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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6544
________________
syy-20211002_g1.jpg
Sysco Corporation
(Exact name of registrant as specified in its charter)
Delaware74-1648137
(State or other jurisdiction of incorporation or organization)(IRS employer identification number)

1390 Enclave Parkway, Houston, Texas 77077-2099
(Address of principal executive offices and zip code)

Registrant’s Telephone Number, Including Area Code:
(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $1.00 Par ValueSYYNew York Stock Exchange
1.25% Notes due June 2023SYY 23New York Stock Exchange

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 þ    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ    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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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 þ

512,656,343 shares of common stock were outstanding as of October 22, 2021.

1


TABLE OF CONTENTS







PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
 Oct. 2, 2021Jul. 3, 2021
 (unaudited)
ASSETS
Current assets
Cash and cash equivalents$2,067,873 $3,007,123 
Accounts receivable, less allowances of $126,759 and $117,6954,309,883 3,781,510 
Inventories4,054,844 3,695,219 
Prepaid expenses and other current assets255,588 240,956 
Income tax receivable 8,759 
Total current assets10,688,188 10,733,567 
Plant and equipment at cost, less accumulated depreciation4,343,263 4,326,063 
Other long-term assets
Goodwill4,402,354 3,944,139 
Intangibles, less amortization927,966 746,073 
Deferred income taxes360,193 352,523 
Operating lease right-of-use assets, net750,675 709,163 
Other assets630,227 602,011 
Total other long-term assets7,071,415 6,353,909 
Total assets$22,102,866 $21,413,539 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable$8,909 $8,782 
Accounts payable5,238,313 4,884,781 
Accrued expenses1,809,459 1,814,837 
Accrued income taxes83,141 22,644 
Current operating lease liabilities106,927 102,659 
Current maturities of long-term debt491,233 486,141 
Total current liabilities7,737,982 7,319,844 
Long-term liabilities
Long-term debt10,645,443 10,588,184 
Deferred income taxes171,653 147,066 
Long-term operating lease liabilities672,465 634,481 
Other long-term liabilities1,167,875 1,136,480 
Total long-term liabilities12,657,436 12,506,211 
Noncontrolling interest34,156 34,588 
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 shares765,175 765,175 
Paid-in capital1,655,110 1,619,995 
Retained earnings10,288,291 10,151,706 
Accumulated other comprehensive loss(1,217,937)(1,148,764)
Treasury stock at cost, 252,825,080 and 253,342,595 shares(9,817,347)(9,835,216)
Total shareholders’ equity1,673,292 1,552,896 
Total liabilities and shareholders’ equity$22,102,866 $21,413,539 
Note: The July 3, 2021 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements
1


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In thousands, except for share and per share data)
 13-Week Period Ended
 Oct. 2, 2021Sep. 26, 2020
Sales$16,456,546 $11,777,379 
Cost of sales13,484,838 9,557,534 
Gross profit2,971,708 2,219,845 
Operating expenses2,340,026 1,800,266 
Operating income631,682 419,579 
Interest expense128,214 146,717 
Other (income) expense, net(3,252)14,124 
Earnings before income taxes506,720 258,738 
Income taxes128,707 41,838 
Net earnings$378,013 $216,900 
  
Net earnings:  
Basic earnings per share$0.74 $0.43 
Diluted earnings per share0.73 0.42 
Average shares outstanding512,516,067 509,127,405 
Diluted shares outstanding515,782,928 510,738,760 

See Notes to Consolidated Financial Statements
2


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
 13-Week Period Ended
 Oct. 2, 2021Sep. 26, 2020
Net earnings$378,013 $216,900 
Other comprehensive (loss) income:
Foreign currency translation adjustment(87,194)113,140 
Items presented net of tax:
Amortization of cash flow hedges2,155 2,155 
Change in net investment hedges10,165 (11,261)
Change in cash flow hedges(429)(12,967)
Amortization of prior service cost74 137 
Amortization of actuarial gain6,367 7,765 
Change in marketable securities(311)(474)
Total other comprehensive (loss) income(69,173)98,495 
Comprehensive income$308,840 $315,395 

See Notes to Consolidated Financial Statements
3



Sysco Corporation and its Consolidated Subsidiaries
CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)
(In thousands, except for share data)

Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of July 3, 2021765,174,900 $765,175 $1,619,995 $10,151,706 $(1,148,764)253,342,595 $(9,835,216)$1,552,896 
Net earnings378,013 378,013 
Foreign currency translation adjustment(87,194)(87,194)
Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of tax(429)(429)
Change in net investment hedges, net of tax10,165 10,165 
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax6,441 6,441 
Change in marketable securities, net of tax(311)(311)
Dividends declared ($0.47 per common share)(241,428)(241,428)
Share-based compensation awards35,115 (517,515)17,869 52,984 
Balance as of October 2, 2021765,174,900 $765,175 $1,655,110 $10,288,291 $(1,217,937)252,825,080 $(9,817,347)$1,673,292 
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of June 27, 2020765,174,900 $765,175 $1,506,901 $10,563,008 $(1,710,881)256,915,825 $(9,965,590)$1,158,613 
Net earnings216,900 216,900 
Foreign currency translation adjustment113,140 113,140 
Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of tax(12,967)(12,967)
Change in net investment hedges, net of tax(11,261)(11,261)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax7,902 7,902 
Change in marketable securities, net of tax(474)(474)
Adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), net of tax(2,068)(2,068)
Dividends declared ($0.45 per common share)(231,242)(231,242)
Share-based compensation awards27,380 (840,053)31,933 59,313 
Balance as of September 26, 2020765,174,900 $765,175 $1,534,281 $10,546,598 $(1,612,386)256,075,772 $(9,933,657)$1,300,011 

See Notes to Consolidated Financial Statements

4


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In thousands)
 13-Week Period Ended
 Oct. 2, 2021Sep. 26, 2020
Cash flows from operating activities:
Net earnings$378,013 $216,900 
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense29,313 25,834 
Depreciation and amortization186,466 180,520 
Operating lease asset amortization28,221 27,379 
Amortization of debt issuance and other debt-related costs5,577 6,554 
Deferred income taxes(30,452)(53,579)
Provision for losses on receivables2,097 (77,790)
Loss on sale of business 12,043 
Other non-cash items(201)(6,641)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables(478,671)(111,261)
Increase in inventories(294,517)(23,320)
(Increase) decrease in prepaid expenses and other current assets(12,528)5,577 
Increase in accounts payable329,523 577,013 
(Decrease) increase in accrued expenses(103,483)56,042 
Decrease in operating lease liabilities(34,146)(31,167)
Increase in accrued income taxes69,256 98,712 
(Increase) decrease in other assets(9,345)7,187 
Increase in other long-term liabilities45,689 20,911 
Net cash provided by operating activities110,812 930,914 
Cash flows from investing activities:
Additions to plant and equipment(85,019)(75,539)
Proceeds from sales of plant and equipment5,627 7,064 
Acquisition of businesses, net of cash acquired(714,010) 
Purchase of marketable securities(9,925)(26,557)
Proceeds from sales of marketable securities8,700 12,166 
Other investing activities6,022  
Net cash used for investing activities(788,605)(82,866)
Cash flows from financing activities:
Bank and commercial paper borrowings, net 3,110 
Other debt borrowings3 6,159 
Other debt repayments(10,051)(762,858)
Proceeds from stock option exercises17,881 31,933 
Dividends paid(240,561)(228,714)
Other financing activities(5,003)(457)
Net cash used for financing activities(237,731)(950,827)
Effect of exchange rates on cash, cash equivalents and restricted cash(9,355)17,095 
Net decrease in cash, cash equivalents and restricted cash(924,879)(85,684)
Cash, cash equivalents and restricted cash at beginning of period3,037,100 6,095,570 
Cash, cash equivalents and restricted cash at end of period$2,112,221 $6,009,886 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$225,031 $104,879 
Income taxes, net of refunds76,712 6,851 
See Notes to Consolidated Financial Statements
5


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 audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income (loss), 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 (loss), 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 July 3, 2021. 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 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 amounts shown in the consolidated statement of cash flows:
Oct. 2, 2021Sep. 26, 2020
(In thousands)
Cash and cash equivalents$2,067,873 $5,985,532 
Restricted cash (1)
44,348 24,354 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$2,112,221 $6,009,886 

(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. Restricted cash is located within other assets in each consolidated balance sheet.

2. REVENUE

The company recognizes revenues when its 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 $4.0 billion and $3.5 billion as of October 2, 2021 and July 3, 2021, 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. As of October 2, 2021, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract.

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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 Oct. 2, 2021
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Fresh and frozen meats$2,444,461 $417,171 $474,656 $ $3,336,288 
Canned and dry products2,076,779 581,895 137,597  2,796,271 
Frozen fruits, vegetables, bakery and other1,501,293 518,255 273,148  2,292,696 
Poultry1,351,200 241,202 229,357  1,821,759 
Dairy products1,101,423 305,112 140,224  1,546,759 
Fresh produce986,998 218,963 66,563  1,272,524 
Paper and disposables911,350 119,740 188,243 15,499 1,234,832 
Seafood693,013 121,465 33,224  847,702 
Beverage products256,385 117,220 137,515 22,089 533,209 
Other (1)
280,061 254,224 23,506 216,715 774,506 
Total Sales$11,602,963 $2,895,247 $1,704,033 $254,303 $16,456,546 

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

13-Week Period Ended Sep. 26, 2020
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Fresh and frozen meats$1,491,000 $314,172 $428,919 $ $2,234,091 
Canned and dry products1,391,218 391,578 29,573  1,812,369 
Frozen fruits, vegetables, bakery and other1,048,833 426,565 256,787  1,732,185 
Poultry830,775 179,026 216,635  1,226,436 
Dairy products819,493 232,956 147,029  1,199,478 
Fresh produce767,097 170,538 64,982  1,002,617 
Paper and disposables677,321 90,709 179,174 11,638 958,842 
Seafood481,717 88,567 25,096  595,380 
Beverage products179,652 77,466 148,591 11,210 416,919 
Other (1)
234,427 192,116 27,362 145,157 599,062 
Total Sales$7,921,533 $2,163,693 $1,524,148 $168,005 $11,777,379 

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

3. ACQUISITIONS

During the first quarter of fiscal 2022, the company paid cash of $714.0 million for acquisitions. 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 October 2, 2021, aggregate contingent consideration outstanding was $79.7 million, of which $78.1 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 measurement.
7



Greco and Sons

On August 12, 2021, Sysco consummated its acquisition of Greco and Sons (Greco), a leading independent Italian specialty distributor in the United States, operating out of 10 distribution centers and servicing 22 geographies nationwide. Greco imports and distributes a full line of food and non-food products and manufactures specialty meat products. The acquisition also includes Bellissimo Foods Company, which distributes a broad selection of Italian and Mediterranean ingredients, including a proprietary branded line of products that are sold exclusively through the Bellissimo Foods Company distribution network, serving independent pizza and Italian restaurants. The purpose of the acquisition is to strengthen Sysco’s business within the Italian foodservice sector.

The assets, liabilities and operating results of Greco are reflected in the company’s consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition date. In certain circumstances, the purchase price allocations may be based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision until Sysco receives final information and other analysis during the measurement period. These include items such as finalizing valuation of acquired tangible and intangible assets and related tax attributes.

The purchase price was allocated based on the company’s preliminary estimated fair value of the assets acquired and liabilities assumed, as follows:
Preliminary Purchase Price Allocation
(In millions)
Accounts receivable, net$69 
Inventories79 
Plant and equipment24 
Other assets151 
Goodwill and other intangibles (1)
717 
Total assets1,040 
Accounts payable(73)
Accrued expenses(17)
Deferred tax liabilities(35)
Other liabilities(154)
Total consideration$761 

(1) The excess purchase price of $717.1 million was assigned to goodwill and intangibles, a portion of which is deductible for income tax purposes. Goodwill of $491.4 million has been assigned to the U.S. Foodservice Operations reportable segment. Intangible assets include customer relationships of $116.0 million with a weighted average life of 8 years and trade names of $109.7 million with a weighted average life of 15 years. Amortization expense is being recognized on a straight-line basis and for the first quarter of fiscal 2022 was $3.0 million.

The quarter ended October 2, 2021 includes the results of operations of Greco for the period from August 12, 2021 to October 2, 2021. The results were not material to the consolidated results of the company for the first quarter of fiscal 2022.

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4.  FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest in only high-quality investments. The fair value of the company’s 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 the company’s marketable securities are all 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 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 6, “Derivative Financial Instruments.”

The following tables present the company’s assets measured at fair value on a recurring basis as of October 2, 2021 and July 3, 2021:
 Assets Measured at Fair Value as of Oct. 2, 2021
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents$1,610,164 $400,003 $ $2,010,167 
Other assets (1)
44,348   44,348 
Total assets at fair value$1,654,512 $400,003 $ $2,054,515 

(1)Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
 Assets Measured at Fair Value as of Jul. 3, 2021
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents$2,805,961 $3 $ $2,805,964 
Other assets (1)
29,977   29,977 
Total assets at fair value$2,835,938 $3 $ $2,835,941 

(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 $13.3 billion, while the carrying value was $11.1 billion as of both October 2, 2021 and July 3, 2021.

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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. The company includes fixed income securities maturing in less than twelve months within prepaid expenses and other current assets and includes fixed income securities maturing in more than twelve months within other assets in the accompanying consolidated balance sheets. The company records 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 quarter of fiscal 2022. The following table presents the company’s available-for-sale marketable securities as of October 2, 2021 and July 3, 2021:
Oct. 2, 2021
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds$94,706 $2,311 $(509)$96,508 $6,024 $90,484 
Government bonds30,283 3,402 (5)33,680  33,680 
Total marketable securities$124,989 $5,713 $(514)$130,188 $6,024 $124,164 
Jul. 3, 2021
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds$92,547 $2,491 $(456)$94,582 $11,570 $83,012 
Government bonds31,552 3,556  35,108  35,108 
Total marketable securities$124,099 $6,047 $(456)$129,690 $11,570 $118,120 

As of October 2, 2021, 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.

Oct. 2, 2021
(In thousands)
Due in one year or less$6,024 
Due after one year through five years81,779 
Due after five years through ten years42,385 
Total$130,188 

There were no significant realized gains or losses in marketable securities in the first quarter of fiscal 2022.

6. 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.

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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.

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 October 2, 2021 are presented below:
Maturity Date of the Hedging InstrumentCurrency / Unit of MeasureNotional Value
(In millions)
Hedging of interest rate risk
June 2023Euro500
March 2025U.S. Dollar500
Hedging of foreign currency risk
Various (October 2021)Swedish Krona54
Various (October 2021 to June 2022)British Pound Sterling26
June 2023Euro500
Hedging of fuel risk
Various (October 2021 to June 2022)Gallons30

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of October 2, 2021 and July 3, 2021 are as follows:
 Derivative Fair Value
 Balance Sheet locationOct. 2, 2021Jul. 3, 2021
(In thousands)
Fair Value Hedges:
Interest rate swapsOther assets$39,124 $43,217 
Cash Flow Hedges:
Fuel swapsOther current assets$16,199 $16,732 
Foreign currency forwardsOther current assets70 42 
Foreign currency forwardsOther current liabilities69 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:
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13-Week Period Ended
Oct. 2, 2021Sep. 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$128,214 $146,717 
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items$(2,433)$(9,998)
Derivatives designated as hedging instruments(8,390)3,457 

The 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
Oct. 2, 2021Sep. 26, 2020
(In thousands)
Interest expense$(6,526)$(14,834)
Decrease in fair value of debt(4,093)(4,836)
Hedged items$(2,433)$(9,998)

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 October 2, 2021 and September 26, 2020, presented on a pretax basis, are as follows:

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13-Week Period Ended Oct. 2, 2021
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$(485)Operating expense$7,972 
Foreign currency contracts(78)Cost of sales / Other income 
Total$(563)$7,972 
Derivatives in net investment hedging relationships:
Foreign denominated debt$13,553 N/A$ 
Total$13,553 $ 
13-Week Period Ended Sep. 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$2,891 Operating expense$(8,652)
Foreign currency contracts(19,732)Cost of sales / Other income(2,692)
Total$(16,841)$(11,344)
Derivatives in net investment hedging relationships:
Foreign denominated debt$(36,550)N/A$ 
Total$(36,550)$ 

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of October 2, 2021 are as follows:
Oct. 2, 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$(1,065,690)$(39,124)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of July 3, 2021 are as follows:
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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)

7. DEBT

The company has a $2.0 billion long-term revolving credit facility that expires on June 28, 2024, subject to extension. As of October 2, 2021, there were no borrowings outstanding under this facility. During the first quarter of fiscal 2022, Sysco amended its revolving credit facility to (a) eliminate the covenant that had restricted (i) increases to the company’s regular quarterly dividend and (ii) share repurchases, in each case, until the earlier of September 2022 or the date on which Sysco has achieved a certain ratio of consolidated EBITDA to consolidated interest expense, and (b) adjust the covenant requiring Sysco to maintain a certain ratio of consolidated EBITDA to consolidated interest expense.

Sysco has a U.S. commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of October 2, 2021, there were no commercial paper issuances outstanding under this program. During the first 13 weeks of fiscal 2022, there were no borrowing activities under our commercial paper programs, long-term revolving credit facility or short-term bank notes.

8.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
 13-Week Period Ended
 Oct. 2, 2021Sep. 26, 2020
 (In thousands, except for share
and per share data)
Numerator:  
Net earnings$378,013 $216,900 
Denominator:
Weighted-average basic shares outstanding512,516,067 509,127,405 
Dilutive effect of share-based awards3,266,861