| Revenue | 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. 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 receivable, less allowances in the consolidated balance sheet, were $2.9 billion and $2.7 billion as of September 26, 2020 and June 27, 2020, 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 September 26, 2020, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract. 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. 26, 2020 US Foodservice Operations International Foodservice Operations SYGMA Other Total (In thousands) Principal Product Categories Fresh and frozen meats $ 1,491,000 $ 314,172 $ 428,919 $ — $ 2,234,091 Canned and dry products 1,391,218 391,578 29,573 — 1,812,369 Frozen fruits, vegetables, bakery and other 1,048,833 426,565 256,787 — 1,732,185 Poultry 830,775 179,026 216,635 — 1,226,436 Dairy products 819,493 232,956 147,029 — 1,199,478 Fresh produce 767,097 170,538 64,982 — 1,002,617 Paper and disposables 677,321 90,709 179,174 11,638 958,842 Seafood 481,717 88,567 25,096 — 595,380 Beverage products 179,652 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 other janitorial products, medical supplies and smallwares. 13-Week Period Ended Sep. 28, 2019 US Foodservice Operations International Foodservice Operations SYGMA Other Total (In thousands) Principal Product Categories Fresh and frozen meats $ 2,075,300 $ 412,155 $ 381,377 $ — $ 2,868,832 Canned and dry products 1,898,889 586,625 37,190 — 2,522,704 Frozen fruits, vegetables, bakery and other 1,449,218 552,014 254,455 — 2,255,687 Dairy products 1,148,381 312,178 145,921 — 1,606,480 Poultry 1,090,106 218,600 204,269 — 1,512,975 Fresh produce 998,164 257,758 60,933 — 1,316,855 Paper and disposables 719,540 98,342 168,436 17,373 1,003,691 Seafood 685,410 149,590 24,855 — 859,855 Beverage products 290,785 132,852 143,679 24,329 591,645 Other (1) 302,840 192,274 25,879 243,288 764,281 Total Sales $ 10,658,633 $ 2,912,388 $ 1,446,994 $ 284,990 $ 15,303,005 (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. Credit Risk Sysco is potentially subject to group concentrations of credit risk with respect to accounts receivable, as large amounts of the company’s trade receivables are concentrated on customers within the food away from home industry across North America and Europe. The prolonged disruption of Sysco’s customers’ businesses due to the COVID-19 pandemic has created additional bad debt risk for the company. Sysco determines the past due status of trade receivables based on contractual terms with each customer, evaluates the collectability of accounts receivable and determines the appropriate reserve for doubtful accounts or the uncollectible receivables to be written off. Many of Sysco’s customers, including those in the restaurant, hospitality and education segments, are operating at a substantially reduced volume due to governmental requirements for closures or other social-distancing measures and a portion of Sysco’s customers are closed. Some of these customers have ceased paying their outstanding receivables, creating uncertainty as to their collectability. To calculate the ending reserve needed, the company estimated uncollectible amounts based on the current collection experience and by applying write-off percentages based on historical loss experience, including loss experience during times of local and regional disasters. The COVID-19 pandemic is more widespread and longer in duration than historical disasters impacting our business, and it is possible that actual uncollectible amounts will differ. |
