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~~1, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)


Delaware						74-1648137
(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 class

Trading Symbol

Name of each exchange on which registered

Common stock, $1.00 Par Value

SYY

New York Stock Exchange

1.25% Notes due June 2023

SYY 23

New 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 Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller 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~~506,767,526 shares of common stock were outstanding as of October ~~22, 2021.~~14, 2022.

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, 2021		Jul. 3, 2021				Oct. 1, 2022		Jul. 2, 2022
		(unaudited)						(unaudited)
ASSETS	ASSETS					ASSETS
Current assets	Current assets						Current assets
Cash and cash equivalents	Cash and cash equivalents	$	2,067,873	$	3,007,123		Cash and cash equivalents	$	437,670	$	867,086
Accounts receivable, less allowances of $126,759 and $117,695		4,309,883		3,781,510
Accounts receivable, less allowances of $74,002 and $70,790							Accounts receivable, less allowances of $74,002 and $70,790	5,336,857		4,838,912
Inventories	Inventories	4,054,844		3,695,219			Inventories	4,682,609		4,437,498

Prepaid expenses and other current assets	Prepaid expenses and other current assets	255,588		240,956			Prepaid expenses and other current assets	310,131		303,789

Income tax receivable	Income tax receivable	—		8,759			Income tax receivable	—		35,934
Total current assets	Total current assets	10,688,188		10,733,567			Total current assets	10,767,267		10,483,219
Plant and equipment at cost, less accumulated depreciation	Plant and equipment at cost, less accumulated depreciation	4,343,263		4,326,063			Plant and equipment at cost, less accumulated depreciation	4,462,608		4,456,420
Other long-term assets	Other long-term assets						Other long-term assets
Goodwill	Goodwill	4,402,354		3,944,139			Goodwill	4,434,476		4,542,315
Intangibles, less amortization	Intangibles, less amortization	927,966		746,073			Intangibles, less amortization	906,385		952,683

Deferred income taxes	Deferred income taxes	360,193		352,523			Deferred income taxes	382,778		377,604
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	750,675		709,163			Operating lease right-of-use assets, net	704,664		723,297
Other assets	Other assets	630,227		602,011			Other assets	552,765		550,150
Total other long-term assets	Total other long-term assets	7,071,415		6,353,909			Total other long-term assets	6,981,068		7,146,049
Total assets	Total assets	$	22,102,866	$	21,413,539		Total assets	$	22,210,943	$	22,085,688

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	Current liabilities						Current liabilities
Notes payable		$	8,909	$	8,782

Accounts payable	Accounts payable	5,238,313		4,884,781			Accounts payable	$	6,018,227	$	5,752,958
Accrued expenses	Accrued expenses	1,809,459		1,814,837			Accrued expenses	2,177,793		2,270,753
Accrued income taxes	Accrued income taxes	83,141		22,644			Accrued income taxes	113,388		40,042
Current operating lease liabilities	Current operating lease liabilities	106,927		102,659			Current operating lease liabilities	94,027		105,690
Current maturities of long-term debt	Current maturities of long-term debt	491,233		486,141			Current maturities of long-term debt	555,829		580,611
Total current liabilities	Total current liabilities	7,737,982		7,319,844			Total current liabilities	8,959,264		8,750,054
Long-term liabilities	Long-term liabilities						Long-term liabilities
Long-term debt	Long-term debt	10,645,443		10,588,184			Long-term debt	10,263,331		10,066,931
Deferred income taxes	Deferred income taxes	171,653		147,066			Deferred income taxes	241,748		250,171
Long-term operating lease liabilities	Long-term operating lease liabilities	672,465		634,481			Long-term operating lease liabilities	628,861		636,417
Other long-term liabilities	Other long-term liabilities	1,167,875		1,136,480			Other long-term liabilities	971,190		967,907
Total long-term liabilities	Total long-term liabilities	12,657,436		12,506,211			Total long-term liabilities	12,105,130		11,921,426

Noncontrolling interest	Noncontrolling interest	34,156		34,588			Noncontrolling interest	31,208		31,948
Shareholders’ equity	Shareholders’ equity						Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—		—			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	Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175		765,175			Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175		765,175
Paid-in capital	Paid-in capital	1,655,110		1,619,995			Paid-in capital	1,754,409		1,766,305
Retained earnings	Retained earnings	10,288,291		10,151,706			Retained earnings	10,757,136		10,539,722
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,217,937)		(1,148,764)			Accumulated other comprehensive loss	(1,711,325)		(1,482,054)
Treasury stock at cost, 252,825,080 and 253,342,595 shares		(9,817,347)		(9,835,216)
Treasury stock at cost, 258,414,989 and 256,531,543 shares							Treasury stock at cost, 258,414,989 and 256,531,543 shares	(10,450,054)		(10,206,888)
Total shareholders’ equity	Total shareholders’ equity	1,673,292		1,552,896			Total shareholders’ equity	1,115,341		1,382,260
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	22,102,866	$	21,413,539		Total liabilities and shareholders’ equity	$	22,210,943	$	22,085,688

Note: The July ~~3, 2021~~2, 2022 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 thousands, except for share and per share data)


		13-Week Period Ended				13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020				Oct. 1, 2022		Oct. 2, 2021
Sales	Sales	$	16,456,546	$	11,777,379		Sales	$	19,126,830	$	16,456,546
Cost of sales	Cost of sales	13,484,838		9,557,534			Cost of sales	15,637,975		13,484,838
Gross profit	Gross profit	2,971,708		2,219,845			Gross profit	3,488,855		2,971,708
Operating expenses	Operating expenses	2,340,026		1,800,266			Operating expenses	2,754,522		2,340,026
Operating income	Operating income	631,682		419,579			Operating income	734,333		631,682
Interest expense	Interest expense	128,214		146,717			Interest expense	124,150		128,214
Other (income) expense, net		(3,252)		14,124
Other expense (income), net							Other expense (income), net	15,281		(3,252)
Earnings before income taxes	Earnings before income taxes	506,720		258,738			Earnings before income taxes	594,902		506,720
Income taxes	Income taxes	128,707		41,838			Income taxes	129,334		128,707
Net earnings	Net earnings	$	378,013	$	216,900		Net earnings	$	465,568	$	378,013

Net earnings:	Net earnings:						Net earnings:
Basic earnings per share	Basic earnings per share	$	0.74	$	0.43		Basic earnings per share	$	0.92	$	0.74
Diluted earnings per share	Diluted earnings per share	0.73		0.42			Diluted earnings per share	0.91		0.73

Average shares outstanding	Average shares outstanding	512,516,067		509,127,405			Average shares outstanding	507,578,576		512,516,067
Diluted shares outstanding	Diluted shares outstanding	515,782,928		510,738,760			Diluted shares outstanding	510,383,149		515,782,928

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)


		13-Week Period Ended				13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020				Oct. 1, 2022		Oct. 2, 2021
Net earnings	Net earnings	$	378,013	$	216,900		Net earnings	$	465,568	$	378,013
Other comprehensive (loss) income:	Other comprehensive (loss) income:						Other comprehensive (loss) income:
Foreign currency translation adjustment	Foreign currency translation adjustment	(87,194)		113,140			Foreign currency translation adjustment	(232,182)		(87,194)
Items presented net of tax:	Items presented net of tax:						Items presented net of tax:
Amortization of cash flow hedges	Amortization of cash flow hedges	2,155		2,155			Amortization of cash flow hedges	2,155		2,155
Change in net investment hedges	Change in net investment hedges	10,165		(11,261)			Change in net investment hedges	23,509		10,165
Change in cash flow hedges	Change in cash flow hedges	(429)		(12,967)			Change in cash flow hedges	(26,390)		(429)

Amortization of prior service cost	Amortization of prior service cost	74		137			Amortization of prior service cost	74		74
Amortization of actuarial gain		6,367		7,765
Amortization of actuarial loss							Amortization of actuarial loss	6,891		6,367

Change in marketable securities	Change in marketable securities	(311)		(474)			Change in marketable securities	(3,328)		(311)
Total other comprehensive (loss) income		(69,173)		98,495
Total other comprehensive loss							Total other comprehensive loss	(229,271)		(69,173)
Comprehensive income	Comprehensive income	$	308,840	$	315,395		Comprehensive income	$	236,297	$	308,840

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In thousands, except for share data)


													Accumulated Other Comprehensive Loss																											Accumulated Other Comprehensive Loss
		Common Stock			Paid-in Capital				Retained Earnings						Treasury Stock									Common Stock									Paid-in Capital			Retained Earnings						Treasury Stock
		Shares	Amount								Shares				Accumulated Other Comprehensive Loss		Amounts				Totals			Shares					Amount								Shares		Accumulated Other Comprehensive Loss					Amounts	Totals
Balance as of July 3, 2021		765,174,900	$	765,175			$	1,619,995			$	10,151,706					$	(1,148,764)				$	(9,835,216)				$	1,552,896
Balance as of July 2, 2022																						Balance as of July 2, 2022		765,174,900					$	765,175				$	1,766,305		$	10,539,722				$	(1,482,054)		$	(10,206,888)	$	1,382,260
Net earnings	Net earnings								378,013																378,013		Net earnings													465,568									465,568

Foreign currency translation adjustment	Foreign currency translation adjustment												(87,194)									(87,194)			Foreign currency translation adjustment															(232,182)							(232,182)
Amortization of cash flow hedges, net of tax	Amortization of cash flow hedges, net of tax												2,155									2,155			Amortization of cash flow hedges, net of tax															2,155							2,155
Change in cash flow hedges, net of tax	Change in cash flow hedges, net of tax												(429)									(429)			Change in cash flow hedges, net of tax															(26,390)							(26,390)
Change in net investment hedges, net of tax	Change in net investment hedges, net of tax												10,165									10,165			Change in net investment hedges, net of tax															23,509							23,509

Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax	Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax												6,441									6,441			Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax															6,965							6,965
Change in marketable securities, net of tax	Change in marketable securities, net of tax												(311)									(311)			Change in marketable securities, net of tax															(3,328)							(3,328)

Dividends declared ($0.47 per common share)									(241,428)													(241,428)

Dividends declared ($0.49 per common share)																									Dividends declared ($0.49 per common share)												(248,154)										(248,154)
Treasury stock purchases																									Treasury stock purchases																			3,099,268	(267,727)		(267,727)

Share-based compensation awards	Share-based compensation awards				35,115											(517,515)			17,869			52,984			Share-based compensation awards									(11,896)										(1,215,822)	24,561		12,665
Balance as of October 2, 2021		765,174,900	$	765,175	$	1,655,110			$	10,288,291			$	(1,217,937)		252,825,080			$	(9,817,347)		$	1,673,292
Balance as of October 1, 2022																									Balance as of October 1, 2022	765,174,900					$	765,175		$	1,754,409		$	10,757,136		$	(1,711,325)			258,414,989	$	(10,450,054)	$	1,115,341

													Accumulated Other Comprehensive Loss																											Accumulated Other Comprehensive Loss
		Common Stock			Paid-in Capital				Retained Earnings						Treasury Stock									Common Stock									Paid-in Capital			Retained Earnings						Treasury Stock
		Shares	Amount								Shares				Accumulated Other Comprehensive Loss		Amounts				Totals			Shares					Amount								Shares		Accumulated Other Comprehensive Loss					Amounts	Totals
Balance as of June 27, 2020		765,174,900	$	765,175			$	1,506,901			$	10,563,008					$	(1,710,881)				$	(9,965,590)				$	1,158,613
Balance as of July 3, 2021																						Balance as of July 3, 2021		765,174,900					$	765,175				$	1,619,995		$	10,151,706				$	(1,148,764)		$	(9,835,216)	$	1,552,896
Net earnings	Net earnings								216,900																216,900		Net earnings													378,013									378,013
Foreign currency translation adjustment	Foreign currency translation adjustment												113,140									113,140			Foreign currency translation adjustment															(87,194)							(87,194)
Amortization of cash flow hedges, net of tax	Amortization of cash flow hedges, net of tax												2,155									2,155			Amortization of cash flow hedges, net of tax															2,155							2,155
Change in cash flow hedges, net of tax	Change in cash flow hedges, net of tax												(12,967)									(12,967)			Change in cash flow hedges, net of tax															(429)							(429)
Change in net investment hedges, net of tax	Change in net investment hedges, net of tax												(11,261)									(11,261)			Change in net investment hedges, net of tax															10,165							10,165
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax	Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax												7,902									7,902			Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax															6,441							6,441
Change in marketable securities, net of tax	Change in marketable securities, net of tax												(474)									(474)			Change in marketable securities, net of tax															(311)							(311)
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)

Dividends declared ($0.47 per common share)																									Dividends declared ($0.47 per common share)												(241,428)										(241,428)

Share-based compensation awards	Share-based compensation awards				27,380											(840,053)			31,933			59,313			Share-based compensation awards									35,115										(517,515)	17,869		52,984
Balance as of September 26, 2020		765,174,900	$	765,175	$	1,534,281			$	10,546,598			$	(1,612,386)		256,075,772			$	(9,933,657)		$	1,300,011
Balance as of October 2, 2021																									Balance as of October 2, 2021	765,174,900					$	765,175		$	1,655,110		$	10,288,291		$	(1,217,937)			252,825,080	$	(9,817,347)	$	1,673,292

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)


		13-Week Period Ended					13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings	Net earnings	$	378,013	$	216,900	Net earnings	$	465,568	$	378,013
Adjustments to reconcile net earnings to cash provided by operating activities:	Adjustments to reconcile net earnings to cash provided by operating activities:					Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	Share-based compensation expense	29,313		25,834		Share-based compensation expense	27,224		29,313
Depreciation and amortization	Depreciation and amortization	186,466		180,520		Depreciation and amortization	188,924		186,466
Operating lease asset amortization	Operating lease asset amortization	28,221		27,379		Operating lease asset amortization	27,542		28,221
Amortization of debt issuance and other debt-related costs	Amortization of debt issuance and other debt-related costs	5,577		6,554		Amortization of debt issuance and other debt-related costs	5,435		5,577

Deferred income taxes	Deferred income taxes	(30,452)		(53,579)		Deferred income taxes	(31,226)		(30,452)
Provision for losses on receivables	Provision for losses on receivables	2,097		(77,790)		Provision for losses on receivables	3,865		2,097
Loss on sale of business		—		12,043

Other non-cash items	Other non-cash items	(201)		(6,641)		Other non-cash items	5,011		(201)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:	Additional changes in certain assets and liabilities, net of effect of businesses acquired:					Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables	Increase in receivables	(478,671)		(111,261)		Increase in receivables	(576,585)		(478,671)
Increase in inventories	Increase in inventories	(294,517)		(23,320)		Increase in inventories	(283,252)		(294,517)
(Increase) decrease in prepaid expenses and other current assets		(12,528)		5,577
Increase in prepaid expenses and other current assets						Increase in prepaid expenses and other current assets	(28,372)		(12,528)
Increase in accounts payable	Increase in accounts payable	329,523		577,013		Increase in accounts payable	288,517		329,523
(Decrease) increase in accrued expenses		(103,483)		56,042
Decrease in accrued expenses						Decrease in accrued expenses	(10,893)		(103,483)
Decrease in operating lease liabilities	Decrease in operating lease liabilities	(34,146)		(31,167)		Decrease in operating lease liabilities	(33,319)		(34,146)
Increase in accrued income taxes	Increase in accrued income taxes	69,256		98,712		Increase in accrued income taxes	109,280		69,256
(Increase) decrease in other assets		(9,345)		7,187
Increase in other long-term liabilities		45,689		20,911
Decrease (increase) in other assets						Decrease (increase) in other assets	17,627		(9,345)
(Decrease) increase in other long-term liabilities						(Decrease) increase in other long-term liabilities	(16,740)		45,689

Net cash provided by operating activities	Net cash provided by operating activities	110,812		930,914		Net cash provided by operating activities	158,606		110,812
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to plant and equipment	Additions to plant and equipment	(85,019)		(75,539)		Additions to plant and equipment	(167,260)		(85,019)
Proceeds from sales of plant and equipment	Proceeds from sales of plant and equipment	5,627		7,064		Proceeds from sales of plant and equipment	22,448		5,627
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(714,010)		—		Acquisition of businesses, net of cash acquired	(32,651)		(714,010)
Purchase of marketable securities	Purchase of marketable securities	(9,925)		(26,557)		Purchase of marketable securities	(3,296)		(9,925)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	8,700		12,166		Proceeds from sales of marketable securities	2,650		8,700
Other investing activities	Other investing activities	6,022		—		Other investing activities	3,274		6,022

Net cash used for investing activities	Net cash used for investing activities	(788,605)		(82,866)		Net cash used for investing activities	(174,835)		(788,605)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Bank and commercial paper borrowings, net	Bank and commercial paper borrowings, net	—		3,110		Bank and commercial paper borrowings, net	97,000		—
Other debt borrowings		3		6,159
Other debt repayments		(10,051)		(762,858)
Other debt borrowings including senior notes						Other debt borrowings including senior notes	59,063		3
Other debt repayments including senior notes						Other debt repayments including senior notes	(18,104)		(10,051)

Proceeds from stock option exercises	Proceeds from stock option exercises	17,881		31,933		Proceeds from stock option exercises	24,561		17,881

Stock repurchases						Stock repurchases	(267,727)		—
Dividends paid	Dividends paid	(240,561)		(228,714)		Dividends paid	(249,294)		(240,561)

Other financing activities	Other financing activities	(5,003)		(457)		Other financing activities	(45,851)		(5,003)
Net cash used for financing activities	Net cash used for financing activities	(237,731)		(950,827)		Net cash used for financing activities	(400,352)		(237,731)
Effect of exchange rates on cash, cash equivalents and restricted cash	Effect of exchange rates on cash, cash equivalents and restricted cash	(9,355)		17,095		Effect of exchange rates on cash, cash equivalents and restricted cash	(11,369)		(9,355)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(924,879)		(85,684)		Net decrease in cash, cash equivalents and restricted cash	(427,950)		(924,879)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	3,037,100		6,095,570		Cash, cash equivalents and restricted cash at beginning of period	931,376		3,037,100
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	2,112,221	$	6,009,886	Cash, cash equivalents and restricted cash at end of period	$	503,426	$	2,112,221
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	225,031	$	104,879	Interest	$	84,010	$	225,031
Income taxes, net of refunds	Income taxes, net of refunds	76,712		6,851		Income taxes, net of refunds	47,985		76,712

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 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.~~2, 2022. 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, 2021		Sep. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
		(In thousands)					(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	2,067,873	$	5,985,532	Cash and cash equivalents	$	437,670	$	2,067,873
Restricted cash (1)	Restricted cash (1)	44,348		24,354		Restricted cash (1)	65,756		44,348
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	2,112,221	$	6,009,886	Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	503,426	$	2,112,221

~~(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.


(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.NEW ACCOUNTING STANDARDS

Liabilities – Supplier Financing Programs

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities—Supplier Finance Programs, Subtopic 405-50, that requires entities to disclose in the annual financial statements the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with information about their obligations under these programs, including a rollforward of those obligations. Additionally, the guidance requires disclosure of the outstanding amount of the obligations as of the end of each interim period. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations.

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which is the first quarter of fiscal 2024 for Sysco, except for the rollforward requirement, which is effective annually for fiscal years beginning after December 15, 2023, which is fiscal year 2025 for Sysco. Early adoption is permitted.

The guidance requires retrospective application to all periods in which a balance sheet is presented, except for the rollforward requirement, which will be applied prospectively. The company is currently reviewing the provisions of the new standard.

3. 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~~$4.9 billion and ~~$3.5~~$4.6 billion as of October ~~2, 2021~~1, 2022 and July ~~3, 2021,~~2, 2022, 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,~~1, 2022, 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 Oct. 2, 2021											13-Week Period Ended Oct. 1, 2022
		US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total			US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
		(In thousands)											(In thousands)
Principal Product Categories	Principal Product Categories											Principal Product Categories
Canned and dry products												Canned and dry products	$	2,577,255	$	691,374	$	236,168	$	2,068	$	3,506,865
Fresh and frozen meats	Fresh and frozen meats	$	2,444,461	$	417,171	$	474,656	$	—	$	3,336,288	Fresh and frozen meats	2,465,450		453,364		463,440		—		3,382,254
Canned and dry products		2,076,779		581,895		137,597		—		2,796,271
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	1,501,293		518,255		273,148		—		2,292,696		Frozen fruits, vegetables, bakery and other	1,843,464		580,032		309,197		149		2,732,842
Poultry	Poultry	1,351,200		241,202		229,357		—		1,821,759		Poultry	1,574,251		292,849		277,464		—		2,144,564
Dairy products	Dairy products	1,101,423		305,112		140,224		—		1,546,759		Dairy products	1,525,483		366,847		164,648		—		2,056,978
Fresh produce	Fresh produce	986,998		218,963		66,563		—		1,272,524		Fresh produce	1,337,919		254,737		65,244		—		1,657,900
Paper and disposables	Paper and disposables	911,350		119,740		188,243		15,499		1,234,832		Paper and disposables	1,022,904		144,068		209,358		15,056		1,391,386
Seafood	Seafood	693,013		121,465		33,224		—		847,702		Seafood	638,405		121,201		40,124		—		799,730
Beverage products	Beverage products	256,385		117,220		137,515		22,089		533,209		Beverage products	315,619		136,475		138,169		24,657		614,920
Other (1)												Other (1)	301,732		242,788		29,645		265,226		839,391

Other (1)		280,061		254,224		23,506		216,715		774,506
Total Sales	Total Sales	$	11,602,963	$	2,895,247	$	1,704,033	$	254,303	$	16,456,546	Total Sales	$	13,602,482	$	3,283,735	$	1,933,457	$	307,156	$	19,126,830


(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.

~~(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 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


	13-Week Period Ended Oct. 2, 2021
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,444,461	$	417,171	$	474,656	$	—	$	3,336,288
Canned and dry products	2,076,779		581,895		137,597		—		2,796,271
Frozen fruits, vegetables, bakery and other	1,501,293		518,255		273,148		—		2,292,696
Poultry	1,351,200		241,202		229,357		—		1,821,759
Dairy products	1,101,423		305,112		140,224		—		1,546,759
Fresh produce	986,998		218,963		66,563		—		1,272,524
Paper and disposables	911,350		119,740		188,243		15,499		1,234,832
Seafood	693,013		121,465		33,224		—		847,702
Beverage products	256,385		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 subscription sales for our former Sysco Labs business, and other janitorial products, medical supplies and smallwares.


(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.

3.4. ACQUISITIONS

During the first ~~quarter~~13 weeks of fiscal ~~2022,~~2023, the company paid cash of ~~$714.0~~$32.7 million for acquisitions. These acquisitions did not have a material effect on the company’s operating results, cash flows or financial position. 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,~~1, 2022, aggregate contingent consideration outstanding was ~~$79.7~~$93.0 million, of which ~~$78.1~~$89.0 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 fair value measurement.

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 iswas to strengthen Sysco’s business within the Italian foodservice sector.

~~The assets, liabilities and operating results~~During the first quarter of ~~Greco are reflected in~~fiscal 2023, the ~~company’s consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from~~company completed 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 valuationdetermination 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
~~Inventories~~	79
~~Plant and equipment~~	24
~~Other assets~~	~~151~~
~~Goodwill and other intangibles~~ ~~(1)~~	~~717~~
~~Total assets~~	~~1,040~~
~~Accounts payable~~	~~(73)~~
~~Accrued expenses~~	~~(17)~~
~~Deferred tax liabilities~~	~~(35)~~
~~Other liabilities~~	~~(154)~~
~~Total consideration~~	$	~~761~~

~~(1)~~assumed. 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 firstcompany recorded certain measurement period adjustments during each quarter of fiscal 2022 ~~was $3.0 million.~~

~~The quarter ended October 2, 2021 includes the results~~and fiscal 2023, none of ~~operations of Greco for the period from August 12, 2021 to October 2, 2021. The results~~which were ~~not~~individually or in aggregate material to the ~~consolidated results of the company for the first quarter of fiscal 2022.~~company’s financial statements.

4.5. 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 5,6, “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 6,7, “Derivative Financial Instruments.”

The following tables present the company’s assets measured at fair value on a recurring basis as of October ~~2, 2021~~1, 2022 and July ~~3, 2021:~~2, 2022:


		Assets Measured at Fair Value as of Oct. 2, 2021									Assets Measured at Fair Value as of Oct. 1, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(In thousands)									(In thousands)
Assets:	Assets:									Assets:
Cash equivalents	Cash equivalents									Cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	1,610,164	$	400,003	$	—	$	2,010,167	Cash and cash equivalents	$	183,816	$	5,008	$	—	$	188,824

Other assets (1)	Other assets (1)	44,348		—		—		44,348		Other assets (1)	65,756		—		—		65,756

Total assets at fair value	Total assets at fair value	$	1,654,512	$	400,003	$	—	$	2,054,515	Total assets at fair value	$	249,572	$	5,008	$	—	$	254,580

~~(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 1 Level 2 Level 3 Total
(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)~~


(1)			Represents restricted cash balance recorded within other assets in the consolidated balance sheet.


	Assets Measured at Fair Value as of Jul. 2, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	625,281	$	10,007	$	—	$	635,288



Other assets (1)	64,290		—		—		64,290

Total assets at fair value	$	689,571	$	10,007	$	—	$	699,578


(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~~$10.2 billion as of October 1, 2022 and $10.5 billion as of July 2, 2022, while the carrying value was ~~$11.1~~$10.8 billion as of ~~both~~ October 1, 2022 and $10.6 billion as of July 2, ~~2021 and July 3, 2021.~~2022.

5.6. 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~~13 weeks of fiscal ~~2022.~~2023. The following table presents the company’s available-for-sale marketable securities as of October ~~2, 2021~~1, 2022 and July ~~3, 2021:~~2, 2022:


		Oct. 2, 2021													Oct. 1, 2022
		Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities			Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
		(In thousands)													(In thousands)
Fixed income securities:	Fixed income securities:													Fixed income securities:
Corporate bonds	Corporate bonds	$	94,706	$	2,311	$	(509)	$	96,508	$	6,024	$	90,484	Corporate bonds	$	96,457	$	—	$	(8,615)	$	87,842	$	5,955	$	81,887
Government bonds	Government bonds	30,283		3,402		(5)		33,680		—		33,680		Government bonds	29,997		—		(1,885)		28,112		—		28,112
Total marketable securities	Total marketable securities	$	124,989	$	5,713	$	(514)	$	130,188	$	6,024	$	124,164	Total marketable securities	$	126,454	$	—	$	(10,500)	$	115,954	$	5,955	$	109,999

		Jul. 3, 2021													Jul. 2, 2022
		Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities			Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
		(In thousands)													(In thousands)
Fixed income securities:	Fixed income securities:													Fixed income securities:
Corporate bonds	Corporate bonds	$	92,547	$	2,491	$	(456)	$	94,582	$	11,570	$	83,012	Corporate bonds	$	96,167	$	8	$	(5,995)	$	90,180	$	5,983	$	84,197
Government bonds	Government bonds	31,552		3,556		—		35,108		—		35,108		Government bonds	30,070		—		(302)		29,768		—		29,768
Total marketable securities	Total marketable securities	$	124,099	$	6,047	$	(456)	$	129,690	$	11,570	$	118,120	Total marketable securities	$	126,237	$	8	$	(6,297)	$	119,948	$	5,983	$	113,965

As of October ~~2, 2021,~~1, 2022, 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~~1, 2022
	(In thousands)
Due in one year or less	$	~~6,024~~5,955
Due after one year through five years	~~81,779~~71,062
Due after five years through ten years	~~42,385~~38,937

Total	$	~~130,188~~115,954

There were no significant realized gains or losses in marketable securities in the first ~~quarter~~13 weeks of fiscal ~~2022.~~2023.

6.7. 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.

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, British pound sterling, 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~~1, 2022 are presented below:

Maturity Date of the Hedging Instrument

Currency / Unit of Measure

Notional Value

(In millions)

Hedging of interest rate risk

June 2023

Euro

500

~~March 2025~~

~~U.S. Dollar~~

~~500~~

Hedging of foreign currency risk

Various (October ~~2021)~~2022 to January 2023)

Swedish Krona

54131

Various (October ~~2021~~2022 to ~~June~~December 2022)

British Pound Sterling

2610

June 2023

Euro

500

Hedging of fuel risk

Various ~~(October 2021~~October 2022 to ~~June 2022)~~December 2024)

Gallons

3059

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of October ~~2, 2021~~1, 2022 and July ~~3, 2021~~2, 2022 are as follows:


			Derivative Fair Value						Derivative Fair Value
		Balance Sheet location	Oct. 2, 2021		Jul. 3, 2021			Balance Sheet location	Oct. 1, 2022		Jul. 2, 2022
			(In thousands)						(In thousands)
Fair Value Hedges:	Fair Value Hedges:						Fair Value Hedges:

Interest rate swaps	Interest rate swaps	Other assets	$	39,124	$	43,217	Interest rate swaps	Other current liabilities	$	7,136	$	2,820

Cash Flow Hedges:	Cash Flow Hedges:						Cash Flow Hedges:
Fuel swaps	Fuel swaps	Other current assets	$	16,199	$	16,732	Fuel swaps	Other current assets	$	16,188	$	47,170
Foreign currency forwards	Foreign currency forwards	Other current assets	70		42		Foreign currency forwards	Other current assets	945		633

Fuel swaps							Fuel swaps	Other assets	3		—

Fuel swaps							Fuel swaps	Other current liabilities	1,647		—

Foreign currency forwards		Other current liabilities	69		46
Fuel swaps							Fuel swaps	Other long-term liabilities	3,844		209

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					13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020					Oct. 1, 2022		Oct. 2, 2021
		(In thousands)				(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	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			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	$	124,150	$	128,214
Gain or (loss) on fair value hedging relationships:	Gain or (loss) on fair value hedging relationships:							Gain or (loss) on fair value hedging relationships:
Interest rate swaps:	Interest rate swaps:							Interest rate swaps:
Hedged items	Hedged items	$	(2,433)	$	(9,998)			Hedged items	$	2,376	$	(2,433)
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	(8,390)		3,457				Derivatives designated as hedging instruments	(4,759)		(8,390)

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					13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020					Oct. 1, 2022		Oct. 2, 2021
		(In thousands)				(In thousands)
Interest expense	Interest expense	$	(6,526)	$	(14,834)			Interest expense	$	(1,939)	$	(6,526)
Decrease in fair value of debt	Decrease in fair value of debt	(4,093)		(4,836)				Decrease in fair value of debt	(4,315)		(4,093)
Hedged items	Hedged items	$	(2,433)	$	(9,998)			Hedged items	$	2,376	$	(2,433)

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 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ presented on a pretax basis, are as follows:


		13-Week Period Ended Oct. 2, 2021						13-Week Period Ended Oct. 1, 2022
		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			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 thousands)			(In thousands)			(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:						Derivatives in cash flow hedging relationships:
Fuel swaps	Fuel swaps	$	(485)	Operating expense	$	7,972	Fuel swaps	$	(36,295)	Operating expense	$	12,985
Foreign currency contracts	Foreign currency contracts	(78)		Cost of sales / Other income	—		Foreign currency contracts	286		Cost of sales / Other income	—

Total	Total	$	(563)		$	7,972	Total	$	(36,009)		$	12,985

Derivatives in net investment hedging relationships:	Derivatives in net investment hedging relationships:						Derivatives in net investment hedging relationships:

Foreign denominated debt	Foreign denominated debt	$	13,553	N/A	$	—	Foreign denominated debt	$	31,346	N/A	$	—
Total	Total	$	13,553		$	—	Total	$	31,346		$	—

		13-Week Period Ended Sep. 26, 2020						13-Week Period Ended Oct. 2, 2021
		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			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 thousands)			(In thousands)			(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:						Derivatives in cash flow hedging relationships:
Fuel swaps	Fuel swaps	$	2,891	Operating expense	$	(8,652)	Fuel swaps	$	(485)	Operating expense	$	7,972
Foreign currency contracts	Foreign currency contracts	(19,732)		Cost of sales / Other income	(2,692)		Foreign currency contracts	(78)		Cost of sales / Other income	—

Total	Total	$	(16,841)		$	(11,344)	Total	$	(563)		$	7,972

Derivatives in net investment hedging relationships:	Derivatives in net investment hedging relationships:						Derivatives in net investment hedging relationships:

Foreign denominated debt	Foreign denominated debt	$	(36,550)	N/A	$	—	Foreign denominated debt	$	13,553	N/A	$	—
Total	Total	$	(36,550)		$	—	Total	$	13,553		$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of October ~~2, 2021~~1, 2022 are as follows:

Oct. 2, 2021

Oct. 1, 2022

Carrying Amount of Hedged Assets (Liabilities)

Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)

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:

Current maturities of long-term debt

(568,766)

7,136

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~~2, 2022 are as follows:

Jul. 3, 2021

Jul. 2, 2022

Carrying Amount of Hedged Assets (Liabilities)

Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)

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:

Current maturities of long-term debt

(568,601)

2,820

Long-term debt

(1,065,364)

(43,217)

7.8. DEBT

~~The company~~Sysco has a ~~$2.0 billion~~ long-term revolving credit facility that ~~expires on June 28, 2024, subject~~includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to ~~extension.~~increase such commitments to $4.0 billion. As of October ~~2, 2021,~~1, 2022, 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.~~U.S commercial paper program allowing the company to issue short-term unsecured ~~notes in~~notes. On September 2, 2022, Sysco entered into an amended and restated commercial paper dealer agreement increasing the issuance allowance from an aggregate amount not to exceed $2.0 billion to 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. As of October ~~2, 2021,~~1, 2022, there were no$97.0 million in 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.~~

8.9. EARNINGS PER SHARE

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


		13-Week Period Ended				13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020				Oct. 1, 2022		Oct. 2, 2021
		(In thousands, except for share and per share data)				(In thousands, except for share and per share data)
Numerator:	Numerator:						Numerator:
Net earnings	Net earnings	$	378,013	$	216,900		Net earnings	$	465,568	$	378,013
Denominator:	Denominator:						Denominator:
Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	512,516,067		509,127,405			Weighted-average basic shares outstanding	507,578,576		512,516,067
Dilutive effect of share-based awards	Dilutive effect of share-based awards	3,266,861		1,611,355			Dilutive effect of share-based awards	2,804,573		3,266,861
Weighted-average diluted shares outstanding	Weighted-average diluted shares outstanding	515,782,928		510,738,760			Weighted-average diluted shares outstanding	510,383,149		515,782,928
Basic earnings per share	Basic earnings per share	$	0.74	$	0.43		Basic earnings per share	$	0.92	$	0.74
Diluted earnings per share	Diluted earnings per share	$	0.73	$	0.42		Diluted earnings per share	$	0.91	$	0.73

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~~approximately 1,393,000 and 1,963,000 ~~and 6,110,000~~ for the first quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

10. 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, changes in marketable securities, amounts related to certain hedging arrangements and amounts related to pension and other postretirement plans. Comprehensive income was ~~$308.8~~$236.3 million and ~~$315.4~~$308.8 million for the first quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, 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 Oct. 1, 2022
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:


Reclassification adjustments:



Amortization of prior service cost	Other expense, net	$	99	$	25	$	74
Amortization of actuarial loss, net	Other expense, net	9,186		2,295		6,891
Total reclassification adjustments		9,285		2,320		6,965
Foreign currency translation:

Foreign currency translation adjustment	N/A	(232,182)		—		(232,182)
Marketable securities:
Change in marketable securities (1)	N/A	(4,212)		(884)		(3,328)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedge	Operating expenses (2)	(36,009)		(9,619)		(26,390)
Change in net investment hedge	N/A	31,346		7,837		23,509

Total other comprehensive income before reclassification adjustments		(4,663)		(1,782)		(2,881)
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,874		719		2,155

Total other comprehensive income (loss)		$	(228,898)	$	373	$	(229,271)

13-Week Period Ended Oct. 2, 2021
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost Other expense, net $ 99 $ 25 $ 74
Amortization of actuarial loss, net Other expense, net 8,486 2,119 6,367
Total reclassification adjustments 8,585 2,144 6,441
Foreign currency translation:
Foreign currency translation adjustment N/A (87,194) — (87,194)
Marketable securities:
   Change in marketable securities (1)
N/A (393) (82) (311)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
   Change in cash flow hedge
Operating expenses (2)
(563) (134) (429)
   Change in net investment hedge N/A 13,553 3,388 10,165
Total other comprehensive income before reclassification adjustments 12,990 3,254 9,736
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2,874 719 2,155
Total other comprehensive loss $ (63,138) $ 6,035 $ (69,173)


(1)			~~(1)~~Realized gains or losses on marketa~~ble securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first~~ ~~quarter~~ ~~of fiscal 2022.~~ ~~(2)~~ble securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first quarter of fiscal 2023.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.


			13-Week Period Ended Sep. 26, 2020								13-Week Period Ended Oct. 2, 2021
		Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount			Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
			(In thousands)								(In thousands)
Pension and other postretirement benefit plans:	Pension and other postretirement benefit plans:								Pension and other postretirement benefit plans:

Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of prior service cost	Amortization of prior service cost	Other expense, net	$	183	$	46	$	137	Amortization of prior service cost	Other expense, net	$	99	$	25	$	74
Amortization of actuarial loss, net	Amortization of actuarial loss, net	Other expense, net	10,353		2,588		7,765		Amortization of actuarial loss, net	Other expense, net	8,486		2,119		6,367

Total reclassification adjustments	Total reclassification adjustments		10,536		2,634		7,902		Total reclassification adjustments		8,585		2,144		6,441
Foreign currency translation:	Foreign currency translation:								Foreign currency translation:
Foreign currency translation adjustment	Foreign currency translation adjustment	N/A	113,140		—		113,140		Foreign currency translation adjustment	N/A	(87,194)		—		(87,194)
Marketable Securities:
Marketable securities:									Marketable securities:
Change in marketable securities (1)	Change in marketable securities (1)	N/A	(600)		(126)		(474)		Change in marketable securities (1)	N/A	(393)		(82)		(311)
Hedging instruments:	Hedging instruments:								Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:	Other comprehensive income (loss) before reclassification adjustments:								Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedge (3)		Operating expenses (2)	(16,841)		(3,874)		(12,967)
Change in cash flow hedges									Change in cash flow hedges	Operating expenses (2)	(563)		(134)		(429)
Change in net investment hedges	Change in net investment hedges	N/A	(20,399)		(9,138)		(11,261)		Change in net investment hedges	N/A	13,553		3,388		10,165

Total other comprehensive income before reclassification adjustments	Total other comprehensive income before reclassification adjustments		(37,240)		(13,012)		(24,228)		Total other comprehensive income before reclassification adjustments		12,990		3,254		9,736
Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of cash flow hedges	Amortization of cash flow hedges	Interest expense	2,874		719		2,155		Amortization of cash flow hedges	Interest expense	2,874		719		2,155
Total other comprehensive income	Total other comprehensive income		$	88,710	$	(9,785)	$	98,495	Total other comprehensive income		$	(63,138)	$	6,035	$	(69,173)


(1)			Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first quarter of fiscal 2022.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

~~(1)~~Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the ~~first~~ ~~quarter of fiscal~~ ~~2021~~.

~~(2)~~ ~~Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.~~

~~(3)~~ ~~Change in cash flow hedges includes the termination of some cash flow hedges.~~

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


		13-Week Period Ended Oct. 2, 2021											13-Week Period Ended Oct. 1, 2022
		Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities, net of tax		Total			Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities, net of tax		Total
		(In thousands)											(In thousands)
Balance as of Jul. 3, 2021		$	(1,061,991)	$	(40,092)	$	(51,096)	$	4,415	$	(1,148,764)
Balance as of Jul. 2, 2022												Balance as of Jul. 2, 2022	$	(1,011,335)	$	(501,517)	$	35,770	$	(4,972)	$	(1,482,054)
Equity adjustment from foreign currency translation	Equity adjustment from foreign currency translation	—		(87,194)		—		—		(87,194)		Equity adjustment from foreign currency translation	—		(232,182)		—		—		(232,182)

Amortization of cash flow hedges	Amortization of cash flow hedges	—		—		2,155		—		2,155		Amortization of cash flow hedges	—		—		2,155		—		2,155

Change in net investment hedges	Change in net investment hedges	—		—		10,165		—		10,165		Change in net investment hedges	—		—		23,509		—		23,509
Change in cash flow hedge	Change in cash flow hedge	—		—		(429)		—		(429)		Change in cash flow hedge	—		—		(26,390)		—		(26,390)

Amortization of unrecognized prior service cost	Amortization of unrecognized prior service cost	74		—		—		—		74		Amortization of unrecognized prior service cost	74		—		—		—		74
Amortization of unrecognized net actuarial losses	Amortization of unrecognized net actuarial losses	6,367		—		—		—		6,367		Amortization of unrecognized net actuarial losses	6,891		—		—		—		6,891
Change in marketable securities	Change in marketable securities	—		—		—		(311)		(311)		Change in marketable securities	—		—		—		(3,328)		(3,328)
Balance as of Oct. 2, 2021		$	(1,055,550)	$	(127,286)	$	(39,205)	$	4,104	$	(1,217,937)
Balance as of Oct. 1, 2022												Balance as of Oct. 1, 2022	$	(1,004,370)	$	(733,699)	$	35,044	$	(8,300)	$	(1,711,325)

13-Week Period Ended Sep. 26, 2020
Pension and Other Postretirement Benefit Plans,
net of tax Foreign Currency Translation Hedging,
net of tax Marketable Securities,
net of tax Total
(In thousands)
Balance as of Jun. 27, 2020 $ (1,265,714) $ (402,384) $ (49,878) $ 7,095 $ (1,710,881)
Equity adjustment from foreign currency translation — 113,140 — — 113,140
Amortization of cash flow hedges — — 2,155 — 2,155
Change in net investment hedges — — (11,261) — (11,261)
Change in cash flow hedge — — (12,967) — (12,967)
Amortization of unrecognized prior service cost 137 — — — 137
Amortization of unrecognized net actuarial losses 7,765 — — — 7,765
Change in marketable securities — — — (474) (474)
Balance as of Sep. 26, 2020 $ (1,257,812) $ (289,244) $ (71,951) $ 6,621 $ (1,612,386)


	13-Week Period Ended Oct. 2, 2021
	Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities		Total
	(In thousands)
Balance as of Jul. 3, 2021	$	(1,061,991)	$	(40,092)	$	(51,096)	$	4,415	$	(1,148,764)

Equity adjustment from foreign currency translation	—		(87,194)		—		—		(87,194)
Amortization of cash flow hedges	—		—		2,155		—		2,155

Change in net investment hedges	—		—		10,165		—		10,165
Change in cash flow hedge	—		—		(429)		—		(429)

Amortization of unrecognized prior service cost	74		—		—		—		74
Amortization of unrecognized net actuarial losses	6,367		—		—		—		6,367
Change in marketable securities	—		—		—		(311)		(311)
Balance as of Oct. 2, 2021	$	(1,055,550)	$	(127,286)	$	(39,205)	$	4,104	$	(1,217,937)

~~10.~~11. 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 ~~quarter~~ 13 weeks of fiscal ~~2022,~~2023, options to purchase ~~1,150,645~~882,359 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 ~~quarter~~13 weeks of fiscal ~~2022~~2023 was ~~$17.36.~~$24.58.

In the first ~~quarter~~ 13 weeks of fiscal ~~2022, 412,598~~2023, employees were granted 420,627 performance share units (PSUs) ~~were granted to employees.~~. 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 was 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 ~~quarter~~ 13 weeks of fiscal ~~2022~~2023 was ~~$76.81.~~ $85.43.

The PSUs will convert into shares of Sysco 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 ~~quarter~~ 13 weeks of fiscal ~~2022, 172,739~~2023, employees were granted 172,987 restricted stock ~~units were granted to employees.~~units. The weighted average grant-date fair value per restricted stock unit granted during the first ~~quarter~~13 weeks of fiscal ~~2022~~2023 was ~~$76.63.~~$85.38.

Employee Stock Purchase Plan

Plan participants purchased ~~235,197~~326,226 shares of common stock under the ESPP during the first ~~quarter~~13 weeks of fiscal ~~2022.~~2023. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was ~~$11.78~~$10.61 during the first ~~quarter~~13 weeks of fiscal ~~2022.~~2023. 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 ~~$29.3~~$27.2 million and ~~$25.8~~$29.3 million for the first ~~quarter~~ 13 weeks of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

As of October ~~2, 2021,~~1, 2022, there was ~~$154.1~~$152.0 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of ~~1.96~~2.16 years.

~~11.~~12. INCOME TAXES

Effective Tax Rate

The effective tax ~~rates~~rate for the first ~~quarters~~quarter of fiscal 2023 was 21.74% and was favorably impacted by the excess tax benefits of equity-based compensation, which totaled $8.9 million. The effective tax rate for the first quarter of fiscal 2022 ~~and 2021 were~~was 25.40% ~~and 16.17%, respectively.~~. As compared to the company’s statutory tax rate, the higher effective tax rate for the first quarter of fiscal 2022 was impacted by the increase in our reserve for uncertain tax positions of $12.0 million, partially offset by (1) the favorable impact of corporate owned life insurance policies that total $1.9 million, and (2) the favorable impact of excess tax benefits of equity-based compensation that totaled $1.4 million. As compared to the company’s statutory tax rate, the lower effective tax rate for the first quarter of fiscal 2021 was impacted by (1) the $7.6 million tax benefit attributable to the sale of the stock of Cake Corporation, (2) the impact of changes in tax law in the United Kingdom (U.K.) of $5.5 million and, (3) the favorable impact of excess tax benefits of equity-based compensation that totaled $2.3 million.

Uncertain Tax Positions

As of October ~~2, 2021,~~1, 2022, the gross amount of unrecognized tax benefit and related accrued interest was $32.4 million and ~~$3.8~~$6.6 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months. At this time, an estimate of the range of the reasonably possible change cannot be made.

Other

The determination of the company’s provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. The company’s 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 the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

~~12.~~13. 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.~~

14. 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 3three 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, ~~specialty~~ produce, specialty Italian, specialty imports and a wide variety of non-food ~~products;~~products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, our Asian specialty distribution company and a number of other small specialty businesses that are not material to our operations;

•International Foodservice Operations – includes operations ~~in the Americas (primarily~~ outside of the ~~U.S. and Europe,~~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, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the ~~U.K.~~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 generally includes all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.

The following tables set forth certain financial information for Sysco’s reportable business ~~segments.~~segments:


		13-Week Period Ended					13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020					Oct. 1, 2022		Oct. 2, 2021
Sales:	Sales:	(In thousands)				Sales:	(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	11,602,963	$	7,921,533			U.S. Foodservice Operations	$	13,602,482	$	11,602,963
International Foodservice Operations	International Foodservice Operations	2,895,247		2,163,693				International Foodservice Operations	3,283,735		2,895,247
SYGMA	SYGMA	1,704,033		1,524,148				SYGMA	1,933,457		1,704,033
Other	Other	254,303		168,005				Other	307,156		254,303
Total	Total	$	16,456,546	$	11,777,379			Total	$	19,126,830	$	16,456,546

		13-Week Period Ended					13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020					Oct. 1, 2022		Oct. 2, 2021
Operating income (loss):	Operating income (loss):	(In thousands)				Operating income (loss):	(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	797,523	$	588,409			U.S. Foodservice Operations	$	903,828	$	797,523
International Foodservice Operations	International Foodservice Operations	36,676		(537)				International Foodservice Operations	87,208		36,676
SYGMA	SYGMA	(2,447)		11,692				SYGMA	5,471		(2,447)
Other	Other	6,456		(5)				Other	11,538		6,456
Total segments	Total segments	838,208		599,559				Total segments	1,008,045		838,208
Global Support Center	Global Support Center	(206,526)		(179,980)				Global Support Center	(273,712)		(206,526)
Total operating income	Total operating income	631,682		419,579				Total operating income	734,333		631,682
Interest expense	Interest expense	128,214		146,717				Interest expense	124,150		128,214
Other (income) expense, net		(3,252)		14,124
Other expense (income), net								Other expense (income), net	15,281		(3,252)
Earnings before income taxes	Earnings before income taxes	$	506,720	$	258,738			Earnings before income taxes	$	594,902	$	506,720

15.SUBSEQUENT EVENTS

In October 2022, Sysco and an independent fiduciary of the Sysco Corporation Retirement Plan (the Plan), entered into a commitment agreement with Massachusetts Mutual Life Insurance Company (the Insurer), which has AA+, Aa3, and A++ credit ratings from S&P Global, Moody’s, and AM Best, respectively, under which the Plan agreed to purchase a nonparticipating single premium group annuity contract that will transfer to the Insurer approximately $700 million of the Plan’s defined benefit pension obligations related to certain pension benefits.

The purchase of the group annuity contract by the Plan closed on October 25, 2022. The contract covers approximately 10,000 Sysco participants and beneficiaries (the Transferred Participants). Under the group annuity contract, the Insurer will make an unconditional and irrevocable commitment to pay the pension benefits of each Transferred Participant that are due on or after January 1, 2023. The transaction will result in no changes to the amount of benefits payable to the Transferred Participants.

As a result of the transaction, the company expects to recognize a one-time, non-cash pre-tax pension settlement charge of approximately $250 to $300 million in the second quarter of fiscal 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with our consolidated financial statements as of July ~~3, 2021,~~2, 2022, and for the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended July ~~3, 2021~~2, 2022 (our fiscal ~~2021~~2022 Form 10-K), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

Highlights

Our first quarter of fiscal ~~2022~~2023 results ~~were strong due~~reflected continued positive momentum in our business to ~~substantial~~start the fiscal year, delivering our highest ever quarterly sales ~~momentum surpassing first quarter of fiscal 2019 levels. Our results increased sequentially each month of~~at Sysco. We generated double-digit sales and earnings growth compared to the ~~quarter, despite the presence of the Delta variant of COVID-19. Customers are responding positively to Sysco’s relative supply chain strength, our new purpose platform and our improving capabilities~~same period last year, driven by higher volumes, effective management of inflation and market share gains. We continued to advance our Recipe ~~for~~For Growth ~~strategy. Our financial results demonstrate~~strategy, including within our ~~ability to gain market share in this business climate.~~International Foodservice Operations segment, while addressing operational improvement opportunities. See below for a comparison of our fiscal ~~2022~~2023 results to our fiscal ~~2021~~2022 results, both including and excluding Certain Items (as defined below).

Comparisons of results from the first quarter of fiscal ~~2022~~2023 to the first quarter of fiscal ~~2021~~2022 are presented below:

•Sales:

◦increased ~~39.7%~~16.2%, or ~~$4.7~~$2.7 billion, to ~~$16.5~~$19.1 billion;

•Operating income:

◦increased ~~50.6%~~16.3%, or ~~$212.1~~$102.7 million, to ~~$631.7~~$734.3 million;

◦adjusted operating income increased ~~87.9%~~12.4%, or ~~$320.4~~$85.2 million, to ~~$685.1~~$770.3 million;

•Net earnings:

◦increased ~~74.3%~~23.2%, or ~~$161.1~~$87.6 million, to ~~$378.0~~$465.6 million;

◦adjusted net earnings increased ~~147.9%~~14.6%, or ~~$256.5~~$62.7 million, to ~~$429.9~~$492.6 million;

•Basic earnings per share:

◦increased ~~72.1%~~24.3%, or ~~$0.31,~~$0.18, to ~~$0.74~~$0.92 per share;

•Diluted earnings per share:

◦increased ~~73.8%~~24.7%, or ~~$0.31,~~$0.18, to ~~$0.73~~$0.91 per share;

◦adjusted diluted earnings per share increased ~~144.1%~~16.9%, or ~~$0.49,~~$0.14, to ~~$0.83~~$0.97 in fiscal ~~2022;~~2023;

•EBITDA:

◦increased ~~40.2%~~10.5%, or ~~$235.4~~$86.6 million, to ~~$821.4~~$908.0 million; and

◦adjusted EBITDA increased ~~62.5%~~7.5%, or ~~$328.1~~$64.1 million, to ~~$852.8~~$916.9 million.

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, ~~that~~as we believe these metrics provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of restructuring and transformational project costs consisting of: (1) restructuring charges, (2) expenses associated with our various transformation initiatives and (3) facility closure and severance charges; ~~and~~ acquisition-related costs consisting of: ~~(1)~~(a) intangible amortization expense and ~~(2)~~(b) acquisition costs and due diligence costs related to our ~~significant acquisitions. Our results for fiscal 2022 are also impacted by the increase in reserves for uncertain tax positions. Our results for the first quarter of fiscal 2021 were also impacted by~~acquisitions; and the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable ~~balances, by a loss on the sale of a business and by a net benefit from remeasuring net deferred tax assets due to the changes in U.K. tax rates.~~balances.

The fiscal ~~2022~~2023 and fiscal ~~2021~~2022 items discussed above are collectively referred to as “Certain Items.” The results of our foreign operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations results on a constant currency basis.

2021

Trends

Economic and Industry Trends

~~Despite the presence of the Delta variant of COVID-19, Sysco’s sales improved sequentially through~~The food-away-from-home sector experienced growth in the first quarter of fiscal ~~2022 and have~~2023. Restaurants continued to ~~grow through October 2022, showing~~be resilient and our ~~ability~~travel/hospitality and business/industry segments results posted year-over-year improvements. We are closely monitoring macro-economic conditions for signs of business slow down. At this time, we are not seeing recession concerns negatively impacting our business results. We have experienced a strong start to ~~gain market-share~~the year in ~~this environment. There was a high volume of cases shipped within~~both national and local sales, which has driven market share gains overall, as we grew more than 1.4 times the ~~restaurant sector during~~market for the ~~first quarter of fiscal 2022, and additional~~period. We are on track to deliver our stated growth ~~is still expected to come in certain segments such~~objective for the year, as ~~hospitality, business and industry and foodservice management. International travel restrictions are beginning to ease, which~~ we expect will benefit our hospitality sector in specific regions of our business. Our International Foodservice Operations segment improved sequentially throughout the first quarter of fiscal 2022, as restrictionssee continued ~~to ease across our international regions. The relative performance~~growth opportunities, particularly in the ~~international sector still lags the U.S. sector; however, we believe that the international foodservice markets will experience further recovery as the global effects of the COVID-19 pandemic subside.~~non-commercial sector.

Sales and Gross Profit Trends

Our sales and gross profit performance ~~can be~~are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in the first quarter of fiscal ~~2022~~2023 was volume growth, as we ~~are experiencing~~experienced strong results from both ~~independent~~national and ~~chain~~local customers driven by a ~~23.8%~~5.4% improvement in local case volume and ~~a 28.1%~~an 7.3% improvement in total case volume within our U.S. ~~Broadline operations,~~Foodservice segment, in each ~~case~~instance as compared to the first quarter of fiscal ~~2021. Sysco continues to lead the industry~~2022. This volume reflects our broadline and specialty businesses except with our specialty meats business which measures its volume in ~~how we are supporting our customers during this challenging supply chain period.~~pounds. This ~~has~~growth enabled us to gain market share during the first quarter of fiscal ~~2022.~~2023. We expect ~~additional recovery~~ to ~~occur, as~~continue seeing momentum on our ~~volume is yet to fully recover in certain segments, such as hospitality, business~~rate of growth and ~~industry, and foodservice management. We~~ are on track to ~~deliver~~exceed our stated goal of achieving growth at a rate of ~~1.2~~1.5 times the industry in fiscal ~~2022, and we believe that our Recipe for Growth strategy will enable us to accelerate over the next three years and grow at 1.5 times the pace of the industry by the end of fiscal~~ 2024.

~~In terms~~Product cost inflation has also been a driver of ~~customer mix,~~our sales and gross profit performance. We experienced inflation at a rate of 9.7% in the first quarter of fiscal ~~2022 represented another period of strong net new business wins for Sysco, as we continued our strong momentum and posted compelling wins~~2023 at the ~~national and local~~total enterprise level, primarily driven by inflation in the ~~U.S. In Europe,~~dairy and frozen categories. We continue to be successful in managing our business is skewed towards the business, industry and travel segments, which remain constrained due to the continuing effects of the COVID-19 pandemic. We expect that our Recipe for Growth strategy will enable our International Foodservice Operations segment to improve how we serve local customers over time and will create a better balanceinflation, resulting in ~~our customer mix to the more profitable local sector over our current three-year plan.~~

~~Although our~~an increase in gross profit dollars. Gross margin ~~decreased 79~~increased 18 basis points in the first quarter of fiscal ~~2022,~~2023, as compared to the same prior year period, ~~largely due to~~primarily driven by higher volumes, the ~~impact~~effective management of inflation onand progress against our sales, we believe we managed our profitability well in the inflationary environment. We passed along this inflation to our customers, and we are successfully growing gross profit dollars. In terms of the impact on pricing, we experienced inflation at a rate of 12.8% combined for the U.S. and Canada during the first quarter of fiscal 2022, primarily in the meat, poultry and canned and dry foods categories. While challenging to predict, we expect inflation to moderate by the fourth quarter of fiscal 2022. The gross margin dilution at the enterprise level was also driven by margin changes at our higher-margin businesses, with the larger U.S. Foodservice Operations segment business growing volume at lower-margin rates. Across our enterprise, each business segment experienced an increase in gross profit dollars per case, despite the decline in the gross margin rate.partnership growth management initiatives.

Operating Expense Trends

Total operating expenses increased ~~30.0%~~17.7% during the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, driven by ~~the variable costs associated with significantly~~ increased volumes, ~~one-time~~cost inflation, continued operational cost pressures from the operating environment and ~~short-term transitory expenses associated with the~~our planned investments to drive our transformation initiatives under our Recipe For Growth strategy. This quarter included transformation investments of $63.4 million, new-associate related productivity costs of $41.1 million and a sequential improvement in business recovery and transformation investments towards our Recipe for Growth strategy. The largest contributor to the increase was the higher associate-related expenses associated with elevated overtime rates and intentional expenditures to improve our staffing in preparation for additional growth and for increased throughput capacity.costs. We ~~have~~ continued to invest in associate retention and best-in-class training, primarily for transportation and warehouse staff. Our Sysco Driver Academy is contributing to improved retention and productivity, and we expect to see this trend improve, as the percentage of drivers trained from within Sysco continues to grow. We believe the advancements we are making in our ~~staffing~~physical capabilities, and the investments we are making in improved training, will provide improved service levels to our customers and strengthen Sysco’s ability to profitably win market share in the coming quarters and years.

Pension Settlement Charge

As discussed in Note 15. “Subsequent Events,” the Sysco Corporation Retirement Plan (the Plan), entered into a commitment agreement to purchase a nonparticipating single premium group annuity contract that will transfer approximately $700 million of the Plan’s defined benefit pension obligations related to certain pension benefits. As a result of the transaction, we expect to recognize a one-time, non-cash pre-tax pension settlement charge of approximately $250 to $300 million in the second quarter of fiscal ~~2022, adding 1,000~~2023. The actual charge will depend on finalization of the actuarial and other assumptions. This charge will be treated as a Certain Item. We will also compute a new ~~supply chain associates, consisting primarily~~amount of ~~transportation and warehouse staff. Additionally, we had an unfavorable comparison of bad debt~~on-going expense as we recognized a $98.6 million benefit in the first quarter of fiscal 2021 from reducing our reserves on pre-pandemic receivables. In the first quarter of fiscal 2022, we recognized a benefit of $7.1 million from the reversal of pre-pandemic receivable allowances.

Our operating results in the first quarter of fiscal 2022 included $57.0 million of one-time and short-term transitory expenses related to the business recovery, including investments in incremental marketing to advertise open positions, sign-on bonuses for new associates, and referral and retention bonuses for existing staff, and more than $24.4 million of operating expense investments for our Recipe for Growth strategy. We are making these necessary investments to ensure that we can serve our customers to enable us to continue winning market share, profitably, at the national and local level; however, the higher operating expenses had a negative impact on our results for the ~~quarter, and we expect these investments to have a similar impact on our results~~Plan for ~~the second quarter of fiscal 2022. We anticipate making progress on reducing overtime and on the incremental investments in hiring during~~ the remainder of the fiscal ~~2022; however, we expect investments in transformation to remain elevated early in the transformation process.~~

~~Income Tax Trends~~

Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions. Tax law changes, increases or decreases in 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.

Our effective tax rate has been influenced by discrete events, such as tax law changes and excess tax benefits attributable to equity compensation exercises as discussed in Note 11, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I.

~~Comparisons to Fiscal 2019~~

In assessing our financial performance through the business recovery, Sysco’s management compared our results in the first quarter of fiscal 2022 against the first quarter of fiscal 2019. These results include:

•~~Sales:~~

◦~~increased 8.2%, or $1.2 billion, as compared to fiscal 2019;~~

•~~Operating income:~~

◦~~increased 0.6%, or $3.5 million, as compared to fiscal 2019;~~

◦~~adjusted operating income decreased 1.0%, or $6.6 million, as compared to fiscal 2019;~~

•~~EBITDA:~~

◦~~increased 0.8%, or $6.8 million, as compared to fiscal 2019;~~

◦~~adjusted EBITDA decreased 0.6%, or $4.8 million, as compared to fiscal 2019;~~

•~~Diluted earnings per share:~~

◦~~decreased 9.9%, or $0.08, as compared to fiscal 2019; and~~

◦~~adjusted diluted earnings per share decreased 8.8%, or $0.08, as compared to fiscal 2019.~~

Key items impacting the comparability of Sysco’s results in the first quarter of fiscal 2022 to the first quarter of fiscal 2019 included the one-time and short-term transitory expenses associated with the business recovery and the operating expense investments towards our Recipe for Growth strategy. Additionally, in the first quarter of fiscal 2022, Sysco incurred $50.9 million of on-going interest expense related to senior notes issued in April 2020 as a precautionary measure in response to the COVID-19 pandemic, as the company sought to preserve its available liquidity. Some of the senior notes issued in April 2020 remain outstanding as part of our capital structure.year.

Mergers and Acquisitions

We continue to focus on mergers and acquisitions as a part of our growth strategy, where we plan to ~~cultivate~~reinforce our existing businesses, while cultivating new channels, new segments and new capabilities. We have completed the following acquisitions thus far in fiscal ~~2022.~~2023:

•In the first quarter of ~~2022,~~fiscal 2023, we acquired ~~Greco and Sons, a leading~~two small U.S.-based independent ~~specialty~~ Italian ~~distributor in the United States. We expect this acquisition to deliver over $1 billion in incremental sales to Sysco in fiscal 2022.~~

•~~In the first quarter of fiscal 2022, we acquired a specialty~~ food ~~distributor in the United Kingdom.~~

•~~In the second quarter of 2022, we acquired a regional broadline fresh produce distributor. The acquisition will operate~~distributors as part of ~~Sysco’s U.S. specialty produce business.~~our plan to meaningfully scale our growing Italian platform.

The results of these acquisitions were not material to the consolidated results of the company for the first quarter of fiscal 2023.

Strategy

Our purpose is “Connecting the World to Share Food and Care for One ~~Another,~~Another.” ~~which~~Purpose driven companies are believed to perform better, and we believe our purpose will ~~allow~~assist us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our “Recipe for Growth” transformation. This growth transformation is supported by strategic pillars that we believe will allow us to better serve our customers, including our digital, products and solutions, supply chain, customer teams, and future horizons strategies.

Our various business transformation initiatives remain on track, such as the centralized pricing tool project, which is substantially complete for local customers, and which enables Sysco to strategically manage the high levels of inflation that we are currently experiencing. Other initiatives, such as our personalization engine ~~continue~~that is currently under construction and has proved to ~~expand, while the sales transformation is helping~~be beneficial to our ~~sales teams continue to win new business.~~pilot customers. Additionally, we are ~~continuing~~improving our merchandising and marketing solutions by developing improved strategies for specific cuisine segments, and we are developing a more nimble, accessible and productive supply chain that is better positioned to ~~improve the efficiency of our organization, such~~support customers in their business recovery. Our strategic initiatives to increase delivery frequency and enable omni-channel inventory fulfillment remain on track. From these actions as ~~regionalizing the leadership structure of our specialty business, as we reduce our structural expenses to fund our capital investments. We are in the early stages~~a part of our Recipe for Growth, ~~but we can already see~~ the benefits of our developing capabilities is apparent in the new customers we are winning and in the progress we are making towards ~~gaining~~increasing market share. We expect that, as our Recipe for Growth matures, the impact on our ~~top line~~top-line growth will continue to accelerate. We are committed to profitably growing ~~1.2 times the market for fiscal 2022 and~~ 1.5 times the market by the end of fiscal 2024, the third year of our three-year strategic plan.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:


		13-Week Period Ended				13-Week Period Ended
		Oct. 2, 2021		Sep. 26, 2020				Oct. 1, 2022		Oct. 2, 2021
Sales	Sales	100.0	%	100.0	%		Sales	100.0	%	100.0	%
Cost of sales	Cost of sales	81.9		81.2			Cost of sales	81.8		81.9
Gross profit	Gross profit	18.1		18.8			Gross profit	18.2		18.1
Operating expenses	Operating expenses	14.2		15.3			Operating expenses	14.4		14.2
Operating income	Operating income	3.8		3.5			Operating income	3.8		3.8
Interest expense	Interest expense	0.8		1.2			Interest expense	0.6		0.8
Other (income) expense, net	Other (income) expense, net	—		0.1			Other (income) expense, net	0.1		—
Earnings before income taxes	Earnings before income taxes	3.1		2.2			Earnings before income taxes	3.1		3.1
Income taxes	Income taxes	0.8		0.4			Income taxes	0.7		0.8
Net earnings	Net earnings	2.3	%	1.8	%		Net earnings	2.4	%	2.3	%

The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:


	13-Week Period Ended
	Oct. ~~2, 2021~~1, 2022
Sales	~~39.7~~16.2	%
Cost of sales	~~41.1~~16.0
Gross profit	~~33.9~~17.4
Operating expenses	~~30.0~~17.7
Operating income	~~50.6~~16.3
Interest expense	~~12.6~~ (3.2)
Other (income) expense, net (1) ~~(2)~~	~~123.0~~ (569.9)
Earnings before income taxes	~~(95.8)~~17.4
Income taxes	~~207.6~~0.5
Net earnings	~~74.3~~23.2	%
Basic earnings per share	~~72.1~~24.3	%
Diluted earnings per share	~~73.8~~24.7
Average shares outstanding	~~0.7~~ (1.0)
Diluted shares outstanding	~~1.0~~ (1.0)

~~(1)Other (income) expense, net was income of $3.3 million and expense of $14.1 million in the first quarter of fiscal 2022 and fiscal 2021, respectively.~~


(1)			Other (income) expense, net was expense of $15.3 million and income of $3.3 million in the first quarter of fiscal 2023 and fiscal 2022, respectively.

The following tables represent our results by reportable segments:


		13-Week Period Ended Oct. 2, 2021																			13-Week Period Ended Oct. 1, 2022
		U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals				U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals
		(In thousands)																			(In thousands)
Sales	Sales	$	11,602,963		$	2,895,247		$	1,704,033		$	254,303					$	16,456,546		Sales	$	13,602,482		$	3,283,735		$	1,933,457		$	307,156		$	—		$	19,126,830
Sales increase (decrease)		46.5		%	33.8		%	11.8		%	51.4		%				39.7		%
Sales increase																				Sales increase	17.2		%	13.4		%	13.5		%	20.8		%				16.2		%
Percentage of total	Percentage of total	70.5		%	17.6		%	10.4		%	1.5		%				100.0		%	Percentage of total	71.1		%	17.2		%	10.1		%	1.6		%				100.0		%

Operating income (loss)	Operating income (loss)	$	797,523		$	36,676		$	(2,447)		$	6,456		$	(206,526)		$	631,682		Operating income (loss)	$	903,828		$	87,208		$	5,471		$	11,538		$	(273,712)		$	734,333
Operating income (loss) increase (decrease)		35.5		%	NM			NM			NM			14.7		%	50.6		%
Operating income (loss) increase																				Operating income (loss) increase	13.3		%	137.8		%	NM			78.7		%	32.5		%	16.3		%
Percentage of total segments	Percentage of total segments	95.1		%	4.4		%	(0.3)		%	0.8		%				100.0		%	Percentage of total segments	89.7		%	8.7		%	0.5		%	1.1		%				100.0		%
Operating income (loss) as a percentage of sales		6.9		%	1.3		%	(0.1)		%	2.5		%				3.8		%
Operating income as a percentage of sales																				Operating income as a percentage of sales	6.6		%	2.7		%	0.3		%	3.8		%				3.8		%


		13-Week Period Ended Sep. 26, 2020																		13-Week Period Ended Oct. 2, 2021
		U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center		Consolidated Totals				U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center		Consolidated Totals
		(In thousands)																		(In thousands)
Sales	Sales	$	7,921,533		$	2,163,693		$	1,524,148		$	168,005				$	11,777,379		Sales	$	11,602,963		$	2,895,247		$	1,704,033		$	254,303		$	—	$	16,456,546

Percentage of total	Percentage of total	67.3		%	18.4		%	12.9		%	1.4		%			100.0		%	Percentage of total	70.5		%	17.6		%	10.4		%	1.5		%			100.0		%

Operating income		$	588,409		$	(537)		$	11,692		$	(5)		$	(179,980)	$	419,579
Operating income (loss)																			Operating income (loss)	$	797,523		$	36,676		$	(2,447)		$	6,456		$	(206,526)	$	631,682

Percentage of total segments	Percentage of total segments	98.1		%	(0.1)		%	2.0		%	—		%			100.0		%	Percentage of total segments	95.1		%	4.4		%	(0.3)		%	0.8		%			100.0		%
Operating income as a percentage of sales		7.4		%	—		%	0.8		%	—		%			3.6		%
Operating income (loss) as a percentage of sales																			Operating income (loss) as a percentage of sales	6.9		%	1.3		%	(0.1)		%	2.5		%			3.8		%

Based on information in Note ~~13,~~14, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, in the first quarter of fiscal ~~2022,~~2023, U.S. Foodservice Operations and International Foodservice Operations collectively represented approximately ~~88.1%~~88.3% of Sysco’s overall sales and ~~99.5%~~98.4% of total segment operating ~~income.~~income, respectively. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.

Results of U.S. Foodservice Operations

The following tables set forth a summary of the components of operating income expressed as a percentage increase or decrease over the comparable period in the prior year:

13-Week Period Ended Oct. 2, 2021 13-Week Period Ended Sep. 26, 2020 Change in Dollars % Change
(Dollars in thousands)
Sales $ 11,602,963 $ 7,921,533 $ 3,681,430 46.5 %
Gross profit 2,185,154 1,599,707 585,447 36.6
Operating expenses 1,387,631 1,011,298 376,333 37.2
Operating income $ 797,523 $ 588,409 $ 209,114 35.5 %
Gross profit $ 2,185,154 $ 1,599,707 $ 585,447 36.6 %
Adjusted operating expenses (Non-GAAP) 1,389,394 1,096,675 292,719 26.7
Adjusted operating income (Non-GAAP) $ 795,760 $ 503,032 $ 292,728 58.2 %


	13-Week Period Ended Oct. 1, 2022		13-Week Period Ended Oct. 2, 2021		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	13,602,482	$	11,602,963	$	1,999,519	17.2	%
Gross profit	2,612,343		2,185,154		427,189		19.5
Operating expenses	1,708,515		1,387,631		320,884		23.1
Operating income	$	903,828	$	797,523	$	106,305	13.3	%

Gross profit	$	2,612,343	$	2,185,154	$	427,189	19.5	%
Adjusted operating expenses (Non-GAAP)	1,698,570		1,389,394		309,176		22.3
Adjusted operating income (Non-GAAP)	$	913,773	$	795,760	$	118,013	14.8	%

Sales

The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of ~~change.~~change:


		Increase (Decrease)				Increase (Decrease)
		13-Week Period				13-Week Period
		(Dollars in millions)				(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars			Cause of change	Percentage		Dollars
Case volume(1)	Case volume(1)	28.7	%	$	2,273.8		Case volume(1)	6.2	%	$	714.1
Inflation ~~(1)~~	Inflation ~~(1)~~	13.5		1,069.6			Inflation ~~(1)~~	9.8		1,137.1
Acquisitions (2)		2.1		167.0

Other ~~(3)~~(2)	Other ~~(3)~~(2)	2.2		171.0			Other ~~(3)~~(2)	1.2		148.3
Total change in sales	Total change in sales	46.5	%	$	3,681.4		Total change in sales	17.2	%	$	1,999.5




(1)~~Includes product cost inflation of 13.4% for U.S. Broadline operations.~~ ~~(2)Includes the impact of the Greco and Sons acquisition.~~ ~~(3)Case volume excludes the volume impact from our custom-cut meat companies that do not measure volume in cases. Any impact in volumes from these operations is included within “Other.”~~			Case volumes increased 7.3% compared to the first quarter of fiscal 2022. This volume increase resulted in a 6.2% increase in the dollar value of sales compared to the first quarter of fiscal 2022.
(2)			Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds. Any impact in volumes from these specialty meats operations is included within “Other.”

The primary ~~driver~~drivers of the sales increase ~~was~~in the ~~significant~~first quarter of fiscal 2023 were inflation, along with an improvement in case volume in our U.S. ~~Broadline operations as a~~Foodservice Operations, which was largely the result of the ~~business recovery from the COVID-19 pandemic.~~impact of our Recipe for Growth initiatives. Case volumes from our U.S. ~~Broadline operations~~Foodservice Operations increased ~~28.1%~~7.3% in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021, and~~2022. This included a ~~23.8% improvement~~5.4% increase in ~~locally managed~~local customer case ~~growth, along with a 33.9% increase~~volume in ~~national customer case volume. The increases in U.S. Broadline case volumes represent organic growth.~~the first quarter of fiscal 2023.

Operating Income

The increase in operating income for the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was driven by gross profit dollar growth and partially offset by an increase in operating expenses.

Gross profit dollar growth in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was driven primarily by the improvement in local cases ~~and~~stemming from: (1) the ~~pass through~~impact of our Recipe for Growth initiatives, (2) management of higher inflation toand (3) optimization of our ~~customers, partially offset by a decline in penetration of Sysco-branded products.~~business processes and performance. The estimated change in product costs, an internal measure of inflation or deflation, for the first quarter of fiscal ~~2022~~2023 for our U.S. Broadline operations was ~~inflation of 13.4%~~12.0%. For the first quarter of fiscal ~~2022,~~2023, this change in product costs was primarily driven by inflation in the ~~meat, poultry,~~dairy and ~~canned and dry foods~~frozen categories. Gross margin, which is gross profit as a percentage of sales, was ~~18.83%~~19.2% in the first quarter of fiscal ~~2022,~~2023 for our U.S. Foodservice Operations, which was an increase of 37 basis points compared to gross margin of 18.8% in the first quarter of fiscal 2022.

~~was a decrease of 136 basis points compared to gross margin of 20.19% in the first quarter of fiscal 2021, primarily attributable to inflationary pressure.~~

The increase in operating expenses for the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was primarily driven by variable costs associated with increased volumes and ~~largely from short-term transitory expenses associated with the business recovery, including increases in associate-related~~ costs ~~associated with recruiting~~for employee training and ~~hiring additional supply chain associates. Additionally, we experienced an unfavorable comparison of bad debt expense in the first quarter of fiscal 2022, as compared~~retention designed to ~~fiscal 2021, which included a net bad debt benefit due to the significant reduction of reserves on pre-pandemic receivables.~~improve productivity.

Results of International Foodservice Operations

The following table sets forth a summary of the components of operating income and adjusted operating income expressed as a percentage increase or decrease over the comparable period in the prior year:


		13-Week Period Ended Oct. 2, 2021		13-Week Period Ended Sep. 26, 2020		Change in Dollars		% Change			13-Week Period Ended Oct. 1, 2022		13-Week Period Ended Oct. 2, 2021		Change in Dollars		% Change
		(Dollars in thousands)									(Dollars in thousands)
Sales	Sales	$	2,895,247	$	2,163,693	$	731,554	33.8	%	Sales	$	3,283,735	$	2,895,247	$	388,488	13.4	%
Gross profit	Gross profit	589,134		450,398		138,736		30.8		Gross profit	649,265		589,134		60,131		10.2
Operating expenses	Operating expenses	552,458		450,935		101,523		22.5		Operating expenses	562,057		552,458		9,599		1.7
Operating income (loss)		$	36,676	$	(537)	$	37,213	NM
Operating income										Operating income	$	87,208	$	36,676	$	50,532	137.8	%

Gross profit	Gross profit	$	589,134	$	450,398	$	138,736	30.8	%	Gross profit	$	649,265	$	589,134	$	60,131	10.2	%
Adjusted operating expenses (Non-GAAP)	Adjusted operating expenses (Non-GAAP)	525,017		431,616		93,401		21.6		Adjusted operating expenses (Non-GAAP)	542,136		525,017		17,119		3.3
Adjusted operating income (Non-GAAP)	Adjusted operating income (Non-GAAP)	$	64,117	$	18,782	$	45,335	241.4	%	Adjusted operating income (Non-GAAP)	$	107,129	$	64,117	$	43,012	67.1	%

Sales on a constant currency basis (Non-GAAP)	Sales on a constant currency basis (Non-GAAP)	$	2,773,852	$	2,163,693	$	610,159	28.2	%	Sales on a constant currency basis (Non-GAAP)	$	3,599,186	$	2,895,247	$	703,939	24.3	%
Gross profit on a constant currency basis (Non-GAAP)	Gross profit on a constant currency basis (Non-GAAP)	566,400		450,398		116,002		25.8		Gross profit on a constant currency basis (Non-GAAP)	721,025		589,134		131,891		22.4
Adjusted operating expenses on a constant currency basis (Non-GAAP)	Adjusted operating expenses on a constant currency basis (Non-GAAP)	503,943		431,616		72,327		16.8		Adjusted operating expenses on a constant currency basis (Non-GAAP)	606,843		525,017		81,826		15.6
Adjusted operating income (Non-GAAP)	Adjusted operating income (Non-GAAP)	$	62,457	$	18,782	$	43,675	232.5	%	Adjusted operating income (Non-GAAP)	$	114,182	$	64,117	$	50,065	78.1	%

Sales

The following tables set forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.


		Increase (Decrease)				Increase (Decrease)
		13-Week Period				13-Week Period
		(Dollars in millions)				(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars			Cause of change	Percentage		Dollars
Inflation	Inflation	3.3	%	$	71.9		Inflation	14.5	%	$	418.5

Foreign currency	Foreign currency	5.7		122.9			Foreign currency	(10.9)		(315.5)
Other (1)	Other (1)	24.8		536.8			Other (1)	9.8		285.5
Total change in sales	Total change in sales	33.8	%	$	731.6		Total change in sales	13.4	%	$	388.5

~~(1)~~The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.


(1)			The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.

Sales for the first quarter of fiscal ~~2022~~2023 were higher, as compared to the first quarter of fiscal ~~2021,~~2022, primarily due to ~~the significant~~inflation along with an improvement in volume, ~~as restrictions continued~~some of which was attributable to ~~ease across~~ our ~~European, Canadian and Latin American businesses.~~

Recipe for Growth initiatives. Partially offsetting these increases was the negative impact of foreign currency translation.

Operating Income

The increase in operating income for the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was ~~primarily~~ due to the continuing ~~recovery~~increase in ~~business resulting from COVID-19 restrictions lifting in many international regions.~~sales volumes, along with specific efforts to optimize our gross profit while addressing our increased operating expenses.

The increase in gross profit dollars in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was ~~primarily~~ attributable to the increase in sales volume and ~~inflation.~~the management of inflation, along with specific efforts to optimize our gross profit dollars.

The increase in operating expenses for the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, was primarily due to an increase in associate-related costs associated with hiring associates to manage the business recovery. Additionally, we had an unfavorable comparison of bad debt expense, as fiscal 2021 included a reduction of reserves on pre-pandemic receivables.increased volume.

Results of SYGMA and Other Segment

For SYGMA, sales were ~~11.8%~~13.5% higher in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, primarily from an increase in case ~~volume~~volumes driven by the success of national and regional quick service restaurants ~~partially offset by a decrease in volume due to the planned exit of a large regional customer.~~and inflation. Operating income ~~decreased~~increased by ~~$14.1~~$7.9 million in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021, as our increased investments in business recovery staffing drove an~~2022, primarily due to the increase in ~~operating expenses~~case volumes and fee increases to ~~exceed gross profit dollar growth from increased case volume.~~customers.

For the operations that are grouped within Other, operating income increased ~~$6.5~~$5.1 million in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, primarily due to the recovery of our hospitality business, Guest ~~Worldwide, which had a gross profit increase of 75.2% in the first quarter of fiscal 2022. This~~Worldwide. Volume for this business has improved, as hospitality occupancy rates have grown from prior year levels.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the first quarter of fiscal ~~2022~~2023 increased ~~$29.0~~$59.5 million, or ~~16.3%~~28.8%, as compared to the first quarter of fiscal ~~2021,~~2022, primarily due to ~~higher charges~~investments for ~~professional fees, including acquisition and due diligence costs associated certain acquisitions, as well as~~our Recipe for Growth strategy, higher associate-related ~~expenses.~~expenses, partially from centralization of certain functions, and an increase in self-insurance reserves.

Included in Global Support Center expenses are Certain Items that totaled $6.1 million in the first quarter of fiscal 2023, as compared to $27.7 million in the first quarter of fiscal ~~2022, as compared to $12.0 million in~~2022. Certain Items impacting the first quarter of fiscal ~~2021.~~2023 were primarily expenses associated with our business technology transformation initiatives. Certain Items impacting the first quarter of fiscal 2022 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. ~~Certain Items impacting the first quarter of fiscal 2021 were primarily expenses associated with our business technology transformation initiatives.~~

Interest Expense

Interest expense decreased ~~$18.5~~$4.1 million for the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, primarily attributable to lower ~~fixed~~ debt ~~volume, along with~~levels.

Other income and expense

Other (income) expense, net was expense of $15.3 million and income of $3.3 million in the first quarter of fiscal 2023 and fiscal 2022, respectively. The expense in the first quarter of fiscal 2023 was primarily attributable to expenses from our U.S. Sysco Corporation Retirement Plan due to increased interest rates and lower ~~floating interest rates.~~plan asset values as compared to fiscal 2022.

Net Earnings

Net earnings increased ~~74.3%~~23.2% in the first quarter of fiscal ~~2022,~~2023, as compared to the first quarter of fiscal ~~2021,~~2022, due primarily to the items noted above for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note ~~11,~~12, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I.I of this Form 10-Q. Adjusted net earnings, excluding Certain Items, increased ~~147.9%~~14.6% in the first quarter of fiscal ~~2022,~~2023, primarily due to ~~a significant~~an increase in sales volume, partially offset by an unfavorable tax expense compared to the prior year.

Earnings Per Share

Basic earnings per share in the first quarter of fiscal ~~2022~~2023 were ~~$0.74,~~$0.92, a ~~72.1%~~24.3% increase from the comparable prior year amount of ~~$0.43~~$0.74 per share. Diluted earnings per share in the first quarter of fiscal ~~2022~~2023 were ~~$0.73,~~$0.91, a ~~73.8%~~24.7% increase from the comparable prior year period amount of ~~$0.42~~$0.73 per share.

Adjusted diluted earnings per share, excluding Certain Items, in the first quarter of fiscal ~~2022~~2023 were ~~$0.83,~~$0.97, a ~~144.1% decrease~~16.9% increase from the comparable prior year amount of ~~$0.34~~$0.83 per share.

2827

Non-GAAP Reconciliations


Our discussion of our results includes certain non-GAAP financial measures, ~~including~~such as EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact ofof: (1) restructuring and transformational project costs consisting of: ~~(1)~~(a) restructuring charges, ~~(2)~~(b) expenses associated with our various transformation initiatives and ~~(3)~~(c) facility closure and severance charges; ~~and by~~(2) acquisition-related costs consisting of: ~~(1)~~(a) intangible amortization expense and ~~(2)~~(b) acquisition costs and due diligence costs related to our significant acquisitions. Our results for the first quarter of fiscal 2022 are also impacted by the increase in reserves for uncertain tax positions. Sysco’s results for the first quarter of fiscal 2022acquisitions; and ~~fiscal 2021 were also impacted by~~(3) the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable ~~balances,~~balances. Our results for fiscal 2023 were also impacted by adjustments to a ~~loss on the sale of a business and~~product return allowance related to COVID-related personal protection equipment inventory. Our results for fiscal 2022 were also impacted by ~~a net benefit from remeasuring net deferred~~an increase in reserves for uncertain tax ~~assets due to the changes in U.K. tax rates.~~positions.

The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. The constant currency impact on our adjusted total Sysco and our adjusted International Foodservice Operations results are disclosed when the impact exceeds a defined threshold of greater than 1% on the growth metric. If the amount does not exceed this threshold, a disclosure will be made that the impact of the currency change was not significant.

Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year-over-year basis.

~~Although~~ Sysco has a history of growth through acquisitions certain acquisitions were significantly larger than the companies historically acquired by Sysco, with a proportionately greater impact on Sysco’s consolidated financial statements. Accordingly, Sysco is excludingand excludes from its non-GAAP financial measures ~~for the relevant periods~~ the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs ~~specific to our significant~~for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal ~~2022~~2023 and fiscal ~~2021.~~2022.

Set forth below is a reconciliation of sales, operating expenses, operating income, ~~other (income) expense,~~ net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add up to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.


	13-Week Period Ended Oct. 1, 2022			13-Week Period Ended Oct. 2, 2021			Change in Dollars		% Change
Sales (GAAP)	$	19,126,830		$	16,456,546		$	2,670,284	16.2	%
Impact of currency fluctuations (1)	319,162			—			319,162		2.0
Comparable sales using a constant currency basis (Non-GAAP)	$	19,445,992		$	16,456,546		$	2,989,446	18.2	%




Cost of sales (GAAP)	$	15,637,975		$	13,484,838		$	2,153,137	16.0	%
Impact of inventory valuation adjustment (2)	2,571			—			2,571		—
Cost of sales adjusted for Certain Items (Non-GAAP)	$	15,640,546		$	13,484,838		$	2,155,708	16.0	%



Gross profit (GAAP)	$	3,488,855		$	2,971,708		$	517,147	17.4	%
Impact of inventory valuation adjustment (2)	(2,571)			—			(2,571)		(0.1)
Comparable gross profit adjusted for Certain Items (Non-GAAP)	3,486,284			2,971,708			514,576		17.3
Impact of currency fluctuations (1)	73,035			—			73,035		2.5
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	3,559,319		$	2,971,708		$	587,611	19.8	%




Gross margin (GAAP)	18.24		%	18.06		%			18 bps
Impact of inventory valuation adjustment (2)	(0.01)		%	—		%			-1 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP)	18.23		%	18.06		%			17 bps


Impact of currency fluctuations (1)	0.07			—					7 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	18.30		%	18.06		%			24 bps






Operating expenses (GAAP)	$	2,754,522		$	2,340,026		$	414,496	17.7	%
Impact of restructuring and transformational project costs (3)	(11,645)			(24,511)			12,866		52.5
Impact of acquisition-related costs (4)	(29,454)			(35,926)			6,472		18.0
Impact of bad debt reserve adjustments (5)	2,592			7,061			(4,469)		(63.3)

Operating expenses adjusted for Certain Items (Non-GAAP)	2,716,015			2,286,650			429,365		18.8
Impact of currency fluctuations (1)	70,695			—			70,695		3.1
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	2,786,710		$	2,286,650		$	500,060	21.9	%




Operating expense as a percentage of sales (GAAP)	14.40		%	14.22		%			18 bps
Impact of certain item adjustments	(0.20)		%	(0.32)		%			12 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)	14.20		%	13.90		%			30 bps

Operating income (GAAP)	$	734,333		$	631,682		$	102,651	16.3	%
Impact of inventory valuation adjustment (2)	(2,571)			—			(2,571)		NM
Impact of restructuring and transformational project costs (3)	11,645			24,511			(12,866)		(52.5)
Impact of acquisition-related costs (4)	29,454			35,926			(6,472)		(18.0)
Impact of bad debt reserve adjustments (5)	(2,592)			(7,061)			4,469		63.3

Operating income adjusted for Certain Items (Non-GAAP)	770,269			685,058			85,211		12.4
Impact of currency fluctuations (1)	2,340			—			2,340		0.4
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	772,609		$	685,058		$	87,551	12.8	%




Operating margin (GAAP)	3.84		%	3.84		%			0 bps

13-Week Period Ended Oct. 2, 2021 13-Week Period Ended Sep. 26, 2020 Change in Dollars % Change
Sales (GAAP) $ 16,456,546 $ 11,777,379 $ 4,679,167 39.7 %
Impact of currency fluctuations (1)
(124,726) — (124,726) (1.1)
Comparable sales using a constant currency basis (Non-GAAP) $ 16,331,820 $ 11,777,379 $ 4,554,441 38.7 %
Gross profit (GAAP) $ 2,971,708 $ 2,219,845 $ 751,863 33.9 %
Impact of currency fluctuations (1)
(23,863) — (23,863) (1.1)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 2,947,845 $ 2,219,845 $ 728,000 32.8 %
Gross margin (GAAP) 18.06 % 18.85 % -79 bps
Impact of currency fluctuations (1)
(0.01) — -1 bps
Comparable Gross margin using a constant currency basis (Non-GAAP) 18.05 % 18.85 % -80 bps
Operating expenses (GAAP) $ 2,340,026 $ 1,800,266 $ 539,760 30.0 %
Impact of restructuring and transformational project costs (2)
(24,511) (25,964) 1,453 5.6
Impact of acquisition-related costs (3)
(35,926) (17,755) (18,171) (102.3)
Impact of bad debt reserve adjustments (4)
7,061 98,629 (91,568) (92.8)
Operating expenses adjusted for Certain Items (Non-GAAP) 2,286,650 1,855,176 431,474 23.3
Impact of currency fluctuations (1)
(21,751) — (21,751) (1.2)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 2,264,899 $ 1,855,176 $ 409,723 22.1 %
Operating income (GAAP) $ 631,682 $ 419,579 $ 212,103 50.6 %
Impact of restructuring and transformational project costs (2)
24,511 25,964 (1,453) (5.6)
Impact of acquisition-related costs (3)
35,926 17,755 18,171 102.3
Impact of bad debt reserve adjustments (4)
(7,061) (98,629) 91,568 92.8
Operating income adjusted for Certain Items (Non-GAAP) 685,058 364,669 320,389 87.9 %
Impact of currency fluctuations (1)
(2,112) — (2,112) (0.6)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 682,946 $ 364,669 $ 318,277 87.3 %
Other (income) expense (GAAP) $ (3,252) $ 14,124 $ (17,376) 123.0 %
Impact of loss on sale of business — (12,043) 12,043 NM
Other (income) expense adjusted for Certain Items (Non-GAAP) $ (3,252) $ 2,081 $ (5,333) 256.3 %
Net earnings (GAAP) $ 378,013 $ 216,900 $ 161,113 74.3 %
Impact of restructuring and transformational project costs (2)
24,511 25,964 (1,453) (5.6)
Impact of acquisition-related costs (3)
35,926 17,755 18,171 102.3
Impact of bad debt reserve adjustments (4)
(7,061) (98,629) 91,568 92.8
Impact of loss on sale of business — 12,043 (12,043) NM
Tax impact of restructuring and transformational project costs (5)
(6,186) (5,920) (266) (4.5)
Tax impact of acquisition-related costs (5)
(9,066) (4,048) (5,018) (124.0)
Tax impact of bad debt reserves adjustments (5)
1,782 22,488 (20,706) (92.1)
Tax impact of loss on sale of business (5)
— (7,553) 7,553 NM
Impact of adjustments to uncertain tax positions 12,000 — 12,000 NM
Impact of foreign tax rate change (6)
— (5,548) 5,548 NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 429,919 $ 173,452 $ 256,467 147.9 %

Diluted earnings per share (GAAP) $ 0.73 $ 0.42 $ 0.31 73.8 %
Impact of restructuring and transformational project costs (2)
0.05 0.05 — —
Impact of acquisition-related costs (3)
0.07 0.03 0.04 133.3
Impact of bad debt reserve adjustments (4)
(0.01) (0.19) 0.18 94.7
Impact of loss on sale of business — 0.02 (0.02) NM
Tax impact of restructuring and transformational project costs (5)
(0.01) (0.01) — —
Tax impact of acquisition-related costs (5)
(0.02) (0.01) (0.01) (100.0)
Tax impact of bad debt reserves adjustments (5)
— 0.04 (0.04) NM
Tax impact of Impact of loss on sale of business (5)
— (0.01) 0.01 NM
Impact of adjustments to uncertain tax positions 0.02 — 0.02 NM
Impact of foreign tax rate change (6)
— (0.01) 0.01 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)
$ 0.83 $ 0.34 $ 0.49 144.1 %


	13-Week Period Ended Oct. 1, 2022			13-Week Period Ended Oct. 2, 2021			Change in Dollars		% Change
Operating margin adjusted for Certain Items (Non-GAAP)	4.03		%	4.16		%			-13 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	3.97		%	4.16		%			-19 bps















Net earnings (GAAP)	$	465,568		$	378,013		$	87,555	23.2	%
Impact of inventory valuation adjustment (2)	(2,571)			—			(2,571)		NM
Impact of restructuring and transformational project costs (3)	11,645			24,511			(12,866)		(52.5)
Impact of acquisition-related costs (4)	29,454			35,926			(6,472)		(18.0)
Impact of bad debt reserve adjustments (5)	(2,592)			(7,061)			4,469		63.3



Tax impact of inventory valuation adjustment (6)	637			—			637		NM
Tax impact of restructuring and transformational project costs (6)	(2,884)			(6,186)			3,302		53.4
Tax impact of acquisition-related costs (6)	(7,295)			(9,066)			1,771		19.5
Tax impact of bad debt reserves adjustments (6)	642			1,782			(1,140)		(64.0)


Impact of adjustments to uncertain tax positions	—			12,000			(12,000)		NM

Net earnings adjusted for Certain Items (Non-GAAP)	$	492,604		$	429,919		$	62,685	14.6	%



Diluted earnings per share (GAAP)	$	0.91		$	0.73		$	0.18	24.7	%
Impact of inventory valuation adjustment (2)	(0.01)			—			(0.01)		NM
Impact of restructuring and transformational project costs (3)	0.02			0.05			(0.03)		(60.0)
Impact of acquisition-related costs (4)	0.06			0.07			(0.01)		(14.3)
Impact of bad debt reserve adjustments (5)	(0.01)			(0.01)			—		—




Tax impact of restructuring and transformational project costs (6)	(0.01)			(0.01)			—		—
Tax impact of acquisition-related costs (6)	(0.01)			(0.02)			0.01		50.0



Impact of adjustments to uncertain tax positions	—			0.02			(0.02)		NM

Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)	$	0.97		$	0.83		$	0.14	16.9	%



(1)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)			Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(3)			Fiscal 2023 includes $4 million related to restructuring, severance, and facility closure charges and $8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $8 million related to restructuring charges.
(4)			Fiscal ~~2021~~2023 includes ~~$13 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $13~~$26 million of ~~primarily consisting of restructuring charges.~~
~~(3)~~			intangible amortization expense and $4 million in acquisition and due diligence costs. Fiscal 2022 includes $22 million of intangible amortization expense and $14 million in acquisition and due diligence costs, which are primarily included in Global Support Center expenses. ~~Fiscal 2021 represents $18 million related to intangible amortization expense.~~
~~(4)~~(5)			Fiscal ~~2022~~2023 and ~~2021~~fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
~~(5)~~(6)			The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
~~(6)~~			~~Fiscal 2021 represents a net benefit from remeasuring Sysco’s accrued income taxes, deferred tax asset and deferred tax liabilities due to changes in tax rates in the United Kingdom.~~
(7)			Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
			~~NM represents that the percentage change is not meaningful.~~

13-Week Period Ended Oct. 2, 2021 13-Week Period Ended Sep. 29, 2018 Change in Dollars % Change
Sales (GAAP) $ 16,456,546 $ 15,215,279 $ 1,241,267 8.2 %
Gross profit (GAAP) 2,971,708 2,903,785 67,923 2.3 %
Gross margin (GAAP) 18.06 % 19.08 % -103
Operating expenses (GAAP) $ 2,340,026 $ 2,275,645 $ 64,381 2.8 %
Impact of restructuring and transformational project costs (1)
(24,511) (40,903) 16,392 40.1 %
Impact of acquisition-related costs (2)
(35,926) (22,636) (13,290) (58.7) %
Impact of bad debt reserve adjustments (3)
7,061 — 7,061 NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $ 2,286,650 $ 2,212,106 $ 74,544 3.4 %
Operating income (GAAP) $ 631,682 $ 628,140 $ 3,542 0.6 %
Impact of restructuring and transformational project costs (1)
24,511 40,903 (16,392) (40.1) %
Impact of acquisition-related costs (2)
35,926 22,636 13,290 58.7 %
Impact of bad debt reserve adjustments (3)
(7,061) — (7,061) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 685,058 $ 691,679 $ (6,621) (1.0) %
Net earnings (GAAP) $ 378,013 $ 431,042 $ (53,029) (12.3) %
Impact of restructuring and transformational project costs (1)
24,511 40,903 (16,392) (40.1) %
Impact of acquisition-related costs (2)
35,926 22,636 13,290 58.7 %
Impact of bad debt reserve adjustments (3)
(7,061) — (7,061) NM
Tax impact of restructuring and transformational project costs (4)
(6,186) (10,674) 4,488 42.0 %
Tax impact of acquisition-related costs (4)
(9,066) (4,691) (4,375) (93.3) %
Tax impact of bad debt reserves adjustments (4)
1,782 — 1,782 NM
Impact of adjustments to uncertain tax positions 12,000 — 12,000 NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 429,919 $ 479,216 $ (49,297) (10.3) %
Diluted earnings per share (GAAP) $ 0.73 $ 0.81 $ (0.08) (9.9) %
Impact of restructuring and transformational project costs (1)
0.05 0.08 (0.03) (37.5) %
Impact of acquisition-related costs (2)
0.07 0.04 0.03 75.0 %
Impact of bad debt reserve adjustments (3)
(0.01) — (0.01) NM
Tax impact of restructuring and transformational project costs (4)
(0.01) (0.02) 0.01 50.0 %
Tax impact of acquisition-related costs (4)
(0.02) (0.01) (0.01) (100.0) %
Tax impact of bad debt reserves adjustments (4)
— — — NM
Impact of adjustments to uncertain tax positions 0.02 — 0.02 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)
$ 0.83 $ 0.91 $ (0.08) (8.8) %


~~(1)~~			Fiscal 2022 includes $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy, and $8 million primarily consisting of restructuring charges. Fiscal 2019 includes $26 million related to various transformation initiative costs and $15 million related to severance, restructuring and facility closure charges.
~~(2)~~			Fiscal 2022 includes $22 million of intangible amortization expense and $14 million of acquisition and due diligence costs, which are primarily included in Global Support Center expenses. Fiscal 2019 includes $21 million of intangible amortization expense and $1 million of acquisition costs.
~~(3)~~			~~Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.~~
~~(4)~~			The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
~~(5)~~			Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
			NM represents that the percentage change is not meaningful.


		13-Week Period Ended Oct. 2, 2021			13-Week Period Ended Sep. 26, 2020			Change in Dollars		%/bps Change			13-Week Period Ended Oct. 1, 2022			13-Week Period Ended Oct. 2, 2021			Change in Dollars		%/bps Change
U.S. FOODSERVICE OPERATIONS	U.S. FOODSERVICE OPERATIONS											U.S. FOODSERVICE OPERATIONS

Operating expenses (GAAP)	Operating expenses (GAAP)	$	1,387,631		$	1,011,298		$	376,333	37.2	%	Operating expenses (GAAP)	$	1,708,515		$	1,387,631		$	320,884	23.1	%
Impact of restructuring and transformational project costs	Impact of restructuring and transformational project costs	(3)			(940)			937		99.7		Impact of restructuring and transformational project costs	48			(3)			51		NM
Impact of acquisition-related costs (1)	Impact of acquisition-related costs (1)	(4,654)			—			(4,654)		NM		Impact of acquisition-related costs (1)	(12,585)			(4,654)			(7,931)		NM
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	6,420			86,317			(79,897)		(92.6)		Impact of bad debt reserve adjustments (2)	2,592			6,420			(3,828)		(59.6)

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,389,394		$	1,096,675		$	292,719	26.7	%	Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,698,570		$	1,389,394		$	309,176	22.3	%

Operating income (GAAP)	Operating income (GAAP)	$	797,523		$	588,409		$	209,114	35.5	%	Operating income (GAAP)	$	903,828		$	797,523		$	106,305	13.3	%
Impact of restructuring and transformational project costs	Impact of restructuring and transformational project costs	3			940			(937)		(99.7)		Impact of restructuring and transformational project costs	(48)			3			(51)		NM
Impact of acquisition-related costs (1)	Impact of acquisition-related costs (1)	4,654			—			4,654		NM		Impact of acquisition-related costs (1)	12,585			4,654			7,931		NM
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	(6,420)			(86,317)			79,897		92.6		Impact of bad debt reserve adjustments (2)	(2,592)			(6,420)			3,828		59.6

Operating income adjusted for Certain Items (Non-GAAP)	Operating income adjusted for Certain Items (Non-GAAP)	$	795,760		$	503,032		$	292,728	58.2	%	Operating income adjusted for Certain Items (Non-GAAP)	$	913,773		$	795,760		$	118,013	14.8	%

INTERNATIONAL FOODSERVICE OPERATIONS	INTERNATIONAL FOODSERVICE OPERATIONS											INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	Sales (GAAP)	$	2,895,247		$	2,163,693		$	731,554	33.8	%	Sales (GAAP)	$	3,283,735		$	2,895,247		$	388,488	13.4	%

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(121,395)			—			(121,395)		(5.6)		Impact of currency fluctuations (3)	315,451			—			315,451		10.9
Comparable sales using a constant currency basis (Non-GAAP)	Comparable sales using a constant currency basis (Non-GAAP)	$	2,773,852		$	2,163,693		$	610,159	28.2	%	Comparable sales using a constant currency basis (Non-GAAP)	$	3,599,186		$	2,895,247		$	703,939	24.3	%

Gross profit (GAAP)	Gross profit (GAAP)	$	589,134		$	450,398		$	138,736	30.8	%	Gross profit (GAAP)	$	649,265		$	589,134		$	60,131	10.2	%
Impact of currency fluctuations (3)												Impact of currency fluctuations (3)	71,760			—			71,760		12.2
Comparable gross profit using a constant currency basis (Non-GAAP)												Comparable gross profit using a constant currency basis (Non-GAAP)	$	721,025		$	589,134		$	131,891	22.4	%

Impact of currency fluctuations (3)		(22,734)			—			(22,734)		(5.0)
Comparable gross profit using a constant currency basis (Non-GAAP)		$	566,400		$	450,398		$	116,002	25.8	%

Gross margin (GAAP)	Gross margin (GAAP)	20.35		%	20.82		%			-48 bps		Gross margin (GAAP)	19.77		%	20.35		%			-58 bps
Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(0.07)			—					-7 bps		Impact of currency fluctuations (3)	0.26			—					26 bps
Comparable gross margin using a constant currency basis (Non-GAAP)	Comparable gross margin using a constant currency basis (Non-GAAP)	20.42		%	20.82		%			-40 bps		Comparable gross margin using a constant currency basis (Non-GAAP)	20.03		%	20.35		%			-32 bps

Operating expenses (GAAP)	Operating expenses (GAAP)	$	552,458		$	450,935		$	101,523	22.5	%	Operating expenses (GAAP)	$	562,057		$	552,458		$	9,599	1.7	%
Impact of restructuring and transformational project costs (4)	Impact of restructuring and transformational project costs (4)	(9,426)			(12,993)			3,567		27.5		Impact of restructuring and transformational project costs (4)	(3,907)			(9,426)			5,519		58.6
Impact of acquisition-related costs (5)	Impact of acquisition-related costs (5)	(18,656)			(17,755)			(901)		(5.1)		Impact of acquisition-related costs (5)	(16,014)			(18,656)			2,642		14.2
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	641			11,429			(10,788)		(94.4)		Impact of bad debt reserve adjustments (2)	—			641			(641)		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	525,017			431,616			93,401		21.6		Operating expenses adjusted for Certain Items (Non-GAAP)	542,136			525,017			17,119		3.3

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(21,074)			—			(21,074)		(4.9)		Impact of currency fluctuations (3)	64,707			—			64,707		12.3
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	503,943		$	431,616		$	72,327	16.8	%	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	606,843		$	525,017		$	81,826	15.6	%

Operating income (loss) (GAAP)		$	36,676		$	(537)		$	37,213	NM
Operating income (GAAP)												Operating income (GAAP)	$	87,208		$	36,676		$	50,532	NM
Impact of restructuring and transformational project costs (4)	Impact of restructuring and transformational project costs (4)	9,426			12,993			(3,567)		(27.5)		Impact of restructuring and transformational project costs (4)	3,907			9,426			(5,519)		(58.6)
Impact of acquisition-related costs (5)	Impact of acquisition-related costs (5)	18,656			17,755			901		5.1		Impact of acquisition-related costs (5)	16,014			18,656			(2,642)		(14.2)
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	(641)			(11,429)			10,788		94.4		Impact of bad debt reserve adjustments (2)	—			(641)			641		NM

Operating income adjusted for Certain Items (Non-GAAP)	Operating income adjusted for Certain Items (Non-GAAP)	64,117			18,782			45,335		241.4		Operating income adjusted for Certain Items (Non-GAAP)	107,129			64,117			43,012		67.1

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(1,660)			—			(1,660)		(8.8)		Impact of currency fluctuations (3)	7,053			—			7,053		11.0
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	62,457		$	18,782		$	43,675	232.5	%	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	114,182		$	64,117		$	50,065	78.1	%

SYGMA	SYGMA											SYGMA

Operating expenses (GAAP)	Operating expenses (GAAP)	$	140,604		$	119,849		$	20,755	17.3	%	Operating expenses (GAAP)	$	148,422		$	140,604		$	7,818	5.6	%
Impact of restructuring and transformational project costs		—			(13)			13		NM

Operating expenses adjusted for Certain Items (Non-GAAP)		$	140,604		$	119,836		$	20,768	17.3	%

Operating (loss) income (GAAP)	Operating (loss) income (GAAP)	$	(2,447)		$	11,692		$	(14,139)	(120.9)	%	Operating (loss) income (GAAP)	5,471			(2,447)			7,918		NM
Impact of restructuring and transformational project costs		—			13			(13)		NM

Operating (loss) income adjusted for Certain Items (Non-GAAP)		$	(2,447)		$	11,705		$	(14,152)	(120.9)	%

OTHER												OTHER

Operating expenses (GAAP)												Operating expenses (GAAP)	$	69,300		$	52,565		$	16,735	31.8	%

Operating income (GAAP)												Operating income (GAAP)	11,538			6,456			5,082		78.7

3331

OTHER
Operating expenses (GAAP) $ 52,565 $ 40,435 $ 12,130 30.0 %
Impact of bad debt reserve adjustments (2)
— 883 (883) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 52,565 $ 41,318 $ 11,247 27.2 %
Operating income (loss) (GAAP) $ 6,456 $ (5) $ 6,461 NM
Impact of bad debt reserve adjustments (2)
— (883) 883 NM
Operating income (loss) adjusted for Certain Items (Non-GAAP) $ 6,456 $ (888) $ 7,344 NM
GLOBAL SUPPORT CENTER
Operating expenses (GAAP) $ 206,768 $ 177,749 $ 29,019 16.3 %
Impact of restructuring and transformational project costs (6)
(15,082) (12,018) (3,064) (25.5)
Impact of acquisition-related costs (7)
(12,616) — (12,616) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 179,070 $ 165,731 $ 13,339 8.0 %
Operating loss (GAAP) $ (206,526) $ (179,980) $ (26,546) 14.7 %
Impact of restructuring and transformational project costs (6)
15,082 12,018 3,064 25.5
Impact of acquisition-related costs (7)
12,616 — 12,616 NM
Operating loss adjusted for Certain Items (Non-GAAP) $ (178,828) $ (167,962) $ (10,866) 6.5 %


	13-Week Period Ended Oct. 1, 2022		13-Week Period Ended Oct. 2, 2021		Change in Dollars		%/bps Change

GLOBAL SUPPORT CENTER




Gross (loss) profit (GAAP)	$	(7,484)	$	242	$	(7,726)	NM
Impact of inventory valuation adjustment (6)	(2,571)		—		(2,571)		NM
Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP)	$	(10,055)	$	242	$	(10,297)	NM

Operating expenses (GAAP)	$	266,228	$	206,768	$	59,460	28.8	%
Impact of restructuring and transformational project costs (7)	(7,786)		(15,082)		7,296		48.4
Impact of acquisition-related costs (8)	(855)		(12,616)		11,761		93.2


Operating expenses adjusted for Certain Items (Non-GAAP)	$	257,587	$	179,070	$	78,517	43.8	%



Operating loss (GAAP)	$	(273,712)	$	(206,526)	$	(67,186)	(32.5)	%
Impact of inventory valuation adjustment (6)	(2,571)		—		(2,571)		NM
Impact of restructuring and transformational project costs (7)	7,786		15,082		(7,296)		(48.4)
Impact of acquisition-related costs (8)	855		12,616		(11,761)		(93.2)


Operating loss adjusted for Certain Items (Non-GAAP)	$	(267,642)	$	(178,828)	$	(88,814)	(49.7)	%


(1)			Fiscal 2023 and fiscal 2022 ~~includes $3 million~~include intangible amortization expense and acquisition costs.
(2)			Fiscal ~~2022~~2023 and ~~2021~~fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)			Includes restructuring and facility closure costs primarily in Europe.
(5)			Represents intangible amortization expense.
(6)			Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(7)			Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
~~(7)~~(8)			Represents due diligence costs.

			NM represents that the percentage change is not meaningful.

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in assessing Sysco’s overall financial performance for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal ~~2021~~2022 Form 10-K for discussions ~~around~~regarding this non-GAAP performance metric. Set forth below is a reconciliation of actual net earnings to EBITDA and to adjusted EBITDA results for the periods presented (dollars in thousands):


		13-Week Period Ended Oct. 2, 2021		13-Week Period Ended Sep. 26, 2020		Change in Dollars		% Change			13-Week Period Ended Oct. 1, 2022		13-Week Period Ended Oct. 2, 2021		Change in Dollars		% Change
Net earnings (GAAP)	Net earnings (GAAP)	$	378,013	$	216,900	$	161,113	74.3	%	Net earnings (GAAP)	$	465,568	$	378,013	$	87,555	23.2	%
Interest (GAAP)	Interest (GAAP)	128,214		146,717		(18,503)		(12.6)	%	Interest (GAAP)	124,150		128,214		(4,064)		(3.2)
Income taxes (GAAP)	Income taxes (GAAP)	128,707		41,838		86,869		207.6		Income taxes (GAAP)	129,334		128,707		627		0.5
Depreciation and amortization (GAAP)	Depreciation and amortization (GAAP)	186,466		180,520		5,946		3.3		Depreciation and amortization (GAAP)	188,924		186,466		2,458		1.3
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	821,400	$	585,975	$	235,425	40.2	%	EBITDA (Non-GAAP)	$	907,976	$	821,400	$	86,576	10.5	%
Certain Item adjustments:	Certain Item adjustments:									Certain Item adjustments:
Impact of restructuring and transformational project costs (1)		24,247		25,278		(1,031)		(4.1)
Impact of acquisition-related costs (2)		14,221		—		14,221		NM
Impact of bad debt reserve adjustments (3)		(7,061)		(98,629)		91,568		(92.8)
Impact of inventory valuation adjustment (1)										Impact of inventory valuation adjustment (1)	$	(2,571)	$	—	$	(2,571)	NM
Impact of restructuring and transformational project costs (2)										Impact of restructuring and transformational project costs (2)	10,509		24,247		(13,738)		(56.7)
Impact of acquisition-related costs (3)										Impact of acquisition-related costs (3)	3,546		14,221		(10,675)		(75.1)
Impact of bad debt reserve adjustments (4)										Impact of bad debt reserve adjustments (4)	(2,592)		(7,061)		4,469		63.3

Impact of impact of loss on sale of business		—		12,043		(12,043)		NM
EBITDA adjusted for Certain Items (Non-GAAP) (4)		$	852,807	$	524,667	$	328,140	62.5	%

EBITDA adjusted for Certain Items (Non-GAAP) (5)										EBITDA adjusted for Certain Items (Non-GAAP) (5)	$	916,868	$	852,807	$	64,061	7.5	%


(1)			~~Includes~~Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(2)			Fiscal 2023 and fiscal 2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
~~(2)~~(3)			Fiscal 2023 and fiscal 2022 ~~includes~~include acquisition and due diligence costs.
~~(3)~~(4)			Fiscal ~~2022~~2023 and ~~2021~~fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
~~(4)~~			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $2 million and $4 million for fiscal 2022 and fiscal 2021, respectively, or non-cash stock compensation expense of $29 million and $25 million for fiscal 2022 and fiscal 2021, respectively.

13-Week Period Ended Oct. 2, 2021 13-Week Period Ended Sep. 29, 2018 Change in Dollars % Change
Net earnings (GAAP) $ 378,013 $ 431,042 $ (53,029) (12.3) %
Interest (GAAP) 128,214 89,016 39,198 44.0 %
Income taxes (GAAP) 128,707 106,950 21,757 20.3 %
Depreciation and amortization (GAAP) 186,466 187,627 (1,161) (0.6) %
EBITDA (Non-GAAP) $ 821,400 $ 814,635 $ 6,765 0.8 %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
24,247 40,903 (16,656) (40.7) %
Impact of acquisition-related costs (2)
14,221 2,056 12,165 NM
Impact of bad debt reserve adjustments (3)
(7,061) — (7,061) NM
EBITDA adjusted for Certain Items (Non-GAAP) (4)
$ 852,807 $ 857,594 $ (4,787) (0.6) %


~~(1)~~			Fiscal 2022 includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation. Fiscal 2019 includes $26 million related to various transformation initiative costs and $15 million related to severance, restructuring and facility closure charges, excluding charges related to accelerated depreciation.
~~(2)~~			~~Fiscal 2022 includes acquisition and due diligence costs. Fiscal 2019 represents acquisition costs.~~
~~(3)~~			~~Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.~~
~~(4)~~(5)			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $2$3 million and $1$2 million ~~for fiscal 2022 and fiscal 2019, respectively,~~ or non-cash stock compensation expense of $27 million and $29 million in ~~both~~fiscal 2023 and fiscal 2022, ~~and fiscal 2019.~~respectively.
			NM represents that the percentage change is not meaningful.

Liquidity and Capital Resources

Highlights

As of October ~~2, 2021,~~1, 2022, we had ~~$2.1 billion~~$437.7 million in cash and cash ~~equivalents, approximately 28% of which was held by our international subsidiaries.~~equivalents. We produced positive free cash flow in a period of higher working capital investments, ~~one-time and short-term transitory costs related to the business recovery~~capital expenditures and investments towards our Recipe for Growth strategy. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of the significant cash flows from the first ~~quarter~~13 weeks of fiscal ~~2022~~2023 to the first ~~quarter~~13 weeks of fiscal ~~2021~~2022 are provided.

13-Week Period Ended Oct. 2, 2021 13-Week Period Ended Sep. 26, 2020
(In thousands)
Net cash provided by operating activities (GAAP) $ 110,812 $ 930,914
Additions to plant and equipment (85,019) (75,539)
Proceeds from sales of plant and equipment 5,627 7,064
Free Cash Flow (Non-GAAP) (1)
$ 31,420 $ 862,439
Acquisition of businesses, net of cash acquired $ (714,010) $ —
Debt (repayments) borrowings, net (10,048) (753,589)
Dividends paid (240,561) (228,714)
On September 2, 2022, we upsized our commercial paper program to $3.0 billion. The commercial paper program allows the company to issue short-term, senior unsecured notes. The notes are pari passu with the company’s other senior unsecured debt, including its senior notes and revolving credit facility. We intend to use any proceeds from the commercial paper program for general corporate purposes.


	13-Week Period Ended Oct. 1, 2022		13-Week Period Ended Oct. 2, 2021
Source of cash (use of cash)	(In thousands)
Net cash provided by operating activities (GAAP)	$	158,606	$	110,812
Additions to plant and equipment	(167,260)		(85,019)
Proceeds from sales of plant and equipment	22,448		5,627
Free Cash Flow (Non-GAAP) (1)	$	13,794	$	31,420

Acquisition of businesses, net of cash acquired	$	(32,651)	$	(714,010)

Debt borrowings (repayments), net	137,959		(10,048)

Stock repurchases	(267,727)		—
Dividends paid	(249,294)		(240,561)


(1)			Free cash flow should not be used as a substitute for the most comparable GAAP measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal ~~2021~~2022 Form 10-K for discussions ~~around~~regarding this non-GAAP performance metric.

Sources and Uses of Cash

Sysco generates cash in the U.S and internationally. As of October 1, 2022, we had $437.7 million in cash and cash equivalents, approximately 85% of which was held by our international subsidiaries. Sysco’s strategic objectives are funded primarily by cash from operations and, to a lesser extent, external borrowings. Traditionally, our operations have produced significant cash flow and, due to our strong financial position, we believe that we will continue to be able to effectively access capital markets, as needed. Cash is generally allocated to working capital requirements, investments compatible with our overall growth strategy (organic and inorganic), debt management, and shareholder return. Remaining cash balances are invested in high-quality, short-term instruments.

We believe our cash flow from operations, the availability of liquidity under our commercial paper program and our revolving credit facility, and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements for more than the next twelve months, while maintaining sufficient liquidity for normal operating purposes.

Cash Flows

Operating Activities

We generated ~~$110.8~~$158.6 million in cash flows from operations in the first ~~quarter~~ 13 weeks of fiscal ~~2022,~~2023, compared to cash flows from ~~operative activities~~operations of ~~$930.9~~$110.8 million in the first ~~quarter~~ 13 weeks of fiscal ~~2021. These~~2022. In the first 13 weeks of fiscal 2023, these amounts ~~include~~included year-over-year unfavorable comparisons on working capital due to higher accounts receivables and ~~accrued expenses, partially offset by higher operating results.~~

a decrease in accounts payable. Changes in working capital had a negative impact of ~~$886.1~~$127.7 million on cash ~~flow~~flows from operations period-over-period. There were unfavorable comparisons on receivables, inventories and accounts payable. The unfavorable comparison in cash flows from accounts receivables is primarily due to our customers beginning to purchase more in the first quarter of fiscal 2022, coupled with significantly lower sales in the first quarter of fiscal 2021 resulting from the COVID-19 pandemic. In the first quarter of fiscal 2021, we recorded a net credit to the provision for losses on receivables totaling $77.8 million, which reflects a benefit on the reduction of our allowance for pre-pandemic receivable balances, as collection rates exceeded our expectations. In the first quarter of fiscal 2022, we invested heavily in inventory, and we ended the quarter with inventory on-hand and inventory on-order in a combined amount that exceeds our pre-COVID-19 levels. This positions us to be able to ship product on time and in full during the recovery from COVID-19. Accounts payable has increased, as we continue our business recovery

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~~efforts and investments in inventory. In the first quarter of fiscal 2021, we experienced a greater benefit within our accounts payable due to extended payment terms implemented at that time.~~

Included in the change in accrued expenses ~~was a negative comparison,~~were positive comparisons, primarily from accrued interest, ~~expenses due~~earnout liabilities, and self-insurance in the first 13 weeks of fiscal 2023 in comparison to the ~~timing~~first 13 weeks of ~~interest~~fiscal 2022.

Income taxes positively impacted cash flows from operations, as estimated payments made in the first quarter of fiscal ~~2022, as compared to the~~ ~~first~~ ~~quarter of fiscal 2021. In~~2023 were lower than in fiscal 2022 ~~these interest payments were included in our first quarter, whereas payments on these same notes occurred~~due to overpayments in the ~~second quarter of fiscal 2021.~~prior year.

Investing Activities

Our capital expenditures in the first ~~quarter~~ 13 weeks of fiscal ~~2022~~2023 consisted primarily ~~consisted~~ of investments in ~~technology equipment,~~ buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first ~~quarter~~13 weeks of fiscal ~~2022~~2023 were ~~$9.5~~$82.2 million higher than in the first ~~quarter~~13 weeks of fiscal ~~2021,~~2022, as we made investments ~~are made towards advancing~~to advance our Recipe for Growth strategy.

During the first ~~quarter~~13 weeks of fiscal ~~2022,~~2023, we paid ~~$714.0~~$32.7 million, net of cash acquired, for ~~acquisitions. There were no such~~acquisitions compared to $714.0 million in acquisitions made in the first ~~quarter~~13 weeks of fiscal ~~2021.~~2022.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $24.6 million in the first 13 weeks of fiscal 2023, as compared to $17.9 million in the first ~~quarter~~ 13 weeks of fiscal ~~2022, as compared to $31.9 million in the~~ ~~first~~ ~~quarter of fiscal 2021.~~2022. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

~~We made no~~In May 2021, our Board of Directors approved a share ~~repurchases during~~repurchase program to authorize the ~~first~~ ~~quarter of fiscal 2022; however, given the strength of our results of operations and financial position, we expect to commence share repurchases~~repurchase of up to ~~$500 million for fiscal 2022 under our~~ $5.0 billion of the company’s common stock, which will remain available until fully utilized. We commenced our share repurchase program ~~beginning in~~during the second quarter of fiscal 2022. We repurchased 3.1 million shares for $267.7 million during the first 13 weeks of fiscal 2023. As of October 1, 2022, we had a remaining authorization of approximately $4.2 billion.

Dividends paid in the first quarter of fiscal ~~2022~~2023 were ~~$240.6~~$249.3 million, or ~~$0.47~~$0.49 per share, as compared to ~~$228.7~~$240.6 million, or ~~$0.45~~$0.47 per share, in the first quarter of fiscal ~~2021.~~2022. In August ~~2021,~~2022, we declared our regular quarterly dividend for the first quarter of fiscal ~~2022~~2023 of ~~$0.47~~$0.49 per share, which was paid in October ~~2021.~~2022.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, if any, and our borrowing availability isare described in Note 7,8, “Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings at October ~~2, 2021~~1, 2022 are disclosed within that note.

During the first 13 weeks of fiscal 2022, we amended our revolving credit facility to (a) eliminate the covenant that had restricted (i) increases to Sysco’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.

Guarantor Summarized Financial Information

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation, which distribute a full line of food products and a wide variety of non-food products, at that time entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company’s ~~$2.0~~now $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of October ~~2, 2021,~~1, 2022, Sysco had a total of ~~$10.6~~$10.0 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal ~~2021~~2022 Form 10-K for additional information regarding the terms of the guarantees.

Basis of Preparation of the Summarized Financial Information

The summarized financial information of Sysco Corporation (issuer), and certain wholly owned U.S. Broadline subsidiaries (guarantors) (together, the obligor group) is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated. Investments in and equity in the earnings of our non-guarantor

subsidiaries, which are not members of the obligor group, have been excluded from the summarized financial information. The obligor group’s amounts due to, amounts due from and transactions with non-guarantor subsidiaries have been presented in separate line items, if they are material to the obligor financials. The following tables include summarized financial information of the obligor group for the periods presented.


Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Oct. 2, 2021		Jul. 3, 2021		Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Oct. 1, 2022		Jul. 2, 2022
		(In thousands)					(In thousands)
ASSETS	ASSETS					ASSETS
Receivables due from non-obligor subsidiaries	Receivables due from non-obligor subsidiaries	$	148,565	$	171,718	Receivables due from non-obligor subsidiaries	$	218,392	$	264,378
Current assets	Current assets	6,251,167		6,661,284		Current assets	5,714,872		5,658,972
Total current assets	Total current assets	$	6,399,732	$	6,833,002	Total current assets	$	5,933,264	$	5,923,350
Notes receivable from non-obligor subsidiaries	Notes receivable from non-obligor subsidiaries	$	83,550	$	83,457	Notes receivable from non-obligor subsidiaries	$	91,138	$	91,067
Other noncurrent assets	Other noncurrent assets	3,981,818		3,933,833		Other noncurrent assets	3,969,771		3,910,951
Total noncurrent assets	Total noncurrent assets	$	4,065,368	$	4,017,290	Total noncurrent assets	$	4,060,909	$	4,002,018

LIABILITIES	LIABILITIES					LIABILITIES
Payables due to non-obligor subsidiaries	Payables due to non-obligor subsidiaries	$	76,547	$	203,365	Payables due to non-obligor subsidiaries	$	60,283	$	62,441
Other current liabilities	Other current liabilities	2,403,275		2,299,674		Other current liabilities	2,826,594		2,765,756
Total current liabilities	Total current liabilities	$	2,479,822	$	2,503,039	Total current liabilities	$	2,886,877	$	2,828,197
Notes payable to non-obligor subsidiaries	Notes payable to non-obligor subsidiaries	$	230,956	$	269,709	Notes payable to non-obligor subsidiaries	$	272,099	$	315,753
Long-term debt	Long-term debt	10,127,201		10,139,596		Long-term debt	9,718,645		9,501,842
Other noncurrent liabilities	Other noncurrent liabilities	1,306,495		1,209,598		Other noncurrent liabilities	1,206,767		1,190,177
Total noncurrent liabilities	Total noncurrent liabilities	$	11,664,652	$	11,618,903	Total noncurrent liabilities	$	11,197,511	$	11,007,772

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations

13-Week Period Ended Oct. ~~2, 2021~~1, 2022

(In thousands)

Sales

~~10,665,199~~12,200,611

Gross profit

~~1,924,123~~2,216,571

Operating income

~~602,325~~630,507

Interest expense from non-obligor subsidiaries

~~11,069~~5,588

Net earnings

~~349,251~~375,655

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to the portrayal of our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical accounting policies and estimates and this related disclosure. Our most critical accounting policies and estimates pertain to goodwill and intangible assets, income taxes, company-sponsored pension plans, allowance for doubtful accounts ~~income taxes, share-based compensation~~ and ~~the company-sponsored pension plans,~~inventory valuation, which are described in Item 7 of our fiscal ~~2021~~2022 Form 10-K.

Forward-Looking Statements

Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” “projected,” “continues,” “continuously,” variations of such terms, and similar terms and phrases denoting anticipated or expected occurrences or results. Examples of forward-looking statements include, but are not limited to, statements about:

•the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto, including our ability to withstand and recover from the crisis;

•our expectations ~~regarding our business and~~of an improving market over the ~~economic recovery generally as the COVID-19 pandemic subsides, including beliefs regarding future customer activity and the timing~~course of ~~the recovery;~~fiscal 2023;

•our expectations regarding the ~~impact~~ability of ~~the COVID-19 pandemic on~~ our ~~mix of earnings by jurisdiction;~~supply chain and facilities to remain in place and operational;

•our ~~expectations~~plans regarding ~~the recovery of~~ our ~~travel, hospitality and Food Service Management sectors of our business,~~transformation initiatives and the ~~impact that recovery in~~expected effects from such ~~sectors will have on our business;~~initiatives, including the Sysco Driver Academy;

•~~our expectations~~statements regarding ~~our ability~~uncollectible accounts, including that if collections continue to ~~meet our stated growth rate goals for fiscal 2022;~~

•~~our belief that our Recipe for Growth strategy will enable us to accelerate over the next three years to meet our growth target by the end of fiscal 2024;~~improve, additional reductions in bad debt expense could occur;

•our expectations that our Recipe for Growth strategy will ~~enable~~allow us to better serve our ~~International Foodservice Operations segment to improve how we serve local~~ customers and ~~will create a better balance in~~differentiate Sysco from our ~~customer mix;~~competition;

•our expectations regarding ~~inflation;~~our fiscal 2023 sales and our rate of sales growth in fiscal 2023 and the three years of our long-range plan;

•our expectations regarding the impact of ~~certain investments~~inflation on ~~our ability to serve customers~~sales, gross margin rates and ~~continue to gain market share, and our expectations regarding the impact of such investments on our results for the second quarter of 2022;~~gross profit dollars;

•our expectations regarding ~~the impact of the acquisition of Greco and Sons on incremental sales;~~gross margins in fiscal 2023;

•our ~~expectations~~plans regarding cost savings, including our ~~efforts to reduce overtime rates~~target for cost savings through fiscal 2024 and the ~~incremental investments in hiring, and our expectations regarding~~impact of costs savings on the ~~effects thereof on profits throughout fiscal 2022 and the size of such investments;~~company;

•our ~~ability~~belief that our purpose will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth ~~strategy;~~

•transformation, and statements regarding our ~~belief~~plans with respect to our strategic pillars that ~~our~~support this growth ~~transformation will allow us to better serve our customers;~~

•~~the continuing expansion of other business transformation initiatives, such as our personalization engine;~~transformation;

•our expectations regarding ~~growth in customers~~the use and ~~gains in market share;~~investment of remaining cash generated from operations;

•the expected long-term rate of return on plan assets of the U.S. Retirement Plan;

•the sufficiency of our available liquidity to sustain our operations for multiple years;

•estimates regarding the outcome of legal proceedings;

•the impact of seasonal trends on our ~~expectations~~free cash flow;

•estimates regarding our capital expenditures and the ~~use~~sources of ~~remaining cash generated from operations;~~financing for our capital expenditures;

•our expectations regarding the impact of potential acquisitions and sales of assets on our liquidity, borrowing capacity, leverage ratios and capital availability;

•our ~~belief~~expectations regarding real sales growth in ~~our strong financial position;~~the U.S. foodservice market and trends in produce markets;

•our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;

•our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;

•our expectations regarding our effective tax rate ~~for the remainder of~~in fiscal ~~2022;~~2023;

•the sufficiency of our ~~expectations~~mechanisms for managing working capital and competitive pressures, and our beliefs regarding the ~~amount~~impact of ~~the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions;~~

•~~our expectations regarding the recognition of compensation costs related to share-based compensation arrangements;~~these mechanisms;

•our ability to meet future cash requirements, including the ability to access financial markets effectively, including issuances of debt securities, and maintain sufficient liquidity;

•our expectations regarding the payment of dividends, and the growth of our dividend, in the future;

•our expectations regarding future activity under our share repurchase program; ~~and~~

•future compliance with the covenants under our revolving credit facility;

•our ability to effectively access the commercial paper market and long-term capital ~~markets.~~markets;

•the expected maturity of $482.3 million of debt in the next 12 months;

•our intention to repay our long-term debt with cash on hand, cash flow from operations, issuances of commercial paper, issuances of senior notes, or a combination thereof.

These statements are based on management’s current expectations and estimates; actual results may differ materially due in part to the risk factors set forth below, those within Part II, Item 1A of this document and those discussed in Item 1A of our fiscal ~~2021~~2022 Form 10-K:

•the impact and effects of public health crises, pandemics and epidemics, such as the recent outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations, including, but not limited to, our growth, product costs, supply chain, labor availability, logistical capabilities, customer demand for our products and industry demand generally, consumer spending, our liquidity, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally;operations;

•the risk that if sales from our locally managed customers do not grow at the same rate as sales from ~~regional and national~~multi-unit customers, ~~or if we are unable to continue to accelerate local case growth,~~ our gross margins may decline;

•periods of significant or prolonged inflation or deflation and their impact on our product costs and profitability generally;

•the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit;

•~~periods of significant or prolonged inflation or deflation and their impact on~~the risk that our ~~product~~efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs ~~and profitability generally;~~may be unsuccessful;

•the risk that we may not be able to accelerate and/or identify additional administrative cost savings in order to compensate for any gross profit or supply chain cost leverage challenges;

•risks related to unfavorable conditions in ~~North America~~the Americas and Europe and the impact on our results of operations and financial condition;

•the risks related to our efforts to implement our transformation initiatives and meet our other long-term strategic objectives, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove costlier than expected; the risk that the actual costs of any initiatives may be greater or less than currently expected; and the risk of adverse effects to us if past and future undertakings and the associated changes to our business do not prove to be cost effective or do not result in the level of cost savings and other benefits that we anticipated;

•the impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;

•the risk that the actual costs of any business initiatives may be greater or less than currently expected;

•the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;

•the risk that our relationships with long-term customers may be materially diminished or terminated;

•the risk that changes in consumer eating habits could materially and adversely affect our business, financial condition, or results of operations;

•the risk that changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;

•the risk that we may not be able to fully compensate for increases in fuel costs, and forward purchase commitments intended to contain fuel costs could result in above market fuel costs;

•the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;

•the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;

•risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;

•the risk that we may not realize anticipated benefits from our operating cost reduction efforts;

•difficulties in successfully expanding into international markets and complimentary lines of business;

•the potential impact of product liability claims;

•the risk that we fail to comply with requirements imposed by applicable law or government regulations;

•risks related to our ability to effectively finance and integrate acquired businesses;

•risks related to our access to borrowed funds in order to grow and any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;

•our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position;

•the risk that the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

•the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;

•the risk that ~~the U.K.’s exit from the European Union (EU) on January 31, 2020, commonly referred to as~~ Brexit may adversely impact our operations in the U.K., including those of the Brakes Group;

•the risk that future labor disruptions or disputes could disrupt the integration of Brake France and Davigel into Sysco France and our operations in France and the EU generally;

•the risk that factors beyond management’s control, including fluctuations in the stock market, as well as management’s future subjective evaluation of the company’s needs, would impact the timing of share repurchases;

•due to our reliance on technology, any technology disruption or delay in implementing new technology could have a material negative impact on our business;

•the risk that a cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with customers;

•the risk that changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt;

•the potential requirement to pay material amounts under our multiemployer defined benefit pension plans;

•our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines;

•labor issues, including the renegotiation of union contracts and shortage of qualified labor;

•capital expenditures may vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending; ~~and~~

•the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to ~~stockholders.~~stockholders; and

•the risk that the exclusive forum provisions in our amended and restated bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

For a more detailed discussion of factors that could cause actual results to differ from those contained in the forward-looking statements, see the risk factors discussion contained in Item 1A of our fiscal ~~2021~~2022 Form ~~10-K.~~10-K and in Item 1A of Part II of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk, foreign currency exchange rate risk, fuel price risk and investment risk. For a discussion on our exposure to market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risks” in our fiscal ~~2021~~2022 Form 10-K. There have been no significant changes to our market risks since July ~~3, 2021.~~2, 2022.

Item 4. Controls and Procedures

Sysco’s management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of October ~~2, 2021.~~1, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Sysco’s disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of October ~~2, 2021,~~1, 2022, our chief executive officer and chief financial officer concluded that, as of such date, Sysco’s disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended October ~~2, 2021,~~1, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Environmental Matters

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters in which a governmental authority is a party to the proceedings and when such proceedings involve the potential for monetary sanctions that Sysco’s management reasonably believes will exceed a specified threshold. Pursuant to recent SEC amendments to this item, Sysco has chosen a reporting threshold for such proceedings of $1 million. Applying this threshold, there are no material environmental matters to disclose for this period.

From time to time, we may be party to legal proceedings that arise in the ordinary course of our business. We do not believe there are any pending legal proceedings that, individually or in the aggregate, will have a material adverse effect on the company’s financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There were no material changes from the risk factors disclosed in Item 1A of our fiscal ~~2021~~2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

~~As we~~We made nothe following share repurchases during the first quarter of fiscal ~~2022, the following table represents shares tendered during the period:~~

ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of Shares Purchased (1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1
July 4 - July 31 — $ — — —
Month #2
August 1 - August 28 — — — —
Month #3
August 29 - October 2 1,245 80.25 99,911 —
Totals 1,245 $ 80.25 99,911 —
2023:

~~(1)The total number of shares purchased includes 0, 0 and 1,245 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.~~


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1
July 3 - July 30	3,099,268	$	86.37	267,680,804	—
Month #2
July 31 - Aug 27	4,638	86.18		399,720	—
Month #3
Aug 28 - October 1	1,191	83.89		99,913	—
Totals	3,105,097	$	86.37	268,180,437	—

~~(2)~~See the discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Equity Transactions” for additional information regarding Sysco’s share repurchase program.


(1)			The total number of shares purchased includes 0, 4,638 and 1,191 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.
(2)			See the discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Equity Transactions” for additional information regarding Sysco’s share repurchase program.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

4341

Item 5. Other Information

None

Item 6. Exhibits

The exhibits listed on the Exhibit Index below are filed as a part of this Quarterly Report on Form 10-Q.

4442

EXHIBIT INDEX


3.1	—	Restated Certificate of Incorporation, incorporated by reference to Exhibit 3(a) to Form 10-K for the year ended June 28, 1997 (File No. 1-6544).

3.2	—	Certificate of Amendment to Restated Certificate of Incorporation increasing authorized shares, incorporated by reference to Exhibit 3(e) to Form 10-Q for the quarter ended December 27, 2003 (File No. 1-6544).

3.3	—	Form of Amended Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(c) to Form 10-K for the year ended June 29, 1996 (File No. 1-6544).

3.4	—	Amended and Restated Bylaws of Sysco Corporation dated August 27, 2021, incorporated by reference to Exhibit 3.4 to the Form 10-K for the year ended July 3, 2021 filed on August 30, 2021 (File No. 1-6544).

~~4.5#~~10.1#	—	~~Description~~Form of ~~Sysco Corporation Securities.~~

~~10.1~~	—	~~Amendment No. 3~~Amended and Restated Commercial Paper Dealer Agreement, dated as of September ~~22, 2021 to Credit Agreement dated as of June 28, 2019, among~~2, 2022, by and between Sysco Corporation, ~~Sysco Canada, Inc., Sysco EU II S.à r.l., the subsidiary guarantors party thereto, JP Morgan Chase Bank, N.A.,~~ as ~~administrative agent,~~Issuer, and the ~~lenders~~applicable Dealer party ~~thereto, incorporated by reference to Exhibit 10.1 to the Form 8-K filed on September 22, 2021 (File No. 1-6544).~~thereto.

10.2#	—	~~Amendment No. 4 dated as of October 14, 2021 to Credit~~Amended and Restated Issuing and Paying Agent Agreement, dated as of ~~June 28, 2019, among~~September 2, 2022, by and between U.S. Bank Trust Company, National Association, as Issuing and Paying Agent, and Sysco Corporation, ~~Sysco Canada, Inc., Sysco EU II S.à r.l., the subsidiary guarantors party thereto, JP Morgan Chase Bank, N.A.,~~ as ~~administrative agent, and the lenders party thereto.~~Issuer.

10.3†#	—	Sysco Corporation ~~Short-Term~~Annual Incentive Program ~~(SIP)~~(AIP) For Corporate ~~SIP~~AIP Bonus-Eligible Positions (Fiscal Year ~~2022)~~2023) adopted effective July ~~30, 2021.~~29, 2022.

10.4†#	—	Form of Stock Option Grant Agreement (Fiscal Year ~~2022)~~2023) for executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan.

10.5†#	—	Form of Restricted Stock Unit Grant Agreement (Fiscal Year ~~2022)~~2023) for executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan.

10.6†#	—	Form of Performance Share Unit Grant Agreement (Fiscal Year ~~2022)~~2023) for executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan.

10.7†	—	Summary of Named Executive Officer Compensation, incorporated by reference to the section entitled “Executive Compensation” in the Sysco Corporation Proxy Statement filed on October 6, ~~2021~~2022 (File No. ~~1‑6544)~~1-6544).

~~10.8†#~~	—	~~Performance Share Unit Agreement – Inducement Award For Kevin Hourican dated June 23, 2021, pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan.~~

~~10.9†#~~	—	~~Performance Share Unit Grant Agreement – Retention Award for Greg Bertrand dated August 19, 2021, pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan.~~

~~10.10†#~~	—	~~Executive Agreement, dated as of August 21, 2020, by and between Tim Ørting Jørgensen and Brakes Bros LTD.~~

~~10.11†#~~	—	~~Letter Agreement, dated as of June 29, 2020, by and between Tim Ørting Jørgensen and Sysco Corporation.~~

~~10.12†#~~	—	~~Letter Agreement, dated as of November 23, 2020, by and between Thomas R. Peck, Jr. and Sysco Corporation.~~

22.1	—	Subsidiary Guarantors and Issuers of Guaranteed Securities , incorporated by reference to Exhibit 22.1 to the Form 10-K for the year ended July ~~3, 2021,~~2, 2022 filed on August ~~30, 2021~~26, 2022 (File No. 1-6544).



31.1#	—	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2#	—	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1#	—	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2#	—	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.SCH#	—	Inline XBRL Taxonomy Extension Schema Document

101.CAL#	—	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF#	—	Inline XBRL Taxonomy Extension Definition Linkbase Document


101.LAB#	—	Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE#	—	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________

† Executive Compensation Arrangement pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K

# Filed herewith

4644

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Sysco Corporation
		(Registrant)


Date: November ~~9, 2021~~1, 2022	By:	/s/ KEVIN P. HOURICAN
		Kevin P. Hourican
		President and Chief Executive Officer

Date: November ~~9, 2021~~1, 2022	By:	/s/ AARON E. ALT
		Aaron E. Alt
		Executive Vice President and
		Chief Financial Officer

Date: November ~~9, 2021~~1, 2022	By:	/s/ ~~ANITA A. ZIELINSKI~~SCOTT B. STONE
		~~Anita A. Zielinski~~Scott B. Stone
		~~Senior~~ Vice President ~~and~~of Financial Reporting
		and Interim Chief Accounting Officer

4745



	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4240
Item 4.	Controls and Procedures	4240
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	4341
Item 1A.	Risk Factors	4341
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4341
Item 3.	Defaults Upon Senior Securities	4341
Item 4.	Mine Safety Disclosures	4341
Item 5.	Other Information	4442
Item 6.	Exhibits	4442

Signatures		4745


	13-Week Period Ended Oct. 2, 2021			13-Week Period Ended Sep. 29, 2018			Change in Dollars		% Change
Sales (GAAP)	$	16,456,546		$	15,215,279		$	1,241,267	8.2	%
Gross profit (GAAP)	2,971,708			2,903,785			67,923		2.3	%
Gross margin (GAAP)	18.06		%	19.08		%			-103

Operating expenses (GAAP)	$	2,340,026		$	2,275,645		$	64,381	2.8	%
Impact of restructuring and transformational project costs (1)	(24,511)			(40,903)			16,392		40.1	%
Impact of acquisition-related costs (2)	(35,926)			(22,636)			(13,290)		(58.7)	%
Impact of bad debt reserve adjustments (3)	7,061			—			7,061		NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP)	$	2,286,650		$	2,212,106		$	74,544	3.4	%

Operating income (GAAP)	$	631,682		$	628,140		$	3,542	0.6	%
Impact of restructuring and transformational project costs (1)	24,511			40,903			(16,392)		(40.1)	%
Impact of acquisition-related costs (2)	35,926			22,636			13,290		58.7	%
Impact of bad debt reserve adjustments (3)	(7,061)			—			(7,061)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	685,058		$	691,679		$	(6,621)	(1.0)	%

Net earnings (GAAP)	$	378,013		$	431,042		$	(53,029)	(12.3)	%
Impact of restructuring and transformational project costs (1)	24,511			40,903			(16,392)		(40.1)	%
Impact of acquisition-related costs (2)	35,926			22,636			13,290		58.7	%
Impact of bad debt reserve adjustments (3)	(7,061)			—			(7,061)		NM
Tax impact of restructuring and transformational project costs (4)	(6,186)			(10,674)			4,488		42.0	%
Tax impact of acquisition-related costs (4)	(9,066)			(4,691)			(4,375)		(93.3)	%
Tax impact of bad debt reserves adjustments (4)	1,782			—			1,782		NM
Impact of adjustments to uncertain tax positions	12,000			—			12,000		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	429,919		$	479,216		$	(49,297)	(10.3)	%

Diluted earnings per share (GAAP)	$	0.73		$	0.81		$	(0.08)	(9.9)	%
Impact of restructuring and transformational project costs (1)	0.05			0.08			(0.03)		(37.5)	%
Impact of acquisition-related costs (2)	0.07			0.04			0.03		75.0	%
Impact of bad debt reserve adjustments (3)	(0.01)			—			(0.01)		NM
Tax impact of restructuring and transformational project costs (4)	(0.01)			(0.02)			0.01		50.0	%
Tax impact of acquisition-related costs (4)	(0.02)			(0.01)			(0.01)		(100.0)	%
Tax impact of bad debt reserves adjustments (4)	—			—			—		NM
Impact of adjustments to uncertain tax positions	0.02			—			0.02		NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)	$	0.83		$	0.91		$	(0.08)	(8.8)	%