XML 30 R15.htm IDEA: XBRL DOCUMENT v3.22.0.1
DERIVATIVE FINANCIAL INSTRUMENTS
 6 Months Ended
Jan. 02, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTSSysco 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 the second quarter of fiscal 2022, Sysco settled some of its previously held interest rate swap contracts for proceeds of $23.1 million, which had a notional value of $500 million, due to the redemption of the entire $500 million aggregate principal amount of Sysco’s outstanding 3.550% Senior Notes due 2025 in December 2021.

Hedging of foreign currency risk

The company uses 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 January 1, 2022 are presented below:
Maturity Date of the Hedging InstrumentCurrency / Unit of MeasureNotional Value
(In millions)
Hedging of interest rate risk
June 2023Euro500
Hedging of foreign currency risk
Various (January 2022 to April 2022)Swedish Krona245
Various (January 2022 to June 2022)British Pound Sterling20
June 2023Euro500
Hedging of fuel risk
Various (January 2022 to June 2022)Gallons22

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of January 1, 2022 and July 3, 2021 are as follows:
 Derivative Fair Value
 Balance Sheet locationJan. 1, 2022Jul. 3, 2021
(In thousands)
Fair Value Hedges:
Interest rate swapsOther assets$3,970 $43,217 
Cash Flow Hedges:
Fuel swapsOther current assets$8,766 $16,732 
Foreign currency forwardsOther current assets183 42 
Fuel swapsOther current liabilities102 — 
Foreign currency forwardsOther current liabilities473 46 

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 Ended26-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020
(In thousands)
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$242,899 $146,498 $371,113 $293,215 
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items$29,787 $(3,793)$27,355 $(13,791)
Derivatives designated as hedging instruments(39,473)(296)(47,862)3,161 

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 Ended26-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020
(In thousands)
Interest expense$(5,367)$(9,735)$(11,892)$(24,568)
Decrease in fair value of debt(35,154)(5,942)(39,247)(10,777)
Hedged items$29,787 $(3,793)$27,355 $(13,791)

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 January 1, 2022 and December 26, 2020, presented on a pretax basis, are as follows:
13-Week Period Ended Jan. 1, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(7,588)Operating expense$9,608 
Foreign currency contracts(356)Cost of sales / Other income— 
Total$(7,944)$9,608 
Derivatives in net investment hedging relationships:
Foreign denominated debt$11,149 N/A$— 
Total$11,149 $— 
13-Week Period Ended Dec. 26, 2020
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$16,939 Operating expense$(7,613)
Foreign currency contracts(587)Cost of sales / Other income— 
Total$16,352 $(7,613)
Derivatives in net investment hedging relationships:
Foreign denominated debt$(27,554)N/A$— 
Total$(27,554)$— 

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 January 1, 2022 and December 26, 2020, presented on a pretax basis, are as follows:
26-Week Period Ended Jan. 1, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(8,073)Operating expense$17,580 
Foreign currency contracts(434)Cost of sales / Other income— 
Total$(8,507)$17,580 
Derivatives in net investment hedging relationships:
Foreign denominated debt$24,702 N/A$— 
Total$24,702 $— 
26-Week Period Ended Dec. 26, 2020
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$19,830 Operating expense$(16,265)
Foreign currency contracts(20,319)Cost of sales / Other income(2,692)
Total$(489)$(18,957)
Derivatives in net investment hedging relationships:
Foreign denominated debt$(47,953)N/A$— 
Total$(47,953)$— 


The location and carrying amount of hedged liabilities in the consolidated balance sheet as of January 1, 2022 are as follows:
Jan. 1, 2022
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:
Long-term debt$(568,272)$(3,970)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of July 3, 2021 are as follows:
Jul. 3, 2021
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:
Long-term debt$(1,065,364)$(43,217)