Edgar Filing: SYSCO CORP

10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

(Mark One)

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

For the quarterly period ended December 26, 2015

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

Commission File Number 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)



Delaware	74-1648137
(State or other jurisdiction of	(IRS employer
incorporation or organization)	identification number)
1390 Enclave Parkway	77077-2099
Houston, Texas	(Zip Code)
(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code:

(281) 584-1390

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑ No ☐

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



Large Accelerated Filer ☑	Accelerated Filer ☐
Non-accelerated Filer ☐ (Do not check if a smaller reporting company)	Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

564,603,274 shares of common stock were outstanding as of January 23, 2016.

TABLE OF CONTENTS



		Page No.
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	43
Item 6.	Exhibits	43

Signatures		44

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)



	Dec. 26, 2015			Jun. 27, 2015			Dec. 27, 2014
	(unaudited)						(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	595,602		$	5,130,044		$	4,907,677
Accounts and notes receivable, less allowances of $57,631, $41,720, and $68,427	3,353,453			3,353,381			3,529,997
Inventories	2,736,382			2,691,823			2,791,813
Deferred income taxes	—			135,254			140,456
Prepaid expenses and other current assets	83,263			93,039			76,682
Prepaid income taxes	10,326			90,763			10,279
Total current assets	6,779,026			11,494,304			11,456,904
Plant and equipment at cost, less depreciation	3,936,612			3,982,143			4,002,932
Long-term assets
Goodwill	1,977,921			1,959,817			1,966,547
Intangibles, less amortization	163,089			154,809			168,446
Restricted cash	—			168,274			165,465
Other assets	232,820			229,934			169,515
Total other assets	2,373,830			2,512,834			2,469,973
Total assets	$	13,089,468		$	17,989,281		$	17,929,809

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable	$	83,037		$	70,751		$	76,876
Accounts payable	2,710,469			2,881,953			2,797,947
Accrued expenses	1,071,632			1,467,610			1,100,239
Current maturities of long-term debt	7,076			4,979,301			310,891
Total current liabilities	3,872,214			9,399,615			4,285,953
Long-term liabilities
Long-term debt	4,265,857			2,271,825			7,208,252
Deferred income taxes	111,822			81,591			117,353
Other long-term liabilities	852,655			934,722			940,349
Total other liabilities	5,230,334			3,288,138			8,265,954
Commitments and contingencies
Noncontrolling interest	45,493			41,304			34,942
Shareholders' equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—			—			—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175			765,175			765,175
Paid-in capital	1,022,816			1,213,999			1,181,918
Retained earnings	8,922,498			8,751,985			8,858,831
Accumulated other comprehensive loss	(1,045,177		)	(923,197		)	(828,656		)
Treasury stock at cost, 198,552,842, 170,857,231 and 174,109,675 shares	(5,723,885		)	(4,547,738		)	(4,634,308		)
Total shareholders' equity	3,941,427			5,260,224			5,342,960
Total liabilities and shareholders' equity	$	13,089,468		$	17,989,281		$	17,929,809

Note: The June 27, 2015 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

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



	13-Week Period Ended					26-Week Period Ended
	Dec. 26, 2015			Dec. 27, 2014		Dec. 26, 2015			Dec. 27, 2014
Sales	$	12,153,626		$	12,087,074	$	24,716,237		$	24,532,155
Cost of sales	9,996,812			10,001,937		20,321,428			20,258,301
Gross profit	2,156,814			2,085,137		4,394,809			4,273,854
Operating expenses	1,724,231			1,769,691		3,468,752			3,492,795
Operating income	432,583			315,446		926,057			781,059
Interest expense	47,235			77,042		174,142			107,976
Other expense (income), net	(7,764		)	2,207		(23,004		)	19
Earnings before income taxes	393,112			236,197		774,919			673,064
Income taxes	120,713			78,218		258,100			236,272
Net earnings	$	272,399		$	157,979	$	516,819		$	436,792

Net earnings:
Basic earnings per share	$	0.48		$	0.27	$	0.89		$	0.74
Diluted earnings per share	0.48			0.27		0.88			0.73

Average shares outstanding	566,881,538			590,723,351		581,790,230			589,499,802
Diluted shares outstanding	571,452,124			595,911,680		586,121,013			594,610,315

Dividends declared per common share	$	0.31		$	0.30	$	0.61		$	0.59

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)



	13-Week Period Ended						26-Week Period Ended
	Dec. 26, 2015			Dec. 27, 2014			Dec. 26, 2015			Dec. 27, 2014
Net earnings	$	272,399		$	157,979		$	516,819		$	436,792
Other comprehensive (loss):
Foreign currency translation adjustment	(44,453		)	(91,853		)	(131,682		)	(163,107		)
Items presented net of tax:
Amortization of cash flow hedges	1,825			1,639			3,501			1,765
Change in fair value of cash flow hedges	—			—			(3,779		)	(34,111		)
Amortization of prior service cost	1,715			1,737			3,430			3,474
Amortization of actuarial loss, net	3,275			2,993			6,550			5,986
Total other comprehensive (loss)	(37,638		)	(85,484		)	(121,980		)	(185,993		)
Comprehensive income	$	234,761		$	72,495		$	394,839		$	250,799

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)



	26-Week Period Ended
	Dec. 26, 2015			Dec. 27, 2014
Cash flows from operating activities:
Net earnings	$	516,819		$	436,792
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	44,045			44,460
Depreciation and amortization	281,400			274,655
Amortization of debt issuance and other debt-related costs	13,637			20,144
Loss on extinguishment of debt	86,460			—
Deferred income taxes	153,423			6,804
Provision for losses on receivables	10,093			9,414
Other non-cash items	(15,468		)	(2,359		)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) in receivables	(50,853		)	(181,877		)
(Increase) in inventories	(69,370		)	(214,111		)
Decrease in prepaid expenses and other current assets	9,812			6,537
(Decrease) in accounts payable	(140,499		)	(7,450		)
(Decrease) increase in accrued expenses	(388,667		)	78,438
Increase in accrued income taxes	92,638			40,220
(Increase) decrease in other assets	(9,556		)	16,072
(Decrease) in other long-term liabilities	(52,942		)	(67,438		)
Excess tax benefits from share-based compensation arrangements	(12,091		)	(7,863		)
Net cash provided by operating activities	468,881			452,438
Cash flows from investing activities:
Additions to plant and equipment	(248,233		)	(298,068		)
Proceeds from sales of plant and equipment	10,827			2,130
Acquisition of businesses, net of cash acquired	(98,154		)	(29,177		)
Decrease (increase) in restricted cash	168,274			(20,053		)
Net cash used for investing activities	(167,286		)	(345,168		)
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments), net	—			(129,999		)
Other debt borrowings	2,012,353			5,008,502
Other debt repayments	(19,155		)	(21,618		)
Redemption of senior notes	(5,050,000		)	—
Debt issuance costs	(20,881		)	(30,980		)
Cash paid for settlement of cash flow hedge	(6,134		)	(188,840		)
Cash received from termination of interest rate swap agreements	14,496			—
Proceeds from stock option exercises	131,969			122,492
Accelerated share and treasury stock purchases	(1,521,638		)	—
Dividends paid	(348,436		)	(340,654		)
Excess tax benefits from share-based compensation arrangements	12,091			7,863
Net cash (used for) provided by financing activities	(4,795,335		)	4,426,766
Effect of exchange rates on cash and cash equivalents	(40,702		)	(39,405		)
Net (decrease) increase in cash and cash equivalents	(4,534,442		)	4,494,631
Cash and cash equivalents at beginning of period	5,130,044			413,046
Cash and cash equivalents at end of period	$	595,602		$	4,907,677
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	106,600		$	73,756
Income taxes	33,156			189,538

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1. BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without audit, with the exception of the June 27, 2015 consolidated balance sheet, which was derived from the audited consolidated financial statements included in the company's fiscal 2015 Annual Report on Form 10-K. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income 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 and cash flows for all periods presented have been made.

The company adopted Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs in fiscal 2015. This guidance requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, rather than an asset. This guidance requires retrospective application; therefore, prior year amounts within the consolidated balance sheets have been reclassified to conform to the current year presentation.

Deferred taxes within the consolidated balance sheet for December 26, 2015, have been classified as long-term due to the adoption of an accounting pronouncement related to simplification in the presentation of deferred taxes. See Note 2, "Changes in Accounting" for additional information on these changes.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the company's fiscal 2015 Annual Report on Form 10-K. 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.

The interim financial information herein has been reviewed by Ernst & Young LLP, independent registered public accounting firm, in accordance with established professional standards and procedures for such a review. A Review Report of Independent Registered Public Accounting Firm has been issued by Ernst & Young LLP and is included as Exhibit 15.1 to this Form 10-Q.

2. CHANGES IN ACCOUNTING

Simplification of Balance Sheet Classification of Deferred Taxes

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, as part of its simplification initiative, which is the FASB's effort to reduce the cost and complexity of certain aspects of U.S. GAAP. This guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. The guidance does not change the existing requirement that only permits offsetting of deferred tax assets and deferred tax liabilities within a jurisdiction. The company early adopted this standard in the second quarter of fiscal 2016 on a prospective basis, as permitted by the ASU.

3. NEW ACCOUNTING STANDARDS

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for interim and annual periods beginning after December 15, 2017, which is fiscal 2019 for Sysco, and could be early adopted in fiscal 2018. The standard may be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The

company has not selected a transition method and is currently evaluating the impact of the pending adoption of this ASU on its ongoing financial reporting.

4. ACQUISITIONS

During the first 26 weeks of fiscal 2016, the company paid cash of $98.2 million for acquisitions. The acquisitions did not have a material effect on the company's operating results, cash flows or financial position. Certain current year and prior year acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are attained. As of December 26, 2015, aggregate contingent consideration outstanding was $28.4 million, of which $20.7 million was recorded as earnout liabilities as of December 26, 2015.

5. FAIR VALUE MEASUREMENTS

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


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


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


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

Sysco’s policy is to invest in only high-quality investments. Cash equivalents primarily include 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. Restricted cash consists of investments in high-quality money market funds.

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


•	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 and restricted cash as Level 1 measurements in the tables below.


•	The interest rate swap agreements, discussed further in Note 6, "Derivative Financial Instruments" 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. These are included within other assets and other long-term liabilities as Level 2 measurements in the tables below.

The following tables present the company’s assets and liabilities measured at fair value on a recurring basis as of December 26, 2015, June 27, 2015 and December 27, 2014:



	Assets and Liabilities Measured at Fair Value as of Dec. 26, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	234,161	$	61,473	$	—	$	295,634
Other assets
Interest rate swap agreement	—		3,936		—		3,936
Total assets at fair value	$	234,161	$	65,409	$	—	$	299,570

Liabilities:
Long-term debt	$	—	$	1,241,786	$	—	$	1,241,786
Other long-term liabilities:
Interest rate swap agreement	—		6,575		—		6,575
Total liabilities at fair value	$	—	$	1,248,361	$	—	$	1,248,361



	Assets and Liabilities Measured at Fair Value as of Jun. 27, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	4,677,735	$	63,689	$	—	$	4,741,424
Restricted cash	168,274		—		—		168,274
Other assets
Interest rate swap agreement	—		12,597		—		12,597
Total assets at fair value	$	4,846,009	$	76,286	$	—	$	4,922,295

Liabilities:
Accrued expenses
Current portion of long-term debt	$	—	$	1,257,127	$	—	$	1,257,127
Long-term debt	—		503,379		—		503,379
Total liabilities at fair value	$	—	$	1,760,506	$	—	$	1,760,506



	Assets and Liabilities Measured at Fair Value as of Dec. 27, 2014
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	4,655,434	$	21,841	$	—	$	4,677,275
Restricted cash	165,465		—		—		165,465
Other assets
Interest rate swap agreement	—		4,802		—		4,802
Total assets at fair value	$	4,820,899	$	26,643	$	—	$	4,847,542

Liabilities:
Long-term debt	$	—	$	1,752,118	$	—	$	1,752,118
Other long-term liabilities
Interest rate swap agreement	—		152		—		152
Total liabilities at fair value	$	—	$	1,752,270	$	—	$	1,752,270

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 issue or on the current rates offered to the company for debt of the same remaining maturities and is considered a Level 2 measurement. The table above reflects the fair value for any long-term debt that has been hedged and is recorded at fair value. Non-hedged debt is recorded at book value. The fair value of total non-hedged debt approximated $3.3 billion, $5.6 billion and $7.6 billion as of December 26, 2015, June 27, 2015 and December 27, 2014, respectively. The carrying value of total non-hedged debt was $3.1 billion, $5.4 billion and $7.1 billion as of December 26, 2015, June 27, 2015 and December 27, 2014, respectively.

6. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco manages its debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps from time to time to achieve this position. The company does not use derivative financial instruments for trading or speculative purposes.

In October 2015, Sysco issued senior notes totaling $2.0 billion to fund $1.5 billion in repurchases of outstanding shares of its common stock pursuant to its $1.5 billion accelerated share repurchase program, to repay approximately $500 million of its outstanding commercial paper and for general corporate purposes. Concurrent with the offering of these senior notes, the company entered into interest rate swap agreements that effectively converted $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates.

In August 2015, the company entered into forward starting swap agreements with a notional amount totaling $500 million. The company designated these derivatives as cash flow hedges to reduce interest rate exposure on forecasted 10-year debt due to changes in the benchmark interest rates for debt the company expected to issue in fiscal 2016. Concurrent with the debt offering in October 2015, Sysco terminated these hedges and paid $6.1 million. The loss was recorded in Accumulated other comprehensive income (loss) and will be amortized to interest expense over the term of the issued debt.

In October 2014, Sysco obtained long-term financing for its proposed merger with US Foods, Inc. (US Foods) by completing a six-part senior notes offering totaling $5 billion. At the same time of these note issuances, the company entered into interest rate swap agreements that effectively converted $500 million of senior notes maturing in fiscal 2018 and $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These are collectively referred to as the 2015 swaps. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates. In the first quarter of 2016, we terminated the 2015 swaps for proceeds of $14.5 million in connection with the redemption of these senior notes.

In January 2014, the company entered into two forward starting swap agreements with notional amounts totaling $2 billion in contemplation of securing long-term financing for the proposed US Foods merger or for other long-term financing purposes in the event the merger did not occur. The company designated these derivatives as cash flow hedges to reduce interest rate exposure on forecasted 10-year and 30-year debt due to changes in the benchmark interest rates for debt the company issued in fiscal 2015. In September 2014, in conjunction with the pricing of the $1.25 billion senior notes maturing in fiscal 2025 and the $1 billion senior notes maturing in fiscal 2045, the company terminated these swaps, locking in the effective yields on the related debt. Cash of $58.9 million was paid to settle the 10-year swap in September 2014, and cash of $129.9 million was paid to settle the 30-year swap in October 2014. The cash payments are located within the line Cash paid for settlement of cash flow hedge within financing activities in the statement of consolidated cash flows. The cumulative losses recorded in Accumulated other comprehensive (loss) income related to these swaps will continue to be amortized through interest expense over the term of the originally issued debt as the amount hedged is anticipated to remain within our capital structure.

In August 2013, the company entered into an interest rate swap agreement that effectively converted $500 million of fixed rate debt maturing in fiscal 2018 to floating rate debt.

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 26, 2015, June 27, 2015 and December 27, 2014 are as follows:



	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Interest rate swap agreements:
Dec. 26, 2015	Other assets	$	3,936	Other liabilities	$	6,575
Jun. 27, 2015	Other assets	12,597
Dec. 27, 2014	Other assets	4,802		Other long-term liabilities	152

The location and effect of derivative instruments and related hedged items on the consolidated results of operations for the 13-week periods ended December 26, 2015 and December 27, 2014 presented on a pretax basis are as follows:



	Location of (Gain) or Loss Recognized	Amount of (Gain) or Loss Recognized
		13-Week Period Ended
		Dec. 26, 2015		Dec. 27, 2014
		(In thousands)
Fair Value Hedge Relationships:
Interest rate swap agreements	Interest expense	$	—	$	(6,401	)
Cash Flow Hedge Relationships:
Interest rate swap agreements	Other comprehensive income	—		—
Interest rate contracts	Interest expense	2,962		(2,660		)

The location and effect of derivative instruments and related hedged items on the consolidated results of operations for the 26-week periods ended December 26, 2015 and December 27, 2014 presented on a pretax basis are as follows:



	Location of (Gain) or Loss Recognized	Amount of (Gain) or Loss Recognized
		26-Week Period Ended
		Dec. 26, 2015		Dec. 27, 2014
		(In thousands)
Fair Value Hedge Relationships:
Interest rate swap agreements	Interest expense	$	—	$	(9,670	)
Cash Flow Hedge Relationships:
Interest rate swap agreements	Other comprehensive income	5,682		55,374
Interest rate contracts	Interest expense	6,134		(2,865		)

Hedge ineffectiveness represents the difference between the changes in the fair value of the derivative instruments and the changes in fair value of the fixed rate debt attributable to changes in the benchmark interest rates. Hedge ineffectiveness is recorded directly in earnings within interest expense and was not applicable for the second quarter of fiscal 2016 and was immaterial for the second quarter of fiscal 2015 and the 26-week periods ended December 26, 2015 and December 27, 2014. The interest rate swaps do not contain credit-risk-related contingent features.

7. DEBT

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $1.5 billion. As of December 26, 2015, there were no commercial paper issuances outstanding. Any outstanding amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first 26 weeks of 2016, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from zero to approximately $1.0 billion.

In June 2015, Sysco terminated the US Foods merger agreement triggering the redemption of the senior notes that had been issued in contemplation of the proposed merger at a redemption price equal to 101% of the principal of the senior notes. Sysco redeemed the senior notes in July 2015 using cash on hand and proceeds from our commercial paper program in the amount of $5.05 billion. The repayment of these senior notes triggered a redemption loss of $86.5 million included in interest expense for the first quarter of fiscal 2016. Additionally, as discussed in Note 6, "Derivative Financial Instruments," the company terminated fair value hedges associated with these senior notes. Interest expense for the first 26 weeks of fiscal 2016 includes the following amounts from these transactions:



	26-Week Period Ended Dec. 26, 2015
		(In thousands)
Redemption Premium Payment		$	50,000
Debt issuance cost write-off		28,642
Bond discount write-off		17,869
Gain on swap termination		(10,051		)
Loss on extinguishment of debt		86,460
Interest expense on senior notes		8,375
Total		$	94,835

Senior Notes Offering

On September 28, 2015, Sysco issued senior notes totaling $2.0 billion. Details of the senior notes are as follows:



Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
October 1, 2020	$	750	2.60	%	99.809	%
October 1, 2025	750		3.75	%	100.00	%
October 1, 2045	500		4.85	%	99.921	%

Sysco used the net proceeds from the offering to fund repurchases of outstanding shares of its common stock pursuant to Sysco’s $1.5 billion accelerated share repurchase program, to repay approximately $500 million of its outstanding commercial paper and for general corporate purposes. The notes are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes. Interest on the senior notes will be paid semi-annually in arrears on April 1 and October 1, beginning April 1, 2016. At Sysco’s option, any or all of the senior notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the senior notes maturing in 2020 before the date that is one month prior to the maturity date, (ii) the senior notes maturing in 2025 before the date that is three months prior to the maturity date or (iii) the senior notes maturing in 2045 before the date that is six months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the senior notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the senior notes to be redeemed that would be due if such senior notes matured on the applicable date described above. If Sysco elects to redeem a series of senior notes on or after the applicable date described in the preceding sentence, Sysco will pay an amount equal to 100% of the principal amount of the senior notes to be redeemed. Sysco will pay accrued and unpaid interest on the notes redeemed to the redemption date.

8. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

In the tables below, the caption “Pension Benefits” includes both the company-sponsored qualified pension plan and the Supplemental Executive Retirement Plan. The components of net company-sponsored benefit cost for the second quarter and first 26 weeks of fiscal 2016 and fiscal 2015 are as follows:



	Pension Benefits						Other Postretirement Plans
	Dec. 26, 2015			Dec. 27, 2014			Dec. 26, 2015			Dec. 27, 2014
	(In thousands)
Service cost	$	2,902		$	2,815		$	134		$	134
Interest cost	42,833			42,779			153			148
Expected return on plan assets	(53,202		)	(57,156		)	—			—
Amortization of prior service cost	2,743			2,777			41			42
Amortization of actuarial loss (gain)	5,435			4,968			(118		)	(109		)
Net periodic costs (benefits)	$	711		$	(3,817	)	$	210		$	215



	Pension Benefits						Other Postretirement Plans
	Dec. 26, 2015			Dec. 27, 2014			Dec. 26, 2015			Dec. 27, 2014
	(In thousands)
Service cost	$	5,803		$	5,630		$	268		$	268
Interest cost	85,665			85,558			305			296
Expected return on plan assets	(106,404		)	(114,312		)	—			—
Amortization of actuarial loss (gain)	5,486			5,554			83			84
Amortization of actuarial loss (gain)	10,870			9,936			(236		)	(218		)
Net periodic costs (benefits)	$	1,420		$	(7,634	)	$	420		$	430

Sysco’s contributions to its company-sponsored defined benefit plans were $43.7 million and $62.3 million during the first 26 weeks of fiscal 2016 and 2015, respectively.

9. SHAREHOLDERS' EQUITY

Accelerated Share Repurchase Program

On September 23, 2015, the company entered into a Master Confirmation and Supplemental Confirmation (collectively, the ASR Agreement) with Goldman, Sachs & Co. (Goldman) relating to an accelerated share repurchase program (the ASR Program). Pursuant to the terms of the ASR Agreement, Sysco agreed to repurchase $1.5 billion of its common stock from Goldman.

In connection with the ASR Program, the company paid $1.5 billion to Goldman on September 28, 2015, in exchange for 32,319,392 shares of the company’s outstanding common stock, which represents a substantial majority of the shares owed to Sysco by Goldman; however, the number of shares ultimately delivered to the company by Goldman is subject to adjustment based on the volume-weighted average share price of the company’s common stock during the term of the ASR Agreement, less an agreed discount. All purchases under the ASR Program will be completed by May 2016, although the exact date of completion will depend on whether or when Goldman exercises an acceleration option that it has under the ASR Agreement. At settlement, the company may be entitled to receive additional shares of common stock from Goldman or, under certain circumstances, may be required to issue additional shares or make a payment to Goldman at the company’s option.

The initial receipt of 32,319,392 shares is included in Treasury Stock and reduced the company's weighted average common shares outstanding for the second quarter and first 26 weeks of fiscal 2016. The adjustment feature, which is based on the volume-weighted average share price, is considered a forward contract indexed to Sysco's own common stock and meets all of the applicable criteria for equity classification and, therefore, is not accounted for as a derivative instrument.

10. 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. 26, 2015		Dec. 27, 2014		Dec. 26, 2015		Dec. 27, 2014
	(In thousands, except for share and per share data)				(In thousands, except for share and per share data)
Numerator:
Net earnings	$	272,399	$	157,979	$	516,819	$	436,792
Denominator:
Weighted-average basic shares outstanding	566,881,538		590,723,351		581,790,230		589,499,802
Dilutive effect of share-based awards	4,570,586		5,188,329		4,330,783		5,110,513
Weighted-average diluted shares outstanding	571,452,124		595,911,680		586,121,013		594,610,315
Basic earnings per share	$	0.48	$	0.27	$	0.89	$	0.74
Diluted earnings per share	$	0.48	$	0.27	$	0.88	$	0.73

The number of options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 4,000,000 and 2,000,000 for the second quarter of fiscal 2016 and fiscal 2015, respectively. The number of options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 965,000 and 1,300,000 for the first 26 weeks of 2016 and 2015, respectively.

11. OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to cash flow hedging arrangements and certain amounts related to pension and other postretirement plans. Comprehensive income was $234.8 million and $72.5 million for the second quarter of fiscal 2016 and fiscal 2015, respectively. Comprehensive income was $394.8 million and $250.8 million for the first 26 weeks of fiscal 2016 and 2015, 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. 26, 2015
	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	Operating expenses	$	2,784		$	1,069	$	1,715
Amortization of actuarial loss (gain), net	Operating expenses	5,317			2,042		3,275
Total reclassification adjustments		8,101			3,111		4,990
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(44,453		)	—		(44,453		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,962			1,137		1,825
Total other comprehensive (loss) income		$	(33,390	)	$	4,248	$	(37,638	)



		13-Week Period Ended Dec. 27, 2014
	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	Operating expenses	$	2,819		$	1,082	$	1,737
Amortization of actuarial loss (gain), net	Operating expenses	4,859			1,866		2,993
Total reclassification adjustments		7,678			2,948		4,730
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(91,853		)	—		(91,853		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,660			1,021		1,639
Total other comprehensive (loss) income		$	(81,515	)	$	3,969	$	(85,484	)



		26-Week Period Ended Dec. 26, 2015
	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	Operating expenses	$	5,568		$	2,138		$	3,430
Amortization of actuarial loss (gain), net	Operating expenses	10,634			4,084			6,550
Total reclassification adjustments		16,202			6,222			9,980
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(131,682		)	—			(131,682		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	5,682			2,181			3,501
Change in fair value of cash flow hedge	N/A	(6,134		)	(2,355		)	(3,779		)
Total other comprehensive (loss) income		$	(115,932	)	$	6,048		$	(121,980	)



		26-Week Period Ended Dec. 27, 2014
	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	Operating expenses	$	5,638		$	2,164		$	3,474
Amortization of actuarial loss (gain), net	Operating expenses	9,718			3,732			$	5,986
Total reclassification adjustments		15,356			5,896			9,460
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(163,107		)	—			(163,107		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,865			1,100			1,765
Other comprehensive income before reclassification adjustments:
Change in fair value of cash flow hedges	N/A	(55,374		)	(21,263		)	(34,111		)
Total other comprehensive (loss) income		$	(200,260	)	$	(14,267	)	$	(185,993	)

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



	26-Week Period Ended Dec. 26, 2015
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Interest Rate Swaps, net of tax			Total
	(In thousands)
Balance as of Jun. 27, 2015	$	(705,311	)	$	(97,733	)	$	(120,153	)	$	(923,197	)
Other comprehensive income before reclassification adjustments	—			(131,682		)	—			(131,682		)
Amortization of cash flow hedges	—			—			3,501			3,501
Change in fair value of cash flow hedges	—			—			(3,779		)	(3,779		)
Amortization of unrecognized prior service cost	3,430			—			—			3,430
Amortization of unrecognized net actuarial losses	6,550			—			—			6,550
Balance as of Dec. 26, 2015	$	(695,331	)	$	(229,415	)	$	(120,431	)	$	(1,045,177	)



	26-Week Period Ended Dec. 27, 2014
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Interest Rate Swaps, net of tax			Total
	(In thousands)
Balance as of Jun. 28, 2014	$	(685,957	)	$	134,452		$	(91,158	)	$	(642,663	)
Other comprehensive income before reclassification adjustments	—			(163,107		)	—			(163,107		)
Amortization of cash flow hedges	—			—			1,765			1,765
Change in fair value of cash flow hedges	—			—			(34,111		)	(34,111		)
Amortization of unrecognized prior service cost	3,474			—			—			3,474
Amortization of unrecognized net actuarial losses	5,986			—			—			5,986
Balance as of Dec. 27, 2014	$	(676,497	)	$	(28,655	)	$	(123,504	)	$	(828,656	)

12. SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees and non-employee directors under several share-based payment arrangements including various employee stock incentive plans, the Employee Stock Purchase Plan, and various non‑employee director plans.

Stock Incentive Plans

In the first 26 weeks of fiscal 2016, options to purchase 4,326,915 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 2016 was $40.59.

In the first 26 weeks of fiscal 2016, 435,970 restricted stock units were granted to employees. Based on the jurisdiction in which the employee resides, some of these restricted stock units were granted with forfeitable dividend equivalents. The fair value of each restricted stock unit award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For restricted stock unit awards 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 restricted stock unit granted during the first 26 weeks of fiscal 2016 was $40.41.

Employee Stock Purchase Plan

Plan participants purchased 704,129 shares of Sysco common stock under the Sysco Employee Stock Purchase Plan during the first 26 weeks of fiscal 2016.

The weighted average fair value per share of employee stock purchase rights issued pursuant to the Employee Stock Purchase Plan was $5.63 during the first 26 weeks of fiscal 2016. The fair value of the stock purchase rights is estimated as the difference between the stock price 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 $44.0 million and $44.5 million for the first 26 weeks of fiscal 2016 and fiscal 2015, respectively.

As of December 26, 2015, there was $70.4 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 2.6 years.

13. INCOME TAXES

Uncertain Tax Positions

As of December 26, 2015, the gross amount of unrecognized tax benefits was $32.1 million, and the gross amount of liability for accrued interest related to unrecognized tax benefits was $19.4 million. It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months, either because Sysco prevails on positions that were being challenged upon audit or because the company agrees to their disallowance. Items that may cause changes to unrecognized tax benefits primarily include the consideration of various filing requirements in numerous states and the allocation of income and expense between tax jurisdictions. At this time, an estimate of the range of the reasonably possible change cannot be made.

Effective Tax Rate

Sysco’s effective tax rate is reflective of the jurisdictions where the company has operations. In the second quarter of fiscal 2016, the company favorably resolved a tax contingency resulting in a tax benefit of $20.8 million. In the second quarter of fiscal 2015, the tax rate was impacted by reduced state taxes from legal restructuring and a benefit related to disqualifying dispositions of Sysco's stock pursuant to share-based compensation arrangements. Indefinitely reinvested earnings taxed at foreign statutory rates less than our domestic tax rate have the impact of reducing the effective tax rate in both periods. The effective tax rates for the second quarter of fiscal 2016 and fiscal 2015 were 30.71% and 33.12%, respectively.

The effective tax rate for the first 26 weeks of fiscal 2016 of 33.31% was favorably impacted by the resolution of a tax contingency in the second quarter of fiscal 2016. The effective tax rate for the first 26 weeks of fiscal 2015 of 35.10% was favorably impacted by lower state taxes. Indefinitely reinvested earnings taxed at foreign statutory rates less than our domestic tax rate have the impact of reducing the effective tax rate in both periods.

Other

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

14. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen, but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. 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. However, the final results of legal proceedings cannot be predicted with certainty and, if the company failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the company’s current estimates of the range of potential losses, the company’s consolidated financial position or results of operations could be materially adversely affected in future periods.

15. BUSINESS SEGMENT INFORMATION

The company has aggregated certain of its operating companies into two reporting segments, Broadline and SYGMA in accordance with the accounting literature related to disclosures about segments of an enterprise. The Broadline reportable segment is an aggregation of the company’s broadline segments located in the Bahamas, Canada, Costa Rica, Ireland and the United States. Broadline operating companies distribute a full line of food products and a wide variety of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations. "Other" financial information is attributable to the company's other operating segments, including the company's specialty produce, custom-cut meat operations, lodging industry segments, a company that distributes specialty imported products, a company that distributes to international customers and the company’s Sysco Ventures platform, which includes a suite of technology solutions that help support the business needs of Sysco’s customers. In fiscal 2015, our leadership structure was realigned and now our custom-cut meat operations no longer report through our Broadline leadership. As a result, these operations are no longer included in our Broadline segment and are now reported in "Other." Prior year amounts have been reclassified to conform to the current year presentation.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Intersegment sales primarily represent products the Broadline and SYGMA operating companies procured from the specialty produce, custom-cut meat operations, imported specialty products and a company that distributes to international customers. Management evaluates the performance of each of the operating segments based on its respective operating income results. Corporate expenses generally include all expenses of the corporate office and Sysco’s shared service center. These also include all share-based compensation costs.

The following tables set forth certain financial information for Sysco’s business segments:



	13-Week Period Ended						26-Week Period Ended
	Dec. 26, 2015			Dec. 27, 2014			Dec. 26, 2015			Dec. 27, 2014
Sales:	(In thousands)						(In thousands)
Broadline	$	9,605,710		$	9,548,847		$	19,633,806		$	19,520,222
SYGMA	1,506,836			1,559,863			2,952,741			3,101,475
Other	1,447,740			1,305,179			2,814,566			2,557,265
Intersegment sales	(406,661		)	(326,815		)	(684,875		)	(646,807		)
Total	$	12,153,626		$	12,087,074		$	24,716,237		$	24,532,155

	13-Week Period Ended						26-Week Period Ended
	Dec. 26, 2015			Dec. 27, 2014			Dec. 26, 2015			Dec. 27, 2014
Operating income:	(In thousands)						(In thousands)
Broadline	$	633,167		$	582,598		$	1,360,162		$	1,268,973
SYGMA	5,952			7,803			11,177			12,953
Other	36,865			33,695			63,372			71,422
Total segments	675,984			624,096			1,434,711			1,353,348
Corporate expenses	(243,401		)	(308,650		)	(508,654		)	(572,289		)
Total operating income	432,583			315,446			926,057			781,059
Interest expense	47,235			77,042			174,142			107,976
Other expense (income), net	(7,764		)	2,207			(23,004		)	19
Earnings before income taxes	$	393,112		$	236,197		$	774,919		$	673,064



	Dec. 26, 2015		Jun. 27, 2015		Dec. 27, 2014
Assets:	(In thousands)
Broadline	$	7,739,428	$	7,730,239	$	7,906,762
SYGMA	556,480		512,044		520,862
Other	1,523,493		1,415,038		1,401,847
Total segments	9,819,401		9,657,321		9,829,471
Corporate	3,270,067		8,331,960		8,100,338
Total	$	13,089,468	$	17,989,281	$	17,929,809

16. SUPPLEMENTAL GUARANTOR INFORMATION - SUBSIDIARY GUARANTEES

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. Borrowings under the company’s revolving credit facility supporting the company’s U.S. and Canadian commercial paper programs are also covered under these guarantees. As of December 26, 2015, Sysco had a total of $4.4 billion in senior notes, debentures and commercial paper outstanding that was covered by these guarantees.

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

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



	Condensed Consolidating Balance Sheet
	Dec. 26, 2015
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	279,596	$	3,944,472		$	2,554,958		$	—		$	6,779,026
Investment in subsidiaries	9,787,777		241,561			(355,335		)	(9,674,003		)	—
Plant and equipment, net	501,514		1,632,601			1,802,497			—			3,936,612
Other assets	258,216		273,324			1,842,290			—			2,373,830
Total assets	$	10,827,103	$	6,091,958		$	5,844,410		$	(9,674,003	)	$	13,089,468
Current liabilities	$	602,058	$	731,474		$	2,538,682		$	—		$	3,872,214
Intercompany payables (receivables)	1,576,888		(2,274,556		)	697,668			—			—
Long-term debt	4,079,396		9,350			177,111			—			4,265,857
Other liabilities	672,888		278,590			12,999			—			964,477
Noncontrolling interest	—		—			45,493			—			45,493
Shareholders’ equity	3,895,873		7,347,100			2,372,457			(9,674,003		)	3,941,427
Total liabilities and shareholders’ equity	$	10,827,103	$	6,091,958		$	5,844,410		$	(9,674,003	)	$	13,089,468



	Condensed Consolidating Balance Sheet
	Jun. 27, 2015
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	4,894,387	$	4,012,924		$	2,586,993	$	—		$	11,494,304
Investment in subsidiaries	9,088,455		—			—		(9,088,455		)	—
Plant and equipment, net	510,285		1,694,659			1,777,199		—			3,982,143
Other assets	371,802		522,566			1,618,466		—			2,512,834
Total assets	$	14,864,929	$	6,230,149		$	5,982,658	$	(9,088,455	)	$	17,989,281
Current liabilities	$	5,851,364	$	1,658,558		$	1,889,693	$	—		$	9,399,615
Intercompany payables (receivables)	973,497		(1,996,915		)	1,023,418		—			—
Long-term debt	2,154,923		10,121			106,781		—			2,271,825
Other liabilities	624,795		278,458			113,060		—			1,016,313
Noncontrolling interest	—		—			41,304		—			41,304
Shareholders’ equity	5,260,350		6,279,927			2,808,402		(9,088,455		)	5,260,224
Total liabilities and shareholders’ equity	$	14,864,929	$	6,230,149		$	5,982,658	$	(9,088,455	)	$	17,989,281



	Condensed Consolidating Balance Sheet
	Dec. 27, 2014
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	4,779,586	$	4,057,608		$	2,619,710	$	—		$	11,456,904
Investment in subsidiaries	8,613,500		—			—		(8,613,500		)	—
Plant and equipment, net	491,972		1,736,843			1,774,117		—			4,002,932
Other assets	324,771		520,178			1,625,024		—			2,469,973
Total assets	$	14,209,829	$	6,314,629		$	6,018,851	$	(8,613,500	)	$	17,929,809
Current liabilities	$	848,885	$	910,487		$	2,526,581	$	—		$	4,285,953
Intercompany payables (receivables)	258,923		(759,128		)	500,205		—			—
Long-term debt	7,127,186		17,550			63,516		—			7,208,252
Other liabilities	631,875		321,406			104,421		—			1,057,702
Noncontrolling interest	—		—			34,942		—			34,942
Shareholders’ equity	5,342,960		5,824,314			2,789,186		(8,613,500		)	5,342,960
Total liabilities and shareholders’ equity	$	14,209,829	$	6,314,629		$	6,018,851	$	(8,613,500	)	$	17,929,809

Condensed Consolidating Statement of Comprehensive Income

For the 13-Week Period Ended Dec. 26, 2015

Sysco