) gain, arising in the current year		$	(36,891	)	$	(4,380	)	$	(32,511	)
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	2,133			533			1,600
Amortization of actuarial loss (gain), net	Other expense, net	8,706			2,177			6,529
Total reclassification adjustments		10,839			2,710			8,129
Foreign currency translation:
Other comprehensive income (loss) before    reclassification adjustments:
Foreign currency translation adjustment	N/A	(24,927		)	—			(24,927		)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (1)	(3,777		)	(769		)	(3,008		)
Change in net investment hedges	N/A	11,178			2,590			8,588
Total other comprehensive income (loss) before reclassification adjustments		7,401			1,821			5,580
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,873			718			2,155
Total other comprehensive income (loss)		$	(40,705	)	$	869		$	(41,574	)

⁽¹⁾  Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:

	13-Week Period Ended Sep. 28, 2019
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Marketable Securities, net of tax		Total
	(In thousands)
Balance as of Jun. 29, 2019	$	(1,217,617	)	$	(290,169	)	$	(94,770	)	$	2,827	$	(1,599,729	)
Equity adjustment from foreign currency translation	—			(126,159		)	—			—		(126,159		)
Amortization of cash flow hedges	—			—			2,155			—		2,155
Change in net investment hedges	—			—			30,000			—		30,000
Change in cash flow hedge	—			—			9,259			—		9,259
Amortization of unrecognized prior service cost	1,428			—			—			—		1,428
Amortization of unrecognized net actuarial losses	6,683			—			—			—		6,683
Change in marketable securities	—			—			—			933		933
Balance as of Sep. 28, 2019	$	(1,209,506	)	$	(416,328	)	$	(53,356	)	$	3,760	$	(1,675,430	)

	13-Week Period Ended Sep. 29, 2018
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Hedging, net of tax			Total
	(In thousands)
Balance as of Jun. 30, 2018	$	(1,095,059	)	$	(171,043	)	$	(143,167	)	$	(1,409,269	)
Equity adjustment from foreign currency translation	—			(24,927		)	—			(24,927		)
Amortization of cash flow hedges	—			—			2,155			2,155
Change in net investment hedges	—			—			8,588			8,588
Change in cash flow hedges	—			—			(3,008		)	(3,008		)
Net actuarial loss	(32,511		)	—			—			(32,511		)
Amortization of unrecognized prior service cost	1,600			—			—			1,600
Amortization of unrecognized net actuarial losses	6,529			—			—			6,529
Balance as of Sep. 29, 2018	$	(1,119,441	)	$	(195,970	)	$	(135,432	)	$	(1,450,843	)

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Earnings Per Share (Tables)

3 Months Ended

Sep. 28, 2019

Earnings Per Share, Basic [Abstract]

Computation of basic and diluted earnings per share table

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

	13-Week Period Ended
	Sep. 28, 2019		Sep. 29, 2018
	(In thousands, except for share and per share data)
Numerator:
Net earnings	$	453,781	$	431,042
Denominator:
Weighted-average basic shares outstanding	513,496,296		520,856,599
Dilutive effect of share-based awards	5,265,160		8,177,871
Weighted-average diluted shares outstanding	518,761,456		529,034,470
Basic earnings per share	$	0.88	$	0.83
Diluted earnings per share	$	0.87	$	0.81

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019
Current assets
Cash and cash equivalents	$ 455,482	$ 513,460
Accounts and notes receivable, less allowances of $49,443 and $28,176	4,397,005	4,181,696
Inventories	3,386,808	3,216,034
Prepaid expenses and other current assets	235,014	210,582
Income tax receivable	9,855	19,733
Total current assets	8,484,164	8,141,505
Plant and equipment at cost, less accumulated depreciation	4,493,016	4,501,705
Other long-term assets
Goodwill	3,871,722	3,896,226
Intangibles, less amortization	825,287	857,301
Deferred income taxes	98,118	80,760
Operating lease right-of-use assets, net	626,580
Other assets	557,688	489,025
Total other long-term assets	5,979,395	5,323,312
Total assets	18,956,575	17,966,522
Current liabilities
Notes payable	3,433	3,957
Accounts payable	4,247,276	4,314,620
Accrued expenses	1,596,925	1,729,941
Accrued income taxes	96,932	17,343
Current operating lease liabilities	102,544
Current maturities of long-term debt	54,361	37,322
Total current liabilities	6,101,471	6,103,183
Long-term liabilities
Long-term debt	8,637,706	8,122,058
Deferred income taxes	178,719	172,232
Long-term operating lease liabilities	545,566
Other long-term liabilities	1,005,337	1,031,020
Total long-term liabilities	10,367,328	9,325,310
Noncontrolling interest	33,028	35,426
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	0	0
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175	765,175
Paid-in capital	1,490,661	1,457,419
Retained earnings	11,486,833	11,229,679
Accumulated other comprehensive loss	(1,675,430)	(1,599,729)
Treasury stock at cost, 254,310,626 and 252,297,926 shares	(9,612,491)	(9,349,941)
Total shareholders’ equity	2,454,748	2,502,603
Total liabilities and shareholders’ equity	$ 18,956,575	$ 17,966,522

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Changes in Consolidated Shareholders' Equity - USD ($) $ in Thousands	Total	Cash flow hedging	Net investment hedging	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Cash flow hedging	Accumulated Other Comprehensive Loss Net investment hedging	Treasury Stock
Beginning balance, shareholders' equity at Jun. 30, 2018	$ 2,506,957			$ 765,175	$ 1,383,619	$ 10,348,628	$ (1,409,269)			$ (8,581,196)
Beginning balance, shareholders' equity (in shares) at Jun. 30, 2018				765,174,900						244,533,248
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	431,042					431,042
Foreign currency translation adjustment	(24,927)						(24,927)
Amortization of cash flow hedges	2,155	$ 2,155					2,155
Changes in derivatives		(3,008)	$ 8,588					$ (3,008)	$ 8,588
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax	8,129						8,129
Pension funded status adjustment, net of tax	(32,511)						(32,511)
Change in marketable securities, net of tax	0
Dividends declared	(187,180)					(187,180)
Treasury stock purchases	(209,541)									$ (209,541)
Treasury stock purchases (in shares)										2,911,677
Share-based compensation awards	138,870				54,478					$ 84,392
Share-based compensation awards (in shares)										(2,419,654)
Ending balance, shareholders' equity at Sep. 29, 2018	2,638,574			$ 765,175	1,438,097	10,592,490	(1,450,843)			$ (8,706,345)
Ending balance, shareholders' equity (in shares) at Sep. 29, 2018				765,174,900						245,025,271
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU 2016-02, Leases (Topic 842), net of tax	1,978					1,978
Beginning balance, shareholders' equity at Jun. 29, 2019	2,502,603			$ 765,175	1,457,419	11,229,679	(1,599,729)			$ (9,349,941)
Beginning balance, shareholders' equity (in shares) at Jun. 29, 2019				765,174,900						252,297,926
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	453,781					453,781
Foreign currency translation adjustment	(126,159)						(126,159)
Amortization of cash flow hedges	2,155						2,155
Changes in derivatives		$ 9,259	$ 30,000					$ 9,259	$ 30,000
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax	8,111						8,111
Change in marketable securities, net of tax	933						933
Dividends declared	(198,605)					(198,605)
Treasury stock purchases	(347,867)									$ (347,867)
Treasury stock purchases (in shares)										4,587,397
Share-based compensation awards	118,559				33,242					$ 85,317
Share-based compensation awards (in shares)										(2,574,697)
Ending balance, shareholders' equity at Sep. 28, 2019	$ 2,454,748			$ 765,175	$ 1,490,661	$ 11,486,833	$ (1,675,430)			$ (9,612,491)
Ending balance, shareholders' equity (in shares) at Sep. 28, 2019				765,174,900						254,310,626

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Basis of Presentation (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019	Sep. 29, 2018	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 455,482	$ 513,460	$ 790,304
Restricted cash	58,938		163,067
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$ 514,420	$ 532,245	$ 953,371	$ 715,844

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Business Segment Information (Details) $ in Thousands	3 Months Ended
	Sep. 28, 2019 USD ($)	Sep. 29, 2018 USD ($) segment
Segment Reporting [Abstract]
Number of reporting segments | segment		3
Segment Reporting Information [Line Items]
Sales	$ 15,303,005	$ 15,215,279
Operating income:	668,318	628,140
Interest expense	83,335	89,016
Other (income) expense, net	3,112	1,132
Earnings before income taxes	581,871	537,992
U.S. Foodservice Operations
Segment Reporting Information [Line Items]
Sales	10,658,633	10,399,411
International Foodservice Operations
Segment Reporting Information [Line Items]
Sales	2,912,388	2,920,950
SYGMA
Segment Reporting Information [Line Items]
Sales	1,446,994	1,621,457
Other
Segment Reporting Information [Line Items]
Sales	284,990	273,461
Operating Segments
Segment Reporting Information [Line Items]
Operating income:	933,913	895,296
Operating Segments | U.S. Foodservice Operations
Segment Reporting Information [Line Items]
Operating income:	861,406	815,758
Operating Segments | International Foodservice Operations
Segment Reporting Information [Line Items]
Operating income:	54,800	66,772
Operating Segments | SYGMA
Segment Reporting Information [Line Items]
Operating income:	7,570	2,431
Operating Segments | Other
Segment Reporting Information [Line Items]
Operating income:	10,137	10,335
Corporate
Segment Reporting Information [Line Items]
Operating income:	$ (265,595)	$ (267,156)

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Other Comprehensive Income - Components of OCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Comprehensive income	$ 378,080	$ 389,468
Before Tax Amount
Total other comprehensive income (loss)	(56,304)	(40,705)
Tax
Total other comprehensive income (loss)	19,397	869
Net of Tax Amount
Total other comprehensive (loss) income	(75,701)	(41,574)
Pension and other postretirement benefit plans: | Other expense, net
Before Tax Amount
Reclassification adjustments, before tax	10,847	10,839
Tax
Amortization of prior service cost	2,736	2,710
Net of Tax Amount
Amortization of prior service cost	8,111	8,129
Amortization of prior service cost
Net of Tax Amount
Amortization of prior service cost	1,428	1,600
Amortization of prior service cost | Other expense, net
Before Tax Amount
Reclassification adjustments, before tax	1,905	2,133
Tax
Amortization of prior service cost	477	533
Net of Tax Amount
Amortization of prior service cost	1,428	1,600
Amortization of actuarial loss (gain), net
Before Tax Amount
Other comprehensive income before reclassifications, before tax		(36,891)
Tax
Foreign currency translation adjustment		(4,380)
Net of Tax Amount
Amortization of prior service cost	6,683	6,529
Foreign currency translation adjustment		(32,511)
Amortization of actuarial loss (gain), net | Other expense, net
Before Tax Amount
Reclassification adjustments, before tax	8,942	8,706
Tax
Amortization of prior service cost	2,259	2,177
Net of Tax Amount
Amortization of prior service cost	6,683	6,529
Foreign currency translation:
Before Tax Amount
Other comprehensive income before reclassifications, before tax	(126,159)	(24,927)
Tax
Foreign currency translation adjustment	0	0
Net of Tax Amount
Foreign currency translation adjustment	(126,159)	(24,927)
Change in marketable securities (1)
Before Tax Amount
Other comprehensive income before reclassifications, before tax	1,181
Tax
Foreign currency translation adjustment	248
Net of Tax Amount
Foreign currency translation adjustment	933
Hedging, net of tax
Before Tax Amount
Other comprehensive income before reclassifications, before tax	54,953	7,401
Tax
Foreign currency translation adjustment	15,694	1,821
Net of Tax Amount
Foreign currency translation adjustment	39,259	5,580
Amortization of cash flow hedges
Net of Tax Amount
Amortization of prior service cost	2,155
Foreign currency translation adjustment	9,259
Amortization of cash flow hedges | Operating expenses
Before Tax Amount
Other comprehensive income before reclassifications, before tax	12,651
Tax
Foreign currency translation adjustment	3,392
Net of Tax Amount
Foreign currency translation adjustment	9,259
Amortization of cash flow hedges | Interest expense
Before Tax Amount
Reclassification adjustments, before tax	2,874
Tax
Amortization of prior service cost	719
Net of Tax Amount
Amortization of prior service cost	2,155
Amortization of cash flow hedges
Net of Tax Amount
Amortization of prior service cost		2,155
Foreign currency translation adjustment		(3,008)
Amortization of cash flow hedges | Operating expenses
Before Tax Amount
Other comprehensive income before reclassifications, before tax		(3,777)
Tax
Foreign currency translation adjustment		(769)
Net of Tax Amount
Foreign currency translation adjustment		(3,008)
Amortization of cash flow hedges | Interest expense
Before Tax Amount
Reclassification adjustments, before tax		2,873
Tax
Amortization of prior service cost		718
Net of Tax Amount
Amortization of prior service cost		2,155
Change in net investment hedge
Before Tax Amount
Other comprehensive income before reclassifications, before tax	42,302	11,178
Tax
Foreign currency translation adjustment	12,302	2,590
Net of Tax Amount
Foreign currency translation adjustment	$ 30,000	$ 8,588

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019
Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of total debt	$ 9,500,000	$ 8,600,000
Carrying value of total debt	8,700,000	8,200,000
Recurring Fair Value Measurements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	110,362	73,024
Other assets	58,938	18,785
Total assets at fair value	169,300	91,809
Recurring Fair Value Measurements | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	108,962	72,824
Other assets	58,938	18,785
Total assets at fair value	167,900	91,609
Recurring Fair Value Measurements | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	1,400	200
Other assets	0	0
Total assets at fair value	1,400	200
Recurring Fair Value Measurements | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
Other assets	0	0
Total assets at fair value	$ 0	$ 0

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Derivative Financial Instruments - Location of Gain (Loss) on Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Derivative [Line Items]
Cost of sales	$ 12,359,635	$ 12,311,494
Operating expenses	2,275,052	2,275,645
Interest expense	83,335	89,016
Unrealized gain (loss) on hedged item in fair value hedge, interest expense	14,600	15,100
Unrealized gain (loss) on hedged item in fair value hedge, change in fair value of debt	10,200	6,500
Hedging Instrument | Fair Value Hedging | Interest rate swaps | Cost of Sales
Derivative [Line Items]
Gain (loss) on fair value hedging relationship, hedged items	0	0
Gain (loss) on fair value hedging relationship, designated as hedging instruments	0	0
Hedging Instrument | Fair Value Hedging | Interest rate swaps | Other expense (income)
Derivative [Line Items]
Gain (loss) on fair value hedging relationship, hedged items	0	0
Gain (loss) on fair value hedging relationship, designated as hedging instruments	0	0
Hedging Instrument | Fair Value Hedging | Interest rate swaps | Interest expense
Derivative [Line Items]
Gain (loss) on fair value hedging relationship, hedged items	(24,736)	(8,588)
Gain (loss) on fair value hedging relationship, designated as hedging instruments	$ 8,857	$ (10,859)

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Leases - Summary of Balance Sheet Information (Details) $ in Thousands	Sep. 28, 2019 USD ($)
Leases [Abstract]
Finance lease right-of-use assets	$ 92,052
Current finance lease liabilities	27,300
Long-term finance lease liabilities	$ 69,213

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Marketable Securities (Tables)

3 Months Ended

Sep. 28, 2019

Investments, Debt and Equity Securities [Abstract]

Available-for-sale marketable securities

The following table presents the company’s available-for-sale marketable securities as of September 28, 2019 and June 29, 2019:

	September 28, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Fixed income securities:
Corporate bonds	$	88,505	$	2,067	$	(2	)	$	90,570	$	12,017	$	78,553
Government bonds	28,834		2,695		—			31,529		—		31,529
Total marketable securities	$	117,339	$	4,762	$	(2	)	$	122,099	$	12,017	$	110,082
	June 29, 2019
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Corporate bonds	$	87,540	$	1,734	$	—		$	89,274	$	12,006	$	77,268
Government bonds	28,900		1,845		—			30,745		—		30,745
Total marketable securities	$	116,440	$	3,579	$	—		$	120,019	$	12,006	$	108,013

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Changes in Accounting (Policies)

3 Months Ended

Sep. 28, 2019

Accounting Changes and Error Corrections [Abstract]

New Accounting Standards

Leases

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), specifying the accounting for leases, which supersedes the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount and timing of cash flows arising from a lease. The amended guidance requires the recognition of lease assets and lease liabilities on the balance sheet for those leases currently classified as operating leases. In addition, Topic 842 expands the disclosure requirements of lease arrangements. Sysco adopted this ASU and related amendments as of June 30, 2019, the first day of fiscal 2020, under the modified retrospective approach and elected certain practical expedients permitted under the transition guidance, including to retain the historical lease classification, as well as relief from separating and allocating consideration across all categories of leases to lease and non-lease components of an agreement. For leases subject to index or rate adjustments, the most current index or rate adjustments were included in the measurement of operating lease obligations at adoption.

The adoption of this ASU and related amendments resulted in Sysco recognizing $647.2 million and $657.9 million of operating lease right-of-use (ROU) assets and operating lease liabilities, respectively, as of June 30, 2019. There were no other significant impacts to the company’s consolidated financial statements. Updated accounting policies and additional lease disclosures as a result of the adoption of this ASU are described in Note 9, “Leases.”

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Income Taxes

3 Months Ended

Sep. 28, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Effective Tax Rate

The effective tax rates for the first quarters of fiscal 2020 and 2019 were 22.01% and 19.88%, respectively. As compared to the company’s statutory tax rate, the lower effective tax rate for the first quarter of fiscal 2020 was primarily due to the favorable impact of excess tax benefits of equity-based compensation that totaled $15.7 million. The lower effective tax rate for the first quarter of 2019 was primarily due to the favorable impact of excess tax benefits of equity-based compensation that totaled $14.3 million and the release of certain tax contingencies due to the lapse of statutes of limitations.

Uncertain Tax Positions

As of September 28, 2019, the gross amount of unrecognized tax benefit and related accrued interest was $23.9 million and $3.8 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months. At this time, an estimate of the range of the reasonably possible change cannot be made.

Other

The determination of the company’s provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. The company’s provision for income taxes reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

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Derivative Financial Instruments (Tables)

3 Months Ended

Sep. 28, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of outstanding swap agreements

Details of outstanding hedging instruments as of September 28, 2019 are presented below:

Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk
October 2020	U.S. Dollar	750
July 2021	U.S. Dollar	500
June 2023	Euro	500
March 2025	U.S. Dollar	500
Hedging of foreign currency risk
Various (September 30, 2019 to January 2020)	Swedish Krona	280
Various (October 2019 to June 2020)	British Pound Sterling	23
June 2021	Canadian Dollar	187
July 2021	British Pound Sterling	234
August 2021	British Pound Sterling	466
June 2023	Euro	500
Hedging of fuel risk
Various (September 30, 2019 to September 2020)	Gallons	55

Derivatives balance sheet location table

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of September 28, 2019 and June 29, 2019 are as follows:

		Derivative Fair Value
	Balance Sheet location	Sep. 28, 2019		Jun. 29, 2019
		(In thousands)
Fair Value Hedges:
Interest rate swaps	Other assets	$	44,407	$	37,396
Interest rate swaps	Other long-term liabilities	6,061		9,285
Cash Flow Hedges:
Fuel Swaps	Other current assets	$	16	$	154
Foreign currency forwards	Other current assets	275		624
Fuel swaps	Other assets	—		136
Cross currency swaps	Other assets	21,046		8,592
Fuel Swaps	Other current liabilities	6,262		6,537
Foreign currency forwards	Other current liabilities	591		162
Fuel swaps	Other long-term liabilities	28		239
Net Investment Hedges:
Foreign currency swaps	Other assets	$	28,171	$	18,614
Foreign currency swaps	Other long-term liabilities	—		9,973

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 28, 2019 are as follows:

	Sep. 28, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,312,113	)	$	(38,795	)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2019 are as follows:

	Jun. 29, 2019
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Long-term debt	$	(2,311,636	)	$	(28,616	)

Schedule of location and effect of derivative instruments and related hedged items

The location and amount of gains or losses recognized in the consolidated results of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,359,635	$	2,275,052	$	83,335
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(24,736	)
Derivatives designated as hedging instruments	—		—		8,857

⁽¹⁾  The hedged total includes interest expense of $14.6 million and change in fair value of debt of $10.2 million.

	13-Week Period Ended Sep. 29, 2018
	Cost of Sales		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	12,311,494	$	2,275,645	$	89,016
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items (1)	$	—	$	—	$	(8,588	)
Derivatives designated as hedging instruments	—		—		(10,859		)

⁽¹⁾  The hedged total includes interest expense of $15.1 million and change in fair value of debt of $6.5 million.

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 13-week periods ended September 28, 2019 and September 29, 2018, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 28, 2019
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	344		Operating expense	$	(3,406	)
Foreign currency contracts	12,307			Cost of sales	2
Total	$	12,651			$	(3,404	)
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	20,852		N/A	$	—
Foreign denominated debt	21,450			N/A	—
Total	$	42,302			$	—
	13-Week Period Ended Sep. 29, 2018
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	1,026		Operating expense	$	4,353
Foreign currency contracts	(4,803		)	Cost of sales	483
Total	$	(3,777	)		$	4,836
Derivatives in net investment hedging relationships:
Foreign currency contracts	$	7,228		N/A	$	—
Foreign denominated debt	3,950			N/A	—
Total	$	11,178			$	—

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Consolidated Results of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Income Statement [Abstract]
Sales	$ 15,303,005	$ 15,215,279
Cost of sales	12,359,635	12,311,494
Gross profit	2,943,370	2,903,785
Operating expenses	2,275,052	2,275,645
Operating income	668,318	628,140
Interest expense	83,335	89,016
Other (income) expense, net	3,112	1,132
Earnings before income taxes	581,871	537,992
Income taxes	128,090	106,950
Net earnings	$ 453,781	$ 431,042
Net earnings:
Basic earnings per share (in dollars per share)	$ 0.88	$ 0.83
Diluted earnings per share (in dollars per share)	$ 0.87	$ 0.81
Average shares outstanding (in shares)	513,496,296	520,856,599
Diluted shares outstanding (in shares)	518,761,456	529,034,470

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Business Segment Information (Tables)

3 Months Ended

Sep. 28, 2019

Segment Reporting [Abstract]

Business segment table

The following tables set forth certain financial information for Sysco’s reportable business segments. Sysco reclassified prior year amounts to conform to the current year presentation of net periodic pension and postretirement benefit costs in accordance with ASU 2017-07.

	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Sales:	(In thousands)
U.S. Foodservice Operations	$	10,658,633		$	10,399,411
International Foodservice Operations	2,912,388			2,920,950
SYGMA	1,446,994			1,621,457
Other	284,990			273,461
Total	$	15,303,005		$	15,215,279
	13-Week Period Ended
	Sep. 28, 2019			Sep. 29, 2018
Operating income:	(In thousands)
U.S. Foodservice Operations	$	861,406		$	815,758
International Foodservice Operations	54,800			66,772
SYGMA	7,570			2,431
Other	10,137			10,335
Total segments	933,913			895,296
Corporate	(265,595		)	(267,156		)
Total operating income	668,318			628,140
Interest expense	83,335			89,016
Other expense (income), net	3,112			1,132
Earnings before income taxes	$	581,871		$	537,992

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Jun. 29, 2019
Disaggregation of Revenue [Line Items]
Customer receivables included in accounts and notes receivable, net	$ 4,100,000		$ 3,900,000
Revenue	15,303,005	$ 15,215,279
Fresh and frozen meats
Disaggregation of Revenue [Line Items]
Revenue	2,868,832	2,914,307
Canned and dry products
Disaggregation of Revenue [Line Items]
Revenue	2,522,704	2,541,259
Frozen fruits, vegetables, bakery and other
Disaggregation of Revenue [Line Items]
Revenue	2,255,687	2,343,809
Dairy products
Disaggregation of Revenue [Line Items]
Revenue	1,606,480	1,559,557
Poultry
Disaggregation of Revenue [Line Items]
Revenue	1,512,975	1,514,579
Fresh produce
Disaggregation of Revenue [Line Items]
Revenue	1,316,855	1,259,973
Paper and disposables
Disaggregation of Revenue [Line Items]
Revenue	1,003,691	1,020,323
Seafood
Disaggregation of Revenue [Line Items]
Revenue	859,855	875,508
Beverage products
Disaggregation of Revenue [Line Items]
Revenue	591,645	513,114
Other
Disaggregation of Revenue [Line Items]
Revenue	764,281	672,850
U.S. Foodservice Operations
Disaggregation of Revenue [Line Items]
Revenue	10,658,633	10,399,411
U.S. Foodservice Operations | Fresh and frozen meats
Disaggregation of Revenue [Line Items]
Revenue	2,075,300	2,121,517
U.S. Foodservice Operations | Canned and dry products
Disaggregation of Revenue [Line Items]
Revenue	1,898,889	1,852,168
U.S. Foodservice Operations | Frozen fruits, vegetables, bakery and other
Disaggregation of Revenue [Line Items]
Revenue	1,449,218	1,423,386
U.S. Foodservice Operations | Dairy products
Disaggregation of Revenue [Line Items]
Revenue	1,148,381	1,086,404
U.S. Foodservice Operations | Poultry
Disaggregation of Revenue [Line Items]
Revenue	1,090,106	1,026,936
U.S. Foodservice Operations | Fresh produce
Disaggregation of Revenue [Line Items]
Revenue	998,164	937,580
U.S. Foodservice Operations | Paper and disposables
Disaggregation of Revenue [Line Items]
Revenue	719,540	710,759
U.S. Foodservice Operations | Seafood
Disaggregation of Revenue [Line Items]
Revenue	685,410	661,687
U.S. Foodservice Operations | Beverage products
Disaggregation of Revenue [Line Items]
Revenue	290,785	290,571
U.S. Foodservice Operations | Other
Disaggregation of Revenue [Line Items]
Revenue	302,840	288,403
International Foodservice Operations
Disaggregation of Revenue [Line Items]
Revenue	2,912,388	2,920,950
International Foodservice Operations | Fresh and frozen meats
Disaggregation of Revenue [Line Items]
Revenue	412,155	420,456
International Foodservice Operations | Canned and dry products
Disaggregation of Revenue [Line Items]
Revenue	586,625	611,470
International Foodservice Operations | Frozen fruits, vegetables, bakery and other
Disaggregation of Revenue [Line Items]
Revenue	552,014	628,559
International Foodservice Operations | Dairy products
Disaggregation of Revenue [Line Items]
Revenue	312,178	318,347
International Foodservice Operations | Poultry
Disaggregation of Revenue [Line Items]
Revenue	218,600	215,582
International Foodservice Operations | Fresh produce
Disaggregation of Revenue [Line Items]
Revenue	257,758	257,544
International Foodservice Operations | Paper and disposables
Disaggregation of Revenue [Line Items]
Revenue	98,342	104,539
International Foodservice Operations | Seafood
Disaggregation of Revenue [Line Items]
Revenue	149,590	188,436
International Foodservice Operations | Beverage products
Disaggregation of Revenue [Line Items]
Revenue	132,852	52,069
International Foodservice Operations | Other
Disaggregation of Revenue [Line Items]
Revenue	192,274	123,948
SYGMA
Disaggregation of Revenue [Line Items]
Revenue	1,446,994	1,621,457
SYGMA | Fresh and frozen meats
Disaggregation of Revenue [Line Items]
Revenue	381,377	372,334
SYGMA | Canned and dry products
Disaggregation of Revenue [Line Items]
Revenue	37,190	77,621
SYGMA | Frozen fruits, vegetables, bakery and other
Disaggregation of Revenue [Line Items]
Revenue	254,455	291,864
SYGMA | Dairy products
Disaggregation of Revenue [Line Items]
Revenue	145,921	154,806
SYGMA | Poultry
Disaggregation of Revenue [Line Items]
Revenue	204,269	272,061
SYGMA | Fresh produce
Disaggregation of Revenue [Line Items]
Revenue	60,933	64,849
SYGMA | Paper and disposables
Disaggregation of Revenue [Line Items]
Revenue	168,436	188,616
SYGMA | Seafood
Disaggregation of Revenue [Line Items]
Revenue	24,855	25,385
SYGMA | Beverage products
Disaggregation of Revenue [Line Items]
Revenue	143,679	147,294
SYGMA | Other
Disaggregation of Revenue [Line Items]
Revenue	25,879	26,627
Other
Disaggregation of Revenue [Line Items]
Revenue	284,990	273,461
Other | Fresh and frozen meats
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Canned and dry products
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Frozen fruits, vegetables, bakery and other
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Dairy products
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Poultry
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Fresh produce
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Paper and disposables
Disaggregation of Revenue [Line Items]
Revenue	17,373	16,409
Other | Seafood
Disaggregation of Revenue [Line Items]
Revenue	0	0
Other | Beverage products
Disaggregation of Revenue [Line Items]
Revenue	24,329	23,180
Other | Other
Disaggregation of Revenue [Line Items]
Revenue	$ 243,288	$ 233,872

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Consolidated Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash flows from operating activities:
Net earnings	$ 453,781	$ 431,042
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	21,386	29,193
Depreciation and amortization	187,405	187,627
Operating lease asset amortization	26,925	0
Amortization of debt issuance and other debt-related costs	4,920	6,170
Deferred income taxes	(25,494)	(20,249)
Provision for losses on receivables	18,712	10,464
Other non-cash items	2,295	(3,695)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) in receivables	(236,136)	(182,233)
(Increase) in inventories	(186,331)	(229,100)
(Increase) in prepaid expenses and other current assets	(30,133)	(23,540)
(Decrease) increase in accounts payable	(38,894)	78,112
(Decrease) in accrued expenses	(92,661)	(111,309)
(Decrease) in operating lease liabilities	(30,597)	0
Increase in accrued income taxes	89,467	100,868
Decrease (increase) in other assets	3,141	(4,261)
Increase in other long-term liabilities	3,793	2,056
Net cash provided by operating activities	171,579	271,145
Cash flows from investing activities:
Additions to plant and equipment	(175,728)	(104,322)
Proceeds from sales of plant and equipment	4,902	3,839
Acquisition of businesses, net of cash acquired	(74,814)	0
Purchase of marketable securities	(4,002)	0
Proceeds from sales of marketable securities	3,018	0
Other investing activities	0	912
Net cash used for investing activities	(246,624)	(99,571)
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments), net	533,400	0
Other debt borrowings	31,789	386,142
Other debt repayments	(16,139)	(8,078)
Proceeds from stock option exercises	85,317	84,393
Treasury stock purchases	(349,314)	(204,640)
Dividends paid	(200,037)	(187,229)
Other financing activities	(22,311)	(2,200)
Net cash provided by financing activities	62,705	68,388
Effect of exchange rates on cash, cash equivalents and restricted cash	(5,485)	(2,435)
Net (decrease) increase in cash, cash equivalents and restricted cash	(17,825)	237,527
Cash, cash equivalents and restricted cash at beginning of period	532,245	715,844
Cash, cash equivalents and restricted cash at end of period	514,420	953,371
Cash paid during the period for:
Interest	84,407	81,392
Income taxes	$ 70,013	$ 70,675

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Leases

3 Months Ended

Sep. 28, 2019

Leases [Abstract]

Leases

LEASES

Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The company determines if an arrangement is a lease at inception and recognizes a finance or operating lease liability and ROU asset in the consolidated balance sheets if a lease exists. Lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. If the borrowing rate implicit in the lease is not readily determinable, Sysco uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

The lease term is defined as the noncancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the company will exercise one of these options. Leases with an initial term of 12 months or less are not recorded in Sysco’s consolidated balance sheets, and the company recognizes expense for these leases on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate, such as insurance and property taxes, are excluded from the measurement of the lease liability and are recognized as variable lease cost when the obligation for that payment is incurred. For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance. Sysco’s leases do not contain significant residual value guarantees and do not impose significant restrictions or covenants.

The following table presents the location of the finance lease ROU assets and lease liabilities in the company’s Consolidated Balance Sheet at September 28, 2019:

	Consolidated Balance Sheet Location	September 28, 2019
		(In thousands)
Finance lease right-of-use assets	Plant and equipment at cost, less accumulated depreciation	$	92,052
Current finance lease liabilities	Current maturities of long-term debt	27,300
Long-term finance lease liabilities	Long-term debt	69,213

The following table presents lease costs for the 13-week period ended September 28, 2019:

	Consolidated Results of Operations Location	13-Week Period Ended Sep. 28, 2019
		(In thousands)
Operating lease cost	Operating expenses	$	30,425
Financing lease cost:
Amortization of right-of-use assets	Operating expenses	8,613
Interest on lease obligations	Interest expense	1,182
Variable lease cost	Operating expenses	468
Short-term lease cost	Operating expenses	2,896
Net lease cost		$	43,584

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of September 28, 2019 are as follows:

	Operating Leases			Finance Leases
	(In thousands)
Remainder of fiscal 2020	$	88,622		$	24,112
2021	109,589			27,829
2022	84,288			20,370
2023	68,088			14,046
2024	46,874			8,912
2025	43,721			5,742
Thereafter	322,335			6,378
Total undiscounted lease obligations	763,517			107,389
Less imputed interest	(115,407		)	(10,876		)
Present value of lease obligations	$	648,110		$	96,513

Other information related to lease agreements was as follows:

	13-Week Period Ended Sep. 28, 2019
Cash Paid For Amounts Included In Measurement of Liabilities:	(Dollars in thousands)
Operating cash flows for operating leases	$	30,597
Operating cash flows for financing leases	1,182
Financing cash flows for financing leases	7,232
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations	$	5,781
Assets obtained in exchange for finance lease obligations	1,553
Lease Term and Discount Rate:
Weighted-average remaining lease term (years):
Operating leases	11.35 years
Financing leases	4.34 years
Weighted-average discount rate:
Operating leases	2.39		%
Financing leases	4.96		%

Leases

LEASES

Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The company determines if an arrangement is a lease at inception and recognizes a finance or operating lease liability and ROU asset in the consolidated balance sheets if a lease exists. Lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. If the borrowing rate implicit in the lease is not readily determinable, Sysco uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

The lease term is defined as the noncancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the company will exercise one of these options. Leases with an initial term of 12 months or less are not recorded in Sysco’s consolidated balance sheets, and the company recognizes expense for these leases on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate, such as insurance and property taxes, are excluded from the measurement of the lease liability and are recognized as variable lease cost when the obligation for that payment is incurred. For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance. Sysco’s leases do not contain significant residual value guarantees and do not impose significant restrictions or covenants.

The following table presents the location of the finance lease ROU assets and lease liabilities in the company’s Consolidated Balance Sheet at September 28, 2019:

	Consolidated Balance Sheet Location	September 28, 2019
		(In thousands)
Finance lease right-of-use assets	Plant and equipment at cost, less accumulated depreciation	$	92,052
Current finance lease liabilities	Current maturities of long-term debt	27,300
Long-term finance lease liabilities	Long-term debt	69,213

The following table presents lease costs for the 13-week period ended September 28, 2019:

	Consolidated Results of Operations Location	13-Week Period Ended Sep. 28, 2019
		(In thousands)
Operating lease cost	Operating expenses	$	30,425
Financing lease cost:
Amortization of right-of-use assets	Operating expenses	8,613
Interest on lease obligations	Interest expense	1,182
Variable lease cost	Operating expenses	468
Short-term lease cost	Operating expenses	2,896
Net lease cost		$	43,584

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of September 28, 2019 are as follows:

	Operating Leases			Finance Leases
	(In thousands)
Remainder of fiscal 2020	$	88,622		$	24,112
2021	109,589			27,829
2022	84,288			20,370
2023	68,088			14,046
2024	46,874			8,912
2025	43,721			5,742
Thereafter	322,335			6,378
Total undiscounted lease obligations	763,517			107,389
Less imputed interest	(115,407		)	(10,876		)
Present value of lease obligations	$	648,110		$	96,513

Other information related to lease agreements was as follows:

	13-Week Period Ended Sep. 28, 2019
Cash Paid For Amounts Included In Measurement of Liabilities:	(Dollars in thousands)
Operating cash flows for operating leases	$	30,597
Operating cash flows for financing leases	1,182
Financing cash flows for financing leases	7,232
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations	$	5,781
Assets obtained in exchange for finance lease obligations	1,553
Lease Term and Discount Rate:
Weighted-average remaining lease term (years):
Operating leases	11.35 years
Financing leases	4.34 years
Weighted-average discount rate:
Operating leases	2.39		%
Financing leases	4.96		%

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Fair Value Measurements

3 Months Ended

Sep. 28, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

• Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;

• Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

• Level 3 – Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

Sysco’s policy is to invest in only high-quality investments. Cash equivalents primarily include cash deposits, time deposits, certificates of deposit, commercial paper, high-quality money market funds and all highly liquid instruments with original maturities of three months or less.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value:

• Cash deposits included in cash equivalents are valued at amortized cost, which approximates fair value. These are included within cash equivalents as a Level 1 measurement in the tables below.

• Time deposits and commercial paper included in cash equivalents are valued at amortized cost, which approximates fair value. These are included within cash equivalents as a Level 2 measurement in the tables below.

• Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. These are included within cash equivalents as Level 1 measurements in the tables below.

• Fixed income securities are valued using evaluated bid prices based on a compilation of observable market information or a broker quote in a non-active market. Inputs used vary by type of security, but include spreads, yields, rate benchmarks, rate of prepayment, cash flows, rating changes and collateral performance and type.

• The interest rate swap agreements are valued using a swap valuation model that utilizes an income approach using observable market inputs including interest rates, LIBOR swap rates and credit default swap rates.

• The foreign currency swap agreements, including cross-currency swaps, are valued using a swap valuation model that utilizes an income approach applying observable market inputs including interest rates, LIBOR swap rates for U.S. dollars, Canadian dollars, pound sterling and euro currencies, and credit default swap rates.

• Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments.

• Fuel swap contracts are valued based on observable market transactions of forward commodity prices.

The fair value of the company’s marketable securities are all measured using inputs that are considered a Level 2 measurement, as they are actively traded and are valued using quoted market prices in active markets. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 6, “Marketable Securities.” The fair value of the company’s derivative instruments are all measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair value of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 7, “Derivative Financial Instruments.”

The following tables present the company’s assets measured at fair value on a recurring basis as of September 28, 2019 and June 29, 2019:

	Assets Measured at Fair Value as of Sep. 28, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	108,962	$	1,400	$	—	$	110,362
Other assets (1)	58,938		—		—		58,938
Total assets at fair value	$	167,900	$	1,400	$	—	$	169,300

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

	Assets Measured at Fair Value as of Jun. 29, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	72,824	$	200	$	—	$	73,024
Other assets (1)	18,785		—		—		18,785
Total assets at fair value	$	91,609	$	200	$	—	$	91,809

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt, and is considered a Level 2 measurement. The fair value of total debt was approximately $9.5 billion and $8.6 billion as of September 28, 2019 and June 29, 2019, respectively. The carrying value of total debt was $8.7 billion and $8.2 billion as of September 28, 2019 and June 29, 2019, respectively.

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Supplemental Guarantor Information - Subsidiary Guarantees - Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Jun. 29, 2019	Sep. 29, 2018	Jun. 30, 2018
Supplemental Guarantor Information [Line Items]
Current assets	$ 8,484,164	$ 8,141,505
Intercompany receivables	0	0
Investment in subsidiaries	0	0
Plant and equipment, net	4,493,016	4,501,705
Other assets	5,979,395	5,323,312
Total assets	18,956,575	17,966,522
Current liabilities	6,101,471	6,103,183
Intercompany payables	0	0
Long-term debt	8,637,706	8,122,058
Other liabilities	1,729,622	1,203,252
Noncontrolling interest	33,028	35,426
Shareholders’ equity	2,454,748	2,502,603	$ 2,638,574	$ 2,506,957
Total liabilities and shareholders’ equity	18,956,575	17,966,522
Reportable Legal Entities | Sysco
Supplemental Guarantor Information [Line Items]
Current assets	172,317	121,993
Intercompany receivables	6,517,293	6,162,303
Investment in subsidiaries	5,305,887	4,680,530
Plant and equipment, net	242,040	252,101
Other assets	817,530	787,986
Total assets	13,055,067	12,004,913
Current liabilities	443,234	465,101
Intercompany payables	1,307,665	686,116
Long-term debt	8,192,123	7,668,314
Other liabilities	657,297	682,779
Noncontrolling interest	0	0
Shareholders’ equity	2,454,748	2,502,603
Total liabilities and shareholders’ equity	13,055,067	12,004,913
Reportable Legal Entities | Certain U.S. Broadline Subsidiaries
Supplemental Guarantor Information [Line Items]
Current assets	4,548,019	4,195,543
Intercompany receivables	148,589	30,469
Investment in subsidiaries	0	0
Plant and equipment, net	2,184,301	2,162,668
Other assets	729,136	718,600
Total assets	7,610,045	7,107,280
Current liabilities	1,061,795	1,018,650
Intercompany payables	3,261,317	3,443,182
Long-term debt	10,747	7,938
Other liabilities	551,789	545,391
Noncontrolling interest	0	0
Shareholders’ equity	2,724,397	2,092,119
Total liabilities and shareholders’ equity	7,610,045	7,107,280
Reportable Legal Entities | Other Non-Guarantor Subsidiaries
Supplemental Guarantor Information [Line Items]
Current assets	3,763,828	3,823,969
Intercompany receivables	3,229,688	3,220,237
Investment in subsidiaries	1,255,862	1,126,315
Plant and equipment, net	2,066,675	2,086,936
Other assets	4,974,095	4,372,725
Total assets	15,290,148	14,630,182
Current liabilities	4,596,442	4,619,432
Intercompany payables	5,326,588	5,283,711
Long-term debt	434,836	445,806
Other liabilities	1,061,902	531,081
Noncontrolling interest	33,028	35,426
Shareholders’ equity	3,837,352	3,714,726
Total liabilities and shareholders’ equity	15,290,148	14,630,182
Eliminations
Supplemental Guarantor Information [Line Items]
Current assets	0	0
Intercompany receivables	(9,895,570)	(9,413,009)
Investment in subsidiaries	(6,561,749)	(5,806,845)
Plant and equipment, net	0	0
Other assets	(541,366)	(555,999)
Total assets	(16,998,685)	(15,775,853)
Current liabilities	0	0
Intercompany payables	(9,895,570)	(9,413,009)
Long-term debt	0	0
Other liabilities	(541,366)	(555,999)
Noncontrolling interest	0	0
Shareholders’ equity	(6,561,749)	(5,806,845)
Total liabilities and shareholders’ equity	$ (16,998,685)	$ (15,775,853)

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Share-Based Compensation - Stock Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	2,291,085
Options granted, weighted average grant date fair value (in dollars per share)	$ 10.40
Share-based compensation expense	$ 21,386	$ 29,193
Total unrecognized compensation cost related to share-based compensation arrangements	$ 136,800
Weighted average period of time for unrecognized compensation cost to be recognized (in years)	2 years 21 days
Performance Share Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options granted (in shares)	512,765
Equity instruments other than options granted, weighted average grant date fair value per share (in dollars per share)	$ 72.66
Employees' Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options granted (in shares)	240,802
Equity instruments other than options granted, weighted average grant date fair value per share (in dollars per share)	$ 10.61

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash Paid For Amounts Included In Measurement of Liabilities:
Operating cash flows for operating leases	$ 30,597	$ 0
Operating cash flows for financing leases	1,182
Financing cash flows for financing leases	7,232
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations	5,781
Assets obtained in exchange for finance lease obligations	$ 1,553
Weighted-average remaining lease term (years):
Operating leases	11 years 4 months 6 days
Financing leases	4 years 4 months 2 days
Weighted-average discount rate:
Operating leases	2.39%
Financing leases	4.96%

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Acquisitions (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Business Combinations [Abstract]
Acquisition of businesses, net of cash acquired	$ 74,814	$ 0
Contingent consideration maximum number of years (in years)	3 years
Potential cash payout for contingent consideration arrangements	$ 28,300
Amount of recorded earnout liabilities	$ 21,500

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Basis of Presentation

3 Months Ended

Sep. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, changes in consolidated shareholders’ equity and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity for all periods presented have been made.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

Supplemental Cash Flow Information

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

	Sep. 28, 2019		Sep. 29, 2018
	(In thousands)
Cash and cash equivalents	$	455,482	$	790,304
Restricted cash (1)	58,938		163,067
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	514,420	$	953,371

⁽¹⁾ 

Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within Other assets in each consolidated balance sheet.

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Leases (Tables)

3 Months Ended

Sep. 28, 2019

Leases [Abstract]

Schedule of Leases, Financial Statement Presentation

The following table presents the location of the finance lease ROU assets and lease liabilities in the company’s Consolidated Balance Sheet at September 28, 2019:

	Consolidated Balance Sheet Location	September 28, 2019
		(In thousands)
Finance lease right-of-use assets	Plant and equipment at cost, less accumulated depreciation	$	92,052
Current finance lease liabilities	Current maturities of long-term debt	27,300
Long-term finance lease liabilities	Long-term debt	69,213

Schedule of Lease Costs

The following table presents lease costs for the 13-week period ended September 28, 2019:

	Consolidated Results of Operations Location	13-Week Period Ended Sep. 28, 2019
		(In thousands)
Operating lease cost	Operating expenses	$	30,425
Financing lease cost:
Amortization of right-of-use assets	Operating expenses	8,613
Interest on lease obligations	Interest expense	1,182
Variable lease cost	Operating expenses	468
Short-term lease cost	Operating expenses	2,896
Net lease cost		$	43,584

Other information related to lease agreements was as follows:

	13-Week Period Ended Sep. 28, 2019
Cash Paid For Amounts Included In Measurement of Liabilities:	(Dollars in thousands)
Operating cash flows for operating leases	$	30,597
Operating cash flows for financing leases	1,182
Financing cash flows for financing leases	7,232
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations	$	5,781
Assets obtained in exchange for finance lease obligations	1,553
Lease Term and Discount Rate:
Weighted-average remaining lease term (years):
Operating leases	11.35 years
Financing leases	4.34 years
Weighted-average discount rate:
Operating leases	2.39		%
Financing leases	4.96		%

Schedule of Minimum Operating Lease Obligations

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of September 28, 2019 are as follows:

	Operating Leases			Finance Leases
	(In thousands)
Remainder of fiscal 2020	$	88,622		$	24,112
2021	109,589			27,829
2022	84,288			20,370
2023	68,088			14,046
2024	46,874			8,912
2025	43,721			5,742
Thereafter	322,335			6,378
Total undiscounted lease obligations	763,517			107,389
Less imputed interest	(115,407		)	(10,876		)
Present value of lease obligations	$	648,110		$	96,513

Schedule of Minimum Finance Lease Obligations

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of September 28, 2019 are as follows:

	Operating Leases			Finance Leases
	(In thousands)
Remainder of fiscal 2020	$	88,622		$	24,112
2021	109,589			27,829
2022	84,288			20,370
2023	68,088			14,046
2024	46,874			8,912
2025	43,721			5,742
Thereafter	322,335			6,378
Total undiscounted lease obligations	763,517			107,389
Less imputed interest	(115,407		)	(10,876		)
Present value of lease obligations	$	648,110		$	96,513

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Cover Page - shares	3 Months Ended
	Sep. 28, 2019	Oct. 18, 2019
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 28, 2019
Document Transition Report	false
Entity File Number	1-6544
Entity Registrant Name	Sysco Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-1648137
Entity Address, Address Line One	1390 Enclave Parkway
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77077
City Area Code	281
Local Phone Number	584-1390
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		510,226,830
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000096021
Current Fiscal Year End Date	--06-27
Amendment Flag	false
Common Stock
Document Information [Line Items]
Title of each class	Common stock, $1.00 Par Value
Trading Symbol	SYY
Security Exchange Name	NYSE
Senior Notes, 5.25% Due 2018
Document Information [Line Items]
Title of each class	1.25% Notes due June 2023
Trading Symbol	SYY 23
Security Exchange Name	NYSE

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Net earnings	$ 453,781	$ 431,042
Other comprehensive (loss) income:
Foreign currency translation adjustment	(126,159)	(24,927)
Items presented net of tax:
Amortization of cash flow hedges	2,155
Amortization of cash flow hedges	2,155	2,155
Change in net investment hedges	30,000
Change in cash flow hedges	9,259
Amortization of prior service cost	1,428	1,600
Amortization of actuarial loss	6,683	6,529
Actuarial (loss) gain	0	(32,511)
Change in marketable securities	933	0
Total other comprehensive (loss) income	(75,701)	(41,574)
Comprehensive income	378,080	389,468
Cash flow hedging
Items presented net of tax:
Amortization of cash flow hedges		2,155
Changes in derivatives	9,259	(3,008)
Net investment hedging
Items presented net of tax:
Changes in derivatives	$ 30,000	$ 8,588

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Supplemental Guarantor Information - Subsidiary Guarantees (Tables)

3 Months Ended

Sep. 28, 2019

Guarantees [Abstract]

Condensed consolidating balance sheet table

The following condensed consolidating financial statements present separately the financial position, comprehensive income and cash flows of the parent issuer (Sysco Corporation), the guarantors (certain of the company’s U.S. Broadline subsidiaries), and all other non-guarantor subsidiaries of Sysco (Other Non-Guarantor Subsidiaries) on a combined basis with eliminating entries.

	Condensed Consolidated Balance Sheet
	Sep. 28, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	172,317	$	4,548,019	$	3,763,828	$	—		$	8,484,164
Intercompany receivables	6,517,293		148,589		3,229,688		(9,895,570		)	—
Investment in subsidiaries	5,305,887		—		1,255,862		(6,561,749		)	—
Plant and equipment, net	242,040		2,184,301		2,066,675		—			4,493,016
Other assets	817,530		729,136		4,974,095		(541,366		)	5,979,395
Total assets	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575
Current liabilities	$	443,234	$	1,061,795	$	4,596,442	$	—		$	6,101,471
Intercompany payables	1,307,665		3,261,317		5,326,588		(9,895,570		)	—
Long-term debt	8,192,123		10,747		434,836		—			8,637,706
Other liabilities	657,297		551,789		1,061,902		(541,366		)	1,729,622
Noncontrolling interest	—		—		33,028		—			33,028
Shareholders’ equity	2,454,748		2,724,397		3,837,352		(6,561,749		)	2,454,748
Total liabilities and shareholders’ equity	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575

	Condensed Consolidated Balance Sheet
	Jun. 29, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	121,993	$	4,195,543	$	3,823,969	$	—		$	8,141,505
Intercompany receivables	6,162,303		30,469		3,220,237		(9,413,009		)	—
Investment in subsidiaries	4,680,530		—		1,126,315		(5,806,845		)	—
Plant and equipment, net	252,101		2,162,668		2,086,936		—			4,501,705
Other assets	787,986		718,600		4,372,725		(555,999		)	5,323,312
Total assets	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522
Current liabilities	$	465,101	$	1,018,650	$	4,619,432	$	—		$	6,103,183
Intercompany payables	686,116		3,443,182		5,283,711		(9,413,009		)	—
Long-term debt	7,668,314		7,938		445,806		—			8,122,058
Other liabilities	682,779		545,391		531,081		(555,999		)	1,203,252
Noncontrolling interest	—		—		35,426		—			35,426
Shareholders’ equity	2,502,603		2,092,119		3,714,726		(5,806,845		)	2,502,603
Total liabilities and shareholders’ equity	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522

Condensed consolidating statement of comprehensive income table

	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,810,408		$	6,043,288		$	(550,691	)	$	15,303,005
Cost of sales	—			7,910,440			4,999,886			(550,691		)	12,359,635
Gross profit	—			1,899,968			1,043,402			—			2,943,370
Operating expenses	198,840			1,075,837			1,000,375			—			2,275,052
Operating income (loss)	(198,840		)	824,131			43,027			—			668,318
Interest expense (income) (1)	107,336			(20,528		)	(3,473		)	—			83,335
Other expense (income), net	7,053			(167		)	(3,774		)	—			3,112
Earnings (losses) before income taxes	(313,229		)	844,826			50,274			—			581,871
Income tax (benefit) provision	(98,500		)	212,546			14,044			—			128,090
Equity in earnings of subsidiaries	668,510			—			129,548			(798,058		)	—
Net earnings	453,781			632,280			165,778			(798,058		)	453,781
Other comprehensive income (loss)	(75,701		)	—			(126,159		)	126,159			(75,701		)
Comprehensive income	$	378,080		$	632,280		$	39,619		$	(671,899	)	$	378,080

 

⁽¹⁾  Interest expense (income) includes $20.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 28, 2019. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,479,806		$	6,234,158		$	(498,685	)	$	15,215,279
Cost of sales	—			7,660,101			5,150,078			(498,685		)	12,311,494
Gross profit	—			1,819,705			1,084,080			—			2,903,785
Operating expenses	220,281			1,052,350			1,003,014			—			2,275,645
Operating income (loss)	(220,281		)	767,355			81,066			—			628,140
Interest expense (income) (1)	41,413			(21,538		)	69,141			—			89,016
Other expense (income), net	6,600			(54		)	(5,414		)	—			1,132
Earnings (losses) before income taxes	(268,294		)	788,947			17,339			—			537,992
Income tax (benefit) provision	(93,587		)	196,445			4,092			—			106,950
Equity in earnings of subsidiaries	605,750			—			94,341			(700,091		)	—
Net earnings	431,043			592,502			107,588			(700,091		)	431,042
Other comprehensive income (loss)	(41,574		)	—			(24,927		)	24,927			(41,574		)
Comprehensive income	$	389,469		$	592,502		$	82,661		$	(675,164	)	$	389,468

⁽¹⁾  Interest expense (income) includes $21.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 29, 2018. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

Condensed consolidating cash flows table

	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	11,776		$	69,098		$	90,705		$	—		$	171,579
Investing activities	(49,434		)	(85,903		)	(128,923		)	17,636			(246,624		)
Financing activities	109,226			742			(29,627		)	(17,636		)	62,705
Effect of exchange rates on cash	—			—			(5,485		)	—			(5,485		)
Net increase (decrease) in cash, cash equivalents and restricted cash	71,568			(16,063		)	(73,330		)	—			(17,825		)
Cash, cash equivalents and restricted cash at the beginning of period	29,868			117,643			384,734			—			532,245
Cash, cash equivalents and restricted cash at the end of period	$	101,436		$	101,580		$	311,404		$	—		$	514,420

⁽¹⁾  Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	167,767		$	69,459		$	33,919		$	—		$	271,145
Investing activities	361,777			(42,188		)	(12,229		)	(406,931		)	(99,571		)
Financing activities	(332,988		)	(1,581		)	(3,974		)	406,931			68,388
Effect of exchange rates on cash	—			—			(2,435		)	—			(2,435		)
Net increase (decrease) in cash, cash equivalents and restricted cash	196,556			25,690			15,281			—			237,527
Cash, cash equivalents and restricted cash at the beginning of period	29,144			111,843			574,857			—			715,844
Cash, cash equivalents and restricted cash at the end of period	$	225,700		$	137,533		$	590,138		$	—		$	953,371

⁽¹⁾ 

Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

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Debt

3 Months Ended

Sep. 28, 2019

Debt Disclosure [Abstract]

Debt

DEBT

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. As of September 28, 2019, there were $665.4 million in commercial paper issuances outstanding. Any outstanding amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first 13 weeks of fiscal 2020, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from approximately $208.9 million to approximately $911.3 million.

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Acquisitions

3 Months Ended

Sep. 28, 2019

Business Combinations [Abstract]

Acquisitions

 ACQUISITIONS

During the first 13 weeks of fiscal 2020, the company paid cash of $74.8 million for acquisitions. These acquisitions did not have a material effect on the company’s operating results, cash flows or financial position. Certain acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are achieved. As of September 28, 2019, aggregate contingent consideration outstanding was $28.3 million, of which $21.5 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 measurement.

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Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	$ 2,502,603	$ 2,506,957
Ending balance, shareholders' equity	2,454,748	2,638,574
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	(1,599,729)	(1,409,269)
Ending balance, shareholders' equity	(1,675,430)	(1,450,843)
Pension and Other Postretirement Benefit Plans, net of tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	(1,217,617)	(1,095,059)
Ending balance, shareholders' equity	(1,209,506)	(1,119,441)
Net actuarial loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
OCI before reclassifications, net of tax		(32,511)
Amortization of prior service cost
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Reclassification adjustment, net of tax	1,428	1,600
Amortization of unrecognized net actuarial losses
AOCI Attributable to Parent, Net of Tax [Roll Forward]
OCI before reclassifications, net of tax		(32,511)
Reclassification adjustment, net of tax	6,683	6,529
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	(290,169)	(171,043)
OCI before reclassifications, net of tax	(126,159)	(24,927)
Ending balance, shareholders' equity	(416,328)	(195,970)
Hedging, net of tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	(94,770)	(143,167)
OCI before reclassifications, net of tax	39,259	5,580
Ending balance, shareholders' equity	(53,356)	(135,432)
Amortization of cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
OCI before reclassifications, net of tax	9,259
Reclassification adjustment, net of tax	2,155
Amortization of cash flow hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
OCI before reclassifications, net of tax		(3,008)
Reclassification adjustment, net of tax		2,155
Change in net investment hedge
AOCI Attributable to Parent, Net of Tax [Roll Forward]
OCI before reclassifications, net of tax	30,000	$ 8,588
Change in marketable securities (1)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance, shareholders' equity	2,827
OCI before reclassifications, net of tax	933
Ending balance, shareholders' equity	$ 3,760

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Leases - Future Payments (Details) $ in Thousands	Sep. 28, 2019 USD ($)
Operating Leases
Remainder of fiscal 2020	$ 88,622
2021	109,589
2022	84,288
2023	68,088
2024	46,874
2025	43,721
Thereafter	322,335
Total undiscounted lease obligations	763,517
Less imputed interest	(115,407)
Present value of lease obligations	648,110
Finance Leases
Remainder of fiscal 2020	24,112
2021	27,829
2022	20,370
2023	14,046
2024	8,912
2025	5,742
Thereafter	6,378
Total undiscounted lease obligations	107,389
Less imputed interest	(10,876)
Present value of lease obligations	$ 96,513

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Supplemental Guarantor Information - Subsidiary Guarantees - Narrative (Details) $ in Billions	3 Months Ended
	Sep. 28, 2019 USD ($)
Guarantees [Abstract]
Senior notes and debentures covered by guarantees	$ 7.5
Percentage ownership of subsidiary guarantors by parent	100.00%

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Leases - Lease Costs (Details) $ in Thousands	3 Months Ended
	Sep. 28, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 30,425
Financing lease cost:
Amortization of right-of-use assets	8,613
Interest on lease obligations	1,182
Variable lease cost	468
Short-term lease cost	2,896
Net lease cost	$ 43,584

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Marketable Securities (Details) - USD ($)	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Jun. 29, 2019
Marketable Securities [Line Items]
Amortized Cost Basis	$ 117,339,000		$ 116,440,000
Gross Unrealized Gains	4,762,000		3,579,000
Gross Unrealized Losses	(2,000)		0
Fair Value	$ 122,099,000		120,019,000
Realized gain (loss) on marketable securities		$ 0
Minimum
Marketable Securities [Line Items]
Debt securities maturities	1 year
Maximum
Marketable Securities [Line Items]
Debt securities maturities	11 years
Short-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	$ 12,017,000		12,006,000
Long-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	110,082,000		108,013,000
Corporate bonds
Marketable Securities [Line Items]
Amortized Cost Basis	88,505,000		87,540,000
Gross Unrealized Gains	2,067,000		1,734,000
Gross Unrealized Losses	(2,000)		0
Fair Value	90,570,000		89,274,000
Corporate bonds | Short-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	12,017,000		12,006,000
Corporate bonds | Long-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	78,553,000		77,268,000
Government bonds
Marketable Securities [Line Items]
Amortized Cost Basis	28,834,000		28,900,000
Gross Unrealized Gains	2,695,000		1,845,000
Gross Unrealized Losses	0		0
Fair Value	31,529,000		30,745,000
Government bonds | Short-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	0		0
Government bonds | Long-Term Marketable Securities
Marketable Securities [Line Items]
Fair Value	$ 31,529,000		$ 30,745,000

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Derivative Financial Instruments - Cash Flow Hedges (Details) - Hedging Instrument - USD ($) $ in Thousands	3 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash flow hedging
Derivative [Line Items]
Derivatives in cash flow hedging relationships:	$ 12,651
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		$ (3,777)
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	(3,404)	4,836
Cash flow hedging | Fuel swaps
Derivative [Line Items]
Derivatives in cash flow hedging relationships:	344
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		1,026
Cash flow hedging | Fuel swaps | Operating expense
Derivative [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	(3,406)	4,353
Cash flow hedging | Foreign currency swaps
Derivative [Line Items]
Derivatives in cash flow hedging relationships:	12,307
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		(4,803)
Cash flow hedging | Foreign currency swaps | Cost of sales
Derivative [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	2	483
Net investment hedging
Derivative [Line Items]
Derivatives in net investment hedging relationships:	42,302
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		11,178
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	0	0
Net investment hedging | Foreign currency swaps
Derivative [Line Items]
Derivatives in net investment hedging relationships:	20,852
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		7,228
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	0	0
Net investment hedging | Foreign denominated debt
Derivative [Line Items]
Derivatives in net investment hedging relationships:	21,450
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		3,950
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	$ 0	$ 0

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Supplemental Guarantor Information - Subsidiary Guarantees

3 Months Ended

Sep. 28, 2019

Guarantees [Abstract]

Supplemental Guarantor Information - Subsidiary Guarantees

SUPPLEMENTAL GUARANTOR INFORMATION - SUBSIDIARY GUARANTEES

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation at that time entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. have also been guaranteed by these subsidiaries. As of September 28, 2019, Sysco had a total of $7.5 billion in senior notes and debentures that was covered by these guarantees.

All subsidiary guarantors are 100% owned by the parent company, all guarantees are full and unconditional, and all guarantees are joint and several, except that the guarantee of any subsidiary guarantor with respect to a series of senior notes or debentures may be released under certain customary circumstances. If we exercise our defeasance option with respect to the senior notes or debentures of any series, then any subsidiary guarantor effectively will be released with respect to that series. Further, each subsidiary guarantee will remain in full force and effect until the earliest to occur of the date, if any, on which (1) the applicable subsidiary guarantor shall consolidate with or merge into Sysco Corporation or any successor of Sysco Corporation or (2) Sysco Corporation or any successor of Sysco Corporation consolidates with or merges into the applicable subsidiary guarantor.

The following condensed consolidating financial statements present separately the financial position, comprehensive income and cash flows of the parent issuer (Sysco Corporation), the guarantors (certain of the company’s U.S. Broadline subsidiaries), and all other non-guarantor subsidiaries of Sysco (Other Non-Guarantor Subsidiaries) on a combined basis with eliminating entries.

	Condensed Consolidated Balance Sheet
	Sep. 28, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	172,317	$	4,548,019	$	3,763,828	$	—		$	8,484,164
Intercompany receivables	6,517,293		148,589		3,229,688		(9,895,570		)	—
Investment in subsidiaries	5,305,887		—		1,255,862		(6,561,749		)	—
Plant and equipment, net	242,040		2,184,301		2,066,675		—			4,493,016
Other assets	817,530		729,136		4,974,095		(541,366		)	5,979,395
Total assets	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575
Current liabilities	$	443,234	$	1,061,795	$	4,596,442	$	—		$	6,101,471
Intercompany payables	1,307,665		3,261,317		5,326,588		(9,895,570		)	—
Long-term debt	8,192,123		10,747		434,836		—			8,637,706
Other liabilities	657,297		551,789		1,061,902		(541,366		)	1,729,622
Noncontrolling interest	—		—		33,028		—			33,028
Shareholders’ equity	2,454,748		2,724,397		3,837,352		(6,561,749		)	2,454,748
Total liabilities and shareholders’ equity	$	13,055,067	$	7,610,045	$	15,290,148	$	(16,998,685	)	$	18,956,575

	Condensed Consolidated Balance Sheet
	Jun. 29, 2019
	Sysco		Certain U.S.  Broadline Subsidiaries		Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	121,993	$	4,195,543	$	3,823,969	$	—		$	8,141,505
Intercompany receivables	6,162,303		30,469		3,220,237		(9,413,009		)	—
Investment in subsidiaries	4,680,530		—		1,126,315		(5,806,845		)	—
Plant and equipment, net	252,101		2,162,668		2,086,936		—			4,501,705
Other assets	787,986		718,600		4,372,725		(555,999		)	5,323,312
Total assets	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522
Current liabilities	$	465,101	$	1,018,650	$	4,619,432	$	—		$	6,103,183
Intercompany payables	686,116		3,443,182		5,283,711		(9,413,009		)	—
Long-term debt	7,668,314		7,938		445,806		—			8,122,058
Other liabilities	682,779		545,391		531,081		(555,999		)	1,203,252
Noncontrolling interest	—		—		35,426		—			35,426
Shareholders’ equity	2,502,603		2,092,119		3,714,726		(5,806,845		)	2,502,603
Total liabilities and shareholders’ equity	$	12,004,913	$	7,107,280	$	14,630,182	$	(15,775,853	)	$	17,966,522

	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,810,408		$	6,043,288		$	(550,691	)	$	15,303,005
Cost of sales	—			7,910,440			4,999,886			(550,691		)	12,359,635
Gross profit	—			1,899,968			1,043,402			—			2,943,370
Operating expenses	198,840			1,075,837			1,000,375			—			2,275,052
Operating income (loss)	(198,840		)	824,131			43,027			—			668,318
Interest expense (income) (1)	107,336			(20,528		)	(3,473		)	—			83,335
Other expense (income), net	7,053			(167		)	(3,774		)	—			3,112
Earnings (losses) before income taxes	(313,229		)	844,826			50,274			—			581,871
Income tax (benefit) provision	(98,500		)	212,546			14,044			—			128,090
Equity in earnings of subsidiaries	668,510			—			129,548			(798,058		)	—
Net earnings	453,781			632,280			165,778			(798,058		)	453,781
Other comprehensive income (loss)	(75,701		)	—			(126,159		)	126,159			(75,701		)
Comprehensive income	$	378,080		$	632,280		$	39,619		$	(671,899	)	$	378,080

 

⁽¹⁾  Interest expense (income) includes $20.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 28, 2019. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

	Condensed Consolidated Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	9,479,806		$	6,234,158		$	(498,685	)	$	15,215,279
Cost of sales	—			7,660,101			5,150,078			(498,685		)	12,311,494
Gross profit	—			1,819,705			1,084,080			—			2,903,785
Operating expenses	220,281			1,052,350			1,003,014			—			2,275,645
Operating income (loss)	(220,281		)	767,355			81,066			—			628,140
Interest expense (income) (1)	41,413			(21,538		)	69,141			—			89,016
Other expense (income), net	6,600			(54		)	(5,414		)	—			1,132
Earnings (losses) before income taxes	(268,294		)	788,947			17,339			—			537,992
Income tax (benefit) provision	(93,587		)	196,445			4,092			—			106,950
Equity in earnings of subsidiaries	605,750			—			94,341			(700,091		)	—
Net earnings	431,043			592,502			107,588			(700,091		)	431,042
Other comprehensive income (loss)	(41,574		)	—			(24,927		)	24,927			(41,574		)
Comprehensive income	$	389,469		$	592,502		$	82,661		$	(675,164	)	$	389,468

⁽¹⁾  Interest expense (income) includes $21.5 million of intercompany interest income, net, for certain of the U.S. Broadline subsidiaries, which is intercompany interest expense for Sysco Corporation for the first quarter ended September 29, 2018. There is an immaterial amount of intercompany interest expense related to Sysco Corporation for the Other Non-Guarantor Subsidiaries.

	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 28, 2019
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	11,776		$	69,098		$	90,705		$	—		$	171,579
Investing activities	(49,434		)	(85,903		)	(128,923		)	17,636			(246,624		)
Financing activities	109,226			742			(29,627		)	(17,636		)	62,705
Effect of exchange rates on cash	—			—			(5,485		)	—			(5,485		)
Net increase (decrease) in cash, cash equivalents and restricted cash	71,568			(16,063		)	(73,330		)	—			(17,825		)
Cash, cash equivalents and restricted cash at the beginning of period	29,868			117,643			384,734			—			532,245
Cash, cash equivalents and restricted cash at the end of period	$	101,436		$	101,580		$	311,404		$	—		$	514,420

⁽¹⁾  Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

	Condensed Consolidated Cash Flows
	For the 13-Week Period Ended Sep. 29, 2018
	Sysco			Certain U.S.  Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Elimination (1)			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	167,767		$	69,459		$	33,919		$	—		$	271,145
Investing activities	361,777			(42,188		)	(12,229		)	(406,931		)	(99,571		)
Financing activities	(332,988		)	(1,581		)	(3,974		)	406,931			68,388
Effect of exchange rates on cash	—			—			(2,435		)	—			(2,435		)
Net increase (decrease) in cash, cash equivalents and restricted cash	196,556			25,690			15,281			—			237,527
Cash, cash equivalents and restricted cash at the beginning of period	29,144			111,843			574,857			—			715,844
Cash, cash equivalents and restricted cash at the end of period	$	225,700		$	137,533		$	590,138		$	—		$	953,371

⁽¹⁾ 

Represents primarily intercompany loans between the subsidiaries and the parent, Sysco Corporation.

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Share-Based Compensation

3 Months Ended

Sep. 28, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees under several share-based payment arrangements, including various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In the first quarter of fiscal 2020, options to purchase 2,291,085 shares were granted to employees. The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value per option granted during the first quarter of fiscal 2020 was $10.40.

In the first quarter of fiscal 2020, 512,765 performance share units (PSUs) were granted to employees. Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs granted without dividend equivalents, the fair value was reduced by the present value of expected dividends during the vesting period. The weighted average grant-date fair value per PSU granted during the first quarter of fiscal 2020 was $72.66. The PSUs will convert into shares of Sysco common stock at the end of the performance period based on financial performance targets consisting of Sysco’s adjusted earnings per share compound annual growth rate and adjusted return on invested capital.

Employee Stock Purchase Plan

Plan participants purchased 240,802 shares of common stock under the Sysco ESPP during the first quarter of fiscal 2020. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $10.61 during the first quarter of fiscal 2020. The fair value of each stock purchase right is estimated as the difference between the stock price at the date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $21.4 million and $29.2 million for the first quarter of fiscal 2020 and fiscal 2019, respectively.

As of September 28, 2019, there was $136.8 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.06 years.

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Fair Value Measurements (Tables)

3 Months Ended

Sep. 28, 2019

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value table

The following tables present the company’s assets measured at fair value on a recurring basis as of September 28, 2019 and June 29, 2019:

	Assets Measured at Fair Value as of Sep. 28, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	108,962	$	1,400	$	—	$	110,362
Other assets (1)	58,938		—		—		58,938
Total assets at fair value	$	167,900	$	1,400	$	—	$	169,300

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

	Assets Measured at Fair Value as of Jun. 29, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	72,824	$	200	$	—	$	73,024
Other assets (1)	18,785		—		—		18,785
Total assets at fair value	$	91,609	$	200	$	—	$	91,809

⁽¹⁾  Represents restricted cash balance recorded within other assets in the consolidated balance sheet.