Edgar Filing: SYSCO CORP

Document

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 29, 2018



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

Commission File Number 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)



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

1390 Enclave Parkway
Houston, Texas	77077-2099
(Address of principal executive offices)	(Zip Code)

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer þ		Accelerated Filer ¨
Non-accelerated Filer ¨		Smaller Reporting Company ¨
(Do not check if a smaller reporting company)		Emerging growth company ¨

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

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

Yes ☐ No ☑

513,462,661 shares of common stock were outstanding as of January 18, 2019.

TABLE OF CONTENTS




	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55
Item 4.	Controls and Procedures	55
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	57

Signatures		58

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)



	Dec. 29, 2018			Jun. 30, 2018			Dec. 30, 2017
	(unaudited)						(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	744,808		$	552,325		$	961,067
Accounts and notes receivable, less allowances of $44,418, $25,768 and $52,588	4,147,367			4,073,723			3,953,643
Inventories, net	3,310,312			3,125,413			3,174,012
Prepaid expenses and other current assets	212,289			187,880			183,446
Income tax receivable	23,007			64,112			—
Total current assets	8,437,783			8,003,453			8,272,168
Plant and equipment at cost, less depreciation	4,375,550			4,521,660			4,366,292
Other long-term assets
Goodwill	3,875,973			3,955,485			4,001,020
Intangibles, less amortization	899,939			979,812			1,056,335
Deferred income taxes	77,191			83,666			92,950
Other assets	527,740			526,328			430,605
Total other long-term assets	5,380,843			5,545,291			5,580,910
Total assets	$	18,194,176		$	18,070,404		$	18,219,370

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable	$	6,101		$	4,176		$	6,629
Accounts payable	4,230,215			4,136,482			3,745,817
Accrued expenses	1,723,246			1,608,966			1,567,362
Accrued income taxes	4,571			56,793			128,446
Current maturities of long-term debt	786,037			782,329			534,716
Total current liabilities	6,750,170			6,588,746			5,982,970
Long-term liabilities
Long-term debt	8,019,846			7,540,765			8,312,489
Deferred income taxes	233,601			319,124			143,794
Other long-term liabilities	987,566			1,077,163			1,477,991
Total long-term liabilities	9,241,013			8,937,052			9,934,274
Commitments and contingencies
Noncontrolling interest	35,357			37,649			33,524
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	1,465,461			1,383,619			1,361,471
Retained earnings	10,654,711			10,348,628			9,708,261
Accumulated other comprehensive loss	(1,524,407		)	(1,409,269		)	(1,116,028		)
Treasury stock at cost, 251,658,719, 244,533,248 and 243,764,879 shares	(9,193,304		)	(8,581,196		)	(8,450,277		)
Total shareholders’ equity	2,167,636			2,506,957			2,268,602
Total liabilities and shareholders' equity	$	18,194,176		$	18,070,404		$	18,219,370

Note: The June 30, 2018 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. 29, 2018		Dec. 30, 2017			Dec. 29, 2018		Dec. 30, 2017
Sales	$	14,765,707	$	14,411,490		$	29,980,986	$	29,061,914
Cost of sales	11,993,995		11,712,104			24,305,489		23,568,860
Gross profit	2,771,712		2,699,386			5,675,497		5,493,054
Operating expenses	2,319,817		2,170,834			4,595,462		4,345,137
Operating income	451,895		528,552			1,080,035		1,147,917
Interest expense	87,113		85,986			176,129		166,870
Other expense (income), net	10,197		(9,162		)	11,329		(17,137		)
Earnings before income taxes	354,585		451,728			892,577		998,184
Income taxes	87,205		167,615			194,155		346,431
Net earnings	$	267,380	$	284,113		$	698,422	$	651,753

Net earnings:
Basic earnings per share	$	0.52	$	0.55		$	1.34	$	1.24
Diluted earnings per share	0.51		0.54			1.33		1.23

Average shares outstanding	517,871,328		521,284,182			519,363,973		524,286,931
Diluted shares outstanding	524,600,510		527,249,587			526,817,501		530,156,510

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. 29, 2018			Dec. 30, 2017			Dec. 29, 2018			Dec. 30, 2017
Net earnings	$	267,380		$	284,113		$	698,422		$	651,753
Other comprehensive income (loss):
Foreign currency translation adjustment	(101,533		)	19,254			(126,460		)	140,584
Items presented net of tax:
Amortization of cash flow hedges	2,155			2,155			4,310			3,925
Change in net investment hedges	26,469			(4,153		)	35,057			(16,177		)
Change in cash flow hedges	(8,784		)	917			(11,792		)	3,118
Amortization of prior service cost	1,600			1,807			3,200			3,291
Amortization of actuarial loss, net	6,529			6,571			13,058			11,968
Actuarial loss, net	—			—			(32,511		)	—
Total other comprehensive (loss) income	(73,564		)	26,551			(115,138		)	146,709
Comprehensive income	$	193,816		$	310,664		$	583,284		$	798,462

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)



	26-Week Period Ended
	Dec. 29, 2018			Dec. 30, 2017
Cash flows from operating activities:
Net earnings	$	698,422		$	651,753
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	54,199			51,612
Depreciation and amortization	392,413			370,316
Amortization of debt issuance and other debt-related costs	10,814			14,395
Deferred income taxes	(89,098		)	37,005
Provision for losses on receivables	27,647			20,151
Other non-cash items	411			12,986
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) decrease in receivables	(137,314		)	99,713
(Increase) in inventories	(204,437		)	(133,374		)
(Increase) in prepaid expenses and other current assets	(31,465		)	(33,484		)
Increase (decrease) in accounts payable	131,715			(286,899		)
Increase (decrease) in accrued expenses	92,100			(21,802		)
(Decrease) increase in accrued income taxes	(11,117		)	120,397
(Increase) in other assets	(21,138		)	(29,508		)
Increase in other long-term liabilities	4,638			59,943
Net cash provided by operating activities	917,790			933,204
Cash flows from investing activities:
Additions to plant and equipment	(223,825		)	(258,577		)
Proceeds from sales of plant and equipment	6,901			3,878
Acquisition of businesses, net of cash acquired	(88		)	(147,644		)
Net cash (used for) investing activities	(217,012		)	(402,343		)
Cash flows from financing activities:
Bank and commercial paper borrowings, net	109,900			630,265
Other debt borrowings	383,163			5,465
Other debt repayments	(16,617		)	(10,368		)
Proceeds from stock option exercises	137,896			172,298
Treasury stock purchases	(739,205		)	(750,532		)
Dividends paid	(379,216		)	(346,920		)
Other financing activities	(6,653		)	(10,136		)
Net cash (used for) financing activities	(510,732		)	(309,928		)
Effect of exchange rates on cash, cash equivalents and restricted cash	(8,904		)	23,510
Net increase in cash, cash equivalents and restricted cash	181,142			244,443
Cash, cash equivalents and restricted cash at beginning of period	715,844			869,502
Cash, cash equivalents and restricted cash at end of period	$	896,986		$	1,113,945
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	158,574		$	136,279
Income taxes	328,574			75,841

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 30, 2018 consolidated balance sheet, which was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (our 2018 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.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our 2018 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.

These financial statements and related notes have been presented in compliance with the Securities and Exchange Commission’s (SEC) Final Rule Release No. 33-10532, Disclosure Update and Simplification, effective for all filings made on or after November 5, 2018. Sysco has complied with all relevant disclosure requirements, with the exception of adding the changes in stockholders’ equity disclosures for interim periods, which for Sysco, is allowed to be first included in its Form 10-Q for the quarter ending March 30, 2019.

Supplemental Cash Flow Information

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



	Dec. 29, 2018		Dec. 30, 2017
	(In thousands)
Cash and cash equivalents	$	744,808	$	961,067
Restricted cash ⁽¹⁾	152,178		152,878
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	896,986	$	1,113,945


⁽¹⁾	Restricted cash as of December 29, 2018 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 the consolidated balance sheet as of December 29, 2018.

2. CHANGES IN ACCOUNTING

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and has issued subsequent amendments to this guidance. This new standard superseded existing revenue recognition standards and eliminated all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Sysco adopted the new standard effective July 1, 2018 using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on Sysco’s consolidated balance sheet or consolidated results of operations as of the adoption date or for the period ended December 29, 2018.

Guidance in Presentation of Cash Flows - Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The eight specific issues are: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Businesses Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Invitees; (7) Beneficial Interests in Securitization Transactions; and (8) Separately Identifiable Cash and Application of the Predominance Principle. The company adopted this ASU retrospectively, effective July 1, 2018. The adoption of ASU 2016-15 did not have a material effect on the company’s consolidated cash flow statement as of the adoption date or for the period ended December 29, 2018.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, requiring that an employer report the service cost component of pension and postretirement benefits in the same line item or items as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. In addition, only the service cost component will be eligible for capitalization as applicable. The company adopted this ASU effective July 1, 2018, resulting in net cost of $8.9 million in the second quarter of fiscal 2019 and net cost of $17.8 million for the first 26 weeks of fiscal 2019 being reported in other expense (income), net that would have previously been included in operating expense. The ASU was applied retrospectively, resulting in net benefit of $3.7 million in the second quarter of fiscal 2019 and net benefit of $7.5 million for the first 26 weeks of fiscal 2018 being reported in other expense (income), net.

3. NEW ACCOUNTING STANDARDS

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), specifying the accounting for leases, which supersedes the leases requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The amended guidance requires the recognition of lease assets and lease liabilities on the balance sheet for those leases currently classified as operating leases. In addition, Topic 842 expands the disclosure requirements of lease arrangements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, which is fiscal 2020 for Sysco, with early adoption permitted.

To assess the impact of the standard, the company has formed a cross-functional steering committee to review the amended guidance and subsequent clarifications in order to understand the potential impact the new standard could have on the company’s consolidated financial statements and disclosures, business processes, and internal controls. The company is in the process of gathering lease data, reviewing its lease portfolio, and completing an impact assessment with respect to the adoption of the provisions of the new standard. To facilitate this ongoing process, the company is currently implementing a third-party lease accounting software. The company will finalize its assessment in fiscal 2019 and adopt this standard on June 30, 2019, the first day of fiscal 2020.

Implementation Costs Incurred in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The guidance amends Accounting Standards Codification (ASC) 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a cloud computing arrangement. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, which is the first quarter of fiscal 2021 for Sysco, with early adoption permitted. The company is currently reviewing the provisions of the new standard.

4. REVENUE

Adoption of ASC Topic 606, “Revenues from Contracts with Customers”

On July 1, 2018, Sysco adopted ASC Topic 606 with no significant impact to its financial position or results of operations, using the modified retrospective method. There were no contracts which were not completed as of July 1, 2018. Results for reporting periods beginning after July 1, 2018 are presented under Topic 606, while prior period amounts have not been restated and continue to be reported in accordance with our historic accounting under Topic 605. Sysco had no adjustment to opening retained earnings as of July 1, 2018 as a result of adopting ASC Topic 606. There was no material impact on revenues for the quarter and 26 weeks ended December 29, 2018 as a result of applying ASC Topic 606.

Revenue Recognition

The company recognizes revenues when the performance obligation is satisfied, which is the point at which control of the promised goods or services are transferred to its customers, in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods or services. For the majority of Sysco’s customer arrangements, control transfers to customers at a point-in-time when goods have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. The timing of satisfaction of the performance obligation is not subject to significant judgment. While certain additional services may be identified within a contract, we have concluded that those services are individually immaterial in the context of the contract with the customer, and therefore, not assessed as performance obligations.

Sales tax collected from customers is not included in revenue, but rather recorded as a liability due to the respective taxing authorities. Shipping and handling costs include costs associated with the selection of products and delivery to customers and are included within operating expenses.

Product Sales Revenues

Sysco generates revenue primarily from the distribution and sale of food and related products to its customers. Substantially all revenue is recognized at the point in time in which the product is delivered to the customer. The company grants certain customers sales incentives, such as rebates or discounts, which are accounted for as variable consideration. The variable consideration is based on amounts known at the time the performance obligation is satisfied and, therefore, requires minimal judgment.

Contract Balances

After completion of Sysco’s performance obligations, the company has an unconditional right to consideration as outlined in its contracts with customers. Sysco’s customer receivables will generally be collected in less than 30 days in accordance with the underlying payment terms. Customer receivables, which are included in Accounts and notes receivable, less allowances in the consolidated balance sheet, were $3.9 billion and $3.8 billion as of December 29, 2018 and June 30, 2018, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in Other Assets and amortized over the life of the contract or the expected life of the relationship with the customer on a straight-line basis. As of December 29, 2018, Sysco’s contract assets were immaterial. Sysco has no material commissions paid that are directly attributable to obtaining a particular contract.

Disaggregation of Sales

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. 29, 2018
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,084,648	$	409,086	$	374,069	$	—	$	2,867,803
Canned and dry products	1,799,535		611,609		66,719		—		2,477,863
Frozen fruits, vegetables, bakery and other	1,417,063		354,178		315,129		—		2,086,370
Dairy products	1,041,436		306,364		148,103		—		1,495,903
Poultry	1,001,579		209,542		208,674		—		1,419,795
Fresh produce	927,997		322,020		57,048		—		1,307,065
Paper and disposables	681,890		87,376		181,896		14,175		965,337
Seafood	581,655		196,413		23,451		—		801,519
Beverage products	271,182		161,317		136,244		20,422		589,165
Other ⁽¹⁾	280,120		232,693		25,274		216,800		754,887
Total Sales	$	10,087,105	$	2,890,598	$	1,536,607	$	251,397	$	14,765,707


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



	13-Week Period Ended Dec. 30, 2017
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	1,975,717	$	411,726	$	375,602	$	—	$	2,763,045
Canned and dry products	1,742,913		579,881		89,274		—		2,412,068
Frozen fruits, vegetables, bakery and other	1,316,229		645,354		289,133		—		2,250,716
Dairy products	1,019,134		308,362		162,372		—		1,489,868
Poultry	997,225		212,552		277,820		—		1,487,597
Fresh produce	902,943		256,746		63,947		—		1,223,636
Paper and disposables	637,520		98,258		183,205		13,445		932,428
Seafood	555,996		182,393		21,109		—		759,498
Beverage products	266,102		48,819		140,190		19,441		474,552
Other ⁽¹⁾	267,446		124,952		30,493		195,191		618,082
Total Sales	$	9,681,225	$	2,869,043	$	1,633,145	$	228,077	$	14,411,490


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



	26-Week Period Ended Dec. 29, 2018
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	4,206,167	$	829,542	$	746,401	$	—	$	5,782,110
Canned and dry products	3,651,702		1,223,079		144,341		—		5,019,122
Frozen fruits, vegetables, bakery and other	2,840,449		982,735		606,995		—		4,430,179
Dairy products	2,127,840		624,711		302,909		—		3,055,460
Poultry	2,028,515		425,124		480,735		—		2,934,374
Fresh produce	1,865,577		579,564		121,897		—		2,567,038
Paper and disposables	1,392,649		191,915		370,512		30,584		1,985,660
Seafood	1,243,342		384,850		48,835		—		1,677,027
Beverage products	561,752		213,388		283,538		43,601		1,102,279
Other ⁽¹⁾	568,523		356,640		51,901		450,673		1,427,737
Total Sales	$	20,486,516	$	5,811,548	$	3,158,064	$	524,858	$	29,980,986


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



	26-Week Period Ended Dec. 30, 2017
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	4,006,857	$	846,365	$	761,851	$	—	$	5,615,073
Canned and dry products	3,481,591		1,173,234		166,759		—		4,821,584
Frozen fruits, vegetables, bakery and other	2,582,958		1,271,422		561,725		—		4,416,105
Poultry	2,043,911		420,017		574,719		—		3,038,647
Dairy products	2,036,796		624,016		329,059		—		2,989,871
Fresh produce	1,826,735		522,329		129,493		—		2,478,557
Paper and disposables	1,293,829		202,368		365,034		28,835		1,890,066
Seafood	1,176,317		365,664		44,884		—		1,586,865
Beverage products	541,232		99,878		285,264		42,452		968,826
Other ⁽¹⁾	539,941		247,005		55,028		414,346		1,256,320
Total Sales	$	19,530,167	$	5,772,298	$	3,273,816	$	485,633	$	29,061,914


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

5. ACQUISITIONS

There were no new acquisitions in the first 26 weeks of fiscal 2019. Certain acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are achieved. As of December 29, 2018, aggregate contingent consideration outstanding was $14.1 million, of which $9.4 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 measurement.

6. FAIR VALUE MEASUREMENTS

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


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


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


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

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

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


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


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


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


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


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


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


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

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

The following tables present the company’s assets measured at fair value on a recurring basis as of December 29, 2018, June 30, 2018 and December 30, 2017:



	Assets and Liabilities Measured at Fair Value as of Dec. 29, 2018
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	298,461	$	200	$	—	$	298,661
Other assets ⁽¹⁾	152,178		—		—		152,178
Total assets at fair value	$	450,639	$	200	$	—	$	450,839


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



	Assets and Liabilities Measured at Fair Value as of Jun. 30, 2018
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	169,214	$	30,190	$	—	$	199,404
Other assets ⁽¹⁾	163,519		—		—		163,519
Total assets at fair value	$	332,733	$	30,190	$	—	$	362,923


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



	Assets and Liabilities Measured at Fair Value as of Dec. 30, 2017
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	241,071	$	43,191	$	—	$	284,262
Other assets ⁽¹⁾	145,734		7,143		—		152,877
Total assets at fair value	$	386,805	$	50,334	$	—	$	437,139


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

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt, and is considered a Level 2 measurement. The fair value of total debt was approximately $8.8 billion, $8.4 billion and $9.2 billion as of December 29, 2018, June 30, 2018 and December 30, 2017, respectively. The carrying value of total debt was $8.8 billion, $8.3 billion and $8.9 billion as of December 29, 2018, June 30, 2018 and December 30, 2017, respectively.

7. DERIVATIVE FINANCIAL INSTRUMENTS

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

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates. In December 2018, the company entered into an interest rate swap agreement that effectively converted €500.0 million of fixed rate debt maturing in 2023 to floating rate debt.

Hedging of foreign currency risk

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

Hedging of fuel price risk

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

None of the Company’s hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of December 29, 2018 are below:



Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk
April 2019	U.S. Dollar	500
October 2020	U.S. Dollar	750
July 2021	U.S. Dollar	500
June 2023	Euro	500
March 2025	U.S. Dollar	500

Hedging of foreign currency risk
Various (January 2019 to April 2019)	Swedish Krona	261
Various (January 2019 to October 2019)	British Pound Sterling	20
Various (January 2019 to December 2019)	U.S. Dollar	1
June 2021	Canadian Dollar	300
July 2021	British Pound Sterling	234
August 2021	British Pound Sterling	466
June 2023	Euro	500

Hedging of fuel risk
Various (December 31, 2018 to December 2019)	Gallons	52

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 29, 2018, June 30, 2018 and December 30, 2017 are as follows:



		Derivative Fair Value
	Balance Sheet location	Dec. 29, 2018		Jun. 30, 2018		Dec. 30, 2017
		(In thousands)
Fair Value Hedges:
Interest rate swaps	Other current assets	$	—	$	—	$	118
Interest rate swaps	Other assets	5,207		—		—
Interest rate swaps	Other current liabilities	2,180		6,820		—
Interest rate swaps	Other long-term liabilities	31,488		49,734		33,003

Cash Flow Hedges:
Fuel Swaps	Other current assets	$	—	$	15,316	$	13,678
Foreign currency forwards	Other current assets	246		693		555
Cross currency swaps	Other current assets	—		4,284		—
Cross currency swaps	Other assets	13,773		3,454		—
Fuel Swaps	Other current liabilities	19,548		—		—
Foreign currency forwards	Other current liabilities	226		71		351
Fuel swaps	Other long-term liabilities	742		—		—
Cross currency swaps	Other long-term liabilities	—		14,201		21,310

Net Investment Hedges:
Foreign currency swaps	Other assets	$	23,349	$	10,709	$	7,822
Foreign currency swaps	Other long-term liabilities	20,361		39,690		48,087

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



	13-Week Period Ended Dec. 29, 2018
	Cost of Goods Sold		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	11,993,995	$	2,319,817	$	87,113
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items ⁽¹⁾	$	—	$	—	$	(46,919	)
Derivatives designated as hedging instruments	—		—		31,550


⁽¹⁾	The hedged total includes interest expense of $15.7 million and change in fair value of debt of $31.3 million.



	13-Week Period Ended Dec. 30, 2017
	Cost of Goods Sold		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	11,712,104	$	2,170,834	$	85,986
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items ⁽¹⁾	$	—	$	—	$	(7,515	)
Derivatives designated as hedging instruments	—		—		(9,942		)


⁽¹⁾	The hedged total includes interest expense of $17.1 million and change in fair value of debt of $9.6 million.



	26-Week Period Ended Dec. 29, 2018
	Cost of Goods Sold		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	24,305,489	$	4,595,462	$	176,129
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items ⁽¹⁾	$	—	$	—	$	(55,506	)
Derivatives designated as hedging instruments	—		—		20,691


⁽¹⁾	The hedged total includes interest expense of $30.8 million and change in fair value of debt of $24.7 million.



	26-Week Period Ended Dec. 30, 2017
	Cost of Goods Sold		Operating Expense		Interest Expense
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value or cash flow hedges are recorded	$	23,568,860	$	4,345,137	$	166,870
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items ⁽¹⁾	$	—	$	—	$	(22,745	)
Derivatives designated as hedging instruments	—		—		(10,989		)


⁽¹⁾	The hedged total includes interest expense of $34.2 million and change in fair value of debt of $11.4 million.

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 13-week periods ended December 29, 2018 and December 30, 2017, presented on a pretax basis, are as follows:



	13-Week Period Ended Dec. 29, 2018
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(36,843	)	Operating expense	$	5,040
Foreign currency contracts	25,463			Cost of goods sold	8
Total	$	(11,380	)		$	5,048

Derivatives in net investment hedging relationships:
Foreign currency contracts	$	27,143		N/A	$	—
Foreign denominated debt	8,150			N/A	—
Total	$	35,293			$	—

	13-Week Period Ended Dec. 30, 2017
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	8,505		Operating expense	$	1,814
Foreign currency contracts	6,331			Cost of goods sold	525
Total	$	14,836			$	2,339

Derivatives in net investment hedging relationships:
Foreign currency contracts	$	(12,063	)	N/A	$	—
Foreign denominated debt	(9,450		)	N/A	—
Total	$	(21,513	)		$	—

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 26-week periods ended December 29, 2018 and December 30, 2017, presented on a pretax basis, are as follows:



	26-Week Period Ended Dec. 29, 2018
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(35,817	)	Operating expense	$	9,393
Foreign currency contracts	20,660			Cost of goods sold	491
Total	$	(15,157	)		$	9,884

Derivatives in net investment hedging relationships:
Foreign currency contracts	$	34,371		N/A	$	—
Foreign denominated debt	12,100			N/A	—
Total	$	46,471			$	—

	26-Week Period Ended Dec. 30, 2017
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)				(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	19,706		Operating expense	$	1,658
Foreign currency contracts	(15,462		)	Cost of goods sold	834
Total	$	4,244			$	2,492

Derivatives in net investment hedging relationships:
Foreign currency contracts	$	(27,957	)	N/A	$	—
Foreign denominated debt	(28,600		)	N/A	—
Total	$	(56,557	)		$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 29, 2018 are as follows:



	Dec. 29, 2018
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Current maturities of long-term debt	$	(499,867	)	$	2,152
Long-term debt	(2,310,689		)	25,776

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 30, 2018 are as follows:



	Jun. 30, 2018
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Current maturities of long-term debt	$	(499,610	)	$	5,097
Long-term debt	(1,743,732		)	47,555

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 30, 2017, are as follows:



	Dec. 30, 2017
	Carrying Amount of Hedged Assets (Liabilities)			Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Current maturities of long-term debt	$	(499,960	)	$	—
Long-term debt	(1,747,194		)	18,282

8. DEBT

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. As of December 29, 2018, there was $109.9 million in commercial paper issuances outstanding. Any outstanding amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first 26 weeks of fiscal 2019, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from zero to approximately $669.0 million.

Senior notes offering

On September 25, 2018, Sysco issued senior notes totaling CDN $500.0 million. The senior notes were issued in Canada with a coupon rate of 3.65% and pricing, as a percentage of par, of 99.962%. Net proceeds from the offering were used to repay internal debt that was created in fiscal 2018 when the company repatriated earnings from its Canadian operations back to Sysco Corporation, and to repay outstanding borrowings under Sysco’s commercial paper program, along with other general corporate purposes. Interest on the senior notes will be paid semi-annually on April 25 and October 25, beginning April 25, 2019. 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 the senior notes before the date that is two months prior to the maturity date, Sysco will pay an amount equal to the greater of (1) 100% of the principal amount of the senior notes to be redeemed; or (2) the applicable yield price, plus in either case, any accrued and unpaid interest on the senior notes to be redeemed to the date of redemption. 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 plus accrued and unpaid interest on the senior notes redeemed to the redemption date.

9. 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. 29, 2018		Dec. 30, 2017		Dec. 29, 2018		Dec. 30, 2017
	(In thousands, except for share and per share data)				(In thousands, except for share and per share data)
Numerator:
Net earnings	$	267,380	$	284,113	$	698,422	$	651,753
Denominator:
Weighted-average basic shares outstanding	517,871,328		521,284,182		519,363,973		524,286,931
Dilutive effect of share-based awards	6,729,182		5,965,405		7,453,528		5,869,579
Weighted-average diluted shares outstanding	524,600,510		527,249,587		526,817,501		530,156,510
Basic earnings per share	$	0.52	$	0.55	$	1.34	$	1.24
Diluted earnings per share	$	0.51	$	0.54	$	1.33	$	1.23

Dividends declared per common share	$	0.39	$	0.36	$	0.75	$	0.69

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 2,565,000 and 2,749,000 for the second quarter of fiscal 2019 and fiscal 2018, 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 3,630,000 and 4,594,000 for the first 26 weeks of fiscal 2019 and fiscal 2018, respectively.

10. 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 $193.8 million and $310.7 million for the second quarter of fiscal 2019 and fiscal 2018, respectively. Comprehensive income was $583.3 million and $798.5 million for the first 26 weeks of fiscal 2019 and fiscal 2018, 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. 29, 2018
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	2,133		$	533		$	1,600
Amortization of actuarial loss (gain), net	Other expense, net	8,706			2,177			6,529
Total reclassification adjustments		10,839			2,710			8,129
Foreign currency translation:
Foreign currency translation adjustment	N/A	(101,533		)	—			(101,533		)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses ⁽¹⁾	(11,380		)	(2,596		)	(8,784		)
Change in net investment hedges	N/A	35,293			8,824			26,469
Total other comprehensive income (loss) before reclassification adjustments		23,913			6,228			17,685
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,873			718			2,155
Total other comprehensive income (loss)		$	(63,908	)	$	9,656		$	(73,564	)


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



		13-Week Period Ended Dec. 30, 2017
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	2,409		$	602		$	1,807
Amortization of actuarial loss (gain), net	Other expense, net	8,761			2,190			6,571
Total reclassification adjustments		11,170			2,792			8,378
Foreign currency translation:
Foreign currency translation adjustment	N/A	19,254			—			19,254
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses ⁽¹⁾	2,944			2,027			917
Change in net investment hedges	N/A	(6,543		)	(2,390		)	(4,153		)
Total other comprehensive income (loss) before reclassification adjustments		(3,599		)	(363		)	(3,236		)
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,873			718			2,155
Total other comprehensive income (loss)		$	29,698		$	3,147		$	26,551


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



		26-Week Period Ended Dec. 29, 2018
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss		$	(36,891	)	$	(4,380	)	$	(32,511	)
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	4,266			1,066			3,200
Amortization of actuarial loss (gain), net	Other expense, net	17,412			4,354			13,058
Total reclassification adjustments		21,678			5,420			16,258
Foreign currency translation:
Other comprehensive income (loss) before reclassification adjustments:
Foreign currency translation adjustment	N/A	(126,460		)	—			(126,460		)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses ⁽¹⁾	(15,157		)	(3,365		)	(11,792		)
Change in net investment hedges	N/A	46,471			11,414			35,057
Total other comprehensive income (loss) before reclassification adjustments		31,314			8,049			23,265
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	5,746			1,436			4,310
Total other comprehensive income (loss)		$	(104,613	)	$	10,525		$	(115,138	)


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



		26-Week Period Ended Dec. 30, 2017
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	4,818	$	1,527	$	3,291
Amortization of actuarial loss (gain), net	Other expense, net	17,522		5,554		11,968
Total reclassification adjustments		22,340		7,081		15,259
Foreign currency translation:
Foreign currency translation adjustment	N/A	140,584		—		140,584
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses ⁽¹⁾	6,350		3,232		3,118
Change in net investment hedges	N/A