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.