Item 1. Financial Statements
Item 1. Financial Statements
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except for share data)
Dec. 28, 2024 Jun. 29, 2024
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 793 $ 696
Accounts receivable, less allowances of $ 99 and $ 54
5,298 5,324
Inventories 5,050 4,678
Prepaid expenses and other current assets 338 323
Income tax receivable 22 22
Total current assets 11,501 11,043
Plant and equipment at cost, less accumulated depreciation 5,589 5,497
Other long-term assets
Goodwill 5,144 5,153
Intangibles, less amortization 1,119 1,188
Deferred income taxes 441 445
Operating lease right-of-use assets, net 1,031 923
Other assets 493 668
Total other long-term assets 8,228 8,377
Total assets $ 25,318 $ 24,917
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 5,842 $ 6,290
Accrued expenses 2,224 2,226
Accrued income taxes 140 131
Current operating lease liabilities 125 125
Current maturities of long-term debt 1,222 469
Total current liabilities 9,553 9,241
Long-term liabilities
Long-term debt 11,393 11,513
Deferred income taxes 337 345
Long-term operating lease liabilities 950 838
Other long-term liabilities 1,056 1,089
Total long-term liabilities 13,736 13,785
Noncontrolling interest 15 31
Shareholders’ equity
Preferred stock, par value $ 1 per share Authorized 1,500,000 shares, issued none
— —
Common stock, par value $ 1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares
765 765
Paid-in capital 1,965 1,908
Retained earnings 12,649 12,260
Accumulated other comprehensive loss ( 1,396 ) ( 1,339 )
Treasury stock at cost, 275,706,546 and 273,416,685 shares
( 11,969 ) ( 11,734 )
Total shareholders’ equity 2,014 1,860
Total liabilities and shareholders’ equity $ 25,318 $ 24,917
Note: The June 29, 2024 balance sheet has been derived from the audited financial statements at that date.
See Notes to Consolidated Financial Statements
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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In millions, except for share and per share data)
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
Sales $ 20,151 $ 19,288 $ 40,634 $ 38,908
Cost of sales 16,501 15,774 33,231 31,747
Gross profit 3,650 3,514 7,403 7,161
Operating expenses 2,938 2,814 5,884 5,657
Operating income 712 700 1,519 1,504
Interest expense 160 150 319 284
Other expense (income), net 19 5 25 12
Earnings before income taxes 533 545 1,175 1,208
Income taxes 127 130 279 289
Net earnings $ 406 $ 415 $ 896 $ 919
Net earnings:
Basic earnings per share $ 0.83 $ 0.82 $ 1.82 $ 1.82
Diluted earnings per share 0.82 0.82 1.82 1.81
Average shares outstanding 490,698,567 504,312,633 491,361,199 504,719,562
Diluted shares outstanding 492,803,849 505,929,342 493,294,914 506,499,390
See Notes to Consolidated Financial Statements
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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
Net earnings $ 406 $ 415 $ 896 $ 919
Other comprehensive income (loss):
Foreign currency translation adjustment ( 257 ) 163 ( 89 ) 55
Items presented net of tax:
Currency translation adjustment as a result of disposition of a foreign subsidiary 2 — 2 —
Amortization of cash flow hedges 2 2 3 4
Change in net investment hedges 16 ( 17 ) 3 ( 17 )
Change in cash flow hedges 6 ( 20 ) ( 8 ) 7
Change in excluded components of fair value hedge ( 2 ) — ( 2 ) —
Amortization of actuarial loss 5 5 10 10
Net actuarial gain and other adjustments arising in current year — — 23 1
Change in marketable securities ( 2 ) 4 1 3
Total other comprehensive income (loss) ( 230 ) 137 ( 57 ) 63
Comprehensive income $ 176 $ 552 $ 839 $ 982
See Notes to Consolidated Financial Statements
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Sysco Corporation and its Consolidated Subsidiaries
CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except for share data)
Quarter to Date
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of September 28, 2024 765,174,900 $ 765 $ 1,925 $ 12,498 $ ( 1,166 ) 274,104,348 $ ( 11,815 ) $ 2,207
Net earnings 406 406
Other comprehensive income (loss) ( 230 ) ( 230 )
Dividends declared ($ 0.51 per common share)
( 251 ) ( 251 )
Treasury stock purchases 2,489,576 ( 191 ) ( 191 )
Share-based compensation awards 40 ( 887,378 ) 37 77
Adjustments to redeemable non-controlling interest ( 4 ) ( 4 )
Balance as of December 28, 2024 765,174,900 $ 765 $ 1,965 $ 12,649 $ ( 1,396 ) 275,706,546 $ ( 11,969 ) $ 2,014
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of September 30, 2023 765,174,900 $ 765 $ 1,839 $ 11,561 $ ( 1,327 ) 260,971,761 $ ( 10,712 ) $ 2,126
Net earnings 415 415
Other comprehensive income (loss) 137 137
Dividends declared ($ 0.50 per common share)
( 252 ) ( 252 )
Treasury stock purchases 1,479,720 ( 100 ) ( 100 )
Share-based compensation awards 38 ( 978,662 ) 40 78
Balance as of December 30, 2023 765,174,900 $ 765 $ 1,877 $ 11,724 $ ( 1,190 ) 261,472,819 $ ( 10,772 ) $ 2,404
See Notes to Consolidated Financial Statements
Year to Date
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of June 29, 2024 765,174,900 $ 765 $ 1,908 $ 12,260 $ ( 1,339 ) 273,416,685 $ ( 11,734 ) $ 1,860
Net earnings 896 896
Other comprehensive income (loss) ( 57 ) ( 57 )
Dividends declared ($ 1.02 per common share)
( 503 ) ( 503 )
Treasury stock purchases — 3,949,641 ( 300 ) ( 300 )
Share-based compensation awards 57 ( 1,659,780 ) 65 122
Adjustments to redeemable non-controlling interest ( 4 ) ( 4 )
Balance as of December 28, 2024 765,174,900 $ 765 $ 1,965 $ 12,649 $ ( 1,396 ) 275,706,546 $ ( 11,969 ) $ 2,014
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of July 1, 2023 765,174,900 $ 765 $ 1,815 $ 11,311 $ ( 1,253 ) 260,062,834 $ ( 10,629 ) $ 2,009
Net earnings 919 919
Other comprehensive income (loss) 63 63
Dividends declared ($ 1.00 per common share)
( 506 ) ( 506 )
Treasury stock purchases 2,862,667 ( 200 ) ( 200 )
Share-based compensation awards 62 ( 1,452,682 ) 57 119
Balance as of December 30, 2023 765,174,900 $ 765 $ 1,877 $ 11,724 $ ( 1,190 ) 261,472,819 $ ( 10,772 ) $ 2,404
See Notes to Consolidated Financial Statements
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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In millions)
26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023
Cash flows from operating activities:
Net earnings $ 896 $ 919
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense 60 53
Depreciation and amortization 473 425
Operating lease asset amortization 68 59
Amortization of debt issuance and other debt-related costs 8 9
Deferred income taxes ( 22 ) ( 29 )
Provision for losses on receivables 57 30
Other non-cash items ( 88 ) ( 4 )
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables ( 83 ) ( 25 )
Increase in inventories ( 394 ) ( 98 )
(Increase) decrease in prepaid expenses and other current assets ( 3 ) 3
Decrease in accounts payable ( 410 ) ( 404 )
(Decrease) increase in accrued expenses ( 17 ) 17
Decrease in operating lease liabilities ( 88 ) ( 64 )
Increase (decrease) in accrued income taxes 10 ( 55 )
(Increase) decrease in other assets ( 5 ) 22
Increase (decrease) in other long-term liabilities 36 ( 2 )
Net cash provided by operating activities 498 856
Cash flows from investing activities:
Additions to plant and equipment ( 333 ) ( 347 )
Proceeds from sales of plant and equipment 166 18
Acquisition of businesses, net of cash acquired ( 40 ) ( 1,175 )
Purchase of marketable securities ( 16 ) ( 1 )
Proceeds from sales of marketable securities 13 —
Other investing activities 6 —
Net cash used for investing activities ( 204 ) ( 1,505 )
Cash flows from financing activities:
Bank and commercial paper borrowings, net 459 500
Other debt borrowings including senior notes 3 1,133
Other debt repayments including senior notes ( 91 ) ( 188 )
Proceeds from stock option exercises 67 57
Stock repurchases ( 300 ) ( 200 )
Dividends paid ( 503 ) ( 506 )
Other financing activities — ( 18 )
Net cash (used for) provided by financing activities ( 365 ) 778
Effect of exchange rates on cash, cash equivalents and restricted cash ( 19 ) 1
Net (decrease) increase in cash, cash equivalents and restricted cash ( 90 ) 130
Cash, cash equivalents and restricted cash at beginning of period 945 966
Cash, cash equivalents and restricted cash at end of period $ 855 $ 1,096
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 322 $ 266
Income taxes, net of refunds (1)
285 372
(1)
Cash paid for income taxes, net for the 26 weeks ended December 28, 2024 includes $ 190 million of cash paid for the purchase of federal tax credits.
See Notes to Consolidated Financial Statements
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Sysco Corporation and its Consolidated Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or the “company” as used in this Form 10-Q refer to Sysco Corporation together with its consolidated subsidiaries and divisions.
1. BASIS OF PRESENTATION
The consolidated financial statements have been prepared by the company, without an audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, changes in consolidated shareholders’ equity and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity for all periods presented have been made.
These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2024. 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 Balance Sheet Information
Supplier Financing Programs
We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been confirmed as valid require payment by Sysco upon the due date of the obligation.
Our outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:
Dec. 28, 2024 Jun. 29, 2024
(In millions)
Financed payment obligations $ 91 $ 102
Accounts Receivable, Less Allowances
We utilize arrangements to sell portions of our trade accounts receivable to third-party financial institutions on a non-recourse basis in exchange for cash. The arrangements meet the requirements for the receivables transferred to be accounted for as sales and are accounted for as a reduction in trade receivables. Proceeds from the sales are reported net of negotiated discount and are recorded as a reduction to accounts receivable outstanding in the company’s consolidated balance sheets and as cash flows from operating activities in the company’s consolidated statements of cash flows. Accounts receivable sold under these arrangements were $ 2.2 billion and $ 1.3 billion for the second quarter of fiscal 2025 and 2024, respectively, and $ 4.1 billion and $ 2.4 billion for the first 26 weeks of fiscal 2025 and 2024, respectively.
In certain instances, Sysco has continuing involvement subsequent to the transfer, limited to providing certain servicing and collection actions on behalf of the purchasers of the designated trade receivables. The outstanding aggregate principal amount of receivables that has been derecognized and remain outstanding was $ 204 million and $ 173 million at December 28, 2024 and June 29, 2024, respectively. We continue to service the receivables post-transfer on a non-recourse basis with no participating interest.
Supplemental Cash Flow Information
The following table sets forth our 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:
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Dec. 28, 2024 Dec. 30, 2023
(In millions)
Cash and cash equivalents $ 793 $ 962
Restricted cash (1)
62 134
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows $ 855 $ 1,096
(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.
The following table sets forth our non-cash investing and financing activities:
Dec. 28, 2024 Dec. 30, 2023
(In millions)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs $ 204 $ 158
Assets obtained in exchange for finance lease obligations 38 52
Business Combinations
On November 27, 2023, Sysco consummated its acquisition of Edward Don & Company (Edward Don) through a merger between Edward Don and a wholly owned subsidiary of Sysco Corporation, in which Sysco acquired 100 % of the members’ equity of the acquiree for cash consideration of $ 965 million. Edward Don is a leading distributor of foodservice equipment, supplies and disposables and has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies across the Sysco network. The acquisition has allowed Sysco to add strategic capabilities and diversified offerings to complement its existing business and creates a specialty equipment and supplies platform that will provide better selection and service to customers.
During the second quarter of fiscal 2025, we completed the determination of the fair value of the assets acquired and liabilities assumed. We recorded certain measurement period adjustments during fiscal 2024 and 2025, none of which were individually or in aggregate material to our financial statements.
2. NEW ACCOUNTING STANDARDS
Recent Accounting Guidance Not Yet Adopted
Segment Reporting
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, (our fiscal 2025), and interim periods for our fiscal years beginning after December 15, 2024, (our first quarter of fiscal 2026), and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-07 on our disclosures.
Income Taxes
In December 2023, the FASB issued 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, (our fiscal 2026), on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses included within commonly presented income statement captions. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, (our fiscal 2028), and interim reporting periods beginning after December 15, 2027, (our first quarter of fiscal 2029). Early adoption is permitted. The standard updates are to be applied prospectively with the option for retrospective application. We are currently evaluating the effect of adopting ASU 2024-03 on our disclosures.
3. REVENUE
We recognize revenues when our 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. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, were $ 5.0 billion as of both December 28, 2024 and June 29, 2024.
The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:
13-Week Period Ended Dec. 28, 2024
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In millions)
Principal Product Categories
Fresh and frozen meats $ 2,649 $ 547 $ 574 $ — $ 3,770
Canned and dry products 2,595 793 250 — 3,638
Frozen fruits, vegetables, bakery and other 2,037 704 355 — 3,096
Dairy products 1,584 412 153 — 2,149
Poultry 1,438 288 290 — 2,016
Fresh produce 1,330 275 74 — 1,679
Paper and disposables 1,009 130 201 13 1,353
Beverage products 362 181 156 20 719
Seafood 500 104 36 — 640
Equipment and smallwares (1)
267 54 6 121 448
Other (2)
273 240 21 109 643
Total Sales $ 14,044 $ 3,728 $ 2,116 $ 263 $ 20,151
(1)
Due to the acquisition of Edward Don, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.
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13-Week Period Ended Dec. 30, 2023
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In millions)
Principal Product Categories
Canned and dry products $ 2,601 $ 801 $ 229 $ — $ 3,631
Fresh and frozen meats 2,574 504 504 — 3,582
Frozen fruits, vegetables, bakery and other 1,996 682 316 — 2,994
Dairy products 1,449 388 141 — 1,978
Poultry 1,340 286 261 — 1,887
Fresh produce 1,309 265 66 — 1,640
Paper and disposables 971 130 189 14 1,304
Seafood 508 110 44 — 662
Beverage products 336 164 139 22 661
Equipment and smallwares (1)
164 53 6 114 337
Other (2)
246 214 19 133 612
Total Sales $ 13,494 $ 3,597 $ 1,914 $ 283 $ 19,288
(1)
Due to the acquisition of Edward Don, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.
26-Week Period Ended Dec. 28, 2024
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In millions)
Principal Product Categories
Fresh and frozen meats $ 5,256 $ 1,089 $ 1,108 $ — $ 7,453
Canned and dry products 5,273 1,630 497 — 7,400
Frozen fruits, vegetables, bakery and other 4,074 1,405 686 — 6,165
Dairy products 3,197 844 277 — 4,318
Poultry 2,950 576 586 — 4,112
Fresh produce 2,676 566 146 — 3,388
Paper and disposables 2,056 269 401 26 2,752
Beverage products 746 368 312 41 1,467
Seafood 1,047 217 71 — 1,335
Equipment and smallwares (1)
576 105 35 243 959
Other (2)
555 452 43 235 1,285
Total Sales $ 28,406 $ 7,521 $ 4,162 $ 545 $ 40,634
(1)
Due to the acquisition of Edward Don, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.
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26-Week Period Ended Dec. 30, 2023
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In millions)
Principal Product Categories
Canned and dry products $ 5,286 $ 1,633 $ 461 $ — $ 7,380
Fresh and frozen meats 5,144 1,023 984 — 7,151
Frozen fruits, vegetables, bakery and other 4,025 1,355 621 — 6,001
Dairy products 2,902 803 283 — 3,988
Poultry 2,702 576 535 — 3,813
Fresh produce 2,670 540 136 — 3,346
Paper and disposables 1,965 304 375 31 2,675
Seafood 1,086 235 87 — 1,408
Beverage products 698 335 286 45 1,364
Equipment and smallwares (1)
247 100 12 240 599
Other (2)
493 375 40 275 1,183
Total Sales $ 27,218 $ 7,279 $ 3,820 $ 591 $ 38,908
(1)
Due to the acquisition of Edward Don, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.
4. FAIR VALUE MEASUREMENTS
Sysco’s policy is to invest only in high-quality investments. The fair values of our cash deposits and money market funds included in cash equivalents are valued using inputs that are considered a Level 1 measurement. Other cash equivalents, such as time deposits and highly liquid instruments with original maturities of three months or less, are valued using inputs that are considered a Level 2 measurement. The fair value of our marketable securities is 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 our derivative instruments is 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 values of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 6, “Derivative Financial Instruments.”
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The following tables present our assets measured at fair value on a recurring basis as of December 28, 2024 and June 29, 2024:
Assets Measured at Fair Value as of Dec. 28, 2024
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Cash equivalents
Cash and cash equivalents $ 383 $ — $ — $ 383
Other assets (1)
62 — — 62
Total assets at fair value $ 445 $ — $ — $ 445
(1)
Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
Assets Measured at Fair Value as of Jun. 29, 2024
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Cash equivalents
Cash and cash equivalents $ 269 $ — $ — $ 269
Other assets (1)
249 — — 249
Total assets at fair value $ 518 $ — $ — $ 518
(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 our 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 $ 12.1 billion as of December 28, 2024 and $ 11.4 billion as of June 29, 2024, while the carrying value was $ 12.6 billion as of December 28, 2024 and $ 12.0 billion as of June 29, 2024.
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5. MARKETABLE SECURITIES
Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. We include fixed income securities maturing in less than 12 months within prepaid expenses and other current assets. Fixed income securities maturing in more than 12 months are included within other assets in the accompanying consolidated balance sheets. We record the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.
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 i n the first 26 weeks of fiscal 2025.
The following table presents our available-for-sale marketable securities as of December 28, 2024 and June 29, 2024:
Dec. 28, 2024
Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-Term Marketable Securities Long-Term Marketable Securities
(In millions)
Fixed income securities:
Corporate bonds $ 100 $ — $ ( 3 ) $ 97 $ 16 $ 81
Government bonds 34 — ( 1 ) 33 — 33
Total marketable securities $ 134 $ — $ ( 4 ) $ 130 $ 16 $ 114
Jun. 29, 2024
Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-Term Marketable Securities Long-Term Marketable Securities
(In millions)
Fixed income securities:
Corporate bonds $ 98 $ — $ ( 4 ) $ 94 $ 24 $ 70
Government bonds 34 — ( 2 ) 32 — 32
Total marketable securities $ 132 $ — $ ( 6 ) $ 126 $ 24 $ 102
As of December 28, 2024, the balance of available-for-sale securities by contractual maturity is shown in the following table. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
Dec. 28, 2024
(In millions)
Due in one year or less $ 16
Due after one year through five years 74
Due after five years 40
Total $ 130
There wer e no significant realized gains or losses in marketable securities in the first 26 weeks of fiscal 2025.
6. DERIVATIVE FINANCIAL INSTRUMENTS
Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, we do 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.
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Hedging of interest rate risk
Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates.
Hedging of foreign currency risk
Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, British pound sterling, 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.
Sysco has cross-currency swaps and foreign currency forwards designated as fair value hedges for the purpose of hedging foreign currency risk associated with changes in spot rates on foreign denominated intercompany loans and intercompany payables. Sysco has elected to exclude the changes in fair value of the forward points from the assessments of hedge effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of the excluded components. Unrealized gains or losses on components excluded from hedge effectiveness are recorded as a component of accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument. Except for the excluded components, changes in the fair value of the hedge are offset against changes in the fair value of the hedged assets or liabilities through earnings.
Sysco also has a cross-currency swap that hedges the foreign currency exposure of our net investment in certain foreign operations. This cross-currency swap is designated as a net investment hedge with gains and losses recognized within accumulated other comprehensive income (loss).
Hedging of fuel price risk
Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel fuel on anticipated future purchases. These swaps have been designated as cash flow hedges.
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None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of December 28, 2024 are presented below:
Maturity Date of the Hedging Instrument Currency / Unit of Measure Notional Value
(In millions)
Hedging of interest rate risk
January 2034 U.S. Dollar 500
Hedging of foreign currency risk
Various (December 2024 to April 2025) Swedish Krona 378
Various (December 2024 to May 2025) British Pound Sterling 20
April 2025 Canadian Dollar 180
June 2025 Canadian Dollar 137
January 2029 Euro 470
Hedging of fuel risk
Various (December 2024 to September 2026) Gallons 77
The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheets as of December 28, 2024 and June 29, 2024 are as follows:
Derivative Fair Value
Balance Sheet location Dec. 28, 2024 Jun. 29, 2024
(In millions)
Fair Value Hedges:
Interest rate swaps Other assets $ — $ 6
Interest rate swaps Other current liabilities — 1
Interest rate swaps Other long-term liabilities 2 —
Cross currency swaps Other current assets — 2
Cross currency swaps Other current liabilities 10 3
Foreign currency forwards Other current assets 2 —
Cash Flow Hedges:
Fuel swaps Other current assets $ — $ 1
Foreign currency forwards Other current liabilities 1 —
Fuel swaps Other current liabilities 11 2
Fuel swaps Other assets — 1
Fuel swaps Other long-term liabilities 2 —
Net Investment Hedges:
Cross currency swaps Other current assets $ 4 $ 4
Cross currency swaps Other long-term liabilities 5 10
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:
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13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
(In millions)
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 $ 179 $ 155 $ 344 $ 296
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items $ 26 $ ( 30 ) $ ( 6 ) $ ( 30 )
Derivatives designated as hedging instruments ( 32 ) 22 ( 8 ) 22
Cross currency swaps and foreign currency forwards:
Hedged items $ 5 $ ( 3 ) $ 2 $ —
Derivatives designated as hedging instruments ( 6 ) 3 ( 2 ) —
The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above consist of the following components for each of the periods presented:
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
(In millions)
Interest expense $ ( 8 ) $ ( 3 ) $ ( 15 ) $ ( 3 )
Increase (decrease) in fair value of debt ( 34 ) 27 ( 9 ) 27
Foreign currency gain (loss) 5 ( 3 ) 2 —
Hedged items $ 31 $ ( 33 ) $ ( 4 ) $ ( 30 )
The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 13-week periods ended December 28, 2024 and December 30, 2023, presented on a pretax basis, are as follows:
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13-Week Period Ended Dec. 28, 2024
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 millions) (In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 7 Operating expense $ 3
Derivatives in net investment hedging relationships:
Cross currency contracts $ 22 N/A $ —
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge $ ( 2 ) Other expense (income) $ —
13-Week Period Ended Dec. 30, 2023
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 millions) (In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps $ ( 24 ) Operating expense $ 1
Foreign currency contracts ( 1 ) Cost of sales / Other income —
Total $ ( 25 ) $ 1
Derivatives in net investment hedging relationships:
Cross currency contracts $ ( 22 ) N/A $ —
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The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 26-week periods ended December 28, 2024 and December 30, 2023, presented on a pretax basis, are as follows:
26-Week Period Ended Dec. 28, 2024
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 millions) (In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps $ ( 11 ) Operating expense $ 5
Foreign currency contracts ( 1 ) Cost of sales / Other income —
Total $ ( 12 ) $ 5
Derivatives in net investment hedging relationships:
Cross currency contracts $ 4 N/A $ —
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge $ ( 2 ) Other expense (income) $ —
26-Week Period Ended Dec. 30, 2023
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 millions) (In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 10 Operating expense $ 3
Foreign currency contracts ( 1 ) Cost of sales / Other income —
Total $ 9 $ 3
Derivatives in net investment hedging relationships:
Cross currency contracts $ ( 22 ) N/A $ —
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The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 28, 2024 are as follows:
Dec. 28, 2024
Carrying Amount of Hedged Assets (Liabilities) Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In millions)
Balance sheet location:
Long-term debt $ ( 489 ) $ 3
The carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2024 is $ 498 million.
7. DEBT
Sysco has a long-term revolving credit facility that includes aggregate commitments of the lenders thereunder of $ 3.0 billion, with an option to increase such commitments to $ 4.0 billion. As of December 28, 2024, there were no borrowings outstanding under this facility.
We have a U.S. commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $ 3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of December 28, 2024, there were $ 498 million in commercial paper issuances outstanding under this program. We also have a commercial paper program in Europe with borrowings not to exceed € 250 million. As of December 28, 2024, there were € 145 million (the equivalent of $ 151 million) in commercial paper issuances outstanding under this program.
The total carrying value of our debt was $ 12.6 billion as of December 28, 2024 and $ 12.0 billion as of June 29, 2024. The increase in the carrying value of our debt during the 26-week period ended December 28, 2024 was due to new commercial paper issuances and new leases in support of plant and equipment.
Information regarding the guarantors of our registered debt securities is contained in the section captioned Guarantor Summarized Financial Information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Form 10-Q.
8. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
(In millions, except for share
and per share data) (In millions, except for share
and per share data)
Numerator:
Net earnings $ 406 $ 415 $ 896 $ 919
Denominator:
Weighted-average basic shares outstanding 490,698,567 504,312,633 491,361,199 504,719,562
Dilutive effect of share-based awards 2,105,282 1,616,709 1,933,715 1,779,828
Weighted-average diluted shares outstanding 492,803,849 505,929,342 493,294,914 506,499,390
Basic earnings per share $ 0.83 $ 0.82 $ 1.82 $ 1.82
Diluted earnings per share $ 0.82 $ 0.82 $ 1.82 $ 1.81
The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 3,161,000 and 6,451,000 for the second quarter of fiscal 2025 and 2024, respectively, and approximately 3,249,000 and 6,219,000 for the first 26 weeks of fiscal 2025 and 2024, respectively.
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9. OTHER COMPREHENSIVE INCOME
Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to certain hedging arrangements, amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $ 176 million and $ 552 million for the second quarter of fiscal 2025 and fiscal 2024, respectively. Comprehensive income was $ 839 million and $ 982 million for the first 26 weeks of fiscal 2025 and 2024, respectively.
A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:
13-Week Period Ended Dec. 28, 2024
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In millions)
Foreign currency translation:
Foreign currency translation adjustment N/A $ ( 257 ) $ — $ ( 257 )
Currency translation adjustment as a result of
disposition of a foreign subsidiary Operating expense 2 — 2
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
hedge Other expense, net ( 2 ) — ( 2 )
Change in cash flow hedges Operating expenses (1)
7 1 6
Change in net investment hedges N/A 22 6 16
Total other comprehensive income before reclassification adjustments 27 7 20
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2 — 2
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of actuarial loss, net Other expense, net 7 2 5
Total reclassification adjustments 7 2 5
Marketable securities:
Change in marketable securities (2)
N/A ( 3 ) ( 1 ) ( 2 )
Total other comprehensive income (loss) $ ( 222 ) $ 8 $ ( 230 )
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
Realized gains or losses on marketa ble 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 second quarter of fiscal 2025.
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13-Week Period Ended Dec. 30, 2023
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In millions)
Foreign currency translation:
Foreign currency translation adjustment N/A $ 163 $ — $ 163
Hedging instruments:
Other comprehensive income before reclassification adjustments:
Change in cash flow hedges Operating expenses (1)
( 25 ) ( 5 ) ( 20 )
Change in net investment hedges N/A ( 22 ) ( 5 ) ( 17 )
Total other comprehensive (loss) before reclassification adjustments ( 47 ) ( 10 ) ( 37 )
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 3 1 2
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of actuarial loss, net Other expense, net 7 2 5
Total reclassification adjustments 7 2 5
Marketable securities:
Change in marketable securities (2)
N/A 4 — 4
Total other comprehensive income (loss) $ 130 $ ( 7 ) $ 137
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
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 second quarter of fiscal 2024.
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26-Week Period Ended Dec. 28, 2024
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In millions)
Foreign currency translation:
Foreign currency translation adjustment N/A $ ( 89 ) $ — $ ( 89 )
Currency translation adjustment as a result of
disposition of a foreign subsidiary Operating expense 2 — 2
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
hedge Other expense, net ( 2 ) — ( 2 )
Change in cash flow hedges Operating expenses (1)
( 13 ) ( 5 ) ( 8 )
Change in net investment hedges N/A 4 1 3
Total other comprehensive (loss) before reclassification adjustments ( 11 ) ( 4 ) ( 7 )
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 4 1 3
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial gain arising in the current year 31 8 23
Reclassification adjustments:
Amortization of actuarial loss, net Other expense, net 14 4 10
Total reclassification adjustments 14 4 10
Marketable securities:
Change in marketable securities (2)
N/A 1 — 1
Total other comprehensive income (loss) $ ( 48 ) $ 9 $ ( 57 )
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
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 26 weeks of fiscal 2025.
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26-Week Period Ended Dec. 30, 2023
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In millions)
Foreign currency translation:
Foreign currency translation adjustment N/A $ 55 $ — $ 55
Hedging instruments:
Other comprehensive (loss) before reclassification adjustments:
Change in cash flow hedges Operating expenses (1)
9 2 7
Change in net investment hedges N/A ( 22 ) ( 5 ) ( 17 )
Total other comprehensive (loss) before reclassification adjustments ( 13 ) ( 3 ) ( 10 )
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 6 2 4
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial gain arising in the current year 1 — 1
Reclassification adjustments:
Amortization of actuarial loss, net Other expense, net 13 3 10
Total reclassification adjustments 13 3 10
Marketable securities:
Change in marketable securities (2)
N/A 3 — 3
Total other comprehensive income $ 65 $ 2 $ 63
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
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 26 weeks of fiscal 2024.
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The following tables provide a summary of the changes in accumulated other comprehensive (loss) income f or the periods presented:
13-Week Period Ended Dec. 28, 2024
Foreign Currency Translation Hedging,
net of tax Pension and Other Postretirement Benefit Plans,
net of tax Marketable Securities, net of tax Total
(In millions)
Balance as of Sep. 28, 2024 $ ( 239 ) $ ( 36 ) $ ( 889 ) $ ( 2 ) $ ( 1,166 )
Equity adjustment from foreign currency translation ( 257 ) — — — ( 257 )
Currency translation adjustment as a result of disposition of a foreign subsidiary 2 — — — 2
Amortization of cash flow hedges — 2 — — 2
Change in net investment hedges — 16 — — 16
Change in cash flow hedges — 6 — — 6
Change in excluded component of fair value hedge — ( 2 ) — — ( 2 )
Amortization of unrecognized net actuarial losses — — 5 — 5
Change in marketable securities — — — ( 2 ) ( 2 )
Balance as of Dec. 28, 2024 $ ( 494 ) $ ( 14 ) $ ( 884 ) $ ( 4 ) $ ( 1,396 )
13-Week Period Ended Dec. 30, 2023
Foreign Currency Translation Hedging,
net of tax Pension and Other Postretirement Benefit Plans,
net of tax Marketable Securities, net of tax Total
(In millions)
Balance as of Sep. 30, 2023 $ ( 482 ) $ ( 3 ) $ ( 834 ) $ ( 8 ) $ ( 1,327 )
Equity adjustment from foreign currency translation 163 — — — 163
Amortization of cash flow hedges — 2 — — 2
Change in net investment hedges — ( 17 ) — — ( 17 )
Change in cash flow hedges — ( 20 ) — — ( 20 )
Amortization of unrecognized prior service cost — — — — —
Amortization of unrecognized net actuarial losses — — 5 — 5
Change in marketable securities — — — 4 4
Balance as of Dec. 30, 2023 $ ( 319 ) $ ( 38 ) $ ( 829 ) $ ( 4 ) $ ( 1,190 )
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26-Week Period Ended Dec. 28, 2024
Foreign Currency Translation Hedging,
net of tax Pension and Other Postretirement Benefit Plans,
net of tax Marketable Securities,
net of tax Total
(In millions)
Balance as of Jun. 29, 2024 $ ( 407 ) $ ( 10 ) $ ( 917 ) $ ( 5 ) $ ( 1,339 )
Equity adjustment from foreign currency translation ( 89 ) — — — ( 89 )
Currency translation adjustment as a result of disposition of a foreign subsidiary 2 — — — 2
Amortization of cash flow hedges — 3 — — 3
Change in net investment hedges — 3 — — 3
Change in cash flow hedges — ( 8 ) — — ( 8 )
Change in excluded component of fair value hedge — ( 2 ) — — ( 2 )
Amortization of unrecognized net actuarial losses — — 10 — 10
Net actuarial gain arising in the current year — — 23 — 23
Change in marketable securities — — — 1 1
Balance as of Dec. 28, 2024 $ ( 494 ) $ ( 14 ) $ ( 884 ) $ ( 4 ) $ ( 1,396 )
26-Week Period Ended Dec. 30, 2023
Foreign Currency Translation Hedging,
net of tax Pension and Other Postretirement Benefit Plans,
net of tax Marketable Securities, net of tax Total
(In millions)
Balance as of Jul. 1, 2023 $ ( 374 ) $ ( 32 ) $ ( 840 ) $ ( 7 ) $ ( 1,253 )
Equity adjustment from foreign currency translation 55 — — — 55
Amortization of cash flow hedges — 4 — — 4
Change in net investment hedges — ( 17 ) — — ( 17 )
Change in cash flow hedges — 7 — — 7
Amortization of unrecognized net actuarial losses — — 10 — 10
Net actuarial gain arising in the current year — — 1 — 1
Change in marketable securities — — — 3 3
Balance as of Dec. 30, 2023 $ ( 319 ) $ ( 38 ) $ ( 829 ) $ ( 4 ) $ ( 1,190 )
10. 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 26 weeks of fiscal 2025, options to purchase 733,352 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 26 weeks of fiscal 2025 was $ 18.50 .
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In the first 26 weeks of fiscal 2025, employees were granted 466,716 performance share units (PSUs). 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 26 weeks of fiscal 2025 was $ 82.63 . The PSUs will convert into shares of Sysco’s common stock at the end of the three-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 26 weeks of fiscal 2025, employees were granted 353,552 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 26 weeks of fiscal 2025 was $ 75.96 .
Employee Stock Purchase Plan
Plan participants purchased 537,998 shares of common stock under the ESPP during the first 26 weeks of fiscal 2025. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $ 11.60 during the first 26 weeks of fiscal 2025. 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 $ 60 million and $ 53 million for the first 26 weeks of fiscal 2025 and fiscal 2024, respectively.
As of December 28, 2024, there was a total of $ 152 million of unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 1.93 years.
11. INCOME TAXES
Effective Tax Rate
The effective tax rate for both the second quarter and first 26 weeks of fiscal 2025 was 23.8 %, which is higher than the company’s 21.0% statutory tax rate primarily as a result of state income taxes, partially offset by a foreign income tax benefit and equity-based compensation excess tax benefits.
The effective tax rates for the second quarter and first 26 weeks of fiscal 2024 were 23.8 % and 23.9 %, respectively, which are higher than the company’s statutory tax rate primarily as a result of state income taxes, partially offset by a foreign income tax benefit and equity-based compensation excess tax benefits.
Uncertain Tax Positions
As of December 28, 2024, the gross amount of unrecognized tax benefit and related accrued interest was $ 35 million and $ 13 million, respectively. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions of the company will increase or decrease in the next 12 months. At this time, an estimate of the range of the reasonably possible change cannot be made.
During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. In the fourth quarter of fiscal 2023, the company filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which were enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the company’s position regarding its foreign tax credits. Sysco has previously recorded a benefit of $ 131 million attributable to its interpretation of the TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to reverse all, or some portion, of the benefit previously recorded.
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Other
On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One expands a country’s authority to tax profits from companies that make sales into their country but do not have a physical location in the country. Pillar Two includes an agreement on international tax reform, including rules to ensure that large corporations pay a minimum rate of corporate income tax. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. Pillar Two became effective for Sysco at the beginning of fiscal 2025.
The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. Our 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 our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.
12. 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.
13. BUSINESS SEGMENT INFORMATION
Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are located in North America and Europe. Under the accounting provisions related to disclosures about segments of an enterprise, we have aggregated certain operating segments into three reportable segments. “Other” financial information is attributable to our other operating segments that do not meet the quantitative disclosure thresholds.
• U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco and Sons, Inc., our Edward Don restaurant equipment and supplies distribution business, our Asian specialty distribution company and a number of other small specialty businesses that are not material to our operations;
• International Foodservice Operations – includes operations outside of the U.S., 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, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom, France, Ireland and Sweden;
• SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and
• Other – primarily our hotel supply operations, Guest Worldwide.
The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.
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The following tables set forth certain financial information for Sysco’s reportable business segments:
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
Sales: (In millions) (In millions)
U.S. Foodservice Operations $ 14,044 $ 13,494 $ 28,406 $ 27,218
International Foodservice Operations 3,728 3,597 7,521 7,279
SYGMA 2,116 1,914 4,162 3,820
Other 263 283 545 591
Total $ 20,151 $ 19,288 $ 40,634 $ 38,908
13-Week Period Ended 26-Week Period Ended
Dec. 28, 2024 Dec. 30, 2023 Dec. 28, 2024 Dec. 30, 2023
Operating income (loss): (In millions) (In millions)
U.S. Foodservice Operations $ 834 $ 839 $ 1,742 $ 1,780
International Foodservice Operations 95 83 196 176
SYGMA 19 17 37 30
Other 4 8 12 20
Total segments 952 947 1,987 2,006
Global Support Center ( 240 ) ( 247 ) ( 468 ) ( 502 )
Total operating income 712 700 1,519 1,504
Interest expense 160 150 319 284
Other expense, net 19 5 25 12
Earnings before income taxes $ 533 $ 545 $ 1,175 $ 1,208
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