(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS employer identification number) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
☑ | Accelerated Filer | ☐ | |||||||||
Non-accelerated Filer | ☐ | Smaller Reporting Company | |||||||||
(Do not check if a smaller reporting company) | Emerging growth company |
PART I – FINANCIAL INFORMATION | Page No. | |||||||
PART II – OTHER INFORMATION | ||||||||
Sep. 26, 2020 | Jun. 27, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowances of $265,597 and $334,810 | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Income tax receivable | |||||||||||
Total current assets | |||||||||||
Plant and equipment at cost, less accumulated depreciation | |||||||||||
Other long-term assets | |||||||||||
Goodwill | |||||||||||
Intangibles, less amortization | |||||||||||
Deferred income taxes | |||||||||||
Operating lease right-of-use assets, net | |||||||||||
Other assets | |||||||||||
Total other long-term assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities | |||||||||||
Notes payable | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued expenses | |||||||||||
Accrued income taxes | |||||||||||
Current operating lease liabilities | |||||||||||
Current maturities of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Long-term liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred income taxes | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total long-term liabilities | |||||||||||
Noncontrolling interest | |||||||||||
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 | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock at cost, 256,075,772 and 256,915,825 shares | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Sales | $ | $ | |||||||||
Cost of sales | |||||||||||
Gross profit | |||||||||||
Operating expenses | |||||||||||
Operating income | |||||||||||
Interest expense | |||||||||||
Other expense (income), net | |||||||||||
Earnings before income taxes | |||||||||||
Income taxes | |||||||||||
Net earnings | $ | $ | |||||||||
Net earnings: | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | |||||||||||
Average shares outstanding | |||||||||||
Diluted shares outstanding |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Net earnings | $ | $ | |||||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustment | ( | ||||||||||
Items presented net of tax: | |||||||||||
Amortization of cash flow hedges | |||||||||||
Change in net investment hedges | ( | ||||||||||
Change in cash flow hedges | ( | ||||||||||
Amortization of prior service cost | |||||||||||
Amortization of actuarial loss | |||||||||||
Change in marketable securities | ( | ||||||||||
Total other comprehensive income (loss) | ( | ||||||||||
Comprehensive income | $ | $ | |||||||||
Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amounts | Totals | |||||||||||||||||||||||||||||||||||||||||||
Balance as of June 27, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of cash flow hedges, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Change in cash flow hedges, net of tax | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Change in net investment hedges, net of tax | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Change in marketable securities, net of tax | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($0.45 per common share) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation awards | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 26, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amounts | Totals | |||||||||||||||||||||||||||||||||||||||||||
Balance as of June 29, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Net earnings | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Amortization of cash flow hedges, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Change in cash flow hedges, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net investment hedges, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Change in marketable securities, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($0.39 per common share) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation awards | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 28, 2019 | $ | $ | $ | $ | ( | $ | ( | $ |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||||||
Share-based compensation expense | |||||||||||
Depreciation and amortization | |||||||||||
Operating lease asset amortization | |||||||||||
Amortization of debt issuance and other debt-related costs | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Provision for losses on receivables | ( | ||||||||||
Loss on sale of business | |||||||||||
Other non-cash items | ( | ||||||||||
Additional changes in certain assets and liabilities, net of effect of businesses acquired: | |||||||||||
Increase in receivables | ( | ( | |||||||||
Increase in inventories | ( | ( | |||||||||
Decrease (increase) in prepaid expenses and other current assets | ( | ||||||||||
Increase (decrease) in accounts payable | ( | ||||||||||
Increase (decrease) in accrued expenses | ( | ||||||||||
Decrease in operating lease liabilities | ( | ( | |||||||||
Increase in accrued income taxes | |||||||||||
Decrease in other assets | |||||||||||
Increase in other long-term liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Additions to plant and equipment | ( | ( | |||||||||
Proceeds from sales of plant and equipment | |||||||||||
Acquisition of businesses, net of cash acquired | ( | ||||||||||
Purchase of marketable securities | ( | ( | |||||||||
Proceeds from sales of marketable securities | |||||||||||
Net cash used for investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Bank and commercial paper borrowings, net | |||||||||||
Other debt borrowings | |||||||||||
Other debt repayments | ( | ( | |||||||||
Proceeds from stock option exercises | |||||||||||
Treasury stock purchases | ( | ||||||||||
Dividends paid | ( | ( | |||||||||
Other financing activities | ( | ( | |||||||||
Net cash (used for) provided by financing activities | ( | ||||||||||
Effect of exchange rates on cash, cash equivalents and restricted cash | ( | ||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes |
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
(In thousands) | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash (1) | |||||||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ | $ |
13-Week Period Ended Sep. 26, 2020 | ||||||||||||||||||||||||||||||||
US Foodservice Operations | International Foodservice Operations | SYGMA | Other | Total | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Principal Product Categories | ||||||||||||||||||||||||||||||||
Fresh and frozen meats | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Canned and dry products | ||||||||||||||||||||||||||||||||
Frozen fruits, vegetables, bakery and other | ||||||||||||||||||||||||||||||||
Poultry | ||||||||||||||||||||||||||||||||
Dairy products | ||||||||||||||||||||||||||||||||
Fresh produce | ||||||||||||||||||||||||||||||||
Paper and disposables | ||||||||||||||||||||||||||||||||
Seafood | ||||||||||||||||||||||||||||||||
Beverage products | ||||||||||||||||||||||||||||||||
Other (1) | ||||||||||||||||||||||||||||||||
Total Sales | $ | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Canned and dry products | ||||||||||||||||||||||||||||||||
Frozen fruits, vegetables, bakery and other | ||||||||||||||||||||||||||||||||
Dairy products | ||||||||||||||||||||||||||||||||
Poultry | ||||||||||||||||||||||||||||||||
Fresh produce | ||||||||||||||||||||||||||||||||
Paper and disposables | ||||||||||||||||||||||||||||||||
Seafood | ||||||||||||||||||||||||||||||||
Beverage products | ||||||||||||||||||||||||||||||||
Other (1) | ||||||||||||||||||||||||||||||||
Total Sales | $ | $ | $ | $ | $ |
Assets Measured at Fair Value as of Sep. 26, 2020 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash equivalents | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Other assets (1) | |||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
Assets Measured at Fair Value as of Jun. 27, 2020 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash equivalents | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Other assets (1) | |||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||
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 | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
Government bonds | ( | ||||||||||||||||||||||||||||||||||
Total marketable securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
Jun. 27, 2020 | |||||||||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Government bonds | |||||||||||||||||||||||||||||||||||
Total marketable securities | $ | $ | $ | $ | $ | $ |
Maturity Date of the Hedging Instrument | Currency / Unit of Measure | Notional Value | ||||||||||||
(In millions) | ||||||||||||||
Hedging of interest rate risk | ||||||||||||||
July 2021 | U.S. Dollar | |||||||||||||
June 2023 | Euro | |||||||||||||
March 2025 | U.S. Dollar | |||||||||||||
Hedging of foreign currency risk | ||||||||||||||
Various (September 28, 2020 to October 2020) | Swedish Krona | |||||||||||||
Various (October 2020 to February 2021) | British Pound Sterling | |||||||||||||
June 2023 | Euro | |||||||||||||
Hedging of fuel risk | ||||||||||||||
Various (September 30, 2020 to December 2021) | Gallons |
Derivative Fair Value | |||||||||||||||||
Balance Sheet location | Sep. 26, 2020 | Jun. 27, 2020 | |||||||||||||||
(In thousands) | |||||||||||||||||
Fair Value Hedges: | |||||||||||||||||
Interest rate swaps | Other current assets | $ | $ | ||||||||||||||
Interest rate swaps | Other assets | ||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||
Fuel swaps | Other current assets | $ | $ | ||||||||||||||
Foreign currency forwards | Other current assets | ||||||||||||||||
Fuel swaps | Other assets | ||||||||||||||||
Cross currency swaps | Other assets | ||||||||||||||||
Fuel swaps | Other current liabilities | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
13-Week Period Ended | ||||||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | |||||||||||||
(In thousands) | ||||||||||||||
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded | $ | $ | ||||||||||||
Gain or (loss) on fair value hedging relationships: | ||||||||||||||
Interest rate swaps: | ||||||||||||||
Hedged items | $ | ( | $ | ( | ||||||||||
Derivatives designated as hedging instruments | ||||||||||||||
13-Week Period Ended | ||||||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | |||||||||||||
(In thousands) | ||||||||||||||
Interest expense | $ | ( | $ | ( | ||||||||||
Increase (decrease) in fair value of debt | ( | |||||||||||||
Hedged items | $ | ( | $ | ( |
13-Week Period Ended Sep. 26, 2020 | |||||||||||||||||
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 | $ | Operating expense | $ | ( | |||||||||||||
Foreign currency contracts | ( | Cost of sales / Other income | ( | ||||||||||||||
Total | $ | ( | $ | ( | |||||||||||||
Derivatives in net investment hedging relationships: | |||||||||||||||||
Foreign denominated debt | ( | N/A | |||||||||||||||
Total | $ | ( | $ | ||||||||||||||
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 | $ | Operating expense | $ | ( | |||||||||||||
Foreign currency contracts | Cost of sales / Other income | ||||||||||||||||
Total | $ | $ | ( | ||||||||||||||
Derivatives in net investment hedging relationships: | |||||||||||||||||
Foreign currency contracts | $ | N/A | $ | ||||||||||||||
Foreign denominated debt | N/A | ||||||||||||||||
Total | $ | $ |
Sep. 26, 2020 | |||||||||||
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: | |||||||||||
Current maturities of long-term debt | $ | ( | $ | ( | |||||||
Long-term debt | ( | ( |
Jun. 27, 2020 | |||||||||||
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: | |||||||||||
Current maturities of long-term debt | $ | ( | $ | ( | |||||||
Long-term debt | ( | ( |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
(In thousands, except for share and per share data) | |||||||||||
Numerator: | |||||||||||
Net earnings | $ | $ | |||||||||
Denominator: | |||||||||||
Weighted-average basic shares outstanding | |||||||||||
Dilutive effect of share-based awards | |||||||||||
Weighted-average diluted shares outstanding | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
13-Week Period Ended Sep. 26, 2020 | |||||||||||||||||||||||
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 | $ | $ | $ | |||||||||||||||||||
Amortization of actuarial loss, net | Other expense, net | ||||||||||||||||||||||
Total reclassification adjustments | |||||||||||||||||||||||
Foreign currency translation: | |||||||||||||||||||||||
Foreign currency translation adjustment | N/A | ||||||||||||||||||||||
Marketable securities: | |||||||||||||||||||||||
Change in marketable securities (1) | N/A | ( | ( | ( | |||||||||||||||||||
Hedging instruments: | |||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments: | |||||||||||||||||||||||
Change in cash flow hedge (3) | Operating expenses (2) | ( | ( | ( | |||||||||||||||||||
Change in net investment hedge | N/A | ( | ( | ( | |||||||||||||||||||
Total other comprehensive income before reclassification adjustments | ( | ( | ( | ||||||||||||||||||||
Reclassification adjustments: | |||||||||||||||||||||||
Amortization of cash flow hedges | Interest expense | ||||||||||||||||||||||
Total other comprehensive income | $ | $ | ( | $ |
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 | $ | $ | $ | |||||||||||||||||||
Amortization of actuarial loss, net | Other expense, net | ||||||||||||||||||||||
Total reclassification adjustments | |||||||||||||||||||||||
Foreign currency translation: | |||||||||||||||||||||||
Foreign currency translation adjustment | N/A | ( | ( | ||||||||||||||||||||
Marketable Securities: | |||||||||||||||||||||||
Change in marketable securities (1) | N/A | ||||||||||||||||||||||
Hedging instruments: | |||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments: | |||||||||||||||||||||||
Change in cash flow hedges | Operating expenses (2) | ||||||||||||||||||||||
Change in net investment hedges | N/A | ||||||||||||||||||||||
Total other comprehensive income (loss) before reclassification adjustments | |||||||||||||||||||||||
Reclassification adjustments: | |||||||||||||||||||||||
Amortization of cash flow hedges | Interest expense | ||||||||||||||||||||||
Total other comprehensive loss | $ | ( | $ | $ | ( |
13-Week Period Ended Sep. 26, 2020 | |||||||||||||||||||||||||||||
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 June 27, 2020 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Equity adjustment from foreign currency translation | — | — | — | ||||||||||||||||||||||||||
Amortization of cash flow hedges | — | — | — | ||||||||||||||||||||||||||
Change in net investment hedges | — | — | ( | — | ( | ||||||||||||||||||||||||
Change in cash flow hedge | — | — | ( | — | ( | ||||||||||||||||||||||||
Amortization of unrecognized prior service cost | — | — | — | ||||||||||||||||||||||||||
Amortization of unrecognized net actuarial losses | — | — | — | ||||||||||||||||||||||||||
Change in marketable securities | — | — | — | ( | ( | ||||||||||||||||||||||||
Balance as of Sep. 26, 2020 | $ | ( | $ | ( | $ | ( | $ | $ | ( |
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 | $ | ( | $ | ( | $ | ( | 2,827 | $ | ( | ||||||||||||||||||||
Equity adjustment from foreign currency translation | — | ( | — | — | ( | ||||||||||||||||||||||||
Amortization of cash flow hedges | — | — | — | ||||||||||||||||||||||||||
Change in net investment hedges | — | — | — | ||||||||||||||||||||||||||
Change in cash flow hedge | — | — | — | ||||||||||||||||||||||||||
Amortization of unrecognized prior service cost | — | — | — | ||||||||||||||||||||||||||
Amortization of unrecognized net actuarial losses | — | — | — | ||||||||||||||||||||||||||
Change in marketable securities | — | — | — | ||||||||||||||||||||||||||
Balance as of Sep. 28, 2019 | $ | ( | $ | ( | $ | ( | $ | $ | ( |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Sales: | (In thousands) | ||||||||||
U.S. Foodservice Operations | $ | $ | |||||||||
International Foodservice Operations | |||||||||||
SYGMA | |||||||||||
Other | |||||||||||
Total | $ | $ | |||||||||
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Operating income (loss): | (In thousands) | ||||||||||
U.S. Foodservice Operations | $ | $ | |||||||||
International Foodservice Operations | ( | ||||||||||
SYGMA | |||||||||||
Other | ( | ||||||||||
Total segments | |||||||||||
Corporate | ( | ( | |||||||||
Total operating income | |||||||||||
Interest expense | |||||||||||
Other expense (income), net | |||||||||||
Earnings before income taxes | $ | $ |
13-Week Period Ended | |||||||||||
Sep. 26, 2020 | Sep. 28, 2019 | ||||||||||
Sales | 100.0 | % | 100.0 | % | |||||||
Cost of sales | 81.2 | 80.8 | |||||||||
Gross profit | 18.8 | 19.2 | |||||||||
Operating expenses | 15.3 | 14.9 | |||||||||
Operating income | 3.5 | 4.3 | |||||||||
Interest expense | 1.2 | 0.5 | |||||||||
Other expense (income), net | 0.1 | — | |||||||||
Earnings before income taxes | 2.2 | 3.8 | |||||||||
Income taxes | 0.4 | 0.8 | |||||||||
Net earnings | 1.8 | % | 3.0 | % |
13-Week Period Ended | |||||
Sep. 26, 2020 | |||||
Sales | (23.0) | % | |||
Cost of sales | (22.7) | ||||
Gross profit | (24.6) | ||||
Operating expenses | (20.9) | ||||
Operating income | (37.2) | ||||
Interest expense | 76.1 | ||||
Other expense (income), net (1) | 353.9 | ||||
Earnings before income taxes | (55.5) | ||||
Income taxes | (67.3) | ||||
Net earnings | (52.2) | % | |||
Basic earnings per share | (51.1) | % | |||
Diluted earnings per share | (51.7) | ||||
Average shares outstanding | (0.9) | ||||
Diluted shares outstanding | (1.5) |
13-Week Period Ended Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||
U.S. Foodservice Operations | International Foodservice Operations | SYGMA | Other | Corporate | Consolidated Totals | ||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||
Sales | $ | 7,921,533 | $ | 2,163,693 | $ | 1,524,148 | $ | 168,005 | $ | — | $ | 11,777,379 | |||||||||||||||||||||||
Sales increase (decrease) | (25.7) | % | (25.7) | % | 5.3 | % | (41.0) | % | (23.0) | % | |||||||||||||||||||||||||
Percentage of total | 67.3 | % | 18.4 | % | 12.9 | % | 1.4 | % | 100.0 | % | |||||||||||||||||||||||||
Operating income (loss) | $ | 588,409 | $ | (537) | $ | 11,692 | $ | (5) | $ | (179,980) | $ | 419,579 | |||||||||||||||||||||||
Operating income (loss) increase (decrease) | (25.9) | % | NM | 54.5 | % | NM | (37.2) | % | |||||||||||||||||||||||||||
Percentage of total segments | 98.1 | % | (0.1) | % | 2.0 | % | — | % | 100.0 | % | |||||||||||||||||||||||||
Operating income (loss) as a percentage of sales | 7.4 | % | — | % | 0.8 | % | — | % | 3.6 | % |
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 | |||||||||||||||||||||||
Percentage of total | 69.7 | % | 19.0 | % | 9.5 | % | 1.8 | % | 100.0 | % | |||||||||||||||||||||||||
Operating income | $ | 793,618 | $ | 54,800 | $ | 7,570 | $ | 10,137 | $ | (197,807) | $ | 668,318 | |||||||||||||||||||||||
Percentage of total segments | 91.6 | % | 6.3 | % | 0.9 | % | 1.2 | % | 100.0 | % | |||||||||||||||||||||||||
Operating income as a percentage of sales | 7.4 | % | 1.9 | % | 0.5 | % | 3.6 | % | 4.3 | % |
13-Week Period Ended Sep. 26, 2020 | 13-Week Period Ended Sep. 28, 2019 | Change in Dollars | % Change | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Sales | $ | 7,921,533 | $ | 10,658,633 | $ | (2,737,100) | (25.7) | % | |||||||||||||||
Gross profit | 1,599,707 | 2,144,886 | (545,179) | (25.4) | |||||||||||||||||||
Operating expenses | 1,011,298 | 1,351,268 | (339,970) | (25.2) | |||||||||||||||||||
Operating income | $ | 588,409 | $ | 793,618 | $ | (205,209) | (25.9) | % | |||||||||||||||
Gross profit | $ | 1,599,707 | $ | 2,144,886 | $ | (545,179) | (25.4) | % | |||||||||||||||
Adjusted operating expenses (Non-GAAP) | 1,096,675 | 1,347,142 | (250,467) | (18.6) | |||||||||||||||||||
Adjusted operating income (Non-GAAP) | $ | 503,032 | $ | 797,744 | $ | (294,712) | (36.9) | % | |||||||||||||||
Increase (Decrease) | |||||||||||
13-Week Period | |||||||||||
(Dollars in millions) | |||||||||||
Cause of change | Percentage | Dollars | |||||||||
Case volume | (25.6) | % | $ | (2,728.2) | |||||||
Inflation | 0.9 | 92.2 | |||||||||
Acquisitions | 0.3 | 33.8 | |||||||||
Other (1) | (1.3) | (134.9) | |||||||||
Total change in sales | (25.7) | % | $ | (2,737.1) | |||||||
13-Week Period Ended Sep. 26, 2020 | 13-Week Period Ended Sep. 28, 2019 | Change in Dollars | % Change | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Sales | $ | 2,163,693 | $ | 2,912,388 | $ | (748,695) | (25.7) | % | |||||||||||||||
Gross profit | 450,398 | 605,185 | (154,787) | (25.6) | |||||||||||||||||||
Operating expenses | 450,935 | 550,385 | (99,450) | (18.1) | |||||||||||||||||||
Operating (loss) income | $ | (537) | $ | 54,800 | $ | (55,337) | NM | ||||||||||||||||
Gross profit | $ | 450,398 | $ | 605,185 | $ | (154,787) | (25.6) | % | |||||||||||||||
Adjusted operating expenses (Non-GAAP) | 431,616 | 506,204 | (74,588) | (14.7) | |||||||||||||||||||
Adjusted operating income (Non-GAAP) | $ | 18,782 | $ | 98,981 | $ | (80,199) | (81.0) | % | |||||||||||||||
Sales on a constant currency basis (Non-GAAP) | $ | 2,123,053 | $ | 2,912,388 | $ | (789,335) | (27.1) | % | |||||||||||||||
Gross profit on a constant currency basis (Non-GAAP) | 438,886 | 605,185 | (166,299) | (27.5) | |||||||||||||||||||
Adjusted operating expenses on a constant currency basis (Non-GAAP) | 419,287 | 506,204 | (86,917) | (17.2) | |||||||||||||||||||
Adjusted operating income on a constant currency basis (Non-GAAP) | $ | 19,599 | $ | 98,981 | $ | (79,382) | (80.2) | % | |||||||||||||||
Increase (Decrease) | |||||||||||
13-Week Period | |||||||||||
(Dollars in millions) | |||||||||||
Cause of change | Percentage | Dollars | |||||||||
Inflation | 2.8 | % | $ | 81.8 | |||||||
Foreign currency | 1.4 | 40.6 | |||||||||
Other (1) | (29.9) | (871.1) | |||||||||
Total change in sales | (25.7) | % | $ | (748.7) | |||||||
Sysco’s results of operations for fiscal 2021 and fiscal 2020 were impacted by restructuring and transformational project costs consisting of: (1) restructuring charges; (2) expenses associated with our various transformation initiatives; and (3) facility closure and severance charges. All acquisition-related costs in fiscal 2021 and fiscal 2020 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. | ||
Fiscal 2021 results of operations were also positively impacted by the reduction of bad debt expense previously recognized in fiscal 2020 due to the unexpected impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances. Many of Sysco’s customers, including those in the restaurant, hospitality and education segments, are operating at a substantially reduced volume due to governmental requirements for closures or other social-distancing measures and a portion of Sysco’s customers are closed. Some of these customers ceased paying their outstanding receivables, creating uncertainty as to their collectability. We experienced an increase in past due receivables and recognized additional bad debt charges in the third and fourth quarters of fiscal 2020; however, collections have improved in fiscal 2021. We have estimated uncollectible amounts based on the current collection experience and by applying write-off percentages based on historical loss experience, including loss experience during times of local and regional disasters. The COVID-19 pandemic is more widespread and longer in duration than historical disasters impacting our business, and it is possible that actual uncollectible amounts will differ and additional charges may be required; however, if collections continue to improve, it is also possible that additional reductions in our bad debt reserve could occur. While Sysco traditionally incurs bad debt expense, the magnitude of such expenses and benefits, that we have experienced is not indicative of our normal operations. Our adjusted results have not been normalized in a manner that would exclude the full impact of the COVID-19 pandemic on our business. As such, Sysco has not adjusted its results for lost sales, inventory write-offs or other costs associated with the COVID-19 pandemic not previously stated. | ||
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. The constant currency impact on our adjusted International Foodservice Operations results are disclosed when the impact exceeds a defined threshold of greater than 1% on the growth metric. If the amount does not exceed this threshold, a disclosure will be made that the impact of the currency change was not significant. | ||
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, 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 2021 and fiscal 2020. | ||
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 up 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. 26, 2020 | 13-Week Period Ended Sep. 28, 2019 | Change in Dollars | % Change | ||||||||||||||||||||
(Dollars in thousands, except for per share data) | |||||||||||||||||||||||
Operating expenses (GAAP) | $ | 1,800,266 | $ | 2,275,052 | $ | (474,786) | (20.9) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | (25,964) | (56,722) | 30,758 | (54.2) | |||||||||||||||||||
Impact of acquisition-related costs (2) | (17,755) | (16,909) | (846) | 5.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (3) | 98,629 | — | 98,629 | NM | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 1,855,176 | $ | 2,201,421 | $ | (346,245) | (15.7) | % | |||||||||||||||
Operating income (GAAP) | $ | 419,579 | $ | 668,318 | $ | (248,739) | (37.2) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | 25,964 | 56,722 | (30,758) | (54.2) | |||||||||||||||||||
Impact of acquisition-related costs (2) | 17,755 | 16,909 | 846 | 5.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (3) | (98,629) | — | (98,629) | NM | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) | $ | 364,669 | $ | 741,949 | $ | (377,280) | (50.8) | % | |||||||||||||||
Other (income) expense (GAAP) | $ | 14,124 | $ | 3,112 | $ | 11,012 | NM | ||||||||||||||||
Impact of loss on sale of a business | (12,043) | — | (12,043) | NM | |||||||||||||||||||
Other (income) expense (Non-GAAP) | $ | 2,081 | $ | 3,112 | $ | (1,031) | (33.1) | % | |||||||||||||||
Net earnings (GAAP) | $ | 216,900 | $ | 453,781 | $ | (236,881) | (52.2) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | 25,964 | 56,722 | (30,758) | (54.2) | |||||||||||||||||||
Impact of acquisition-related costs (2) | 17,755 | 16,909 | 846 | 5.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (3) | (98,629) | — | (98,629) | NM | |||||||||||||||||||
Impact of loss on sale of a business | 12,043 | — | 12,043 | NM | |||||||||||||||||||
Tax impact of restructuring and transformational project costs (4) | (5,920) | (13,921) | 8,001 | (57.5) | |||||||||||||||||||
Tax impact of acquisition-related costs (4) | (4,048) | (4,149) | 101 | (2.4) | |||||||||||||||||||
Tax impact of bad debt reserve adjustments (4) | 22,488 | — | 22,488 | NM | |||||||||||||||||||
Tax impact of loss on sale of a business | (7,553) | — | (7,553) | NM | |||||||||||||||||||
Impact of foreign tax rate change | (5,548) | 924 | (6,472) | NM | |||||||||||||||||||
Net earnings adjusted for Certain Items (Non-GAAP) | $ | 173,452 | $ | 510,266 | $ | (336,814) | (66.0) | % | |||||||||||||||
Diluted earnings per share (GAAP) | $ | 0.42 | $ | 0.87 | $ | (0.45) | (51.7) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | 0.05 | 0.11 | (0.06) | (54.5) | |||||||||||||||||||
Impact of acquisition-related costs (2) | 0.03 | 0.03 | — | NM | |||||||||||||||||||
Impact of bad debt reserve adjustments (3) | (0.19) | — | (0.19) | NM | |||||||||||||||||||
Impact of loss on sale of a business | 0.02 | — | 0.02 | NM | |||||||||||||||||||
Tax impact of restructuring and transformational project costs (4) | (0.01) | (0.03) | 0.02 | (66.7) | |||||||||||||||||||
Tax impact of acquisition-related costs (4) | (0.01) | (0.01) | — | NM | |||||||||||||||||||
Tax impact of bad debt reserve adjustments (4) | 0.04 | — | 0.04 | NM | |||||||||||||||||||
Tax impact loss on sale of a business | (0.01) | — | (0.01) | NM | |||||||||||||||||||
Tax impact of foreign tax rate change | (0.01) | — | (0.01) | NM | |||||||||||||||||||
Diluted EPS adjusted for Certain Items (Non-GAAP) (5) | $ | 0.34 | $ | 0.98 | $ | (0.64) | (65.3) | % | |||||||||||||||
(1) | Fiscal 2021 includes $13 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy, and $13 million primarily consisting of restructuring charges. 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. | ||||
(2) | Fiscal 2021 and fiscal 2020 include $18 million and $17 million, respectively, related to intangible amortization expense from the Brakes Acquisition, which is included in the results of International Foodservice. | ||||
(3) | Represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. | ||||
(4) | 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. | ||||
(5) | Individual components of diluted earnings per share may not add up 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. |
13-Week Period Ended Sep. 26, 2020 | 13-Week Period Ended Sep. 28, 2019 | Change in Dollars | % Change | ||||||||||||||||||||
U.S. FOODSERVICE OPERATIONS | |||||||||||||||||||||||
Operating expenses (GAAP) | $ | 1,011,298 | $ | 1,351,268 | $ | (339,970) | (25.2) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | (940) | (4,126) | 3,186 | (77.2) | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | 86,317 | — | 86,317 | NM | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 1,096,675 | $ | 1,347,142 | $ | (250,467) | (18.6) | % | |||||||||||||||
Operating income (GAAP) | $ | 588,409 | $ | 793,618 | $ | (205,209) | (25.9) | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | 940 | 4,126 | (3,186) | (77.2) | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | (86,317) | — | (86,317) | NM | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) | $ | 503,032 | $ | 797,744 | $ | (294,712) | (36.9) | % | |||||||||||||||
INTERNATIONAL FOODSERVICE OPERATIONS | |||||||||||||||||||||||
Sales (GAAP) | $ | 2,163,693 | $ | 2,912,388 | $ | (748,695) | (25.7) | % | |||||||||||||||
Impact of currency fluctuations (3) | (40,640) | — | (40,640) | 1.4 | |||||||||||||||||||
Comparable sales using a constant currency basis (Non-GAAP) | $ | 2,123,053 | $ | 2,912,388 | $ | (789,335) | (27.1) | % | |||||||||||||||
Gross Profit (GAAP) | $ | 450,398 | $ | 605,185 | $ | (154,787) | (25.6) | % | |||||||||||||||
Impact of currency fluctuations (3) | (11,512) | — | (11,512) | 1.9 | |||||||||||||||||||
Comparable gross profit using a constant currency basis (Non-GAAP) | $ | 438,886 | $ | 605,185 | $ | (166,299) | (27.5) | % | |||||||||||||||
Gross Margin (GAAP) | 20.82 | % | 20.78 | % | 4 bps | ||||||||||||||||||
Impact of currency fluctuations (3) | 0.15 | % | — | 15 bps | |||||||||||||||||||
Comparable gross margin using a constant currency basis (Non-GAAP) | 20.67 | % | 20.78 | % | -11 bps | ||||||||||||||||||
Operating expenses (GAAP) | $ | 450,935 | $ | 550,385 | $ | (99,450) | (18.1) | % | |||||||||||||||
Impact of restructuring and transformational project costs (4) | (12,993) | (27,272) | 14,279 | (52.4) | |||||||||||||||||||
Impact of acquisition-related costs (5) | (17,755) | (16,909) | (846) | 5.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | 11,429 | — | 11,429 | NM | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | 431,616 | 506,204 | (74,588) | (14.7) | |||||||||||||||||||
Impact of currency fluctuations (3) | (12,329) | — | (12,329) | 2.4 | |||||||||||||||||||
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 419,287 | $ | 506,204 | $ | (86,917) | (17.2) | % | |||||||||||||||
Operating income (loss) (GAAP) | $ | (537) | $ | 54,800 | $ | (55,337) | (101.0) | ||||||||||||||||
Impact of restructuring and transformational project costs (4) | 12,993 | 27,272 | (14,279) | (52.4) | |||||||||||||||||||
Impact of acquisition-related costs (5) | 17,755 | 16,909 | 846 | 5.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | (11,429) | — | (11,429) | NM | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) * | 18,782 | 98,981 | (80,199) | (81.0) | |||||||||||||||||||
SYGMA | |||||||||||||||||||||||
Operating expenses (GAAP) | $ | 119,849 | $ | 118,348 | $ | 1,501 | 1.3 | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | (13) | (2,585) | 2,572 | (99.5) | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 119,836 | $ | 115,763 | $ | 4,073 | 3.5 | % |
Operating income (GAAP) | $ | 11,692 | $ | 7,570 | $ | 4,122 | 54.5 | % | |||||||||||||||
Impact of restructuring and transformational project costs (1) | 13 | 2,585 | (2,572) | (99.5) | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) | $ | 11,705 | $ | 10,155 | $ | 1,550 | 15.3 | % | |||||||||||||||
OTHER | |||||||||||||||||||||||
Operating expenses (GAAP) | $ | 40,435 | $ | 61,607 | (21,172) | (34.4) | % | ||||||||||||||||
Impact of bad debt reserve adjustments (2) | 883 | — | 883 | NM | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 41,318 | $ | 61,607 | $ | (20,289) | (32.9) | % | |||||||||||||||
Operating (loss) income (GAAP) | $ | (5) | $ | 10,137 | (10,142) | (100.0) | % | ||||||||||||||||
Impact of bad debt reserve adjustments (2) | (883) | — | (883) | NM | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) | $ | (888) | $ | 10,137 | $ | (11,025) | (108.8) | % | |||||||||||||||
CORPORATE | |||||||||||||||||||||||
Operating expenses (GAAP) | $ | 177,749 | $ | 193,444 | $ | (15,695) | (8.1) | % | |||||||||||||||
Impact of restructuring and transformational project costs (6) | (12,018) | (22,739) | 10,721 | (47.1) | |||||||||||||||||||
Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 165,731 | $ | 170,705 | $ | (4,974) | (2.9) | % | |||||||||||||||
Operating income (GAAP) | $ | (179,980) | $ | (197,807) | $ | 17,827 | (9.0) | % | |||||||||||||||
Impact of restructuring and transformational project costs (6) | 12,018 | 22,739 | (10,721) | (47.1) | |||||||||||||||||||
Operating income adjusted for Certain Items (Non-GAAP) | $ | (167,962) | $ | (175,068) | $ | 7,106 | (4.1) | % | |||||||||||||||
(1) | Includes charges related to restructuring and business transformation projects. | ||||
(2) | Represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. | ||||
(3) | Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. | ||||
(4) | Includes restructuring, severance and facility closure costs primarily in Europe. | ||||
(5) | Fiscal 2021 and fiscal 2020 include $18 million and $17 million, respectively, related to intangible amortization expense from the Brakes Acquisition. | ||||
(6) | Fiscal 2021 and fiscal 2020 include various transformation initiative costs, primarily consisting of changes to our business technology strategy. | ||||
* | Foreign exchange rates did not have a meaningful impact during the period; therefore, the constant currency adjustment is not disclosed. | ||||
NM represents that the percentage change is not meaningful. |
13-Week Period Ended Sep. 26, 2020 | 13-Week Period Ended Sep. 28, 2019 | ||||||||||
(In thousands) | |||||||||||
Net cash provided by operating activities (GAAP) | $ | 930,914 | $ | 171,579 | |||||||
Additions to plant and equipment | (75,539) | (175,728) | |||||||||
Proceeds from sales of plant and equipment | 7,064 | 4,902 | |||||||||
Free Cash Flow (Non-GAAP) | $ | 862,439 | $ | 753 |
Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet | Sep. 26, 2020 | Jun. 27, 2020 | ||||||||||||
(In thousands) | ||||||||||||||
ASSETS | ||||||||||||||
Receivables due from non-obligor subsidiaries | $ | 123,883 | $ | 133,195 | ||||||||||
Current assets | 8,241,522 | 8,644,084 | ||||||||||||
Total current assets | $ | 8,365,405 | $ | 8,777,279 | ||||||||||
Notes receivable from non-obligor subsidiaries | $ | 83,275 | $ | 671,500 | ||||||||||
Other noncurrent assets | 3,938,444 | 4,036,312 | ||||||||||||
Total noncurrent assets | $ | 4,021,719 | $ | 4,707,812 | ||||||||||
LIABILITIES | ||||||||||||||
Payables due to non-obligor subsidiaries | $ | 46,973 | $ | 48,923 | ||||||||||
Other current liabilities | 2,013,761 | 2,200,422 | ||||||||||||
Total current liabilities | $ | 2,060,734 | $ | 2,249,345 | ||||||||||
Notes payable to non-obligor subsidiaries | $ | 212,695 | $ | 233,158 | ||||||||||
Long-term debt | 11,994,280 | 12,478,453 | ||||||||||||
Other noncurrent liabilities | 1,292,880 | 1,356,781 | ||||||||||||
Total noncurrent liabilities | $ | 13,499,855 | $ | 14,068,392 |
Combined Parent and Guarantor Subsidiaries Summarized Results of Operations | 13-Week Period Ended Sep. 26, 2020 | |||||||
(In thousands) | ||||||||
Sales | $ | 7,330,291 | ||||||
Gross profit | 1,421,395 | |||||||
Operating income | 442,389 | |||||||
Interest expense from non-obligor subsidiaries | 11,307 | |||||||
Net earnings | 262,680 |
3.1 | — | |||||||
3.2 | — | |||||||
3.3 | — | |||||||
3.4 | — | |||||||
10.1# | — | |||||||
10.2# | — | |||||||
10.3†# | — | |||||||
10.4†# | — | |||||||
10.5† | — | |||||||
10.6†# | — | |||||||
10.7†# | — | |||||||
10.8 | — | |||||||
10.9 | — | |||||||
22.1 | — | |||||||
31.1# | — | |||||||
31.2# | — | |||||||
32.1# | — | |||||||
32.2# | — | |||||||
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) |
Sysco Corporation | ||||||||
(Registrant) | ||||||||
Date: November 3, 2020 | By: | /s/ KEVIN P. HOURICAN | ||||||
Kevin P. Hourican | ||||||||
President and Chief Executive Officer | ||||||||
Date: November 3, 2020 | By: | /s/ JOEL T. GRADE | ||||||
Joel T. Grade | ||||||||
Executive Vice President and | ||||||||
Chief Financial Officer | ||||||||
Date: November 3, 2020 | By: | /s/ ANITA A. ZIELINSKI | ||||||
Anita A. Zielinski | ||||||||
Senior Vice President and | ||||||||
Chief Accounting Officer |
Event | Following Grant Date and prior to Vesting Date | ||||
Employment with the Company or an Affiliated Company terminates because of Disability (as defined in Section 15, below). | The Award will continue to vest as if active employment continued for the entire vesting period. | ||||
Employment with the Company or an Affiliated Company terminates as a result of a Retirement in Good Standing (as defined in Section 15, below). | •The Award shall: •continue to vest as if active employment continued for the entire vesting period if employment terminates as a result of a Retirement in Good Standing on or after the first Vesting Date. •be forfeited in its entirety if employment terminates as a result of Retirement in Good Standing prior to the first Vesting Date. | ||||
Employment with the Company or an Affiliated Company terminates because of death. | All unvested RSUs subject to the Award shall immediately vest. | ||||
Employment with the Company or an Affiliated Company involuntarily terminates, for reasons other than for Cause and meets the requirements of a Change in Control Termination (as defined in Section 15, below). | The Award shall be treated as described in Section 4.2(h)(ii) of the Plan, with immediate vesting. | ||||
Military leave or other leave to the extent required by applicable law | For this purpose, employment is deemed to continue during the vesting period. | ||||
Unpaid leave of absence pursuant to published Company policy of 12 months or less (other than leaves described above) 1 | The Award will continue to vest as if active employment continued for the entire vesting period. |
Performance Period | June 28, 2020 to July 2, 2022 | ||||
Performance Certification Date | The date of the first Compensation and Leadership Development Committee meeting following the completion of final financial statements for the Performance Period. | ||||
Payment Date | As soon as administratively possible following the Performance Certification Date, currently anticipated to be September 1, 2022, but no later than September 30, 2022. |
Event | Following commencement of Performance Period and prior to the end of the Performance Period | ||||
Employment with the Company or an Affiliated Company terminates because of Disability (as defined in Section 14, below). | •The Grantee shall be entitled to earn a number of PSUs subject to the Award as if active employment continued for the entire Performance Period, taking into account the actual performance of the Company for the Performance Period. •After the Performance Criteria are certified, shares of Stock equal to the number of PSUs earned will be issued on the Payment Date. | ||||
Employment with the Company or an Affiliated Company terminates as a result of a Retirement in Good Standing (as defined in Section 14, below). | •If the Grantee incurs a Retirement in Good Standing before the end of the first fiscal year of the Company since the start of the Performance Period, the Award is forfeited. •If the Grantee incurs a Retirement in Good Standing on or after the complete fiscal year of the Company from start of the Performance Period, such recipient shall be entitled to retain a prorated number of PSUs subject to the Award if such PSUs have been earned. The PSUs will be prorated based on the number of complete calendar months of employment during the Performance Period through the date of termination of employment. •After the Performance Criteria are certified, shares of Stock equal to the pro-rated number of PSUs earned will be issued on the Payment Date. | ||||
Employment with the Company or an Affiliated Company terminates because of death. | The Grantee’s estate shall be paid a cash amount equal to the value of the Target Award. The value shall be determined based on the closing price of the Stock on the date of the Grantee’s death and shall be paid within 75 days after the Grantee’s death. | ||||
Employment with the Company or an Affiliated Company involuntarily terminates, for reasons other than for Cause and meets the requirements of a Change in Control Termination (as defined in Section 14, below). | Award shall be treated as described in Section 4.2(h)(ii) of the Plan, with immediate vesting and performance-criteria deemed to have been met at Target performance levels. | ||||
US military leave or other leave to the extent required by applicable law | •For this purpose, employment is deemed to continue during the Performance Period. •After the Performance Criteria are certified, shares of Stock equal to the number of PSUs earned will be issued on the Payment Date. | ||||
Unpaid leave of absence pursuant to published Company policy of 12 months or less (other than leaves described above) 1 | •If less than a complete fiscal year of the Company has passed since the start of the Performance Period before the commencement of such an unpaid leave, the Grantee shall be entitled to retain a prorated number of PSUs subject to the Award. The PSUs earned with respect to such a Grantee will be prorated based on the number of complete calendar months of active employment during the Performance Period, divided by 36. •After the Performance Criteria are certified, the shares of Stock equal to the pro-rated number of PSUs earned will be issued on the Payment Date. |
Cost Out / Profit Improvement (50%) | Enterprise Transformation (30%) | Digital Commerce (20%) | ||||||||||||||||||
[REDACTED] | [REDACTED] | [REDACTED] | ||||||||||||||||||
Payout results for each of the above metrics will be calculated according to the following scale: | ||||||||||||||||||||
Significantly Below Target 0% Payout | Below Target 25-85% Payout | On Target 90-110% Payout | Above Target 115-125% Payout | Significantly Above Target 130-150% Payout |
TSR Percentile Rank versus S&P 500 | Payout Modifier applied to # of Target PSUs* | |||||||
≥75th | +25% | |||||||
55th | No modifier | |||||||
≤35th | -25% |
/s/ Michael P. Foster | 02.12.19 |
![]() | ![]() Sysco Corporation 1390 Enclave Parkway Houston, Texas 77077 T 281.584.1390 sysco.com |
/s/ C. Marie Robinson | April 6, 2020 |
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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Jun. 27, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, less allowances of $265,597 and $334,810 | $ 265,597 | $ 334,810 |
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) | 256,075,772 | 256,915,825 |
Consolidated Results of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Income Statement [Abstract] | ||
Sales | $ 11,777,379 | $ 15,303,005 |
Cost of sales | 9,557,534 | 12,359,635 |
Gross profit | 2,219,845 | 2,943,370 |
Operating expenses | 1,800,266 | 2,275,052 |
Operating income | 419,579 | 668,318 |
Interest expense | 146,717 | 83,335 |
Other expense (income), net | 14,124 | 3,112 |
Earnings before income taxes | 258,738 | 581,871 |
Income taxes | 41,838 | 128,090 |
Net earnings | $ 216,900 | $ 453,781 |
Net earnings: | ||
Basic earnings per share (in dollars per share) | $ 0.43 | $ 0.88 |
Diluted earnings per share (in dollars per share) | $ 0.42 | $ 0.87 |
Average shares outstanding (in shares) | 509,127,405 | 513,496,296 |
Diluted shares outstanding (in shares) | 510,738,760 | 518,761,456 |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 216,900 | $ 453,781 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 113,140 | (126,159) |
Items presented net of tax: | ||
Amortization of cash flow hedges | 2,155 | 2,155 |
Change in net investment hedges | (11,261) | 30,000 |
Change in cash flow hedges | (12,967) | 9,259 |
Amortization of prior service cost | 137 | 1,428 |
Amortization of actuarial loss | 7,765 | 6,683 |
Change in marketable securities | (474) | 933 |
Total other comprehensive income (loss) | 98,495 | (75,701) |
Comprehensive income | $ 315,395 | $ 378,080 |
Changes in Consolidated Shareholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per common share (in dollars per share) | $ 0.45 | $ 0.39 |
Basis of Presentation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 27, 2020. Sysco’s fiscal year ends on the Saturday nearest to June 30th. This results in a 53-week year ending July 3, 2021 for fiscal 2021. 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 amounts shown in the consolidated statement of cash flows:
(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.
|
Changes in Accounting |
3 Months Ended |
---|---|
Sep. 26, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Changes in Accounting | CHANGES IN ACCOUNTING Financial Instruments - Credit Losses In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. Sysco adopted this ASU as of June 28, 2020, the first day of fiscal 2021, with no significant impact to the company's financial statements. Implementation Costs Incurred in a Cloud Computing Arrangement In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The guidance amends Accounting Standards Codification (ASC) 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a cloud computing arrangement. Sysco adopted this ASU on June 28, 2020 on a prospective basis with no effect on the company’s financial statements.
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Revenue |
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 receivable, less allowances in the consolidated balance sheet, were $2.9 billion and $2.7 billion as of September 26, 2020 and June 27, 2020, 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. As of September 26, 2020, 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:
(1)Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.
(1)Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and other janitorial products, medical supplies and smallwares. Credit Risk Sysco is potentially subject to group concentrations of credit risk with respect to accounts receivable, as large amounts of the company’s trade receivables are concentrated on customers within the food away from home industry across North America and Europe. The prolonged disruption of Sysco’s customers’ businesses due to the COVID-19 pandemic has created additional bad debt risk for the company. Sysco determines the past due status of trade receivables based on contractual terms with each customer, evaluates the collectability of accounts receivable and determines the appropriate reserve for doubtful accounts or the uncollectible receivables to be written off. Many of Sysco’s customers, including those in the restaurant, hospitality and education segments, are operating at a substantially reduced volume due to governmental requirements for closures or other social-distancing measures and a portion of Sysco’s customers are closed. Some of these customers have ceased paying their outstanding receivables, creating uncertainty as to their collectability. To calculate the ending reserve needed, the company estimated uncollectible amounts based on the current collection experience and by applying write-off percentages based on historical loss experience, including loss experience during times of local and regional disasters. The COVID-19 pandemic is more widespread and longer in duration than historical disasters impacting our business, and it is possible that actual uncollectible amounts will differ. In the first quarter of fiscal 2021, Sysco recognized a net $77.8 million benefit on its provision for losses on receivables. In the third and fourth quarters of fiscal 2020, the company experienced an increase in past due receivables and recognized additional bad debt charges on its trade receivables that were outstanding at the time the pandemic caused closures among our customers in mid-March 2020. These receivables were all created in fiscal 2020 and are referred to as pre-pandemic receivables. In the first quarter of fiscal 2021, collections of the company’s pre-pandemic receivables have improved, and its reserve for doubtful accounts has been reduced accordingly, resulting in a $98.6 million benefit. Additional reserves of $20.8 million were recorded in the first quarter of fiscal 2021 for receivables relating to periods beginning after the onset of the COVID-19 pandemic.
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Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 rely on quoted prices in markets that are not actively traded or observable inputs over the full term of the asset. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 5, “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 6, “Derivative Financial Instruments.” The following tables present the company’s assets measured at fair value on a recurring basis as of September 26, 2020 and June 27, 2020:
(1)Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
(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 $15.8 billion and $16.3 billion as of September 26, 2020 and June 27, 2020, respectively. The carrying value of total debt was $13.7 billion and $14.4 billion as of September 26, 2020 and June 27, 2020, respectively.
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Marketable Securities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | MARKETABLE SECURITIESSysco 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. ASC 326 requires Sysco to estimate lifetime expected credit losses for all available-for-sale debt securities in an unrealized loss position by assessing credit indicators, including credit ratings, for the applicable securities. If the assessment indicates that an expected credit loss exists, the company determines the portion of the unrealized loss attributable to credit deterioration and records an allowance for the expected credit loss through the consolidated results of operations. Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in accumulated other comprehensive loss. There were no significant credit losses recognized in the first 13 weeks of fiscal 2021. The following table presents the company’s available-for-sale marketable securities as of September 26, 2020 and June 27, 2020:
The fixed income securities held at September 26, 2020 had effective maturities ranging from less than one year to approximately ten years. There were no significant realized gains or losses in marketable securities in the first quarter of fiscal 2021.
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Derivative Financial Instruments |
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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. In the first quarter of fiscal 2021, Sysco settled some of its previously held interest rate swap contracts, which had a notional value of $750 million, due to the redemption of Sysco’s 2.60% senior notes. Hedging of foreign currency risk Sysco previously entered into cross-currency swap contracts to hedge the foreign currency transaction risk of certain intercompany loans. There were no credit-risk related contingent features associated with these swaps, which had been designated as cash flow hedges. In the first quarter of 2021, Sysco settled its cross-currency swaps, which had a notional value of £234 million. The company also previously used 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 26, 2020 are presented below:
The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of September 26, 2020 and June 27, 2020 are as follows:
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:
The losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above are comprised of the following components for each of the periods presented:
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 26, 2020 and September 28, 2019, presented on a pretax basis, are as follows:
The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 26, 2020 are as follows:
The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 27, 2020 are as follows:
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Debt |
3 Months Ended |
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Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The company has a $2.0 billion long-term revolving credit facility that expires on June 28, 2024, subject to extension. As of September 26, 2020, there were $700.0 million in borrowings outstanding under this facility. Sysco has a U.S. 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 26, 2020, there were no commercial paper issuances outstanding under this program. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. Sysco’s United Kingdom-based subsidiary, Brake Bros Limited, has a separate U.K. commercial paper program for the purpose of issuing short-term, unsecured Sterling-denominated notes in an aggregate amount not to exceed £600.0 million. As of September 26, 2020, there were £600.0 million in aggregate principal amount of notes outstanding under this commercial paper program. The notes under this commercial paper program will mature on May 7, 2021 and are classified within current maturities of long-term debt. During the first 13 weeks of fiscal 2021, aggregate outstanding commercial paper issuances, borrowings under our long-term revolving credit facility and short-term bank borrowings ranged from approximately $1.4 billion to approximately $1.5 billion. In September 2020, Sysco redeemed all $750 million of its outstanding 2.60% senior notes prior to the October 2020 maturity utilizing a combination of cash flow from operations and net proceeds from senior note issuances in fiscal 2020.
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Earnings Per Share |
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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:
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Other Comprehensive Income |
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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, changes in marketable securities, amounts related to certain hedging arrangements and amounts related to pension and other postretirement plans. Comprehensive income was $315.4 million and $378.1 million for the first quarter of fiscal 2021 and fiscal 2020, 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:
(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 fiscal 2021. (2)Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges. (3)Change in cash flow hedges includes the termination of some cash flow hedges, as described in Note 6, “Derivative Financial Instruments.”
(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 fiscal 2020. (2) 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:
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Share-Based Compensation |
3 Months Ended |
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Sep. 26, 2020 | |
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 2021, options to purchase 1,868,184 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 2021 was $13.44. In the first quarter of fiscal 2021, 749,505 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 2021 was $57.92. The PSUs will convert into shares of Sysco common stock at the end of the two-year performance period based on actual performance targets achieved, as well as the market-based return of Sysco’s common stock relative to that of each company within the S&P 500 index. In the first quarter of fiscal 2021, 395,803 restricted stock units were granted to employees. The weighted average grant-date fair value per restricted stock unit granted during the first quarter of fiscal 2021 was $57.01. Employee Stock Purchase Plan Plan participants purchased 273,323 shares of common stock under the Sysco ESPP during the first quarter of fiscal 2021. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $8.20 during the first quarter of fiscal 2021. 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 $25.8 million and $21.4 million for the first quarter of fiscal 2021 and fiscal 2020, respectively. As of September 26, 2020, there was $143.7 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 2.01 years.
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Income Taxes |
3 Months Ended |
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Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Effective Tax Rate The effective tax rates for the first quarters of fiscal 2021 and 2020 were 16.17% and 22.01%, respectively. As compared to the company’s statutory tax rate, the lower effective tax rate for the first quarter of fiscal 2021 was impacted by (1) the $7.6 million tax benefit attributable to the sale of the stock of Cake Corporation, (2) the impact of changes in tax law in the U.K. of $5.5 million and, (3) the favorable impact of excess tax benefits of equity-based compensation that totaled $2.3 million. 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. Uncertain Tax Positions As of September 26, 2020, the gross amount of unrecognized tax benefit and related accrued interest was $20.4 million and $2.1 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 income earned and taxed in the various U.S. federal and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis differences, 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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Commitments and Contingencies |
3 Months Ended |
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Sep. 26, 2020 | |
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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Business Segment Information |
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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 – includes operations in the Americas and Europe, which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as the company’s operations that distribute to international customers. The company’s European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden; •SYGMA – the company’s U.S. customized distribution subsidiary; and •Other – primarily our hotel supply operations, Guest Worldwide. Sysco sold its interests in Cake Corporation in the first quarter of fiscal 2021. 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 also include all share-based compensation costs. During the fourth quarter of fiscal 2020, Sysco revised the way performance is assessed for the U.S. Foodservice Operations segment. As a result of this change, charges incurred by the company’s corporate and shared services center, to provide direct support functions to the U.S. Foodservice Operations reportable segment, have been reclassified from Corporate expenses into the U.S. Foodservice reportable segment. The segment information disclosed for the first quarter of fiscal 2021 reflects this change in reporting structure and the first quarter of fiscal 2020 results reflect $67.8 million of corporate expense reclassifications to conform with the current year presentation. The following tables set forth certain financial information for Sysco’s reportable business segments.
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Changes in Accounting (Policies) |
3 Months Ended |
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Sep. 26, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Standards | Financial Instruments - Credit Losses In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. Sysco adopted this ASU as of June 28, 2020, the first day of fiscal 2021, with no significant impact to the company's financial statements. Implementation Costs Incurred in a Cloud Computing Arrangement In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The guidance amends Accounting Standards Codification (ASC) 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a cloud computing arrangement. Sysco adopted this ASU on June 28, 2020 on a prospective basis with no effect on the company’s financial statements.
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Basis of Presentation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 amounts shown in the consolidated statement of cash flows:
(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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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 amounts shown in the consolidated statement of cash flows:
(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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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(1)Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.
(1)Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and other janitorial products, medical supplies and smallwares.
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 26, 2020 and June 27, 2020:
(1)Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
(1)Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
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Marketable Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 26, 2020 and June 27, 2020:
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Derivative Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of outstanding swap agreements | Details of outstanding hedging instruments as of September 26, 2020 are presented below:
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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 26, 2020 and June 27, 2020 are as follows:
The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 26, 2020 are as follows:
The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 27, 2020 are as follows:
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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:
The losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above are comprised of the following components for each of the periods presented:
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 26, 2020 and September 28, 2019, presented on a pretax basis, are as follows:
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Earnings Per Share (Tables) |
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Other Comprehensive Income (Tables) |
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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:
(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 fiscal 2021. (2)Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges. (3)Change in cash flow hedges includes the termination of some cash flow hedges, as described in Note 6, “Derivative Financial Instruments.”
(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 fiscal 2020. (2) Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
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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:
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Business Segment Information (Tables) |
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business segment table | The following tables set forth certain financial information for Sysco’s reportable business segments.
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Basis of Presentation (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Jun. 27, 2020 |
Sep. 28, 2019 |
Jun. 29, 2019 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 5,985,532 | $ 6,059,427 | $ 455,482 | |
Restricted cash | 24,354 | 58,938 | ||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ 6,009,886 | $ 6,095,570 | $ 514,420 | $ 532,245 |
Derivative Financial Instruments - Narrative (Details) £ in Millions, $ in Millions |
Sep. 26, 2020
USD ($)
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Sep. 26, 2020
GBP (£)
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Interest rate swaps | ||
Derivative [Line Items] | ||
Notional Value | $ | $ 750 | |
Cross-currency swaps | ||
Derivative [Line Items] | ||
Notional Value | £ | £ 234 | |
Senior Notes | 2.60% Senior Notes | ||
Derivative [Line Items] | ||
Interest rate | 2.60% | 2.60% |
Derivative Financial Instruments - Location of Gain (Loss) on Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Sep. 26, 2020 |
Sep. 28, 2019 |
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Derivative [Line Items] | ||
Interest expense | $ 146,717 | $ 83,335 |
Unrealized gain (loss) on hedged item in fair value hedge, interest expense | (14,834) | (14,557) |
Unrealized gain (loss) on hedged item in fair value hedge, change in fair value of debt | (4,836) | 10,179 |
Hedging Instrument | Fair Value Hedging | Interest rate swaps | Interest expense | ||
Derivative [Line Items] | ||
Gain (loss) on fair value hedging relationship, hedged items | (9,998) | (24,736) |
Gain (loss) on fair value hedging relationship, designated as hedging instruments | $ 3,457 | $ 8,857 |
Derivative Financial Instruments - Location of Hedged Liabilities (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Jun. 27, 2020 |
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Current maturities of long-term debt | ||
Derivative [Line Items] | ||
Carrying Amount of Hedged Assets (Liabilities) | $ (499,678) | $ (749,924) |
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities) | (4,198) | (1,388) |
Long-term debt | ||
Derivative [Line Items] | ||
Carrying Amount of Hedged Assets (Liabilities) | (1,064,374) | (1,563,636) |
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities) | $ (62,594) | $ (70,239) |
Debt (Details) |
1 Months Ended | 3 Months Ended | |
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Sep. 26, 2020
USD ($)
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Sep. 26, 2020
USD ($)
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Sep. 26, 2020
GBP (£)
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Debt [Line Items] | |||
Maximum board-authorized aggregate commercial paper limit | $ 2,000,000,000.0 | ||
Minimum amount of short term debt outstanding | 1,400,000,000 | ||
Maximum amount of short term debt outstanding | 1,500,000,000 | ||
Line of Credit | Revolving Credit Facility | |||
Debt [Line Items] | |||
Long-term revolving credit facility | $ 2,000,000,000.0 | 2,000,000,000.0 | |
Borrowings outstanding under revolving credit facility | 700,000,000.0 | 700,000,000.0 | |
Commercial paper | |||
Debt [Line Items] | |||
Carrying value of total debt | 0 | $ 0 | |
Commercial paper | Commercial Paper, 0.454% | |||
Debt [Line Items] | |||
Long-term revolving credit facility | £ | £ 600,000,000.0 | ||
Senior Notes | 2.60% Senior Notes | |||
Debt [Line Items] | |||
Repayments of senior notes | $ 750,000,000 | ||
Interest rate | 2.60% | 2.60% | 2.60% |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Numerator: | ||
Net earnings | $ 216,900 | $ 453,781 |
Denominator: | ||
Weighted-average basic shares outstanding (in shares) | 509,127,405 | 513,496,296 |
Dilutive effect of share-based awards (in shares) | 1,611,355 | 5,265,160 |
Weighted-average diluted shares outstanding (in shares) | 510,738,760 | 518,761,456 |
Basic earnings per share (in dollars per share) | $ 0.43 | $ 0.88 |
Diluted earnings per share (in dollars per share) | $ 0.42 | $ 0.87 |
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded (in shares) | 6,110,000 | 3,321,000 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 16.17% | 22.01% |
Tax benefit attributable to the sale of stock | $ 7.6 | |
Impact of changes in tax law | 5.5 | |
Effective income tax expense (benefit) attributable to equity-based compensation | (2.3) | $ (15.7) |
Unrecognized tax benefits | 20.4 | |
Liability recorded for interest and penalties related to unrecognized tax benefits | $ 2.1 |
Label | Element | Value |
---|---|---|
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201602Member |
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