Item 1. Financial Statements

100K characters. Original on sec.gov · Markdown

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In millions, except for share data)


	Sep. 27, 2025		Jun. 28, 2025
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	844	$	1,071
Accounts receivable, less allowances of $46 and $17	5,800		5,502
Inventories	5,377		5,053

Prepaid expenses and other current assets	387		338

Income tax receivable	4		4
Total current assets	12,412		11,968
Plant and equipment at cost, less accumulated depreciation	5,936		6,084
Other long-term assets
Goodwill	5,190		5,231
Intangibles, less amortization	1,043		1,080

Deferred income taxes	490		497
Operating lease right-of-use assets, net	1,172		1,131
Other assets	801		783
Total other long-term assets	8,696		8,722
Total assets	$	27,044	$	26,774

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities

Accounts payable	$	6,492	$	6,512
Accrued expenses	2,166		2,268
Accrued income taxes	117		51
Current operating lease liabilities	141		136
Current maturities of long-term debt	1,894		949
Total current liabilities	10,810		9,916
Long-term liabilities
Long-term debt	11,459		12,360
Deferred income taxes	351		345
Long-term operating lease liabilities	1,087		1,049
Other long-term liabilities	1,226		1,247
Total long-term liabilities	14,123		15,001

Noncontrolling interest	44		27
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—		—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765		765
Paid-in capital	2,010		1,986
Retained earnings	13,262		13,061
Accumulated other comprehensive loss	(1,129)		(1,098)
Treasury stock at cost, 286,624,506 and 287,678,658 shares	(12,841)		(12,884)
Total shareholders’ equity	2,067		1,830
Total liabilities and shareholders’ equity	$	27,044	$	26,774

Note: The June 28, 2025 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 millions, except for share and per share data)


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
Sales	$	21,148	$	20,484
Cost of sales	17,247		16,731
Gross profit	3,901		3,753
Operating expenses	3,101		2,945
Operating income	800		808
Interest expense	172		160
Other expense (income), net	28		6
Earnings before income taxes	600		642
Income taxes	124		152
Net earnings	$	476	$	490

Net earnings:
Basic earnings per share	$	0.99	$	1.00
Diluted earnings per share	0.99		0.99

Average shares outstanding	478,761,180		492,023,827
Diluted shares outstanding	480,365,666		493,785,973

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions)


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
Net earnings	$	476	$	490
Other comprehensive income (loss):
Foreign currency translation adjustment	(65)		168
Items presented net of tax:

Amortization of cash flow hedges	1		1
Change in net investment hedges	13		(13)
Change in cash flow hedges	10		(14)




Amortization of actuarial loss	5		5


Net actuarial gain and other adjustments arising in current year	4		23
Change in marketable securities	1		3
Total other comprehensive income (loss)	(31)		173
Comprehensive income	$	445	$	663

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In millions, except for share data)


									Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings					Treasury Stock
	Shares	Amount						Shares			Amounts		Totals
Balance as of June 28, 2025	765,174,900	$	765	$	1,986	$	13,061		$	(1,098)		287,678,658		$	(12,884)	$	1,830
Net earnings						476										476












Other comprehensive income (loss)									(31)							(31)
Dividends declared ($0.54 per common share)						(259)										(259)


Share-based compensation awards				24								(1,054,152)		43		67
Adjustments to redeemable non-controlling interest						(16)										(16)
Balance as of September 27, 2025	765,174,900	$	765	$	2,010	$	13,262		$	(1,129)		286,624,506		$	(12,841)	$	2,067

									Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings					Treasury Stock
	Shares	Amount						Shares			Amounts		Totals
Balance as of June 29, 2024	765,174,900	$	765	$	1,908	$	12,260		$	(1,339)		273,416,685		$	(11,734)	$	1,860
Net earnings						490										490








Other comprehensive income (loss)									173							173
Dividends declared ($0.51 per common share)						(252)										(252)

Treasury stock purchases												1,460,065		(109)		(109)
Share-based compensation awards				17								(772,402)		28		45
Balance as of September 28, 2024	765,174,900	$	765	$	1,925	$	12,498		$	(1,166)		274,104,348		$	(11,815)	$	2,207

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In millions)


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
Cash flows from operating activities:
Net earnings	$	476	$	490
Adjustments to reconcile net earnings to cash provided by operating activities:

Share-based compensation expense	31		30
Depreciation and amortization	233		235
Operating lease asset amortization	37		34
Amortization of debt issuance and other debt-related costs	4		4

Deferred income taxes	(5)		(17)
Provision for losses on receivables	30		21


Other non-cash items	8		(40)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables	(349)		(427)
Increase in inventories	(335)		(287)
Increase in prepaid expenses and other current assets	(42)		(16)
Increase in accounts payable	82		27
Decrease in accrued expenses	(83)		(128)
Decrease in operating lease liabilities	(49)		(42)
Increase in accrued income taxes	66		140
(Increase) decrease in other assets	(11)		2
(Decrease) increase in other long-term liabilities	(7)		27

Net cash provided by operating activities	86		53
Cash flows from investing activities:
Additions to plant and equipment	(160)		(122)
Proceeds from sales of plant and equipment	24		77


Purchase of marketable securities	—		(12)
Proceeds from sales of marketable securities	7		10
Other investing activities	22		1

Net cash used for investing activities	(107)		(46)
Cash flows from financing activities:
Bank and commercial paper borrowings, net	76		240
Other debt borrowings including senior notes	2		3
Other debt repayments including senior notes	(42)		(44)






Proceeds from stock option exercises	43		29

Stock repurchases	—		(108)
Dividends paid	(259)		(251)

Other financing activities	(15)		—
Net cash used for financing activities	(195)		(131)
Effect of exchange rates on cash, cash equivalents and restricted cash	(6)		13
Net decrease in cash, cash equivalents and restricted cash	(222)		(111)
Cash, cash equivalents and restricted cash at beginning of period	1,349		945
Cash, cash equivalents and restricted cash at end of period	$	1,127	$	834
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	178	$	144
Income taxes, net of refunds	31		26

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1. BASIS OF PRESENTATION

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

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2025 (our “fiscal 2025 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.

Supplemental Balance Sheet Information

Supplier Financing Programs

We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been confirmed as valid require payment by Sysco upon the due date of the obligation.

Our outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:


	Sep. 27, 2025		Jun. 28, 2025
	(In millions)
Financed payment obligations	$	111	$	93

Accounts Receivable, Less Allowances

We utilize arrangements to sell portions of our trade accounts receivable to third-party financial institutions on a non-recourse basis in exchange for cash. The arrangements meet the requirements for the receivables transferred to be accounted for as sales and are accounted for as a reduction in trade receivables. Proceeds from the sales are reported net of negotiated discount and are recorded as a reduction to accounts receivable outstanding in the company’s consolidated balance sheets and as cash flows from operating activities in the company’s consolidated statements of cash flows. Accounts receivable sold under these arrangements were $1.4 billion and $1.9 billion for the first 13 weeks of fiscal 2026 and 2025, respectively.

In certain instances, Sysco has continuing involvement subsequent to the transfer, limited to providing certain servicing and collection actions on behalf of the purchasers of the designated trade receivables. The outstanding aggregate principal amount of receivables that has been derecognized and remain outstanding was $206 million and $189 million at September 27, 2025 and June 28, 2025, respectively. We continue to service the receivables post-transfer on a non-recourse basis with no participating interest.

Supplemental Cash Flow Information

The following table sets forth our reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statement of cash flows:


	Sep. 27, 2025		Sep. 28, 2024
	(In millions)
Cash and cash equivalents	$	844	$	733
Restricted cash (1)	283		101
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	1,127	$	834


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

The following table sets forth our non-cash investing and financing activities:


	Sep. 27, 2025		Sep. 28, 2024
	(In millions)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs	$	26	$	105
Assets obtained in exchange for finance lease obligations	11		23

2. NEW ACCOUNTING STANDARDS

Recent Accounting Guidance Adopted

Segment Reporting

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, (our fiscal 2025), and interim periods for our fiscal years beginning after December 15, 2024, (our first quarter of fiscal 2026), and should be applied on a retrospective basis to all periods presented. Sysco adopted ASU 2023-07 related to annual disclosure requirements effective with our fiscal 2025 Form 10-K. The newly required annual disclosures were included in Note 21 - Business Segment Information of the fiscal 2025 Form 10-K. We adopted ASU 2023-07 related to interim disclosure requirements effective with our first quarter fiscal 2026 10-Q filing. See Note 13 included in this Form 10-Q for the additional segment disclosures required as a result of the adoption. Adoption of ASU 2023-07 only impacted our financial statement disclosures, with no impacts to our financial position or results of operations.

Recent Accounting Guidance Not Yet Adopted

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, (our fiscal 2026), on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard update requires more detailed disclosures related to the types of expenses included within commonly presented income statement captions. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, (our fiscal 2028), and interim reporting periods for our fiscal years beginning after December 15, 2027, (our first quarter of fiscal 2029). Early adoption is permitted. The standard updates are to be applied prospectively with the option for retrospective application. We are currently evaluating the effect of adopting ASU 2024-03 on our disclosures.

Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which amends certain aspects of the accounting and disclosure of software costs under ASU 350-40. This ASU updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, (our fiscal 2029), and interim reporting periods within those annual reporting periods, (our first quarter of fiscal 2029). Early adoption is permitted. The standard updates may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the effect of adopting ASU 2025-06 on our consolidated financial statements and disclosures.

3. REVENUE

We recognize revenues when our performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, were $5.5 billion and $5.1 billion as of September 27, 2025 and June 28, 2025, respectively.

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


	13-Week Period Ended Sep. 27, 2025
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In millions)
Principal Product Categories
Fresh and frozen meats	$	2,935	$	624	$	607	$	—	$	4,166
Canned and dry products	2,732		754		260		—		3,746
Frozen fruits, vegetables, bakery and other	2,070		741		326		—		3,137
Dairy products	1,584		462		143		—		2,189
Poultry	1,500		307		287		—		2,094
Fresh produce	1,314		288		75		—		1,677
Paper and disposables	1,065		141		203		12		1,421
Beverage products	418		211		157		21		807
Seafood	588		132		43		—		763
Equipment and smallwares	275		52		6		124		457
Other (1)	299		254		22		116		691
Total Sales	$	14,780	$	3,966	$	2,129	$	273	$	21,148


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


	13-Week Period Ended Sep. 28, 2024
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In millions)
Principal Product Categories
Canned and dry products	$	2,678	$	837	$	247	$	—	$	3,762
Fresh and frozen meats	2,607		542		535		—		3,684
Frozen fruits, vegetables, bakery and other	2,037		702		331		—		3,070
Dairy products	1,613		432		124		—		2,169
Poultry	1,512		288		296		—		2,096

Fresh produce	1,345		291		72		—		1,708
Paper and disposables	1,047		139		200		14		1,400


Beverage products	384		187		156		21		748
Seafood	547		113		35		—		695

Equipment and smallwares	310		52		29		122		513

Other (1)	282		211		21		125		639
Total Sales	$	14,362	$	3,794	$	2,046	$	282	$	20,484


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

4. FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest only in high-quality investments. The fair values of our cash deposits and money market funds included in cash equivalents are valued using inputs that are considered a Level 1 measurement. Other cash equivalents, such as time deposits and highly liquid instruments with original maturities of three months or less, are valued using inputs that are considered a Level 2 measurement. The fair value of our marketable securities is measured using inputs that are considered a Level 2 measurement, as they rely on quoted prices in markets that are not actively traded or observable inputs over the full term of the asset. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 5, “Marketable Securities.” The fair value of our derivative instruments is measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair values of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 6, “Derivative Financial Instruments.”

The following tables present our assets measured at fair value on a recurring basis as of September 27, 2025 and June 28, 2025:


	Assets Measured at Fair Value as of Sep. 27, 2025
	Level 1		Level 2		Level 3		Total
	(In millions)
Assets:

Cash and cash equivalents	$	340	$	—	$	—	$	340

Restricted cash	283		—		—		283







Total assets at fair value	$	623	$	—	$	—	$	623


	Assets Measured at Fair Value as of Jun. 28, 2025
	Level 1		Level 2		Level 3		Total
	(In millions)
Assets:

Cash and cash equivalents	$	466	$	—	$	—	$	466



Restricted cash	277		—		—		277

Total assets at fair value	$	743	$	—	$	—	$	743

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of our total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt and is considered a Level 2 measurement. The fair value of total debt was approximately $13.1 billion as of September 27, 2025 and $12.8 billion as of June 28, 2025, while the carrying value was $13.4 billion as of September 27, 2025 and $13.3 billion as of June 28, 2025.

5. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. We include fixed income securities maturing in less than 12 months within prepaid expenses and other current assets. Fixed income securities maturing in more than 12 months are included within other assets in the accompanying consolidated balance sheets. We record the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.

Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in accumulated other comprehensive loss. There were no significant credit losses recognized in the first 13 weeks of fiscal 2026.

The following table presents our available-for-sale marketable securities as of September 27, 2025 and June 28, 2025:


	Sep. 27, 2025
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In millions)
Fixed income securities:
Corporate bonds	$	97	$	1	$	(1)	$	97	$	15	$	82
Government bonds	29		—		(1)		28		2		26
Total marketable securities	$	126	$	1	$	(2)	$	125	$	17	$	108

	Jun. 28, 2025
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In millions)
Fixed income securities:
Corporate bonds	$	104	$	1	$	(1)	$	104	$	15	$	89
Government bonds	29		—		(1)		28		—		28
Total marketable securities	$	133	$	1	$	(2)	$	132	$	15	$	117

As of September 27, 2025, the balance of available-for-sale securities by contractual maturity is shown in the following table. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.


	Sep. 27, 2025
	(In millions)
Due in one year or less	$	17
Due after one year through five years	71
Due after five years	37

Total	$	125

There were no significant realized gains or losses in marketable securities in the first 13 weeks of fiscal 2026.

6. DERIVATIVE FINANCIAL INSTRUMENTS

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

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. The interest rate swaps are designated as fair value hedges and gains or losses on the hedges impact interest expense within the consolidated statements of income.

Hedging of foreign currency risk

Sysco has cross-currency swaps that hedge the foreign currency exposure of our net investment in certain foreign

operations. These cross-currency swaps are designated as net investment hedges with gains and losses recognized within accumulated other comprehensive income (loss).

Sysco routinely manages foreign currency risk with spot and forward-rate cross-currency swaps on foreign-denominated balances. The swaps are designated as fair value hedges and for swaps hedging the change in foreign currency spot rates, we have elected to exclude the changes in fair value of the forward points from the assessments of hedge effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of the excluded components. Unrealized gains or losses on components excluded from hedge effectiveness are recorded within accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument.

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. Accounts payable associated with these inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. We periodically enter 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 fuel on anticipated future purchases. These swaps are designated as cash flow hedges.

None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of September 27, 2025 are presented below:


Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk

January 2034	U.S. Dollar	500
March 2035	U.S. Dollar	550

Hedging of foreign currency risk








January 2029	Euro	470



September 2030	Canadian Dollar	998

Hedging of fuel risk
Various (September 2025 to April 2027)	Gallons	72

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheets as of September 27, 2025 and June 28, 2025 are as follows:


		Derivative Fair Value
	Balance Sheet location	Sep. 27, 2025		Jun. 28, 2025
		(In millions)
Fair Value Hedges:
Interest rate swaps	Prepaid expenses and other current assets	$	3	$	—

Interest rate swaps	Other assets	31		31
Interest rate swaps	Accrued expenses	—		1







Cash Flow Hedges:
Fuel swaps	Prepaid expenses and other current assets	$	5	$	—



Fuel swaps	Other assets	2		—
Fuel swaps	Accrued expenses	1		7

Fuel swaps	Other long-term liabilities	—		2

Net Investment Hedges:
Cross currency swaps	Prepaid expenses and other current assets	$	15	$	11
Cross currency swaps	Other assets	63		55
Cross currency swaps	Accrued expenses	3		2
Cross currency swaps	Other long-term liabilities	128		134

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


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
	(In millions)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded	$	200	$	166
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items	$	(19)	$	(33)
Derivatives designated as hedging instruments	3		25
Cross currency swaps and foreign currency forwards:
Hedged items	$	—	$	(4)
Derivatives designated as hedging instruments	—		4

The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above consist of the following components for each of the periods presented:


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
	(In millions)
Interest expense	$	(15)	$	(8)
(Increase) decrease in fair value of debt	(4)		(25)
Foreign currency gain (loss)	—		(4)
Hedged items	$	(19)	$	(37)

The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 13-week periods ended September 27, 2025 and September 28, 2024, presented on a pretax basis, are as follows:


	13-Week Period Ended Sep. 27, 2025
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In millions)			(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	13	Operating expense	$	1




Derivatives in net investment hedging relationships:
Cross currency contracts	$	18	N/A	$	—







	13-Week Period Ended Sep. 28, 2024
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In millions)			(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(19)	Operating expense	$	—
Foreign currency contracts	(1)		Cost of sales / Other income	—

Total	$	(20)		$	—

Derivatives in net investment hedging relationships:
Cross currency contracts	$	(18)	N/A	$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 27, 2025 are as follows:


	Sep. 27, 2025
	Carrying Amount of Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In millions)
Balance sheet location:

Long-term debt	$	(1,073)	$	(35)

The carrying amount of hedged liabilities in the consolidated balance sheet as of June 28, 2025 is $1.1 billion.

7. DEBT

On September 5, 2025, Sysco entered into a new long-term revolving credit facility, which replaces the $3.0 billion senior revolving credit facility that was originally entered into on April 29, 2022. The aggregate commitments of the lenders under the new long-term credit agreement are $3.0 billion, with an option to increase such commitments to $4.0 billion. The new facility includes a covenant requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 over four consecutive fiscal quarters, which is consistent with our previous revolving credit facility. The new revolving credit facility expires on September 5, 2030. As of September 27, 2025, there were no borrowings outstanding under this facility.

We have a U.S. commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility noted above. As of September 27, 2025, there were no commercial paper issuances outstanding under this program. We also have a commercial paper program in Europe with borrowings not to exceed €500 million. As of September 27, 2025, there were €290 million (the equivalent of $339 million) in commercial paper issuances outstanding under this program.

The total carrying value of our debt was $13.4 billion as of September 27, 2025 and $13.3 billion as of June 28, 2025. The increase in the carrying value of our debt during the 13-week period ended September 27, 2025 was due to new commercial paper issuances and new leases in support of plant and equipment. In October 2025, Sysco repaid $750 million of matured senior notes that were classified within current maturities of long-term debt as of September 27, 2025.

Information regarding the guarantors of our registered debt securities is contained in the section captioned Guarantor Summarized Financial Information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Form 10-Q.

8. EARNINGS PER SHARE

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


	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
	(In millions, except for share and per share data)
Numerator:
Net earnings	$	476	$	490
Denominator:
Weighted-average basic shares outstanding	478,761,180		492,023,827
Dilutive effect of share-based awards	1,604,486		1,762,146
Weighted-average diluted shares outstanding	480,365,666		493,785,973
Basic earnings per share	$	0.99	$	1.00
Diluted earnings per share	$	0.99	$	0.99

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 1,718,000 and 3,338,000 for the first 13 weeks of fiscal 2026 and 2025, respectively.

9. OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to certain hedging arrangements, amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $445 million and $663 million for the first quarter of fiscal 2026 and fiscal 2025, respectively.

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


		13-Week Period Ended Sep. 27, 2025
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In millions)
Foreign currency translation:

Foreign currency translation adjustment	N/A	$	(65)	$	—	$	(65)

Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:

Change in cash flow hedges	Operating expenses	13		3		10
Change in net investment hedges	N/A	18		5		13

Total other comprehensive income before reclassification adjustments		31		8		23
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	1		—		1
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial gain (loss) and other adjustments arising in the current year	Other expense, net	5		1		4

Total other comprehensive income before reclassification adjustments		5		1		4
Reclassification adjustments:

Amortization of actuarial loss, net	Other expense (income), net	7		2		5
Total reclassification adjustments		7		2		5
Marketable securities:
Change in marketable securities	Other expense (income), net	1		—		1
Total other comprehensive income (loss)		$	(20)	$	11	$	(31)


		13-Week Period Ended Sep. 28, 2024
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In millions)
Foreign currency translation:
Foreign currency translation adjustment	N/A	$	168	$	—	$	168
Hedging instruments:
Other comprehensive income before reclassification adjustments:

Change in cash flow hedges	Operating expenses	(20)		(6)		(14)
Change in net investment hedges	N/A	(18)		(5)		(13)

Total other comprehensive (loss) before reclassification adjustments		(38)		(11)		(27)
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2		1		1
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial gain and other adjustments arising in the current year	Other expense, net	31		8		23

Total other comprehensive income before reclassification adjustments		31		8		23
Reclassification adjustments:

Amortization of actuarial loss, net	Other expense (income), net	7		2		5

Total reclassification adjustments		7		2		5
Marketable securities:
Change in marketable securities	Other expense (income), net	4		1		3
Total other comprehensive income (loss)		$	174	$	1	$	173

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


	13-Week Period Ended Sep. 27, 2025
	Foreign Currency Translation		Hedging, net of tax		Pension and Other Postretirement Benefit Plans, net of tax		Marketable Securities, net of tax		Total
	(In millions)
Balance as of Jun. 28, 2025	$	(120)	$	(59)	$	(918)	$	(1)	$	(1,098)
Equity adjustment from foreign currency translation	(65)		—		—		—		(65)

Amortization of cash flow hedges	—		1		—		—		1
Change in net investment hedges	—		13		—		—		13
Change in cash flow hedges	—		10		—		—		10


Amortization of unrecognized net actuarial losses	—		—		5		—		5


Net actuarial gain and other adjustments arising in the current year	—		—		4		—		4


Change in marketable securities	—		—		—		1		1
Balance as of Sep. 27, 2025	$	(185)	$	(35)	$	(909)	$	—	$	(1,129)


	13-Week Period Ended Sep. 28, 2024
	Foreign Currency Translation		Hedging, net of tax		Pension and Other Postretirement Benefit Plans, net of tax		Marketable Securities, net of tax		Total
	(In millions)
Balance as of Jun. 29, 2024	$	(407)	$	(10)	$	(917)	$	(5)	$	(1,339)
Equity adjustment from foreign currency translation	168		—		—		—		168
Amortization of cash flow hedges	—		1		—		—		1
Change in net investment hedges	—		(13)		—		—		(13)
Change in cash flow hedges	—		(14)		—		—		(14)

Amortization of unrecognized net actuarial losses	—		—		5		—		5


Net actuarial gain and other adjustments arising in the current year	—		—		23		—		23
Change in marketable securities	—		—		—		3		3
Balance as of Sep. 28, 2024	$	(239)	$	(36)	$	(889)	$	(2)	$	(1,166)

10. SHARE-BASED COMPENSATION

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

Stock Incentive Plans

In the first 13 weeks of fiscal 2026, options to purchase 721,368 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 13 weeks of fiscal 2026 was $19.53.

In the first 13 weeks of fiscal 2026, employees were granted 451,638 performance share units (PSUs). Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs granted without dividend equivalents, the fair value is reduced by the present value of expected dividends during the vesting period. The weighted average grant-date fair value per PSU granted during the first 13 weeks of fiscal 2026 was $86.23. The PSUs will convert into shares of Sysco’s common stock at the end of the three-year performance period based on actual performance targets achieved, as well as the market-based return of Sysco’s common stock relative to that of each company within the S&P 500 index.

In the first 13 weeks of fiscal 2026, employees were granted 1,309,048 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 13 weeks of fiscal 2026 was $77.50.

Employee Stock Purchase Plan

Plan participants purchased 287,991 shares of common stock under the ESPP during the first 13 weeks of fiscal 2026. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $12.35 during the first 13 weeks of fiscal 2026. The fair value of each stock purchase right is estimated as the difference between the stock price at the date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $31 million and $30 million for the first 13 weeks of fiscal 2026 and fiscal 2025, respectively.

As of September 27, 2025, there was a total of $219 million of unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.18 years.

11. INCOME TAXES

Effective Tax Rate

For the first quarter of fiscal 2026, the company’s effective tax rate of 20.6% was lower than the company’s 21.0% statutory tax rate primarily as a result of a foreign income tax benefit, equity-based compensation excess tax benefits, and foreign exchange losses, partially offset by state income taxes.

For the first quarter of fiscal 2025, the company’s effective tax rate of 23.7% was higher than the company’s 21.0% statutory tax rate primarily as a result of state income taxes, partially offset by a foreign income tax benefit and equity-based compensation excess tax benefits.

Uncertain Tax Positions

As of September 27, 2025, the gross amount of unrecognized tax benefit and related accrued interest was $68 million and $18 million, respectively. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions of the company will increase or decrease in the next 12 months. At this time, an estimate of the range of the reasonably possible change cannot be made.

During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. In the fourth quarter of fiscal 2023, the company filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which were enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the company’s position regarding its foreign tax credits. Sysco has previously recorded a benefit of $131 million attributable to its interpretation of the TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to reverse all, or some portion, of the benefit previously recorded.

Other

The Inflation Reduction Act includes provisions that allow for the transfer of certain federal clean energy tax credits (Transferable Tax Credits). In September 2025, we entered into a contract to purchase approximately $200 million of Transferable Tax Credits which will be applied against our fiscal 2026 federal income taxes.

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

12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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

13. BUSINESS SEGMENT INFORMATION

Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are located in North America and Europe. Under the accounting provisions related to disclosures about segments of an enterprise, we have aggregated certain operating segments into three reportable segments. “Other” financial information is attributable to our other operating segments that do not meet the quantitative disclosure thresholds.

U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Buckhead | Newport Meat & Seafood specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Inc., our Edward Don restaurant equipment and supplies distribution business, our Asian specialty distribution company and a number of other small specialty businesses that are not material to the operations of Sysco;
International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden;
SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and
Other – primarily our hotel supply operations, Guest Worldwide.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center expenses generally include all expenses of the corporate office and Sysco’s shared service operations. Collectively, our Global Support Center provides numerous centralized services to our operating sites and performs support activities for employees, suppliers and customers. These services include customer and vendor contract administration, finance, legal, information technology, risk management and insurance, sales and marketing, merchandising, inbound logistics, human resources, and strategy. Expenses for the Global Support Center primarily consist of payroll costs for employees assigned to these operations, including severance, if any, all U.S. share-based compensation costs, and certain information technology, self-insurance, and depreciation expenses.

Our chief operating decision maker (CODM) is our chief executive officer, who is responsible for setting the company's strategic direction, managing overall operations, and is the main point of communication between the board of directors and key operational personnel within the organization. The CODM regularly reviews financial results, operating performance, and capital expenditures of our reportable segments. Our CODM uses operating income as a primary measure of segment performance and as a comparison between each of our segments. Operating income is defined as income before interest expense, other expense (income), net, and income taxes. The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to the CODM. The following tables set forth certain financial information for Sysco’s business segments.


	13-Week Period Ended September 27, 2025
	U.S. Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In millions)
Sales	$	14,780	$	3,966	$	2,129	$	273	$	21,148
Less:
Cost of sales	11,957		3,140		1,959		205		17,261
Operations expense	1,201		446		129		34		1,810
Selling, general & administrative expense	742		266		16		30		1,054
Total segment operating income	880		114		25		4		1,023
Global Support Center									(223)
Total operating income									800
Interest expense									172
Other expense (income), net									28
Earnings before income taxes									$	600


	13-Week Period Ended September 28, 2024
	U.S. Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In millions)
Sales	$	14,362	$	3,794	$	2,046	$	282	$	20,484
Less:
Cost of sales	11,615		3,020		1,883		210		16,728
Operations expense	1,202		427		128		34		1,791
Selling, general & administrative expense	637		246		17		29		929
Total segment operating income	908		101		18		9		1,036
Global Support Center									(228)
Total operating income									808
Interest expense									160
Other expense (income), net									6
Earnings before income taxes									$	642


	13-Week Period Ended		13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
Depreciation and amortization:	(In millions)
U.S. Foodservice Operations	$	139	$	130
International Foodservice Operations	62		66
SYGMA	8		8
Other	2		2
Total segments	211		206
Global Support Center	22		29
Total	$	233	$	235


	13-Week Period Ended		13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
Capital Expenditures:	(In millions)
U.S. Foodservice Operations	$	28	$	29
International Foodservice Operations	61		42
SYGMA	1		4
Other	6		6
Total segments	96		81
Global Support Center	64		41
Total	$	160	$	122


	Sep. 27, 2025		Jun. 28, 2025
Assets:	(In millions)
U.S. Foodservice Operations	$	13,685	$	13,169
International Foodservice Operations	8,268		8,119
SYGMA	923		922
Other	517		516
Total segments	23,393		22,726
Global Support Center	3,651		4,048
Total	$	27,044	$	26,774

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations