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 ~~January~~October 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

~~507,447,464~~506,767,526 shares of common stock were outstanding as of ~~January 21,~~October 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)


		Jan. 1, 2022		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	$	1,374,276	$	3,007,123		Cash and cash equivalents	$	437,670	$	867,086
Accounts receivable, less allowances of $128,189 and $117,695		4,219,868		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	4,115,683		3,695,219			Inventories	4,682,609		4,437,498

Prepaid expenses and other current assets	Prepaid expenses and other current assets	252,351		240,956			Prepaid expenses and other current assets	310,131		303,789

Income tax receivable	Income tax receivable	100,973		8,759			Income tax receivable	—		35,934
Total current assets	Total current assets	10,063,151		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	4,307,156		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	4,416,912		3,944,139			Goodwill	4,434,476		4,542,315
Intangibles, less amortization	Intangibles, less amortization	906,328		746,073			Intangibles, less amortization	906,385		952,683

Deferred income taxes	Deferred income taxes	387,050		352,523			Deferred income taxes	382,778		377,604
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	724,861		709,163			Operating lease right-of-use assets, net	704,664		723,297
Other assets	Other assets	621,304		602,011			Other assets	552,765		550,150
Total other long-term assets	Total other long-term assets	7,056,455		6,353,909			Total other long-term assets	6,981,068		7,146,049
Total assets	Total assets	$	21,426,762	$	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		$	8,574	$	8,782

Accounts payable	Accounts payable	5,019,052		4,884,781			Accounts payable	$	6,018,227	$	5,752,958
Accrued expenses	Accrued expenses	1,980,293		1,814,837			Accrued expenses	2,177,793		2,270,753
Accrued income taxes	Accrued income taxes	3,631		22,644			Accrued income taxes	113,388		40,042
Current operating lease liabilities	Current operating lease liabilities	94,603		102,659			Current operating lease liabilities	94,027		105,690
Current maturities of long-term debt	Current maturities of long-term debt	487,407		486,141			Current maturities of long-term debt	555,829		580,611
Total current liabilities	Total current liabilities	7,593,560		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	10,593,390		10,588,184			Long-term debt	10,263,331		10,066,931
Deferred income taxes	Deferred income taxes	160,718		147,066			Deferred income taxes	241,748		250,171
Long-term operating lease liabilities	Long-term operating lease liabilities	659,136		634,481			Long-term operating lease liabilities	628,861		636,417
Other long-term liabilities	Other long-term liabilities	1,166,196		1,136,480			Other long-term liabilities	971,190		967,907
Total long-term liabilities	Total long-term liabilities	12,579,440		12,506,211			Total long-term liabilities	12,105,130		11,921,426

Noncontrolling interest	Noncontrolling interest	32,690		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	1,690,487		1,619,995			Paid-in capital	1,754,409		1,766,305
Retained earnings	Retained earnings	10,216,625		10,151,706			Retained earnings	10,757,136		10,539,722
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,236,258)		(1,148,764)			Accumulated other comprehensive loss	(1,711,325)		(1,482,054)
Treasury stock at cost, 258,033,856 and 253,342,595 shares		(10,214,957)		(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	1,221,072		1,552,896			Total shareholders’ equity	1,115,341		1,382,260
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	21,426,762	$	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				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Sales	Sales	$	16,320,203	$	11,558,982	$	32,776,749	$	23,336,361	Sales	$	19,126,830	$	16,456,546
Cost of sales	Cost of sales	13,429,053		9,460,524		26,913,891		19,018,058		Cost of sales	15,637,975		13,484,838
Gross profit	Gross profit	2,891,150		2,098,458		5,862,858		4,318,303		Gross profit	3,488,855		2,971,708
Operating expenses	Operating expenses	2,446,241		1,886,396		4,786,267		3,686,662		Operating expenses	2,754,522		2,340,026
Operating income	Operating income	444,909		212,062		1,076,591		631,641		Operating income	734,333		631,682
Interest expense	Interest expense	242,899		146,498		371,113		293,215		Interest expense	124,150		128,214
Other income, net		(10,676)		(15,556)		(13,928)		(1,432)
Other expense (income), net										Other expense (income), net	15,281		(3,252)
Earnings before income taxes	Earnings before income taxes	212,686		81,120		719,406		339,858		Earnings before income taxes	594,902		506,720
Income taxes	Income taxes	45,245		13,831		173,952		55,669		Income taxes	129,334		128,707
Net earnings	Net earnings	$	167,441	$	67,289	$	545,454	$	284,189	Net earnings	$	465,568	$	378,013

Net earnings:	Net earnings:									Net earnings:
Basic earnings per share	Basic earnings per share	$	0.33	$	0.13	$	1.07	$	0.56	Basic earnings per share	$	0.92	$	0.74
Diluted earnings per share	Diluted earnings per share	0.33		0.13		1.06		0.56		Diluted earnings per share	0.91		0.73

Average shares outstanding	Average shares outstanding	511,044,400		510,006,754		511,780,234		509,567,080		Average shares outstanding	507,578,576		512,516,067
Diluted shares outstanding	Diluted shares outstanding	514,574,889		512,742,792		515,178,910		511,740,778		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				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Net earnings	Net earnings	$	167,441	$	67,289	$	545,454	$	284,189	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	(26,870)		222,507		(114,064)		335,647		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		4,310		4,310		Amortization of cash flow hedges	2,155		2,155
Change in net investment hedges	Change in net investment hedges	8,362		(20,666)		18,527		(31,927)		Change in net investment hedges	23,509		10,165
Change in cash flow hedges	Change in cash flow hedges	(6,101)		12,335		(6,530)		(632)		Change in cash flow hedges	(26,390)		(429)

Amortization of prior service cost	Amortization of prior service cost	74		137		148		274		Amortization of prior service cost	74		74
Amortization of actuarial gain		5,488		7,793		11,855		15,558
Amortization of actuarial loss										Amortization of actuarial loss	6,891		6,367

Change in marketable securities	Change in marketable securities	(1,429)		(44)		(1,740)		(518)		Change in marketable securities	(3,328)		(311)
Total other comprehensive (loss) income		(18,321)		224,217		(87,494)		322,712
Total other comprehensive loss										Total other comprehensive loss	(229,271)		(69,173)
Comprehensive income	Comprehensive income	$	149,120	$	291,506	$	457,960	$	606,901	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)

~~Quarter to Date~~

Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
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
Net earnings 167,441 167,441
Foreign currency translation adjustment (26,870) (26,870)
Amortization of cash flow hedges, net of tax 2,155 2,155
Change in cash flow hedges, net of tax (6,101) (6,101)
Change in net investment hedges, net of tax 8,362 8,362
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 5,562 5,562
Change in marketable securities, net of tax (1,429) (1,429)
Dividends declared ($0.47 per common share) (239,107) (239,107)
Treasury stock purchases 5,679,298 (415,824) (415,824)
Increase in ownership interest in subsidiaries (304) (304)
Share-based compensation awards 35,681 (470,522) 18,214 53,895
Balance as of January 1, 2022 765,174,900 $ 765,175 $ 1,690,487 $ 10,216,625 $ (1,236,258) 258,033,856 $ (10,214,957) $ 1,221,072
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
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
Net earnings 67,289 67,289
Foreign currency translation adjustment 222,507 222,507
Amortization of cash flow hedges, net of tax 2,155 2,155
Change in cash flow hedges, net of tax 12,335 12,335
Change in net investment hedges, net of tax (20,666) (20,666)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 7,930 7,930
Change in marketable securities, net of tax (44) (44)
Dividends declared ($0.45 per common share) (230,394) (230,394)
Share-based compensation awards 30,974 (899,303) 34,702 65,676
Balance as of December 26, 2020 765,174,900 $ 765,175 $ 1,565,255 $ 10,383,493 $ (1,388,169) 255,176,469 $ (9,898,955) $ 1,426,799

~~Year to Date~~


													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								545,454																545,454		Net earnings													465,568									465,568

Foreign currency translation adjustment	Foreign currency translation adjustment												(114,064)									(114,064)			Foreign currency translation adjustment															(232,182)							(232,182)
Amortization of cash flow hedges, net of tax	Amortization of cash flow hedges, net of tax												4,310									4,310			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												(6,530)									(6,530)			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												18,527									18,527			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												12,003									12,003			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												(1,740)									(1,740)			Change in marketable securities, net of tax															(3,328)							(3,328)

Dividends declared ($0.94 per common share)									(480,535)													(480,535)
Dividends declared ($0.49 per common share)																									Dividends declared ($0.49 per common share)												(248,154)										(248,154)
Treasury stock purchases	Treasury stock purchases															5,679,298			(415,824)			(415,824)			Treasury stock purchases																			3,099,268	(267,727)		(267,727)
Increase in ownership interest in subsidiaries					(304)																	(304)

Share-based compensation awards	Share-based compensation awards				70,796											(988,037)			36,083			106,879			Share-based compensation awards									(11,896)										(1,215,822)	24,561		12,665
Balance as of January 1, 2022		765,174,900	$	765,175	$	1,690,487			$	10,216,625			$	(1,236,258)		258,033,856			$	(10,214,957)		$	1,221,072
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								284,189																284,189		Net earnings													378,013									378,013
Foreign currency translation adjustment	Foreign currency translation adjustment												335,647									335,647			Foreign currency translation adjustment															(87,194)							(87,194)
Amortization of cash flow hedges, net of tax	Amortization of cash flow hedges, net of tax												4,310									4,310			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												(632)									(632)			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												(31,927)									(31,927)			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												15,832									15,832			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												(518)									(518)			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 ($0.90 per common share)									(461,636)													(461,636)

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				58,354											(1,739,356)			66,635			124,989			Share-based compensation awards									35,115										(517,515)	17,869		52,984
Balance as of December 26, 2020		765,174,900	$	765,175	$	1,565,255			$	10,383,493			$	(1,388,169)		255,176,469			$	(9,898,955)		$	1,426,799
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)


		26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 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	$	545,454	$	284,189	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	60,254		47,122		Share-based compensation expense	27,224		29,313
Depreciation and amortization	Depreciation and amortization	377,763		365,332		Depreciation and amortization	188,924		186,466
Operating lease asset amortization	Operating lease asset amortization	54,856		55,231		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	11,014		12,946		Amortization of debt issuance and other debt-related costs	5,435		5,577

Deferred income taxes	Deferred income taxes	(72,892)		(107,821)		Deferred income taxes	(31,226)		(30,452)
Provision for losses on receivables	Provision for losses on receivables	1,508		(94,242)		Provision for losses on receivables	3,865		2,097
Loss on extinguishment of debt		115,603		—
Loss on sale of business		—		12,043

Other non-cash items	Other non-cash items	1,103		(9,312)		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) decrease in receivables		(385,179)		192,121
(Increase) decrease in inventories		(357,908)		37,345
Increase in receivables						Increase in receivables	(576,585)		(478,671)
Increase in inventories						Increase in inventories	(283,252)		(294,517)
Increase in prepaid expenses and other current assets	Increase in prepaid expenses and other current assets	(12,560)		(22,519)		Increase in prepaid expenses and other current assets	(28,372)		(12,528)
Increase in accounts payable	Increase in accounts payable	83,214		84,708		Increase in accounts payable	288,517		329,523
Increase in accrued expenses		95,388		20,108
Decrease in accrued expenses						Decrease in accrued expenses	(10,893)		(103,483)
Decrease in operating lease liabilities	Decrease in operating lease liabilities	(65,123)		(63,496)		Decrease in operating lease liabilities	(33,319)		(34,146)
(Decrease) increase in accrued income taxes		(111,227)		63,385
(Increase) decrease in other assets		(4,255)		20,576
Increase in other long-term liabilities		40,034		38,962
Increase in accrued income taxes						Increase in accrued income taxes	109,280		69,256
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	377,047		936,678		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	(181,374)		(163,944)		Additions to plant and equipment	(167,260)		(85,019)
Proceeds from sales of plant and equipment	Proceeds from sales of plant and equipment	5,450		15,510		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	(769,658)		—		Acquisition of businesses, net of cash acquired	(32,651)		(714,010)
Purchase of marketable securities	Purchase of marketable securities	(18,539)		(36,121)		Purchase of marketable securities	(3,296)		(9,925)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	16,648		20,797		Proceeds from sales of marketable securities	2,650		8,700
Other investing activities	Other investing activities	6,651		—		Other investing activities	3,274		6,022

Net cash used for investing activities	Net cash used for investing activities	(940,822)		(163,758)		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	—		6,463		Bank and commercial paper borrowings, net	97,000		—
Other debt borrowings including senior notes	Other debt borrowings including senior notes	1,249,995		4,094		Other debt borrowings including senior notes	59,063		3
Other debt repayments		(23,050)		(773,663)
Redemption premiums and repayments of senior notes		(1,395,668)		—

Debt issuance costs		(15,547)		—
Other debt repayments including senior notes						Other debt repayments including senior notes	(18,104)		(10,051)

Cash received from termination of interest rate swap agreements		23,127		—

Proceeds from stock option exercises	Proceeds from stock option exercises	36,083		66,635		Proceeds from stock option exercises	24,561		17,881

Stock repurchases	Stock repurchases	(415,824)		—		Stock repurchases	(267,727)		—
Dividends paid	Dividends paid	(481,386)		(458,717)		Dividends paid	(249,294)		(240,561)

Other financing activities	Other financing activities	(5,297)		(873)		Other financing activities	(45,851)		(5,003)
Net cash used for financing activities	Net cash used for financing activities	(1,027,567)		(1,156,061)		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	(10,868)		77,056		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	(1,602,210)		(306,085)		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	$	1,434,890	$	5,789,485	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	$	258,436	$	290,926	Interest	$	84,010	$	225,031
Income taxes, net of refunds	Income taxes, net of refunds	342,628		110,453		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:


		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
		(In thousands)					(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	1,374,276	$	5,767,034	Cash and cash equivalents	$	437,670	$	2,067,873
Restricted cash (1)	Restricted cash (1)	60,614		22,451		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	$	1,434,890	$	5,789,485	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

~~Government Assistance~~Liabilities – Supplier Financing Programs

In ~~November 2021,~~September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2021-10, “Government Assistance (Topic 832),” which~~2022-04, Liabilities—Supplier Finance Programs, Subtopic 405-50, that requires ~~business~~ entities to ~~make annual disclosures about transactions with a government that are accounted for by analogizing to a grant or contribution accounting model. For transactions~~disclose in the ~~scope~~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 ~~new standard, business entities will need to provide information about the nature~~outstanding amount of the ~~transaction, including significant terms and conditions,~~obligations as ~~well as~~of the ~~amounts and specific~~end of each interim period. The guidance does not affect the recognition, measurement, or financial statement ~~line items affected by the transaction.~~ presentation of supplier finance program obligations.

The ~~new~~ guidance is effective for ~~all entities for annual reporting~~fiscal years and interim periods within those fiscal years beginning after December 15, ~~2021; however, early~~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 ~~may~~requires retrospective application to all periods in which a balance sheet is presented, except for the rollforward requirement, which will be applied either prospectively to all in-scope transactions that are reflected in the financial statements at the date of initial application and to new transactions that are entered into after the date of initial application, or retrospectively.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 ~~$3.8~~$4.9 billion and ~~$3.5~~$4.6 billion as of ~~January~~October 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 ~~January~~October 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 Jan. 1, 2022											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	$	2,403,763	$	396,232	$	513,138	$	—	$	3,313,133	Fresh and frozen meats	2,465,450		453,364		463,440		—		3,382,254
Canned and dry products		2,087,808		560,623		155,615		30		2,804,076
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	1,508,462		518,271		292,185		—		2,318,918		Frozen fruits, vegetables, bakery and other	1,843,464		580,032		309,197		149		2,732,842
Poultry	Poultry	1,351,188		240,755		223,348		—		1,815,291		Poultry	1,574,251		292,849		277,464		—		2,144,564
Dairy products	Dairy products	1,114,145		289,380		139,735		—		1,543,260		Dairy products	1,525,483		366,847		164,648		—		2,056,978
Fresh produce	Fresh produce	1,037,683		214,823		64,048		—		1,316,554		Fresh produce	1,337,919		254,737		65,244		—		1,657,900
Paper and disposables	Paper and disposables	894,553		114,634		193,010		12,792		1,214,989		Paper and disposables	1,022,904		144,068		209,358		15,056		1,391,386
Seafood	Seafood	585,713		110,337		33,980		—		730,030		Seafood	638,405		121,201		40,124		—		799,730
Beverage products	Beverage products	246,365		107,156		131,517		18,827		503,865		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)		268,475		254,061		24,747		212,804		760,087
Total Sales	Total Sales	$	11,498,155	$	2,806,272	$	1,771,323	$	244,453	$	16,320,203	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 Dec. 26, 2020											13-Week Period Ended Oct. 2, 2021
		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
Fresh and frozen meats	Fresh and frozen meats	$	1,500,064	$	267,817	$	402,133	$	—	$	2,170,014	Fresh and frozen meats	$	2,444,461	$	417,171	$	474,656	$	—	$	3,336,288
Canned and dry products	Canned and dry products	1,406,053		383,170		32,867		—		1,822,090		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	1,070,227		394,706		275,422		—		1,740,355		Frozen fruits, vegetables, bakery and other	1,501,293		518,255		273,148		—		2,292,696
Poultry	Poultry	844,377		174,717		217,621		—		1,236,715		Poultry	1,351,200		241,202		229,357		—		1,821,759
Dairy products	Dairy products	818,810		208,208		142,966		—		1,169,984		Dairy products	1,101,423		305,112		140,224		—		1,546,759
Fresh produce												Fresh produce	986,998		218,963		66,563		—		1,272,524
Paper and disposables	Paper and disposables	715,775		92,954		182,094		8,675		999,498		Paper and disposables	911,350		119,740		188,243		15,499		1,234,832
Fresh produce		696,879		145,565		66,528		—		908,972
Seafood	Seafood	407,955		69,680		26,387		—		504,022		Seafood	693,013		121,465		33,224		—		847,702
Beverage products	Beverage products	168,902		73,422		142,208		10,728		395,260		Beverage products	256,385		117,220		137,515		22,089		533,209

Other (1)	Other (1)	295,101		157,550		32,175		127,246		612,072		Other (1)	280,061		254,224		23,506		216,715		774,506
Total Sales	Total Sales	$	7,924,143	$	1,967,789	$	1,520,401	$	146,649	$	11,558,982	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.

26-Week Period Ended Jan. 1, 2022
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Fresh and frozen meats $ 4,848,224 $ 813,403 $ 987,794 $ — $ 6,649,421
Canned and dry products 4,164,582 1,142,518 293,212 30 5,600,342
Frozen fruits, vegetables, bakery and other 3,009,755 1,036,526 565,332 — 4,611,613
Poultry 2,702,388 481,956 452,706 — 3,637,050
Dairy products 2,215,569 594,492 279,959 — 3,090,020
Fresh produce 2,024,685 433,786 130,611 — 2,589,082
Paper and disposables 1,805,903 234,374 381,253 28,291 2,449,821
Seafood 1,278,726 231,802 67,204 — 1,577,732
Beverage products 502,750 224,377 269,032 40,916 1,037,075
Other (1)
548,536 508,285 48,253 429,519 1,534,593
Total Sales $ 23,101,118 $ 5,701,519 $ 3,475,356 $ 498,756 $ 32,776,749

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

26-Week Period Ended Dec. 26, 2020
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Fresh and frozen meats $ 2,997,869 $ 581,989 $ 831,053 $ — $ 4,410,911
Canned and dry products 2,812,198 774,747 62,440 — 3,649,385
Frozen fruits, vegetables, bakery and other 2,127,476 821,271 532,209 — 3,480,956
Poultry 1,679,256 353,743 434,255 — 2,467,254
Dairy products 1,655,075 441,164 289,995 — 2,386,234
Paper and disposables 1,396,600 183,663 361,268 20,313 1,961,844
Fresh produce 1,407,799 316,103 131,510 — 1,855,412
Seafood 890,652 158,247 51,483 — 1,100,382
Beverage products 348,919 150,888 290,799 21,938 812,544
Other (1)
529,832 349,667 59,537 272,403 1,211,439
Total Sales $ 15,845,676 $ 4,131,482 $ 3,044,549 $ 314,654 $ 23,336,361


(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.

4. ACQUISITIONS

During the first 2613 weeks of fiscal ~~2022,~~2023, the company paid cash of ~~$769.7~~$32.7 million for ~~several~~ 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 ~~January~~October 1, 2022, aggregate contingent consideration outstanding was ~~$90.9~~$93.0 million, of which ~~$88.3~~$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:~~assumed. The company recorded certain measurement period adjustments during each quarter of fiscal 2022 and fiscal 2023, none of which were individually or in aggregate material to the company’s financial statements.

108


	~~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)~~ 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 $491.6 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 $109.5 million with a weighted average life of 15 years. Amortization expense is being recognized on a straight-line basis and was $9.2 million for the first 26 weeks of fiscal 2022

The first 26 weeks of fiscal 2022 includes the results of operations of Greco for the period from August 12, 2021 to January 1, 2022. The results were not material to the consolidated results of the company for the first 26 weeks of fiscal 2022.

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 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 7, “Derivative Financial Instruments.”

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


		Assets Measured at Fair Value as of Jan. 1, 2022									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	$	1,015,187	$	300,003	$	—	$	1,315,190	Cash and cash equivalents	$	183,816	$	5,008	$	—	$	188,824

Other assets (1)	Other assets (1)	60,614		—		—		60,614		Other assets (1)	65,756		—		—		65,756

Total assets at fair value	Total assets at fair value	$	1,075,801	$	300,003	$	—	$	1,375,804	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 ~~$13.0~~$10.2 billion as of ~~January~~October 1, 2022 and ~~$13.3~~$10.5 billion as of July ~~3, 2021,~~2, 2022, while the carrying value was ~~$11.1~~$10.8 billion as of ~~both January~~October 1, 2022 and $10.6 billion as of July ~~3, 2021.~~2, 2022.

129

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 2613 weeks of fiscal ~~2022.~~2023. The following table presents the company’s available-for-sale marketable securities as of ~~January~~October 1, 2022 and July ~~3, 2021:~~2, 2022:


		Jan. 1, 2022													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	$	95,077	$	1,588	$	(1,123)	$	95,542	$	—	$	95,542	Corporate bonds	$	96,457	$	—	$	(8,615)	$	87,842	$	5,955	$	81,887
Government bonds	Government bonds	30,213		2,950		(24)		33,139		—		33,139		Government bonds	29,997		—		(1,885)		28,112		—		28,112
Total marketable securities	Total marketable securities	$	125,290	$	4,538	$	(1,147)	$	128,681	$	—	$	128,681	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 ~~January~~October 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.


	~~Jan.~~Oct. 1, 2022
	(In thousands)
Due in one year or less	$	—5,955
Due after one year through five years	~~88,084~~71,062
Due after five years through ten years	~~40,597~~38,937

Total	$	~~128,681~~115,954

There were no significant realized gains or losses in marketable securities in the first 2613 weeks of fiscal ~~2022.~~2023.

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.

1310

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates. In the second quarter of fiscal 2022, Sysco settled some of its previously held interest rate swap contracts for proceeds of $23.1 million, which had a notional value of $500 million, due to the redemption of the entire $500 million aggregate principal amount of Sysco’s outstanding 3.550% Senior Notes due 2025 in December 2021.

Hedging of foreign currency risk

The company uses euro-bond denominated debt to hedge the foreign currency exposure of our net investment in certain foreign operations. Additionally, Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, 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 ~~January~~October 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

Hedging of foreign currency risk

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

Swedish Krona

~~245~~131

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

British Pound Sterling

2010

June 2023

Euro

500

Hedging of fuel risk

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

Gallons

2259

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


			Derivative Fair Value						Derivative Fair Value
		Balance Sheet location	Jan. 1, 2022		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	$	3,970	$	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	$	8,766	$	16,732	Fuel swaps	Other current assets	$	16,188	$	47,170
Foreign currency forwards	Foreign currency forwards	Other current assets	183		42		Foreign currency forwards	Other current assets	945		633

Fuel swaps							Fuel swaps	Other assets	3		—

Fuel swaps	Fuel swaps	Other current liabilities	102		—		Fuel swaps	Other current liabilities	1,647		—
Foreign currency forwards		Other current liabilities	473		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:

1411


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 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	$	242,899	$	146,498	$	371,113	$	293,215	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	$	29,787	$	(3,793)	$	27,355	$	(13,791)	Hedged items	$	2,376	$	(2,433)
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	(39,473)		(296)		(47,862)		3,161		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				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
		(In thousands)									(In thousands)
Interest expense	Interest expense	$	(5,367)	$	(9,735)	$	(11,892)	$	(24,568)	Interest expense	$	(1,939)	$	(6,526)
Decrease in fair value of debt	Decrease in fair value of debt	(35,154)		(5,942)		(39,247)		(10,777)		Decrease in fair value of debt	(4,315)		(4,093)
Hedged items	Hedged items	$	29,787	$	(3,793)	$	27,355	$	(13,791)	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 ~~January~~October 1, 2022 and ~~December 26, 2020,~~October 2, 2021, presented on a pretax basis, are as follows:

1512

13-Week Period Ended Jan. 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
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ (7,588) Operating expense $ 9,608
Foreign currency contracts (356) Cost of sales / Other income —
Total $ (7,944) $ 9,608
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 11,149 N/A $ —
Total $ 11,149 $ —
13-Week Period Ended Dec. 26, 2020
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on 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)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 16,939 Operating expense $ (7,613)
Foreign currency contracts (587) Cost of sales / Other income —
Total $ 16,352 $ (7,613)
Derivatives in net investment hedging relationships:
Foreign denominated debt $ (27,554) N/A $ —
Total $ (27,554) $ —

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 26-week periods ended January 1, 2022 and December 26, 2020, presented on a pretax basis, are as follows:


	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
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(36,295)	Operating expense	$	12,985
Foreign currency contracts	286		Cost of sales / Other income	—

Total	$	(36,009)		$	12,985

Derivatives in net investment hedging relationships:

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

	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
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(485)	Operating expense	$	7,972
Foreign currency contracts	(78)		Cost of sales / Other income	—

Total	$	(563)		$	7,972

Derivatives in net investment hedging relationships:

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

1613

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

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

Jan. 1, 2022

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

(568,272)

(3,970)

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)

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 ~~January~~October 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 ~~January~~October 1, 2022, there were no$97.0 million in commercial paper issuances outstanding under this program. ~~During the first 26 weeks of fiscal 2022, there were no borrowing activities under our commercial paper programs, long-term revolving credit facility or short-term bank notes.~~

~~On December 14, 2021, Sysco issued senior notes (the “Notes”) totaling $1.25 billion. Details of the Notes are as follows:~~

Maturity Date Par Value
(in millions) Coupon Rate Pricing
(percentage of par)
December 14, 2031 (the 2031 Notes) $ 450 2.45 % 99.578 %
December 14, 2051 (the 2051 Notes) 800 3.15 99.308

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness. Interest on the Notes will be paid semi-annually in arrears on June 14 and December 14, beginning June 14, 2022. At Sysco’s option, any or all of the Notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the 2031 Notes before the date that is three months prior to the maturity date, or (ii) the 2051 Notes before the date that is six months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the Notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if such senior notes matured on the applicable date described above. If Sysco elects to redeem a series of Notes on or after the applicable date described in the preceding sentence, Sysco will pay an amount equal to 100% of the principal amount of the Notes to be redeemed. Sysco will pay accrued and unpaid interest on the Notes redeemed to the redemption date.

On December 14, 2021, Sysco redeemed $1.25 billion in combined aggregate principal amount of its 5.650% Senior Notes due 2025 (the “5.650% Notes”) and 3.550% Senior Notes due 2025 (the “3.550% Notes”). Sysco used the net proceeds from the offering of the Notes, together with cash on hand, to fund the redemption of all of Sysco’s outstanding 5.650% Notes and 3.550% Notes. The redemption price for the senior notes of each such series that were redeemed was the principal amount of such senior notes plus a “make-whole” amount determined in accordance with the indenture governing such senior notes and accrued and unpaid interest to the applicable redemption date. The redemption was considered to be a debt extinguishment. As such, Sysco recognized a loss on extinguishment of debt of ~~$115.6 million, which is recorded as a component of interest expense in the accompanying consolidated results of operations. Of this loss,~~ ~~$132.7 million~~ ~~was attributable to the purchase premium paid to the noteholders, and~~ ~~$6.0 million~~ ~~was attributable to the write-off of unamortized debt issuance costs and debt discount associated with the redeemed notes, offset by a gain of~~ ~~$23.1 million~~ ~~attributable to the termination of interest rate swap agreements that were serving as a fair value hedge.~~

9. EARNINGS PER SHARE

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


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 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)					(In thousands, except for share and per share data)
Numerator:	Numerator:									Numerator:
Net earnings	Net earnings	$	167,441	$	67,289	$	545,454	$	284,189	Net earnings	$	465,568	$	378,013
Denominator:	Denominator:									Denominator:
Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	511,044,400		510,006,754		511,780,234		509,567,080		Weighted-average basic shares outstanding	507,578,576		512,516,067
Dilutive effect of share-based awards	Dilutive effect of share-based awards	3,530,489		2,736,038		3,398,676		2,173,698		Dilutive effect of share-based awards	2,804,573		3,266,861
Weighted-average diluted shares outstanding	Weighted-average diluted shares outstanding	514,574,889		512,742,792		515,178,910		511,740,778		Weighted-average diluted shares outstanding	510,383,149		515,782,928
Basic earnings per share	Basic earnings per share	$	0.33	$	0.13	$	1.07	$	0.56	Basic earnings per share	$	0.92	$	0.74
Diluted earnings per share	Diluted earnings per share	$	0.33	$	0.13	$	1.06	$	0.56	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 2,124,000~~ approximately 1,393,000 and ~~6,287,000~~1,963,000 for the ~~second~~first quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively. 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 2,044,000 and 6,199,000 for the first 26 weeks of fiscal 2022 and fiscal 2021, 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 ~~$149.1~~$236.3 million and ~~$291.5 million for the second quarter of fiscal 2022 and fiscal 2021, respectively. Comprehensive income was $458.0 million and $606.9~~$308.8 million for the first ~~26 weeks~~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 Jan. 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 7,401 1,913 5,488
Total reclassification adjustments 7,500 1,938 5,562
Foreign currency translation:
Foreign currency translation adjustment N/A (26,870) — (26,870)
Marketable securities:
   Change in marketable securities (1)
N/A (1,808) (379) (1,429)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
   Change in cash flow hedge
Operating expenses (2)
(7,944) (1,843) (6,101)
   Change in net investment hedge N/A 11,149 2,787 8,362
Total other comprehensive income before reclassification adjustments 3,205 944 2,261
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2,874 719 2,155
Total other comprehensive loss $ (15,099) $ 3,222 $ (18,321)


(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 second~~ ~~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.

2015


			13-Week Period Ended Dec. 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	10,387		2,594		7,793		Amortization of actuarial loss, net	Other expense, net	8,486		2,119		6,367

Total reclassification adjustments	Total reclassification adjustments		10,570		2,640		7,930		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	222,507		—		222,507		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	(55)		(11)		(44)		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		Operating expenses (2)	16,352		4,017		12,335
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	(27,554)		(6,888)		(20,666)		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		(11,202)		(2,871)		(8,331)		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		$	224,694	$	477	$	224,217	Total other comprehensive income		$	(63,138)	$	6,035	$	(69,173)


(1)			~~(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~~ ~~second~~ ~~quarter of fiscal~~ ~~2021~~. ~~(2)~~ ~~Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.~~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.

2116

26-Week Period Ended Jan. 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 $ 198 $ 50 $ 148
Amortization of actuarial loss, net Other expense, net 15,887 4,032 11,855
Total reclassification adjustments 16,085 4,082 12,003
Foreign currency translation:
Other comprehensive income (loss) before reclassification adjustments:
Foreign currency translation adjustment N/A (114,064) — (114,064)
Marketable securities:
Change in marketable securities (1)
N/A (2,201) (461) (1,740)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
(8,507) (1,977) (6,530)
Change in net investment hedges N/A 24,702 6,175 18,527
Total other comprehensive income before reclassification adjustments 16,195 4,198 11,997
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 5,748 1,438 4,310
Total other comprehensive income (loss) $ (78,237) $ 9,257 $ (87,494)

~~(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 26 ~~weeks of fiscal~~ ~~2022~~.

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

26-Week Period Ended Dec. 26, 2020
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 $ 366 $ 92 $ 274
Amortization of actuarial loss, net Other expense, net 20,740 5,182 15,558
Total reclassification adjustments 21,106 5,274 15,832
Foreign currency translation:
Foreign currency translation adjustment N/A 335,647 — 335,647
Marketable securities:
Change in marketable securities (1)
N/A (655) (137) (518)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedge (3)
Operating expenses (2)
(489) 143 (632)
Change in net investment hedges N/A (47,953) (16,026) (31,927)
Total other comprehensive income before reclassification adjustments (48,442) (15,883) (32,559)
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 5,748 1,438 4,310
Total other comprehensive (loss) income $ 313,404 $ (9,308) $ 322,712

~~(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 26 ~~weeks 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:


		26-Week Period Ended Jan. 1, 2022											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	—		(114,064)		—		—		(114,064)		Equity adjustment from foreign currency translation	—		(232,182)		—		—		(232,182)

Amortization of cash flow hedges	Amortization of cash flow hedges	—		—		4,310		—		4,310		Amortization of cash flow hedges	—		—		2,155		—		2,155

Change in net investment hedges	Change in net investment hedges	—		—		18,527		—		18,527		Change in net investment hedges	—		—		23,509		—		23,509
Change in cash flow hedge	Change in cash flow hedge	—		—		(6,530)		—		(6,530)		Change in cash flow hedge	—		—		(26,390)		—		(26,390)

Amortization of unrecognized prior service cost	Amortization of unrecognized prior service cost	148		—		—		—		148		Amortization of unrecognized prior service cost	74		—		—		—		74
Amortization of unrecognized net actuarial losses	Amortization of unrecognized net actuarial losses	11,855		—		—		—		11,855		Amortization of unrecognized net actuarial losses	6,891		—		—		—		6,891
Change in marketable securities	Change in marketable securities	—		—		—		(1,740)		(1,740)		Change in marketable securities	—		—		—		(3,328)		(3,328)
Balance as of Jan. 1, 2022		$	(1,049,988)	$	(154,156)	$	(34,789)	$	2,675	$	(1,236,258)
Balance as of Oct. 1, 2022												Balance as of Oct. 1, 2022	$	(1,004,370)	$	(733,699)	$	35,044	$	(8,300)	$	(1,711,325)

26-Week Period Ended Dec. 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 — 335,647 — — 335,647
Amortization of cash flow hedges — — 4,310 — 4,310
Change in net investment hedges — — (31,927) — (31,927)
Change in cash flow hedge — — (632) — (632)
Amortization of unrecognized prior service cost 274 — — — 274
Amortization of unrecognized net actuarial losses 15,558 — — — 15,558
Change in marketable securities — — — (518) (518)
Balance as of Dec. 26, 2020 $ (1,249,882) $ (66,737) $ (78,127) $ 6,577 $ (1,388,169)


	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)

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 2613 weeks of fiscal ~~2022,~~2023, options to purchase ~~1,224,150~~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 2613 weeks of fiscal ~~2022~~2023 was ~~$17.39.~~$24.58.

In the first 2613 weeks of fiscal ~~2022,~~2023, employees were granted ~~470,720~~420,627 performance share units (PSUs). 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 2613 weeks of fiscal ~~2022~~2023 was ~~$76.75.~~ $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 2613 weeks of fiscal ~~2022,~~2023, employees were granted ~~201,922~~172,987 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 2613 weeks of fiscal ~~2022~~2023 was ~~$76.49.~~$85.38.

Employee Stock Purchase Plan

Plan participants purchased ~~465,814~~326,226 shares of common stock under the ESPP during the first 2613 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 2613 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 ~~$60.3~~$27.2 million and ~~$47.1~~$29.3 million for the first 2613 weeks of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

As of ~~January~~October 1, 2022, there was ~~$133.6~~$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 ~~1.86~~2.16 years.

12. INCOME TAXES

Effective Tax Rate

The effective tax ~~rates~~rate for the ~~second~~first 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 ~~26 weeks~~quarter of fiscal 2022 ~~were 21.27% and 24.18%, respectively.~~was 25.40%. As compared to the company’s statutory tax rate, the higher effective tax rate for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal 2022 was impacted by the increase in our reserve for uncertain tax positions of $12.0 million, ~~in the first quarter,~~ 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 and $2.9 million, respectively, and (2) the impact of corporate-owned life insurance policies that totaled an unfavorable $1.0 million in the second quarter and a favorable $1.0 million in the first ~~26 weeks of fiscal 2022. T~~he effective tax rates for the second quarter and first 26 weeks of fiscal 2021 were 17.05% and 16.38%, respectively. As compared to the company’s statutory tax rate, the lower effective tax rate for the second quarter and first 26 weeks of fiscal 2021 was impacted by (1) the favorable impact of excess tax benefits of equity-based compensation that totaled $4.3 million and $6.6 million, respectively, (2) the $7.6 million tax benefit attributable to the sale of the stock of Cake Corporation in the first quarter, and (3) the impact of changes in tax law in the United Kingdom (U.K.) of $5.5 million in the first quarter.million.

Uncertain Tax Positions

As of ~~January~~October 1, 2022, the gross amount of unrecognized tax benefit and related accrued interest was ~~$32.4~~$32.4 million and ~~$4.6~~$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.

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.

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:


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Sales:	Sales:	(In thousands)				(In thousands)				Sales:	(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	11,498,155	$	7,924,143	$	23,101,118	$	15,845,676	U.S. Foodservice Operations	$	13,602,482	$	11,602,963
International Foodservice Operations	International Foodservice Operations	2,806,272		1,967,789		5,701,519		4,131,482		International Foodservice Operations	3,283,735		2,895,247
SYGMA	SYGMA	1,771,323		1,520,401		3,475,356		3,044,549		SYGMA	1,933,457		1,704,033
Other	Other	244,453		146,649		498,756		314,654		Other	307,156		254,303
Total	Total	$	16,320,203	$	11,558,982	$	32,776,749	$	23,336,361	Total	$	19,126,830	$	16,456,546

		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Operating income (loss):	Operating income (loss):	(In thousands)				(In thousands)				Operating income (loss):	(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	676,822	$	485,251	$	1,474,345	$	1,073,660	U.S. Foodservice Operations	$	903,828	$	797,523
International Foodservice Operations	International Foodservice Operations	10,745		(79,949)		47,421		(80,486)		International Foodservice Operations	87,208		36,676
SYGMA	SYGMA	(6,729)		11,328		(9,176)		23,020		SYGMA	5,471		(2,447)
Other	Other	183		(1,018)		6,639		(1,023)		Other	11,538		6,456
Total segments	Total segments	681,021		415,612		1,519,229		1,015,171		Total segments	1,008,045		838,208
Global Support Center	Global Support Center	(236,112)		(203,550)		(442,638)		(383,530)		Global Support Center	(273,712)		(206,526)
Total operating income	Total operating income	444,909		212,062		1,076,591		631,641		Total operating income	734,333		631,682
Interest expense	Interest expense	242,899		146,498		371,113		293,215		Interest expense	124,150		128,214
Other (income) expense, net		(10,676)		(15,556)		(13,928)		(1,432)
Other expense (income), net										Other expense (income), net	15,281		(3,252)
Earnings before income taxes	Earnings before income taxes	$	212,686	$	81,120	$	719,406	$	339,858	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 ~~second~~first quarter of fiscal ~~2022~~2023 results ~~were primarily attributable~~reflected continued positive momentum in our business to start the fiscal year, delivering our highest ever quarterly sales ~~growth that surpassed second quarter of fiscal 2019 levels by 10.5%.~~at Sysco. We ~~experienced sequential volume improvements through the second quarter as~~generated double-digit sales and earnings growth compared to ~~fiscal 2019 until December, when sales began to slow down as~~ the Omicron variant began negatively impacting our customers. We believe customers are responding positively to Sysco’s relative supply chain strength, our new purpose platform and our improving capabilitiessame 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. We continue to experience double-digit product inflation and incur incremental operating expenses associated with labor challenges driven by the current COVID environment, as well as the costs attributable to our snap back and transformation efforts. These have pressured our earnings growth.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 ~~second~~first quarter of fiscal ~~2022~~2023 to the ~~second~~first quarter of fiscal ~~2021~~2022 are presented below:

•Sales:

◦increased ~~41.2%~~16.2%, or ~~$4.8~~$2.7 billion, to ~~$16.3~~$19.1 billion;

•Operating income:

◦increased ~~109.8%~~16.3%, or ~~$232.8~~$102.7 million, to ~~$444.9~~$734.3 million;

◦adjusted operating income increased ~~111.8%~~12.4%, or ~~$261.6~~$85.2 million, to ~~$495.7~~$770.3 million;

•Net earnings:

◦increased ~~148.8%~~23.2%, or ~~$100.2~~$87.6 million, to ~~$167.4~~$465.6 million;

◦adjusted net earnings increased ~~240.0%~~14.6%, or ~~$206.1~~$62.7 million, to ~~$291.9~~$492.6 million;

•Basic earnings per share:

◦increased ~~153.8%~~24.3%, or ~~$0.20,~~$0.18, to ~~$0.33~~$0.92 per share;

•Diluted earnings per share:

◦increased ~~153.8%~~24.7%, or ~~$0.20,~~$0.18, to ~~$0.33~~$0.91 per share;

◦adjusted diluted earnings per share increased ~~235.3%~~16.9%, or ~~$0.40,~~$0.14, to ~~$0.57~~$0.97 in fiscal ~~2022;~~2023;

•EBITDA:

◦increased ~~56.8%~~10.5%, or ~~$234.5~~$86.6 million, to ~~$646.9~~$908.0 million; and

◦adjusted EBITDA increased ~~62.9%~~7.5%, or ~~$258.9~~$64.1 million, to ~~$670.7~~$916.9 million.

~~Comparisons of results from the first 26 weeks of fiscal 2022 to the first 26 weeks of fiscal 2021 are presented below:~~

•~~Sales:~~

◦~~increased 40.5%, or $9.4 billion, to $32.8 billion;~~

•~~Operating income:~~

◦~~increased 70.4%, or $445.0 million, to $1.1 billion;~~

◦~~adjusted operating income increased 97.2%, or $582.0 million, to $1.2 billion;~~

•~~Net earnings:~~

◦~~increased 91.9%, or $261.3 million, to $0.5 billion;~~

◦~~adjusted net earnings increase 178.4%, or $462.6 million, to $721.9 million;~~

•~~Basic earnings per share:~~

◦~~increased 91.1%, or $0.51, to $1.07 per share;~~

•~~Diluted earnings per share:~~

◦~~increased 89.3%, or $0.50, to $1.06 per share; and~~

◦~~adjusted diluted earnings per share increased 174.5%, or $0.89, to $1.40 in fiscal 2022;~~

•~~EBITDA:~~

◦~~increased 47.1%, or $469.9 million, to $1.5 billion; and~~

◦~~adjusted EBITDA increased 62.7%, or $587.0 million, to $1.5 billion.~~

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; acquisition-related costs consisting of: ~~(1)~~(a) intangible amortization ~~expense; (2)~~expense and (b) acquisition costs and due diligence costs related to our ~~significant~~ 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. Our results for the first 26 weeks of fiscal 2022 were also impacted by debt extinguishment costs and the increase in reserves for uncertain tax positions. Our results for the first 26 weeks of fiscal 2021 were also impacted by a loss on the sale of a business.

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.

Trends

Economic and Industry Trends

The food-away-from-home sector continues to experience an overall recovery as compared to fiscal 2021. However, beginning on the weekend after Thanksgiving, the Omicron variant of COVID-19 negatively impacted our customers due to the reintroduction of significant restrictions on their businesses. Our business in Europe was impacted first, which affected our sales and volume performance, most notablyexperienced growth in the ~~United Kingdom and France. We have also experienced an impact in the majority of Canada, where restaurants began closing for on-premise dining towards the end of the second~~first quarter of fiscal ~~2022. While such restrictions~~2023. Restaurants continued to be resilient and our travel/hospitality and business/industry segments results posted year-over-year improvements. We are ~~slowly starting~~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 ~~ease~~the year in ~~February, these types of restrictions impact~~both national and local sales, which has driven market share gains overall, as we grew more than 1.4 times the market for the period. We are on track to deliver our ~~customers’ performance and ordering patterns. In~~stated growth objective for the U.S., demand has declined due to changes in end-consumer behavior over concerns of vaccination breakthrough infections. We expect the top-line impact from the Omicron variant to continue into the third quarter of fiscal 2022. Despite the impact of the Omicron variant, Sysco gained market-shareyear, as we see continued growth opportunities, particularly in the ~~second quarter of fiscal 2022.~~

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 ~~second~~first quarter of fiscal ~~2022~~2023 was volume growth, as we experienced strong results from both ~~independent~~national and ~~chain~~local customers driven by a ~~17.6%~~5.4% improvement in local case volume and ~~a 22.5%~~an 7.3% improvement in total case volume within our U.S. ~~Broadline operations,~~Foodservice segment, in each instance as compared to the ~~second~~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, including no order minimums, when there has been industry-wide product shortages.~~pounds. This ~~has~~growth enabled us to gain market share during the ~~second~~first quarter of fiscal ~~2022.~~2023. We expect ~~our volumes~~ to continue ~~their recovery to fiscal 2019 levels relatively quickly once the Omicron variant peaks are passed~~seeing momentum on our rate of growth and government restrictions ease. However, we believe this impact of the Omicron variant and the subsequent recovery will delay our volumes reaching fiscal 2019 levels later than we originally forecast. This expectation assumes additional variants of concern do not arise. We are on track to 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.

Product cost inflation has also been a driver of our sales and gross profit performance. We experienced inflation at a rate of ~~14.6% and 13.8%~~9.7% in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively, in our U.S. Broadline operations,~~2023 at the total enterprise level, primarily driven by inflation in the ~~meat~~dairy and ~~poultry~~frozen categories. We ~~have been~~continue to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin ~~decreased 44 and 62~~increased 18 basis points in the ~~second~~first quarter ~~and the first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the same prior year ~~periods, largely due to~~period, primarily driven by higher volumes, the ~~impact~~effective management of ~~product cost inflation.~~inflation and progress against our partnership growth management initiatives.

Operating Expense Trends

Total operating expenses increased ~~29.7% and 29.8%~~17.7% during the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, driven by ~~the variable costs associated with significantly~~ increased volumes, ~~increased labor costs stemming~~cost inflation, continued operational cost pressures from ~~supply chain issues~~the operating environment and our planned investments to drive our transformation initiatives under our Recipe For Growth strategy. This quarter included transformation investments ~~towards our Recipe for Growth strategy. We have made~~of $63.4 million, new-associate related productivity costs of $41.1 million and a ~~purposeful response to the COVID-generated labor and safety environment~~sequential improvement in which we are operating, with $73.0 million in snap back operating investments such as recruiting costs, hiring marketing, vaccination promotion, contract labor and sign-on and retention bonuses during the quarter. Omicron has also resulted in job absences, increasing our contract labor and overtimebusiness recovery costs. We 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, primarily for transportation~~2023. The actual charge will depend on finalization of the actuarial and ~~warehouse staff. Onboarding~~other assumptions. This charge will be treated as a Certain Item. We will also compute a new ~~associates in our industry requires ample training and time to improve productivity; therefore, some~~amount of ~~our~~on-going expense increases have occurred as we have not yet achieved those additional productivity gains. We expect our snap back operating expenses to decline in the third quarter of fiscal 2022 and expect to make progress on productivity over time. Our operating results in the second quarter of fiscal 2022 included $43.5 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 increasing market share, profitably, at the national and local level; however, the higher operating expenses had a negative impact on our results for the quarter. Even with those significant snap back and transformation operating expense investments, offset by the continued benefit of our cost-savings efforts, we leveraged our adjusted operating expense structure. We expect our operating expenses related to our investment for our Recipe for Growth to remain elevatedPlan for the remainder of the fiscal year.

~~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 12, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

~~Net Earnings and Earnings per Share Trends~~

In a typical fiscal year prior to the COVID pandemic, our second half earnings are generally weighted around 40% in the third quarter and 60% in the fourth quarter due to the normal seasonality of our business. For fiscal 2022, we expect our second half earnings per share and adjusted earnings per share to be weighted even more to the fourth quarter. We expect a stronger fourth quarter this year, relative to the third quarter, as a result of anticipated volume recovery, lower snap-back

~~expenses and improved operating productivity. For these expectations, we are assuming no further COVID variant disruptions to our operating environment.~~

~~Comparisons to Fiscal 2019~~

~~In assessing our financial performance through the business recovery, Sysco’s management compared our results in fiscal 2022 against our corresponding fiscal 2019 results.~~

~~Comparisons of results from the second quarter of fiscal 2022 to the second quarter of fiscal 2019 are presented below:~~

•~~Sales:~~

◦~~increased 10.5%, or $1.6 billion, as compared to fiscal 2019;~~

•~~Operating income:~~

◦~~decreased 1.5%, or $7.0 million, as compared to fiscal 2019;~~

◦~~adjusted operating income decreased 17.8%, or $107.7 million, as compared to fiscal 2019;~~

•~~EBITDA:~~

◦~~increased 0.1%, or $0.4 million, as compared to fiscal 2019;~~

◦~~adjusted EBITDA decreased 10.8%, or $81.4 million, as compared to fiscal 2019;~~

•~~Diluted earnings per share:~~

◦~~decreased 35.3%, or $0.18, as compared to fiscal 2019; and~~

◦~~adjusted diluted earnings per share decreased 24.0%, or $0.18, as compared to fiscal 2019.~~

~~Comparisons of results from the first 26 weeks of fiscal 2022 to the first 26 weeks of fiscal 2019 are presented below:~~

•~~Sales:~~

◦~~increased 9.3%, or $2.8 billion, as compared to fiscal 2019;~~

•~~Operating income:~~

◦~~decreased 0.3%, or $3.4 million, as compared to fiscal 2019;~~

◦~~adjusted operating income decreased 8.8%, or $114.3 million, as compared to fiscal 2019;~~

•~~EBITDA:~~

◦~~increased 0.5%, or $7.2 million, as compared to fiscal 2019;~~

◦~~adjusted EBITDA decreased 5.4%, or $86.2 million, as compared to fiscal 2019;~~

•~~Diluted earnings per share:~~

◦~~decreased 20.3%, or $0.27, as compared to fiscal 2019; and~~

◦~~adjusted diluted earnings per share decreased 15.7%, or $0.26, as compared to fiscal 2019.~~

Key items impacting the comparability of Sysco’s results in the second quarter of fiscal 2022 to the second quarter of fiscal 2019 included the one-time and short-term expenses associated with the business recovery and the operating expense investments towards our Recipe for Growth strategy.

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 fiscal ~~2022,~~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~~food distributors as part of our plan to ~~deliver over $1 billion in incremental sales to Sysco in fiscal 2022.~~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 ~~2022, we acquired a specialty food distributor in the United Kingdom.~~

•In the second quarter of fiscal 2022, we acquired Paragon Foodservice, a regional broadline fresh produce distributor in western Pennsylvania. The acquisition will operate as part of Sysco’s U.S. specialty produce business.2023.

Sysco has entered into an agreement to acquire The Coastal Companies, a leading fresh produce distributor and value-added processer on the East Coast. The acquisition will operate as part of Sysco’s U.S. specialty produce business, and we anticipate the closing to occur in the third quarter of fiscal 2022.

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 U.S. 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 U.S. Broadline and specialty business, as we reduce our structural expenses to fund our capital investments. We are in the initial 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 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				26-Week Period Ended					13-Week Period Ended
		Jan. 1, 2022		Dec. 26, 2020		Jan. 1, 2022		Dec. 26, 2020			Oct. 1, 2022		Oct. 2, 2021
Sales	Sales	100.0	%	100.0	%	100.0	%	100.0	%	Sales	100.0	%	100.0	%
Cost of sales	Cost of sales	82.3		81.8		82.1		81.5		Cost of sales	81.8		81.9
Gross profit	Gross profit	17.7		18.2		17.9		18.5		Gross profit	18.2		18.1
Operating expenses	Operating expenses	15.0		16.3		14.6		15.8		Operating expenses	14.4		14.2
Operating income	Operating income	2.7		1.9		3.3		2.7		Operating income	3.8		3.8
Interest expense	Interest expense	1.5		1.3		1.1		1.3		Interest expense	0.6		0.8
Other (income) expense, net	Other (income) expense, net	(0.1)		(0.1)		—		—		Other (income) expense, net	0.1		—
Earnings before income taxes	Earnings before income taxes	1.3		0.7		2.2		1.4		Earnings before income taxes	3.1		3.1
Income taxes	Income taxes	0.3		0.1		0.5		0.2		Income taxes	0.7		0.8
Net earnings	Net earnings	1.0	%	0.6	%	1.7	%	1.2	%	Net earnings	2.4	%	2.3	%

3123

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 26-Week Period Ended
Jan. 1, 2022 Jan. 1, 2022
Sales 41.2 % 40.5 %
Cost of sales 41.9 41.5
Gross profit 37.8 35.8
Operating expenses 29.7 29.8
Operating income 109.8 70.4
Interest expense 65.8 26.6
Other (income) expense, net (1) (2)
(31.4) 872.6
Earnings before income taxes 162.2 111.7
Income taxes 227.1 212.5
Net earnings 148.8 % 91.9 %
Basic earnings per share 153.8 % 91.1 %
Diluted earnings per share 153.8 89.3
Average shares outstanding 0.2 0.4
Diluted shares outstanding 0.4 0.7


	13-Week Period Ended
	Oct. 1, 2022
Sales	16.2	%
Cost of sales	16.0
Gross profit	17.4
Operating expenses	17.7
Operating income	16.3
Interest expense	(3.2)
Other (income) expense, net (1)	(569.9)
Earnings before income taxes	17.4
Income taxes	0.5
Net earnings	23.2	%
Basic earnings per share	24.3	%
Diluted earnings per share	24.7
Average shares outstanding	(1.0)
Diluted shares outstanding	(1.0)

~~(1)Other (income) expense, net was income of $10.7 million and income of $15.6 million in the second quarter of fiscal 2022 and fiscal 2021, respectively.~~

~~(2)Other (income) expense, net was income of $13.9 million and income of $1.4 million in the first 26 weeks 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 Jan. 1, 2022																			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	$	11,498,155		$	2,806,272		$	1,771,323		$	244,453					$	16,320,203		Sales	$	13,602,482		$	3,283,735		$	1,933,457		$	307,156		$	—		$	19,126,830
Sales increase (decrease)		45.1		%	42.6		%	16.5		%	66.7		%				41.2		%
Sales increase																				Sales increase	17.2		%	13.4		%	13.5		%	20.8		%				16.2		%
Percentage of total	Percentage of total	70.5		%	17.2		%	10.9		%	1.4		%				100.0		%	Percentage of total	71.1		%	17.2		%	10.1		%	1.6		%				100.0		%

Operating income (loss)	Operating income (loss)	$	676,822		$	10,745		$	(6,729)		$	183		$	(236,112)		$	444,909		Operating income (loss)	$	903,828		$	87,208		$	5,471		$	11,538		$	(273,712)		$	734,333
Operating income (loss) increase (decrease)		39.5		%	NM			NM			NM			16.0		%	NM
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	99.4		%	1.6		%	(1.0)		%	—		%				100.0		%	Percentage of total segments	89.7		%	8.7		%	0.5		%	1.1		%				100.0		%
Operating income (loss) as a percentage of sales		5.9		%	0.4		%	(0.4)		%	0.1		%				2.7		%
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 Dec. 26, 2020
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
(In thousands)
Sales $ 7,924,143 $ 1,967,789 $ 1,520,401 $ 146,649 $ — $ 11,558,982
Percentage of total 68.6 % 17.0 % 13.2 % 1.2 % 100.0 %
Operating income $ 485,251 $ (79,949) $ 11,328 $ (1,018) $ (203,550) $ 212,062
Percentage of total segments 116.8 % (19.2) % 2.7 % (0.3) % 100.0 %
Operating income as a percentage of sales 6.1 % (4.1) % 0.7 % (0.7) % 1.8 %

26-Week Period Ended Jan. 1, 2022
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
(In thousands)
Sales $ 23,101,118 $ 5,701,519 $ 3,475,356 $ 498,695 $ 61 $ 32,776,749
Sales increase (decrease) 45.8 % 38.0 % 14.2 % 58.5 % 40.5 %
Percentage of total 70.5 % 17.4 % 10.6 % 1.5 % 100.0 %
Operating income $ 1,474,345 $ 47,421 $ (9,176) $ 6,639 $ (442,638) $ 1,076,591
Operating income increase (decrease) 37.3 % 158.9 % (139.9) % NM 70.4 %
Percentage of total segments 97.0 % 3.1 % (0.6) % 0.5 % 100.0 %
Operating income as a percentage of sales 6.4 % 0.8 % (0.3) % 1.3 % 3.3 %


		26-Week Period Ended Dec. 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	$	15,845,676		$	4,131,482		$	3,044,549		$	314,654		$	—	$	23,336,361		Sales	$	11,602,963		$	2,895,247		$	1,704,033		$	254,303		$	—	$	16,456,546

Percentage of total	Percentage of total	67.9		%	17.7		%	13.0		%	1.4		%			100.0		%	Percentage of total	70.5		%	17.6		%	10.4		%	1.5		%			100.0		%

Operating income		$	1,073,660		$	(80,486)		$	23,020		$	(1,023)		$	(383,530)	$	631,641
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	105.8		%	(7.9)		%	2.3		%	(0.2)		%			100.0		%	Percentage of total segments	95.1		%	4.4		%	(0.3)		%	0.8		%			100.0		%
Operating income as a percentage of sales		6.8		%	(1.9)		%	0.8		%	(0.3)		%			2.7		%
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 14, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, U.S. Foodservice Operations and International Foodservice Operations collectively represented approximately ~~87.6% and 87.9%~~88.3% of Sysco’s overall sales and ~~101.0% and 100.2%~~98.4% of total segment operating 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 Jan. 1, 2022		13-Week Period Ended Dec. 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	$	11,498,155	$	7,924,143	$	3,574,012	45.1	%	Sales	$	13,602,482	$	11,602,963	$	1,999,519	17.2	%
Gross profit	Gross profit	2,139,278		1,559,322		579,956		37.2		Gross profit	2,612,343		2,185,154		427,189		19.5
Operating expenses	Operating expenses	1,462,456		1,074,071		388,385		36.2		Operating expenses	1,708,515		1,387,631		320,884		23.1
Operating income	Operating income	$	676,822	$	485,251	$	191,571	39.5	%	Operating income	$	903,828	$	797,523	$	106,305	13.3	%

Gross profit	Gross profit	$	2,139,278	$	1,559,322	$	579,956	37.2	%	Gross profit	$	2,612,343	$	2,185,154	$	427,189	19.5	%
Adjusted operating expenses (Non-GAAP)	Adjusted operating expenses (Non-GAAP)	1,454,558		1,087,526		367,032		33.7		Adjusted operating expenses (Non-GAAP)	1,698,570		1,389,394		309,176		22.3
Adjusted operating income (Non-GAAP)	Adjusted operating income (Non-GAAP)	$	684,720	$	471,796	$	212,924	45.1	%	Adjusted operating income (Non-GAAP)	$	913,773	$	795,760	$	118,013	14.8	%

		26-Week Period Ended Jan. 1, 2022		26-Week Period Ended Dec. 26, 2020		Change in Dollars		% Change
		(Dollars in thousands)
Sales		$	23,101,118	$	15,845,676	$	7,255,442	45.8	%
Gross profit		4,324,432		3,159,029		1,165,403		36.9
Operating expenses		2,850,087		2,085,369		764,718		36.7
Operating income		$	1,474,345	$	1,073,660	$	400,685	37.3	%

Gross profit		$	4,324,432	$	3,159,029	$	1,165,403	36.9	%
Adjusted operating expenses (Non-GAAP)		2,843,952		2,184,201		659,751		30.2
Adjusted operating income (Non-GAAP)		$	1,480,480	$	974,828	$	505,652	51.9	%

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:


		Increase (Decrease)				Increase (Decrease)					Increase (Decrease)
		13-Week Period				26-Week Period					13-Week Period
		(Dollars in millions)				(Dollars in millions)					(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars		Percentage		Dollars		Cause of change	Percentage		Dollars
Case volume(1)	Case volume(1)	23.9	%	$	1,895.4	25.1	%	$	3,980.9	Case volume(1)	6.2	%	$	714.1
Inflation ~~(1)~~	Inflation ~~(1)~~	14.9		1,176.4		14.2		2,243.4		Inflation ~~(1)~~	9.8		1,137.1
Acquisitions (2)		3.7		292.4		2.9		459.3

Other ~~(3)~~(2)	Other ~~(3)~~(2)	2.6		209.8		3.6		571.8		Other ~~(3)~~(2)	1.2		148.3
Total change in sales	Total change in sales	45.1	%	$	3,574.0	45.8	%	$	7,255.4	Total change in sales	17.2	%	$	1,999.5




(1)~~Includes product cost inflation of 14.6% and 13.8% for U.S. Broadline operations, respectively.~~ ~~(2)Includes the impact of the Greco and Sons acquisition for both periods and the Paragon acquisition for each period.~~ ~~(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 in the ~~second~~first quarter ~~and the first 26 weeks~~ of fiscal ~~2022 was the significant~~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 ~~22.5% and 25.3%~~7.3% in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021.~~2022. This included a ~~17.6% and 20.8% improvement~~5.4% increase in local ~~customer case growth in the second quarter and first 26 weeks of fiscal 2022, respectively, along with a 28.8% and 31.3% increase in national~~ customer case volume in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively. The increases in U.S. Broadline case volumes represent organic growth.~~

2023.

Operating Income

The increase in operating income for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ 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 ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, was driven primarily by the improvement in local cases ~~and~~stemming from: (1) the impact of our Recipe for Growth initiatives, (2) management of higher ~~inflation.~~inflation and (3) optimization of our business processes and performance. The estimated change in product costs, an internal measure of inflation or deflation, for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022~~2023 for our U.S. Broadline operations was ~~inflation of 14.6% and 13.8%, respectively.~~12.0%. For the ~~second~~first quarter of fiscal ~~2022,~~2023, this change in product costs was primarily driven by inflation in the ~~meat~~dairy and ~~poultry~~frozen categories. Gross margin, which is gross profit as a percentage of sales, was ~~18.61% and 18.72%~~19.2% in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023 for our U.S. Foodservice Operations, which was ~~a decrease~~an increase of ~~107~~37 basis points compared to gross margin of ~~19.68%~~18.8% in the ~~second~~first quarter of fiscal ~~2021, and a decrease of 122 basis points compared to gross margin of 19.94% in the first 26 weeks of fiscal 2021 primarily attributable to inflationary pressure.~~2022.

The increase in operating expenses for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, was primarily driven by variable costs associated with increased volumes and ~~largely from short-term expenses associated with the business recovery, including increases in~~ costs for ~~associates, which included recruiting costs, hiring marketing, vaccination promotion, contract labor and sign-on~~employee training and retention ~~bonuses. Omicron has also resulted in job absences, increasing our contract labor and overtime costs. We have also experienced an increase in operating expenses due~~designed to investments for our Recipe for Growth strategy. Additionally, we experienced a $74.1 million unfavorable comparison of bad debt expense in the first 26 weeks of fiscal 2022, as compared to the first 26 weeks of fiscal 2021, which included a net bad debt benefit due to the significant reduction of reserves on pre-pandemic receivables that were collected in fiscal 2021. Excluding the impact of these pre-pandemic receivables, our year-over-year comparison of bad debt expense has not been significant.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 Jan. 1, 2022		13-Week Period Ended Dec. 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	$	2,806,272	$	1,967,789	$	838,483	42.6	%	Sales	$	3,283,735	$	2,895,247	$	388,488	13.4	%
Gross profit	Gross profit	565,931		373,840		192,091		51.4		Gross profit	649,265		589,134		60,131		10.2
Operating expenses	Operating expenses	555,186		453,789		101,397		22.3		Operating expenses	562,057		552,458		9,599		1.7
Operating income (loss)		$	10,745	$	(79,949)	$	90,694	NM
Operating income										Operating income	$	87,208	$	36,676	$	50,532	137.8	%

Gross profit	Gross profit	$	565,931	$	373,840	$	192,091	51.4	%	Gross profit	$	649,265	$	589,134	$	60,131	10.2	%
Adjusted operating expenses (Non-GAAP)	Adjusted operating expenses (Non-GAAP)	526,281		429,056		97,225		22.7		Adjusted operating expenses (Non-GAAP)	542,136		525,017		17,119		3.3
Adjusted operating income (Non-GAAP)	Adjusted operating income (Non-GAAP)	$	39,650	$	(55,216)	$	94,866	(171.8)	%	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)	$	2,772,211	$	1,967,789	$	804,422	40.9	%	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)	561,898		373,840		188,058		50.3		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)	523,087		429,056		94,031		21.9		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)	$	38,811	$	(55,216)	$	94,027	(170.3)	%	Adjusted operating income (Non-GAAP)	$	114,182	$	64,117	$	50,065	78.1	%

		26-Week Period Ended Jan. 1, 2022		26-Week Period Ended Dec. 26, 2020		Change in Dollars		% Change
		(Dollars in thousands)
Sales		$	5,701,519	$	4,131,482	$	1,570,037	38.0	%
Gross profit		1,155,065		824,238		330,827		40.1
Operating expenses		1,107,644		904,724		202,920		22.4
Operating (loss) income		$	47,421	$	(80,486)	$	127,907	(158.9)	%

Gross profit		$	1,155,065	$	824,238	$	330,827	40.1	%
Adjusted operating expenses (Non-GAAP)		1,051,297		860,673		190,624		22.1
Adjusted operating (loss) income (Non-GAAP)		$	103,768	$	(36,435)	$	140,203	(384.8)	%

Sales on a constant currency basis (Non-GAAP)		$	5,701,519	$	4,131,482	$	1,570,037	38.0	%
Gross profit on a constant currency basis (Non-GAAP)		1,128,298		824,238		304,060		36.9
Adjusted operating expenses on a constant currency basis (Non-GAAP)		1,051,297		860,673		190,624		22.1
Adjusted operating (loss) income on a constant currency basis (Non-GAAP)		$	103,768	$	(36,435)	$	140,203	NM

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)					Increase (Decrease)
		13-Week Period				26-Week Period					13-Week Period
		(Dollars in millions)				(Dollars in millions)					(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars		Percentage		Dollars		Cause of change	Percentage		Dollars
Inflation	Inflation	6.2	%	$	121.1	7.1	%	$	293.9	Inflation	14.5	%	$	418.5

Foreign currency	Foreign currency	1.8		34.9		3.8		157.8		Foreign currency	(10.9)		(315.5)
Other (1)	Other (1)	34.6		682.5		27.1		1,118.3		Other (1)	9.8		285.5
Total change in sales	Total change in sales	42.6	%	$	838.5	38.0	%	$	1,570.0	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 ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022~~2023 were higher, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, primarily due to ~~the significant~~inflation along with an improvement in ~~volume. Volume trends were accelerating prior to the onset~~volume, some of ~~the Omicron variant of COVID-19,~~ which ~~resulted in increased restrictions in key markets such as the United Kingdom and Canada. We continue to monitor the impact~~was attributable to our ~~customers and our business as international restrictions are starting to ease, including in Ireland and~~Recipe for Growth initiatives. Partially offsetting these increases was the ~~United Kingdom.~~negative impact of foreign currency translation.

Operating Income

The increase in operating income for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, was ~~primarily~~ due to the continuing increase in sales ~~volumes.~~volumes, along with specific efforts to optimize our gross profit while addressing our increased operating expenses.

The increase in gross profit dollars in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ 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 ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, was primarily due to an increase in costs for associates including overtime and 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 ~~16.5% and 14.2%~~13.5% higher in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, primarily from an increase in case ~~volume~~volumes driven by the success of national and regional ~~quick-service~~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 ~~$18.1 million and $32.2~~$7.9 million in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter and first 26 weeks of fiscal 2021, as our increased investments in business recovery staffing drove an increase in operating expenses to exceed gross profit dollar growth from increased case volume. SYGMA operated at a loss in the second quarter and first 26 weeks of fiscal 2022, primarily due to ~~higher than expected labor costs, which will be offset~~the increase in ~~future quarters by actions already taken.~~case volumes and fee increases to customers.

For the operations that are grouped within Other, operating income increased ~~$1.2 million and $7.7~~$5.1 million in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021,~~2022, primarily due to the recovery of our hospitality business, Guest Worldwide. ~~This~~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 ~~second~~first quarter of fiscal ~~2022~~2023 increased ~~$26.5~~$59.5 million, or 13.0%, as compared to the second quarter of fiscal 2021, primarily due to an increase in self-insurance reserves and investments for our Recipe for Growth strategy. These expenses in the first 26 weeks of fiscal 2022 increased $55.5 million, or 14.6%28.8%, as compared to the first ~~26 weeks~~quarter of fiscal ~~2021,~~2022, primarily due to ~~acquisition and due diligence costs,~~ investments for our Recipe for Growth strategy, higher associate-related 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 ~~$14.0 million and $41.7~~$6.1 million in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022,~~2023, as compared to ~~$12.0 million and $24.0~~$27.7 million in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2021, respectively.~~2022. Certain Items impacting the ~~second~~first quarter ~~and~~of fiscal 2023 were primarily expenses associated with our business technology transformation initiatives. Certain Items impacting the first ~~26 weeks~~quarter of fiscal 2022 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. ~~Certain Items impacting the second quarter and first 26 weeks of fiscal 2021 were primarily expenses associated with our business technology transformation initiatives.~~

Interest Expense

Interest expense ~~increased $96.4 million and $77.9~~decreased $4.1 million for the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second quarter and~~ first ~~26 weeks of fiscal 2021, primarily attributable to a loss on extinguishment of debt of~~ ~~$115.6 million~~ ~~for the redemption of $1.25 billion in combined aggregate principal amount of our senior notes in the second~~ quarter of fiscal 2022, ~~partially offset by~~primarily attributable to lower debt ~~volume.~~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 plan asset values as compared to fiscal 2022.

Net Earnings

Net earnings increased ~~148.8% and 91.9%~~23.2% in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~2023, as compared to the ~~second~~first quarter ~~and first 26 weeks~~ 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 12, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Adjusted net earnings, excluding Certain Items, increased ~~240.0% and 178.4%~~14.6% in the ~~second~~first quarter ~~and first 26 weeks~~ of fiscal ~~2022, respectively,~~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 ~~second~~first quarter of fiscal ~~2022~~2023 were ~~$0.33,~~$0.92, a ~~153.8%~~24.3% increase from the comparable prior year amount of ~~$0.13~~$0.74 per share. Diluted earnings per share in the ~~second~~first quarter of fiscal ~~2022~~2023 were ~~$0.33,~~$0.91, a ~~153.8%~~24.7% increase from the comparable prior year period amount of $0.13 per share. Adjusted diluted earnings per share, excluding Certain Items, in the second quarter of fiscal 2022 were $0.57, a 235.3% increase from the comparable prior year amount of $0.17 per share.

Basic earnings per share in the first 26 weeks of fiscal 2022 were $1.07, a 91.1% increase from the comparable prior year amount of $0.51 per share. Diluted earnings per share in the first 26 weeks of fiscal 2022 were $1.06, an 89.3% increase from the comparable prior year period amount of $0.50$0.73 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first ~~26 weeks~~quarter of fiscal ~~2022~~2023 were ~~$1.40,~~$0.97, a ~~174.5%~~16.9% increase from the comparable prior year amount of ~~$0.89~~$0.83 per share.

3827

Non-GAAP Reconciliations

~~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; (2) acquisition-related costs consisting of: ~~(1)~~(a) intangible amortization expense and ~~(2)~~(b) acquisition costs and due diligence costs related to our acquisitions; and (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. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance related to COVID-related personal protection equipment inventory. Our results for fiscal 2022 were also impacted by ~~debt extinguishment costs and the~~an increase in reserves for uncertain tax positions. ~~Our results for the first 26 weeks of fiscal 2021 were also impacted by a loss on the sale of a business.~~

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.

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.

Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs 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 Jan. 1, 2022 13-Week Period Ended Dec. 26, 2020 Change in Dollars % Change
Sales (GAAP) $ 16,320,203 $ 11,558,982 $ 4,761,221 41.2 %
Impact of currency fluctuations (1)
(36,077) — (36,077) (0.3)
Comparable sales using a constant currency basis (Non-GAAP) $ 16,284,126 $ 11,558,982 $ 4,725,144 40.9 %
Gross profit (GAAP) $ 2,891,150 $ 2,098,458 $ 792,692 37.8 %
Impact of currency fluctuations (1)
(4,687) — (4,687) (0.2)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 2,886,463 $ 2,098,458 $ 788,005 37.6 %
Gross margin (GAAP) 17.72 % 18.15 % -44 bps
Impact of currency fluctuations (1)
0.01 — 1 bps
Comparable Gross margin using a constant currency basis (Non-GAAP) 17.73 % 18.15 % -43 bps
Operating expenses (GAAP) $ 2,446,241 $ 1,886,396 $ 559,845 29.7 %
Impact of restructuring and transformational project costs (2)
(23,469) (34,160) 10,691 31.3
Impact of acquisition-related costs (3)
(33,732) (18,125) (15,607) (86.1)
Impact of bad debt reserve adjustments (4)
6,438 30,271 (23,833) (78.7)
Operating expenses adjusted for Certain Items (Non-GAAP) 2,395,478 1,864,382 531,096 28.5
Impact of currency fluctuations (1)
(3,433) — (3,433) (0.2)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 2,392,045 $ 1,864,382 $ 527,663 28.3 %
Operating income (GAAP) $ 444,909 $ 212,062 $ 232,847 109.8 %
Impact of restructuring and transformational project costs (2)
23,469 34,160 (10,691) (31.3)
Impact of acquisition-related costs (3)
33,732 18,125 15,607 86.1
Impact of bad debt reserve adjustments (4)
(6,438) (30,271) 23,833 78.7
Operating income adjusted for Certain Items (Non-GAAP) 495,672 234,076 261,596 111.8 %
Impact of currency fluctuations (1)
(1,255) — (1,255) (0.5)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 494,417 $ 234,076 $ 260,341 111.2 %
Interest expense (GAAP) $ 242,899 $ 146,498 $ 96,401 65.8 %
Impact of loss on extinguishment of debt (115,603) — (115,603) NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 127,296 $ 146,498 $ (19,202) (13.1) %
Net earnings (GAAP) $ 167,441 $ 67,289 $ 100,152 148.8 %
Impact of restructuring and transformational project costs (2)
23,469 34,160 (10,691) (31.3)
Impact of acquisition-related costs (3)
33,732 18,125 15,607 86.1
Impact of bad debt reserve adjustments (4)
(6,438) (30,271) 23,833 78.7
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Tax impact of restructuring and transformational project costs (5)
(5,897) (10,666) 4,769 44.7
Tax impact of acquisition-related costs (5)
(8,475) (5,850) (2,625) (44.9)
Tax impact of bad debt reserves adjustments (5)
1,617 13,071 (11,454) (87.6)
Tax impact of loss on extinguishment of debt (5)
(29,111) — (29,111) NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 291,941 $ 85,858 $ 206,083 240.0 %
Diluted earnings per share (GAAP) $ 0.33 $ 0.13 $ 0.20 153.8 %

4028

Impact of restructuring and transformational project costs (2)
0.05 0.07 (0.02) (28.6)
Impact of acquisition-related costs (3)
0.07 0.04 0.03 75.0
Impact of bad debt reserve adjustments (4)
(0.01) (0.06) 0.05 83.3
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Tax impact of restructuring and transformational project costs (5)
(0.01) (0.02) 0.01 50.0
Tax impact of acquisition-related costs (5)
(0.02) (0.01) (0.01) (100.0)
Tax impact of bad debt reserves adjustments (5)
— 0.03 (0.03) NM
Tax impact of loss on extinguishment of debt (5)
(0.06) — (0.06) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6)
$ 0.57 $ 0.17 $ 0.40 235.3 %


	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. 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 ~~2022~~2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(3)			Fiscal 2023 includes ~~$12~~$4 million related to restructuring, severance, and facility closure charges and ~~$12~~$8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal ~~2021~~2022 includes ~~$22 million related to restructuring charges and $12~~$16 million related to various transformation initiative costs, primarily consisting of changes to our business technology ~~strategy.~~strategy and $8 million related to restructuring charges.
~~(3)~~(4)			Fiscal ~~2022~~2023 includes ~~$27~~$26 million of intangible amortization expense and $7$4 million in acquisition and due diligence costs. Fiscal ~~2021 represents~~2022 includes $22 million of intangible amortization ~~expense.~~expense and $14 million in acquisition and due diligence costs, which are primarily included in Global Support Center expenses.
~~(4)~~(5)			Fiscal ~~2022~~2023 and fiscal ~~2021~~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)~~(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 Jan. 1, 2022 13-Week Period Ended Dec. 29, 2018 Change in Dollars % Change
Sales (GAAP) $ 16,320,203 $ 14,765,707 $ 1,554,496 10.5 %
Gross profit (GAAP) 2,891,150 2,771,712 119,438 4.3
Gross margin (GAAP) 17.72 % 18.77 % -106 bps
Operating expenses (GAAP) $ 2,446,241 $ 2,319,817 $ 126,424 5.4 %
Impact of restructuring and transformational project costs (1)
(23,469) (134,436) 110,967 82.5
Impact of acquisition-related costs (2)
(33,732) (17,008) (16,724) (98.3)
Impact of bad debt reserve adjustments (3)
6,438 — 6,438 NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $ 2,395,478 $ 2,168,373 $ 227,105 10.5 %
Operating income (GAAP) $ 444,909 $ 451,895 $ (6,986) 1.5 %
Impact of restructuring and transformational project costs (1)
23,469 134,436 (110,967) (82.5)
Impact of acquisition-related costs (2)
33,732 17,008 16,724 98.3
Impact of bad debt reserve adjustments (3)
(6,438) — (6,438) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 495,672 $ 603,339 $ (107,667) (17.8) %
Interest expense (GAAP) $ 242,899 $ 87,113 $ 155,786 65.8 %
Impact of loss on extinguishment of debt (115,603) — (115,603) NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 127,296 $ 87,113 $ (19,202) (13.1) %
Net earnings (GAAP) $ 167,441 $ 267,380 $ (99,939) (37.4) %
Impact of restructuring and transformational project costs (1)
23,469 134,436 (110,967) (82.5)
Impact of acquisition-related costs (2)
33,732 17,008 16,724 98.3
Impact of bad debt reserve adjustments (3)
(6,438) — (6,438) NM
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Tax impact of restructuring and transformational project costs (4)
(5,897) (34,886) 28,989 83.1
Tax impact of acquisition-related costs (4)
(8,475) (5,611) (2,864) (51.0)
Tax impact of bad debt reserves adjustments (4)
1,617 — 1,617 NM
Tax impact of loss on extinguishment of debt (4)
(29,111) — (29,111) NM
Impact of adjustments to uncertain tax positions — 15,154 (15,154) NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 291,941 $ 393,481 $ (101,540) (25.8) %
Diluted earnings per share (GAAP) $ 0.33 $ 0.51 $ (0.18) (35.3) %
Impact of restructuring and transformational project costs (1)
0.05 0.26 (0.21) (80.8)
Impact of acquisition-related costs (2)
0.07 0.03 0.04 133.3
Impact of bad debt reserve adjustments (3)
(0.01) — (0.01) NM
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Tax impact of restructuring and transformational project costs (4)
(0.01) (0.07) 0.06 85.7
Tax impact of acquisition-related costs (4)
(0.02) (0.01) (0.01) (100.0)
Tax impact of bad debt reserves adjustments (4)
— — — NM
Tax impact of loss on extinguishment of debt (4)
(0.06) — (0.06) NM
Impact of adjustments to uncertain tax positions — 0.03 (0.03) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)
$ 0.57 $ 0.75 $ (0.18) (24.0) %

4230


~~(1)~~			Fiscal 2022 includes $12 million related to restructuring, severance, and facility closure charges and $12 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2019 includes $53 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy, of which $17 million relates to accelerated depreciation related to software that is being replaced, and $81 million related to severance, restructuring and facility closure charges in Europe and Canada, of which $55 million relates to our France restructuring as part of our integration of Brake France and Davigel into Sysco France.
~~(2)~~			~~Fiscal 2022 includes $27 million of intangible amortization expense and $7 million in acquisition and due diligence costs. Fiscal 2019 includes intangible amortization expense.~~
~~(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. 1, 2022			13-Week Period Ended Oct. 2, 2021			Change in Dollars		%/bps Change
U.S. FOODSERVICE OPERATIONS












Operating expenses (GAAP)	$	1,708,515		$	1,387,631		$	320,884	23.1	%
Impact of restructuring and transformational project costs	48			(3)			51		NM
Impact of acquisition-related costs (1)	(12,585)			(4,654)			(7,931)		NM
Impact of bad debt reserve adjustments (2)	2,592			6,420			(3,828)		(59.6)

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



Operating income (GAAP)	$	903,828		$	797,523		$	106,305	13.3	%
Impact of restructuring and transformational project costs	(48)			3			(51)		NM
Impact of acquisition-related costs (1)	12,585			4,654			7,931		NM
Impact of bad debt reserve adjustments (2)	(2,592)			(6,420)			3,828		59.6

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



INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	3,283,735		$	2,895,247		$	388,488	13.4	%


Impact of currency fluctuations (3)	315,451			—			315,451		10.9
Comparable sales using a constant currency basis (Non-GAAP)	$	3,599,186		$	2,895,247		$	703,939	24.3	%

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







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

Operating expenses (GAAP)	$	562,057		$	552,458		$	9,599	1.7	%
Impact of restructuring and transformational project costs (4)	(3,907)			(9,426)			5,519		58.6
Impact of acquisition-related costs (5)	(16,014)			(18,656)			2,642		14.2
Impact of bad debt reserve adjustments (2)	—			641			(641)		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	542,136			525,017			17,119		3.3


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)	$	606,843		$	525,017		$	81,826	15.6	%

Operating income (GAAP)	$	87,208		$	36,676		$	50,532	NM
Impact of restructuring and transformational project costs (4)	3,907			9,426			(5,519)		(58.6)
Impact of acquisition-related costs (5)	16,014			18,656			(2,642)		(14.2)
Impact of bad debt reserve adjustments (2)	—			(641)			641		NM

Operating income adjusted for Certain Items (Non-GAAP)	107,129			64,117			43,012		67.1


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)	$	114,182		$	64,117		$	50,065	78.1	%

SYGMA












Operating expenses (GAAP)	$	148,422		$	140,604		$	7,818	5.6	%








Operating (loss) income (GAAP)	5,471			(2,447)			7,918		NM








OTHER












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








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

4331

26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 26, 2020 Change in Dollars % Change
Sales (GAAP) $ 32,776,749 $ 23,336,361 $ 9,440,388 40.5 %
Impact of currency fluctuations (1)
(160,803) — (160,803) (0.7)
Comparable sales using a constant currency basis (Non-GAAP) $ 32,615,946 $ 23,336,361 $ 9,279,585 39.8 %
Gross profit (GAAP) $ 5,862,858 $ 4,318,303 $ 1,544,555 35.8 %
Impact of currency fluctuations (1)
(28,551) — (28,551) (0.7)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 5,834,307 $ 4,318,303 $ 1,516,004 35.1 %
Gross margin (GAAP) 17.89 % 18.50 % -62 bps
Impact of currency fluctuations (1)
— — 0 bps
Comparable Gross margin using a constant currency basis (Non-GAAP) 17.89 % 18.50 % -62 bps
Operating expenses (GAAP) $ 4,786,267 $ 3,686,662 $ 1,099,605 29.8 %
Impact of restructuring and transformational project costs (2)
(47,980) (60,124) 12,144 20.2
Impact of acquisition-related costs (3)
(69,658) (35,880) (33,778) (94.1)
Impact of bad debt reserve adjustments (4)
13,499 128,899 (115,400) (89.5)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 4,682,128 $ 3,719,557 $ 962,571 25.9 %
Impact of currency fluctuations (1)
(25,184) — (25,184) (0.7)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 4,656,944 $ 3,719,557 $ 937,387 25.2 %
Operating income (GAAP) $ 1,076,591 $ 631,641 $ 444,950 70.4 %
Impact of restructuring and transformational project costs (2)
47,980 60,124 (12,144) (20.2)
Impact of acquisition-related costs (3)
69,658 35,880 33,778 94.1
Impact of bad debt reserve adjustments (4)
(13,499) (128,899) 115,400 89.5
Operating income adjusted for Certain Items (Non-GAAP) $ 1,180,730 $ 598,746 $ 581,984 97.2 %
Impact of currency fluctuations (1)
(3,367) — (3,367) 0.6
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,177,363 $ 598,746 $ 578,617 96.6 %
Interest expense (GAAP) $ 371,113 $ 293,215 $ 77,898 26.6 %
Impact of loss on extinguishment of debt (115,603) — (115,603) NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 255,510 $ 293,215 $ (37,705) (12.9) %
Other income (GAAP) $ (13,928) $ (1,432) $ (12,496) NM
Impact of loss on sale of business — (12,043) 12,043 NM
Other income adjusted for Certain Items (Non-GAAP) $ (13,928) $ (13,475) $ (453) (3.4) %
Net earnings (GAAP) $ 545,454 $ 284,189 $ 261,265 91.9 %
Impact of restructuring and transformational project costs (2)
47,980 60,124 (12,144) (20.2)
Impact of acquisition-related costs (3)
69,658 35,880 33,778 94.1
Impact of bad debt reserve adjustments (4)
(13,499) (128,899) 115,400 89.5
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Impact of loss on sale of business — 12,043 (12,043) NM

Tax impact of restructuring and transformational project costs (5)
(12,082) (16,586) 4,504 27.2
Tax impact of acquisition-related costs (5)
(17,541) (9,898) (7,643) (77.2)
Tax impact of bad debt reserves adjustments (5)
3,399 35,559 (32,160) (90.4)
Tax impact of loss on extinguishment of debt (5)
(29,111) — (29,111) NM
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 — (5,548) 5,548 NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 721,861 $ 259,311 $ 462,550 178.4 %
Diluted earnings per share (GAAP) $ 1.06 $ 0.56 $ 0.50 89.3 %
Impact of restructuring and transformational project costs (2)
0.09 0.12 (0.03) (25.0)
Impact of acquisition-related costs (3)
0.14 0.07 0.07 100.0
Impact of bad debt reserve adjustments (4)
(0.03) (0.25) 0.22 88.0
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Impact of loss on sale of business — 0.02 (0.02) NM
Tax impact of restructuring and transformational project costs (5)
(0.02) (0.03) 0.01 33.3
Tax impact of acquisition-related costs (5)
(0.03) (0.02) (0.01) (50.0)
Tax impact of bad debt reserves adjustments (5)
0.01 0.07 (0.06) (85.7)
Tax impact of loss on extinguishment of debt (5)
(0.06) — (0.06) 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 — (0.01) 0.01 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6)
$ 1.40 $ 0.51 $ 0.89 174.5 %


~~(1)~~			~~Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.~~
~~(2)~~			Fiscal 2022 includes $28 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $20 million related to restructuring charges, severance and facility closure charges. Fiscal 2021 includes $33 million related to restructuring, severance and facility closure charges, and $27 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
~~(3)~~			~~Fiscal 2022 includes $48 million of intangible amortization expense and $21 million in acquisition and due diligence costs. Fiscal 2021 represents intangible amortization expense.~~
~~(4)~~			~~Fiscal 2022 and fiscal 2021 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.~~
~~(5)~~			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.
~~(6)~~			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.~~

26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 29, 2018 Change in Dollars % Change
Sales (GAAP) $ 32,776,749 $ 29,980,986 $ 2,795,763 9.3 %
Gross profit (GAAP) 5,862,858 5,675,497 187,361 3.3
Gross margin (GAAP) 17.89 % 18.93 % -104 bps
Operating expenses (GAAP) $ 4,786,267 $ 4,595,462 $ 190,805 4.2 %
Impact of restructuring and transformational project costs (1)
(47,980) (175,339) 127,359 72.6
Impact of acquisition-related costs (2)
(69,658) (39,645) (30,013) (75.7)
Impact of bad debt reserve adjustments (3)
13,499 — 13,499 NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $ 4,682,128 $ 4,380,478 $ 301,650 6.9 %
Operating income (GAAP) $ 1,076,591 $ 1,080,035 $ (3,444) (0.3) %
Impact of restructuring and transformational project costs (1)
47,980 175,339 (127,359) (72.6)
Impact of acquisition-related costs (2)
69,658 39,645 30,013 75.7
Impact of bad debt reserve adjustments (3)
(13,499) — (13,499) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 1,180,730 $ 1,295,019 $ (114,289) (8.8) %
Interest expense (GAAP) $ 371,113 $ 176,129 $ 194,984 110.7 %
Impact of loss on extinguishment of debt (115,603) — (115,603) NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 255,510 $ 176,129 $ 79,381 45.1 %
Net earnings (GAAP) $ 545,454 $ 698,422 $ (152,968) (21.9) %
Impact of restructuring and transformational project costs (1)
47,980 175,339 (127,359) (72.6)
Impact of acquisition-related costs (2)
69,658 39,645 30,013 75.7
Impact of bad debt reserve adjustments (3)
(13,499) — (13,499) NM
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Tax impact of restructuring and transformational project costs (4)
(12,082) (45,560) 33,478 73.5
Tax impact of acquisition-related costs (4)
(17,541) (10,302) (7,239) (70.3)
Tax impact of bad debt reserves adjustments (4)
3,399 — 3,399 NM
Tax impact of loss on extinguishment of debt (4)
(29,111) — (29,111) NM
Impact of adjustments to uncertain tax positions 12,000 15,154 (3,154) (20.8)
Net earnings adjusted for Certain Items (Non-GAAP) $ 721,861 $ 872,698 $ (150,837) (17.3) %
Diluted earnings per share (GAAP) $ 1.06 $ 1.33 $ (0.27) (20.3) %
Impact of restructuring and transformational project costs (1)
0.09 0.33 (0.24) (72.7)
Impact of acquisition-related costs (2)
0.14 0.08 0.06 75.0
Impact of bad debt reserve adjustments (3)
(0.03) — (0.03) NM
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Tax impact of restructuring and transformational project costs (4)
(0.02) (0.09) 0.07 77.8
Tax impact of acquisition-related costs (4)
(0.03) (0.02) (0.01) (50.0)
Tax impact of bad debt reserves adjustments (4)
0.01 — 0.01 NM
Tax impact of loss on extinguishment of debt (4)
(0.06) — (0.06) NM
Impact of adjustments to uncertain tax positions 0.02 0.03 (0.01) (33.3)
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)
$ 1.40 $ 1.66 $ (0.26) (15.7) %


~~(1)~~			Fiscal 2022 includes $28 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $20 million related to restructuring charges, severance and facility closure charges. Fiscal 2019 includes $79 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy, of which $17 million relates to accelerated depreciation related to software that is being replaced, and $96 million related to severance, restructuring and facility closure charges in Europe and Canada, of which $56 million relates to our France restructuring as part of our integration of Brake France and Davigel into Sysco France.
~~(2)~~			Fiscal 2022 includes $48 million of intangible amortization expense and $21 million in acquisition and due diligence costs. Fiscal 2019 includes $39 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 Jan. 1, 2022 13-Week Period Ended Dec. 26, 2020 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 1,462,456 $ 1,074,071 $ 388,385 36.2 %
Impact of restructuring and transformational project costs (16) (1,784) 1,768 99.1
Impact of acquisition-related costs (1)
(13,131) — (13,131) NM
Impact of bad debt reserve adjustments (2)
5,249 15,239 (9,990) (65.6)
Impact of goodwill impairment — — — NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 1,454,558 $ 1,087,526 $ 367,032 33.7 %
Operating income (GAAP) $ 676,822 $ 485,251 $ 191,571 39.5 %
Impact of restructuring and transformational project costs 16 1,784 (1,768) (99.1)
Impact of acquisition-related costs (1)
13,131 — 13,131 NM
Impact of bad debt reserve adjustments (2)
(5,249) (15,239) 9,990 65.6
Operating income adjusted for Certain Items (Non-GAAP) $ 684,720 $ 471,796 $ 212,924 45.1 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 2,806,272 $ 1,967,789 $ 838,483 42.6 %
Impact of currency fluctuations (3)
(34,061) — (34,061) (1.7)
Comparable sales using a constant currency basis (Non-GAAP) $ 2,772,211 $ 1,967,789 $ 804,422 40.9 %
Gross profit (GAAP) $ 565,931 $ 373,840 $ 192,091 51.4 %
Impact of currency fluctuations (3)
(4,033) — (4,033) (1.1)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 561,898 $ 373,840 $ 188,058 50.3 %
Gross margin (GAAP) 20.17 % 19.00 % 116 bps
Impact of currency fluctuations (3)
(0.10) — -10 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 20.27 % 19.00 % 127 bps
Operating expenses (GAAP) $ 555,186 $ 453,789 $ 101,397 22.3 %
Impact of restructuring and transformational project costs (4)
(11,621) (20,405) 8,784 43.0
Impact of acquisition-related costs (5)
(18,475) (18,125) (350) (1.9)
Impact of bad debt reserve adjustments (2)
1,191 13,797 (12,606) (91.4)
Operating expenses adjusted for Certain Items (Non-GAAP) 526,281 429,056 97,225 22.7
Impact of currency fluctuations (3)
(3,194) — (3,194) (0.7)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 523,087 $ 429,056 $ 94,031 21.9 %
Operating income (loss) (GAAP) $ 10,745 $ (79,949) $ 90,694 113.4 %
Impact of restructuring and transformational project costs (4)
11,621 20,405 (8,784) (43.0)
Impact of acquisition-related costs (5)
18,475 18,125 350 1.9
Impact of bad debt reserve adjustments (2)
(1,191) (13,797) 12,606 91.4
Operating income (loss) adjusted for Certain Items (Non-GAAP) 39,650 (55,216) 94,866 171.8
Impact of currency fluctuations (3)
(839) — (839) (1.5)
Comparable operating income (loss) adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 38,811 $ (55,216) $ 94,027 170.3 %
SYGMA
Operating expenses (GAAP) $ 143,681 $ 117,971 $ 25,710 21.8 %
Impact of restructuring and transformational project costs — 6 (6) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 143,681 $ 117,977 $ 25,704 21.8 %

Operating (loss) income (GAAP) $ (6,729) $ 11,328 $ (18,057) (159.4) %
Impact of restructuring and transformational project costs — (6) 6 NM
Operating (loss) income adjusted for Certain Items (Non-GAAP) $ (6,729) $ 11,322 $ (18,051) (159.4) %
OTHER
Operating expenses (GAAP) $ 54,626 $ 36,785 $ 17,841 48.5 %
Impact of bad debt reserve adjustments (2)
(2) 1,235 (1,237) -100.2
Operating expenses adjusted for Certain Items (Non-GAAP) $ 54,624 $ 38,020 $ 16,604 43.7 %
Operating income (loss) (GAAP) $ 183 $ (1,018) $ 1,201 118.0 %
Impact of bad debt reserve adjustments (2)
2 (1,235) 1,237 100.2
Operating income (loss) adjusted for Certain Items (Non-GAAP) $ 185 $ (2,253) $ 2,438 108.2 %
GLOBAL SUPPORT CENTER
Operating expenses (GAAP) $ 230,292 $ 203,780 $ 26,512 13.0 %
Impact of restructuring and transformational project costs (6)
(11,832) (11,977) 145 1.2
Impact of acquisition-related costs (7)
(2,126) — (2,126) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 216,334 $ 191,803 $ 24,531 12.8 %
Operating loss (GAAP) $ (236,112) $ (203,550) $ (32,562) (16.0) %
Impact of restructuring and transformational project costs (6)
11,832 11,977 (145) (1.2)
Impact of acquisition-related costs (7)
2,126 — 2,126 NM
Operating loss adjusted for Certain Items (Non-GAAP) $ (222,154) $ (191,573) $ (30,581) (16.0) %


	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~~include intangible amortization expense and acquisition costs.
(2)			Fiscal ~~2022~~2023 and fiscal ~~2021~~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.

U.S. FOODSERVICE OPERATIONS 26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 26, 2020 Change in Dollars % Change
Operating expenses (GAAP) $ 2,850,087 $ 2,085,369 $ 764,718 36.7 %
Impact of restructuring and transformational project costs (19) (2,724) 2,705 99.3
Impact of acquisition-related costs (1)
(17,785) — (17,785) NM
Impact of bad debt reserve adjustments (2)
11,669 101,556 (89,887) (88.5)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 2,843,952 $ 2,184,201 $ 659,751 30.2 %
Operating income (GAAP) $ 1,474,345 $ 1,073,660 $ 400,685 37.3 %
Impact of restructuring and transformational project costs 19 2,724 (2,705) (99.3)
Impact of acquisition-related costs (1)
17,785 — 17,785 NM
Impact of bad debt reserve adjustments (2)
(11,669) (101,556) 89,887 88.5
Operating income adjusted for Certain Items (Non-GAAP) $ 1,480,480 $ 974,828 $ 505,652 51.9 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 5,701,519 $ 4,131,482 $ 1,570,037 38.0 %
Impact of currency fluctuations (3)
(155,456) — (155,456) (3.8)
Comparable sales using a constant currency basis (Non-GAAP) $ 5,546,063 $ 4,131,482 $ 1,414,581 34.2 %
Gross profit (GAAP) $ 1,155,065 $ 824,238 $ 330,827 40.1 %
Impact of currency fluctuations (3)
(26,767) — (26,767) (3.2)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 1,128,298 $ 824,238 $ 304,060 36.9 %
Gross margin (GAAP) 20.26 % 19.95 % 31 bps
Impact of currency fluctuations (3)
(0.09) — 9 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 20.34 % 19.95 % 39 bps
Operating expenses (GAAP) $ 1,107,644 $ 904,724 $ 202,920 22.4 %
Impact of restructuring and transformational project costs (4)
(21,047) (33,398) 12,351 37.0
Impact of acquisition-related costs (5)
(37,131) (35,880) (1,251) (3.5)
Impact of bad debt reserve adjustments (2)
1,831 25,227 (23,396) (92.7)
Operating expenses adjusted for Certain Items (Non-GAAP) 1,051,297 860,673 190,624 22.1
Impact of currency fluctuations (3)
(24,268) — (24,268) (2.8)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,027,029 $ 860,673 $ 166,356 19.3 %
Operating loss (GAAP) $ 47,421 $ (80,486) $ 127,907 158.9 %
Impact of restructuring and transformational project costs (4)
21,047 33,398 (12,351) (37.0)
Impact of acquisition-related costs (5)
37,131 35,880 1,251 3.5
Impact of bad debt reserve adjustments (2)
(1,831) (25,227) 23,396 92.7
Operating income (loss) adjusted for Certain Items (Non-GAAP) 103,768 (36,435) 140,203 NM
Impact of currency fluctuations (3)
(2,499) — (2,499) NM
Comparable operating income (loss) adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 101,269 $ (36,435) $ 137,704 NM
SYGMA

Operating expenses (GAAP) $ 284,285 $ 237,820 $ 46,465 19.5 %
Impact of restructuring and transformational project costs — (7) 7 NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 284,285 $ 237,813 $ 46,472 19.5 %
Operating (loss) income (GAAP) $ (9,176) $ 23,020 $ (32,196) (139.9) %
Impact of restructuring and transformational project costs — 7 (7) NM
Operating (loss) income adjusted for Certain Items (Non-GAAP) $ (9,176) $ 23,027 $ (32,203) (139.8) %
OTHER
Operating expenses (GAAP) $ 107,191 $ 77,220 $ 29,971 38.8 %
Impact of bad debt reserve adjustments (2)
(1) 2,116 (2,117) (100.0)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 107,190 $ 79,336 $ 27,854 35.1 %
Operating income (loss) (GAAP) $ 6,639 $ (1,023) $ 7,662 NM
Impact of bad debt reserve adjustments (2)
1 (2,116) 2,117 100.0
Operating income (loss) adjusted for Certain Items (Non-GAAP) $ 6,640 $ (3,139) $ 9,779 NM
GLOBAL SUPPORT CENTER
Operating expenses (GAAP) $ 437,060 $ 381,529 $ 55,531 14.6 %
Impact of restructuring and transformational project costs (6)
(26,914) (23,995) (2,919) (12.2)
Impact of acquisition-related costs (7)
(14,742) — (14,742) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 395,404 $ 357,534 $ 37,870 10.6 %
Operating loss (GAAP) $ (442,638) $ (383,530) $ (59,108) (15.4) %
Impact of restructuring and transformational project costs (6)
26,914 23,995 2,919 12.2
Impact of acquisition-related costs (7)
14,742 — 14,742 NM
Operating loss adjusted for Certain Items (Non-GAAP) $ (400,982) $ (359,535) $ (41,447) (11.5) %


~~(1)~~			~~Fiscal 2022 includes intangible amortization expense and acquisition costs.~~
~~(2)~~			~~Fiscal 2022 and fiscal 2021 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, severance and facility closure costs primarily in Europe.~~
~~(5)~~			~~Represents intangible amortization expense.~~
~~(6)~~			~~Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.~~
~~(7)~~			~~Represents due diligence costs.~~

			~~NM represents that the percentage change is not meaningful.~~

5132

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 Jan. 1, 2022		13-Week Period Ended Dec. 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)	$	167,441	$	67,289	$	100,152	148.8	%	Net earnings (GAAP)	$	465,568	$	378,013	$	87,555	23.2	%
Interest (GAAP)	Interest (GAAP)	242,899		146,498		96,401		65.8		Interest (GAAP)	124,150		128,214		(4,064)		(3.2)
Income taxes (GAAP)	Income taxes (GAAP)	45,245		13,831		31,414		227.1		Income taxes (GAAP)	129,334		128,707		627		0.5
Depreciation and amortization (GAAP)	Depreciation and amortization (GAAP)	191,297		184,811		6,486		3.5		Depreciation and amortization (GAAP)	188,924		186,466		2,458		1.3
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	646,882	$	412,429	$	234,453	56.8	%	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)		23,193		29,674		(6,481)		(21.8)
Impact of acquisition-related costs (2)		7,085		—		7,085		NM
Impact of bad debt reserve adjustments (3)		(6,438)		(30,271)		23,833		78.7
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

EBITDA adjusted for Certain Items (Non-GAAP) (4)		$	670,722	$	411,832	$	258,890	62.9	%
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)			Fiscal ~~2022~~2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(2)			Fiscal 2023 and fiscal ~~2021 includes~~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 fiscal ~~2021~~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 $1 million and $3 million for fiscal 2022 and fiscal 2021, respectively, or non-cash stock compensation expense of $31 million and $20 million for fiscal 2022 and fiscal 2021, respectively.
			~~NM represents that the percentage change is not meaningful.~~

13-Week Period Ended Jan. 1, 2022 13-Week Period Ended Dec. 29, 2018 Change in Dollars % Change
Net earnings (GAAP) $ 167,441 $ 267,380 $ (99,939) (37.4) %
Interest (GAAP) 242,899 87,113 155,786 178.8
Income taxes (GAAP) 45,245 87,205 (41,960) (48.1)
Depreciation and amortization (GAAP) 191,297 204,786 (13,489) (6.6)
EBITDA (Non-GAAP) $ 646,882 $ 646,484 $ 398 0.1 %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
23,193 106,881 (83,688) (78.3)
Impact of acquisition-related costs (2)
7,085 (1,250) 8,335 NM
Impact of bad debt reserve adjustments (3)
(6,438) — (6,438) NM
EBITDA adjusted for Certain Items (Non-GAAP) (4)
$ 670,722 $ 752,115 $ (81,393) (10.8) %


~~(1)~~			Fiscal 2022 includes 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. Fiscal 2019 includes $81 million related to severance, restructuring and facility closure charges, as well as various transformation initiative costs, 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)~~			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $1 million and $1 million for fiscal 2022 and fiscal 2019, respectively, or non-cash stock compensation expense of $31 million and $25 million in fiscal 2022 and fiscal 2019, respectively.
			~~NM represents that the percentage change is not meaningful.~~

26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 26, 2020 Change in Dollars % Change
Net earnings (GAAP) $ 545,454 $ 284,189 $ 261,265 91.9 %
Interest (GAAP) 371,113 293,215 77,898 26.6
Income taxes (GAAP) 173,952 55,669 118,283 212.5
Depreciation and amortization (GAAP) 377,763 365,332 12,431 3.4
EBITDA (Non-GAAP) $ 1,468,282 $ 998,405 $ 469,877 47.1 %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
47,440 54,951 (7,511) (13.7)
Impact of acquisition-related costs (2)
21,306 — 21,306 NM
Impact of bad debt reserve adjustments (3)
(13,499) (128,899) 115,400 (89.5)
Impact of loss on sale of business — 12,043 (12,043) NM
EBITDA adjusted for Certain Items (Non-GAAP) (4) $ 1,523,529 $ 936,500 $ 587,029 62.7 %


~~(1)~~			~~Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.~~
~~(2)~~			~~Fiscal 2022 includes acquisition and due diligence costs.~~
~~(3)~~			~~Fiscal 2022 and fiscal 2021 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 $3 million and $7 million or non-cash stock compensation expense of $60 million and $46 million for fiscal 2022 and fiscal 2021, respectively.
			~~NM represents that the percentage change is not meaningful.~~

26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 29, 2018 Change in Dollars % Change
Net earnings (GAAP) $ 545,454 $ 698,422 $ (152,968) (21.9) %
Interest (GAAP) 371,113 176,129 194,984 110.7
Income taxes (GAAP) 173,952 194,155 (20,203) (10.4)
Depreciation and amortization (GAAP) 377,763 392,413 (14,650) (3.7)
EBITDA (Non-GAAP) $ 1,468,282 $ 1,461,119 $ 7,163 0.5 %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
47,440 147,784 (100,344) (67.9)
Impact of acquisition-related costs (2)
21,306 805 20,501 NM
Impact of bad debt reserve adjustments (3)
(13,499) — (13,499) NM
EBITDA adjusted for Certain Items (Non-GAAP) (4)
$ 1,523,529 $ 1,609,708 $ (86,179) (5.4) %


~~(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 $96 million related to severance, restructuring and facility closure charges as well as various transformation initiative costs, 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 $3 million and $2 million or non-cash stock compensation expense of ~~$60~~$27 million and ~~$54~~$29 million ~~for~~in fiscal ~~2022~~2023 and fiscal ~~2019,~~2022, respectively.
			NM represents that the percentage change is not meaningful.

5433

Liquidity and Capital Resources

Highlights

As of ~~January~~October 1, 2022, we had ~~$1.4 billion~~$437.7 million in cash and cash equivalents. We produced positive free cash flow in a period of higher working capital investments, ~~one-time and short-term costs related to the business recovery~~capital expenditures and investments towards our Recipe for Growth strategy. Our results for the first 26 weeks of fiscal 2022 also reflect incremental progress against our capital allocation priorities, as we were able to refinance debt at more attractive interest rates with later maturities in the second quarter. 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 2613 weeks of fiscal ~~2022~~2023 to the first 2613 weeks of fiscal ~~2021~~2022 are provided.

26-Week Period Ended Jan. 1, 2022 26-Week Period Ended Dec. 26, 2020
(In thousands)
Net cash provided by operating activities (GAAP) $ 377,047 $ 936,678
Additions to plant and equipment (181,374) (163,944)
Proceeds from sales of plant and equipment 5,450 15,510
Free Cash Flow (Non-GAAP) (1)
$ 201,123 $ 788,244
Acquisition of businesses, net of cash acquired $ (769,658) $ —
Debt borrowings (repayments), net 1,226,945 (763,106)
Redemption premiums and repayments of senior notes (1,395,668) —
Stock repurchases (415,824) —
Dividends paid (481,386) (458,717)
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 ~~January~~October 1, 2022, we had ~~$1.4 billion~~$437.7 million in cash and cash equivalents, approximately ~~44%~~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 ~~$377.0~~$158.6 million in cash flows from operations in the first 2613 weeks of fiscal ~~2022,~~2023, compared to cash flows from ~~operating activities~~operations of ~~$936.7~~$110.8 million in the first 2613 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 ~~and accrued income taxes, partially offset by~~due to higher ~~operating results~~accounts receivables and a ~~favorable comparison on accrued expenses.~~

decrease in accounts payable. Changes in working capital had a negative impact of ~~$974.0~~$127.7 million on cash ~~flow~~flows from operations period-over-period. There were unfavorable comparisons primarily on receivables and inventories. The unfavorable comparison in cash flows from accounts receivables is primarily due to our customers beginning to purchase more in the first 26 weeks of fiscal 2022, coupled with significantly lower sales in the first 26 weeks of fiscal 2021 resulting from the COVID-19 pandemic. In the first 26 weeks of fiscal 2021, we recorded a net credit to the provision for losses on receivables totaling $94.2 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 26 weeks of fiscal 2022, we invested heavily in inventory, which has helped us ship product on time and in full during the recovery from COVID-19.

Income taxes negatively impacted cash flow from operations, as estimated payments were made in the second quarter of fiscal 2022. Tax payments in the first 26 weeks of fiscal 2022 were higher than in the first 26 weeks of fiscal 2021 due to higher earnings compared to the prior year.

Included in the change in accrued expenses ~~was a~~were positive ~~comparison,~~comparisons, primarily from ~~favorable comparisons of~~accrued interest, earnout liabilities, ~~related to our acquisitions~~and self-insurance in the first 2613 weeks of fiscal ~~2022 and customer rebate payments resulting from an increase~~2023 in ~~volume purchase incentives earned by our customers, as sales volumes increased through~~comparison to the first ~~half~~13 weeks of fiscal 2022.

Income taxes positively impacted cash flows from operations, as estimated payments made in the first quarter of fiscal 2023 were lower than in fiscal 2022 due to overpayments in the prior year.

Investing Activities

Our capital expenditures in the first 2613 weeks of fiscal ~~2022~~2023 consisted primarily ~~consisted~~ of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 2613 weeks of fiscal ~~2022~~2023 were ~~$17.4~~$82.2 million higher than in the first 2613 weeks of fiscal ~~2021,~~2022, as we made investments to advance our Recipe for Growth strategy. ~~Our capital expenditures have been lower than planned due to increased lead times on fleet and equipment.~~

During the first 2613 weeks of fiscal ~~2022,~~2023, we paid ~~$769.7~~$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 2613 weeks of fiscal ~~2021.~~2022.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were ~~$36.1~~$24.6 million in the first 2613 weeks of fiscal ~~2022,~~2023, as compared to ~~$66.6~~$17.9 million in the first 2613 weeks 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.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized. We commenced our share repurchase program during the second quarter of fiscal 2022. We repurchased ~~5.7~~3.1 million shares for ~~$415.8~~$267.7 million during the first 2613 weeks of fiscal ~~2022.~~2023. As of ~~January~~October 1, 2022, we had a remaining authorization of approximately ~~$4.6~~$4.2 billion.

Dividends paid in the first ~~26 weeks~~quarter of fiscal ~~2022~~2023 were ~~$481.4~~$249.3 million, or ~~$0.94~~$0.49 per share, as compared to ~~$458.7~~$240.6 million, or ~~$0.90~~$0.47 per share, in the ~~second~~first quarter of fiscal ~~2021.~~2022. In ~~November,~~August 2022, we declared our regular quarterly dividend for the ~~second~~first quarter of fiscal ~~2022~~2023 of ~~$0.47~~$0.49 per share, which was paid in ~~January~~October 2022.

Debt Activity and Borrowing Availability

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

During the first 26 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 ~~January~~October 1, 2022, Sysco had a total of ~~$10.5~~$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	Jan. 1, 2022		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	$	118,561	$	171,718	Receivables due from non-obligor subsidiaries	$	218,392	$	264,378
Current assets	Current assets	5,469,809		6,661,284		Current assets	5,714,872		5,658,972
Total current assets	Total current assets	$	5,588,370	$	6,833,002	Total current assets	$	5,933,264	$	5,923,350
Notes receivable from non-obligor subsidiaries	Notes receivable from non-obligor subsidiaries	$	82,833	$	83,457	Notes receivable from non-obligor subsidiaries	$	91,138	$	91,067
Other noncurrent assets	Other noncurrent assets	3,926,680		3,933,833		Other noncurrent assets	3,969,771		3,910,951
Total noncurrent assets	Total noncurrent assets	$	4,009,513	$	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	$	49,591	$	203,365	Payables due to non-obligor subsidiaries	$	60,283	$	62,441
Other current liabilities	Other current liabilities	2,436,064		2,299,674		Other current liabilities	2,826,594		2,765,756
Total current liabilities	Total current liabilities	$	2,485,655	$	2,503,039	Total current liabilities	$	2,886,877	$	2,828,197
Notes payable to non-obligor subsidiaries	Notes payable to non-obligor subsidiaries	$	194,365	$	269,709	Notes payable to non-obligor subsidiaries	$	272,099	$	315,753
Long-term debt	Long-term debt	10,072,559		10,139,596		Long-term debt	9,718,645		9,501,842
Other noncurrent liabilities	Other noncurrent liabilities	1,298,851		1,209,598		Other noncurrent liabilities	1,206,767		1,190,177
Total noncurrent liabilities	Total noncurrent liabilities	$	11,565,775	$	11,618,903	Total noncurrent liabilities	$	11,197,511	$	11,007,772

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations

~~26-Week~~13-Week Period Ended ~~Jan.~~Oct. 1, 2022

(In thousands)

Sales

~~20,994,095~~12,200,611

Gross profit

~~3,764,529~~2,216,571

Operating income

~~1,079,080~~630,507

Interest expense from non-obligor subsidiaries

~~32,239~~5,588

Net earnings

~~522,457~~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 of an improving market over the course of fiscal 2023;

•our expectations regarding the ability of our supply chain and facilities to remain in place and operational;

•our plans regarding our transformation initiatives and the expected effects from such initiatives, including the Sysco Driver Academy;

•statements regarding uncollectible accounts, including that if collections continue to improve, additional reductions in bad debt expense could occur;

•our expectations that our Recipe for Growth strategy will allow us to better serve our customers and differentiate Sysco from our competition;

•our expectations regarding our ~~business~~fiscal 2023 sales and our rate of sales growth in fiscal 2023 and the ~~economic recovery generally as the COVID-19 pandemic subsides, including beliefs regarding future customer activity and the timing of the recovery;~~

•~~our expectations regarding the top-line impact of the Omicron variant in the third quarter of fiscal 2022;~~

•~~our expectations that volumes will continue their recovery to fiscal 2019 levels relatively quickly once the Omicron variant peaks are passed and government restrictions ease;~~

•~~our belief that the impact of the Omicron variant and the subsequent recovery will delay the return~~three years of our ~~volumes to fiscal 2019 levels;~~

•~~our expectations regarding our ability 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;~~

•~~our expectations regarding our snap back operating expenses in the third quarter of fiscal 2022;~~

•~~our expectations regarding improvements in our productivity;~~

•~~our expectations regarding our operating expenses related to our investment for our Recipe for Growth;~~

•~~our expectations regarding inflation;~~

•~~our expectations regarding our earnings per share and adjusted earnings per share in the second half of fiscal 2022;~~

•our expectations that our performance in the fourth quarter of fiscal 2022 will be stronger relative to the third quarter as a result of anticipated volume recovery, lower snap-back expenses and improved operating productivity;

•~~our plans regarding mergers and acquisitions and our growth strategy;~~long-range plan;

•our expectations regarding the impact of ~~the acquisition of Greco~~inflation on sales, gross margin rates and ~~Sons on incremental sales in fiscal 2022;~~gross profit dollars;

•our expectations regarding ~~the timing of the closing of the acquisition of The Coastal Companies;~~gross margins in fiscal 2023;

•our ~~ability~~plans regarding cost savings, including our target for cost savings through fiscal 2024 and the impact of costs savings on the company;

•our 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 ~~transformation;~~

•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;~~

•~~our expectations that as our Recipe for Growth matures, the impact on our top-line growth will continue to accelerate;~~transformation;

•our expectations regarding ~~labor costs;~~the use and 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 ~~expectations regarding growth in customers and gains in market share;~~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, ~~pandemic,~~ 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 ~~group purchasing organizations~~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 ~~complementary~~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 ~~January~~October 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 ~~January~~October 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 ~~January~~October 1, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

6140

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

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

Changes in the method of determining London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt.

Amounts drawn under our revolving credit facility may bear interest rates in relation to LIBOR, depending on our selection of repayment options. In addition, certain of our outstanding interest rate swap agreements have a floating interest rate in relation to three-month LIBOR. On March 5, 2021, the Financial Conduct Authority in the U.K. announced that immediately after (a) December 31, 2021, in the case of all sterling, euro, Swiss franc, and Japanese yen settings, and the one week and two month U.S. dollar LIBOR settings, and (b) June 30, 2023, in the case of all other U.S. dollar LIBOR settings, such LIBOR settings will either cease to be provided by the administrator or will no longer be representative. Despite this deferral for certain U.S. dollar LIBOR tenors, the LIBOR administrator has advised that no new contracts using U.S. dollar LIBOR should be entered into after December 31, 2021. These actions indicate that the continuation of U.S. LIBOR on the current basis cannot be guaranteed after June 30, 2023. Moreover, it is possible that U.S. LIBOR for such tenors will be discontinued or modified prior to June 30, 2023. On July 29, 2021, the Alternative Reference Rates Committee, a steering committee consisting of large U.S. financial institutions convened by the Federal Reserve Board, formally recommended replacing U.S. dollar LIBOR with forward-looking Secured Overnight Financing Rate (SOFR) term rates. As a result of the discontinuation of the remaining U.S. dollar LIBOR tenors, we may need to renegotiate our credit facility and certain interest rate swap agreements, and we may not be able to do so with terms that are favorable to us.

In connection with the discontinuation of LIBOR, (a) we adhered to the ISDA 2020 IBOR Fallbacks Protocol and (b) on October 14, 2021, we entered into an amendment to our revolving credit facility that replaced (i) sterling LIBOR with the Sterling Overnight Index Average (SONIA) and (ii) euro LIBOR with the Euro Short Term Rate (ESTR).

Alternative reference rates, such as SOFR, SONIA, and ESTR, could be higher or more volatile than LIBOR, which could result in an increase in the cost of our indebtedness, impacting our financial condition and results of operations. The overall financing market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market or the inability to renegotiate our credit facility or our interest rate swap agreements with favorable terms could have a material adverse effect on our business, financial position, and operating results. We continue to evaluate the potential impact of the replacement of the LIBOR benchmark interest rate; however, we are not able to predict the impact a transition to an alternative reference rate may have on our business, financial condition, and results of operations.

~~Economic and political instability and potential unfavorable changes in laws and regulations in international markets could adversely affect our results of operations and financial condition.~~

Our international operations subject us to certain risks, including economic and political instability and potential unfavorable changes in laws and regulations in international markets in which we operate. For example, in June 2016, the U.K. held a referendum in which voters approved Brexit. The U.K. exited the EU on January 31, 2020, with a transition period that ended on December 31, 2020. On December 24, 2020, the European Commission reached a trade agreement with the U.K. on the terms of its future cooperation with the EU. The trade agreement offers U.K. and EU companies preferential access to each other’s markets, ensuring imported goods will be free of tariffs and quotas (subject to rules of origin requirements). Uncertainty exists regarding the ultimate impact of this trade agreement, as well as the extent of possible financial, trade, regulatory and

legal implications of Brexit. Brexit also contributes to global political and economic uncertainty, which may cause, among other consequences, volatility in exchange rates and interest rates, and changes in regulations. These effects of Brexit, among others, could adversely affect our financial position, results of operations or cash flows. In addition, labor or other political disputes or general unrest can have a negative impact on our operations. For example, in fiscal 2020, the “yellow vest” protests in France against a fuel tax increase, pension reform and the French government negatively impacted our sales in France. Future labor disruptions or disputes could have a negative impact on our operations in the EU and other parts of the world.

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

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

We made the following share repurchases during the ~~second~~first quarter of fiscal ~~2022:~~2023:


ISSUER PURCHASES OF EQUITY SECURITIES	ISSUER PURCHASES OF EQUITY SECURITIES						ISSUER PURCHASES OF EQUITY SECURITIES
Period	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	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	Month #1						Month #1
October 3 - October 30		7,059	$	83.27	587,789	—
July 3 - July 30							July 3 - July 30	3,099,268	$	86.37	267,680,804	—
Month #2	Month #2						Month #2
October 31 - November 27		1,796,269	75.87		136,285,833	—
July 31 - Aug 27							July 31 - Aug 27	4,638	86.18		399,720	—
Month #3	Month #3						Month #3
November 28 - January 1		3,883,029	71.99		279,538,437	—
Aug 28 - October 1							Aug 28 - October 1	1,191	83.89		99,913	—
Totals	Totals	5,686,357	$	73.23	416,412,059	—	Totals	3,105,097	$	86.37	268,180,437	—

~~(1)The total number of shares purchased includes 7,059, 0 and 0 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.


(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

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.

6342

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).

~~4.1~~10.1#	—	~~Forty-Second Supplemental Indenture~~Form of Amended and Restated Commercial Paper Dealer Agreement, dated as of ~~December 14, 2021 among~~September 2, 2022, by and between Sysco Corporation, as Issuer, and the Guarantors named therein and U.S. Bank National Association, as Trustee, relating to the 2.450% Senior Notes due 2031, incorporated by reference to Exhibit 4.1 to the Form 8-K filed on December 14, 2021 (File No. 1-6544).applicable Dealer party thereto.

~~4.2~~10.2#	—	~~Forty-Third Supplemental Indenture~~Amended and Restated Issuing and Paying Agent Agreement, dated as of ~~December 14, 2021 among Sysco Corporation, the Guarantors named therein~~September 2, 2022, by and between U.S. Bank Trust Company, National Association, as ~~Trustee, relating to the 3.150% Senior Notes due 2051, incorporated by reference to Exhibit 4.3 to the Form 8-K filed on December 14, 2021 (File No. 1-6544).~~Issuing and Paying Agent, and Sysco Corporation, as Issuer.

~~10.1†~~10.3†#	—	Sysco Corporation Annual Incentive Program (AIP) For Corporate AIP Bonus-Eligible Positions (Fiscal Year 2023) adopted effective July 29, 2022.

10.4†#	—	Form of ~~Restricted~~ Stock ~~Award~~Option Grant Agreement (Fiscal Year 2023) for ~~Directors (2021) pursuant to~~executive officers under the Sysco Corporation 2018 Omnibus Incentive Plan.

~~10.2†~~10.5†#	—	Form of Restricted Stock ~~Award~~Unit Grant Agreement (Fiscal Year 2023) for ~~Directors (2021) pursuant to~~executive officers under the Sysco Corporation 2018 Omnibus Incentive ~~Plan (for directors who elect to defer receipt~~Plan.

10.6†#	—	Form of ~~shares~~Performance Share Unit Grant Agreement (Fiscal Year 2023) for executive officers under the ~~2009 Board~~Sysco Corporation 2018 Omnibus Incentive Plan.

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

~~10.3†#~~	—	~~Description of Compensation Arrangements with Non-Employee Directors.~~

~~22.1#~~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 2, 2022 filed on August 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

6544

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: ~~February 8,~~November 1, 2022	By:	/s/ KEVIN P. HOURICAN
		Kevin P. Hourican
		President and Chief Executive Officer

Date: ~~February 8,~~November 1, 2022	By:	/s/ AARON E. ALT
		Aaron E. Alt
		Executive Vice President and
		Chief Financial Officer

Date: ~~February 8,~~November 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

6645



	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	2721
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6140
Item 4.	Controls and Procedures	6140
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	6241
Item 1A.	Risk Factors	6241
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6341
Item 3.	Defaults Upon Senior Securities	6341
Item 4.	Mine Safety Disclosures	6341
Item 5.	Other Information	6342
Item 6.	Exhibits	6342

Signatures		6645


Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
December 14, 2031 (the 2031 Notes)	$	450	2.45	%	99.578	%
December 14, 2051 (the 2051 Notes)	800		3.15		99.308


	13-Week Period Ended Jan. 1, 2022			13-Week Period Ended Dec. 29, 2018			Change in Dollars		% Change
Sales (GAAP)	$	16,320,203		$	14,765,707		$	1,554,496	10.5	%
Gross profit (GAAP)	2,891,150			2,771,712			119,438		4.3
Gross margin (GAAP)	17.72		%	18.77		%			-106 bps

Operating expenses (GAAP)	$	2,446,241		$	2,319,817		$	126,424	5.4	%
Impact of restructuring and transformational project costs (1)	(23,469)			(134,436)			110,967		82.5
Impact of acquisition-related costs (2)	(33,732)			(17,008)			(16,724)		(98.3)
Impact of bad debt reserve adjustments (3)	6,438			—			6,438		NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP)	$	2,395,478		$	2,168,373		$	227,105	10.5	%

Operating income (GAAP)	$	444,909		$	451,895		$	(6,986)	1.5	%
Impact of restructuring and transformational project costs (1)	23,469			134,436			(110,967)		(82.5)
Impact of acquisition-related costs (2)	33,732			17,008			16,724		98.3
Impact of bad debt reserve adjustments (3)	(6,438)			—			(6,438)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	495,672		$	603,339		$	(107,667)	(17.8)	%

Interest expense (GAAP)	$	242,899		$	87,113		$	155,786	65.8	%
Impact of loss on extinguishment of debt	(115,603)			—			(115,603)		NM
Interest expense adjusted for Certain Items (Non-GAAP)	$	127,296		$	87,113		$	(19,202)	(13.1)	%





Net earnings (GAAP)	$	167,441		$	267,380		$	(99,939)	(37.4)	%
Impact of restructuring and transformational project costs (1)	23,469			134,436			(110,967)		(82.5)
Impact of acquisition-related costs (2)	33,732			17,008			16,724		98.3
Impact of bad debt reserve adjustments (3)	(6,438)			—			(6,438)		NM
Impact of loss on extinguishment of debt	115,603			—			115,603		NM
Tax impact of restructuring and transformational project costs (4)	(5,897)			(34,886)			28,989		83.1
Tax impact of acquisition-related costs (4)	(8,475)			(5,611)			(2,864)		(51.0)
Tax impact of bad debt reserves adjustments (4)	1,617			—			1,617		NM
Tax impact of loss on extinguishment of debt (4)	(29,111)			—			(29,111)		NM
Impact of adjustments to uncertain tax positions	—			15,154			(15,154)		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	291,941		$	393,481		$	(101,540)	(25.8)	%

Diluted earnings per share (GAAP)	$	0.33		$	0.51		$	(0.18)	(35.3)	%
Impact of restructuring and transformational project costs (1)	0.05			0.26			(0.21)		(80.8)
Impact of acquisition-related costs (2)	0.07			0.03			0.04		133.3
Impact of bad debt reserve adjustments (3)	(0.01)			—			(0.01)		NM
Impact of loss on extinguishment of debt	0.22			—			0.22		NM
Tax impact of restructuring and transformational project costs (4)	(0.01)			(0.07)			0.06		85.7
Tax impact of acquisition-related costs (4)	(0.02)			(0.01)			(0.01)		(100.0)
Tax impact of bad debt reserves adjustments (4)	—			—			—		NM
Tax impact of loss on extinguishment of debt (4)	(0.06)			—			(0.06)		NM
Impact of adjustments to uncertain tax positions	—			0.03			(0.03)		NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)	$	0.57		$	0.75		$	(0.18)	(24.0)	%


Tax impact of restructuring and transformational project costs (5)	(12,082)		(16,586)		4,504		27.2
Tax impact of acquisition-related costs (5)	(17,541)		(9,898)		(7,643)		(77.2)
Tax impact of bad debt reserves adjustments (5)	3,399		35,559		(32,160)		(90.4)
Tax impact of loss on extinguishment of debt (5)	(29,111)		—		(29,111)		NM
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	—		(5,548)		5,548		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	721,861	$	259,311	$	462,550	178.4	%



Diluted earnings per share (GAAP)	$	1.06	$	0.56	$	0.50	89.3	%
Impact of restructuring and transformational project costs (2)	0.09		0.12		(0.03)		(25.0)
Impact of acquisition-related costs (3)	0.14		0.07		0.07		100.0
Impact of bad debt reserve adjustments (4)	(0.03)		(0.25)		0.22		88.0

Impact of loss on extinguishment of debt	0.22		—		0.22		NM
Impact of loss on sale of business	—		0.02		(0.02)		NM
Tax impact of restructuring and transformational project costs (5)	(0.02)		(0.03)		0.01		33.3
Tax impact of acquisition-related costs (5)	(0.03)		(0.02)		(0.01)		(50.0)
Tax impact of bad debt reserves adjustments (5)	0.01		0.07		(0.06)		(85.7)
Tax impact of loss on extinguishment of debt (5)	(0.06)		—		(0.06)		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	—		(0.01)		0.01		NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6)	$	1.40	$	0.51	$	0.89	174.5	%


	26-Week Period Ended Jan. 1, 2022			26-Week Period Ended Dec. 29, 2018			Change in Dollars		% Change
Sales (GAAP)	$	32,776,749		$	29,980,986		$	2,795,763	9.3	%
Gross profit (GAAP)	5,862,858			5,675,497			187,361		3.3
Gross margin (GAAP)	17.89		%	18.93		%			-104 bps

Operating expenses (GAAP)	$	4,786,267		$	4,595,462		$	190,805	4.2	%
Impact of restructuring and transformational project costs (1)	(47,980)			(175,339)			127,359		72.6
Impact of acquisition-related costs (2)	(69,658)			(39,645)			(30,013)		(75.7)
Impact of bad debt reserve adjustments (3)	13,499			—			13,499		NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP)	$	4,682,128		$	4,380,478		$	301,650	6.9	%

Operating income (GAAP)	$	1,076,591		$	1,080,035		$	(3,444)	(0.3)	%
Impact of restructuring and transformational project costs (1)	47,980			175,339			(127,359)		(72.6)
Impact of acquisition-related costs (2)	69,658			39,645			30,013		75.7
Impact of bad debt reserve adjustments (3)	(13,499)			—			(13,499)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	1,180,730		$	1,295,019		$	(114,289)	(8.8)	%

Interest expense (GAAP)	$	371,113		$	176,129		$	194,984	110.7	%
Impact of loss on extinguishment of debt	(115,603)			—			(115,603)		NM
Interest expense adjusted for Certain Items (Non-GAAP)	$	255,510		$	176,129		$	79,381	45.1	%





Net earnings (GAAP)	$	545,454		$	698,422		$	(152,968)	(21.9)	%
Impact of restructuring and transformational project costs (1)	47,980			175,339			(127,359)		(72.6)
Impact of acquisition-related costs (2)	69,658			39,645			30,013		75.7
Impact of bad debt reserve adjustments (3)	(13,499)			—			(13,499)		NM
Impact of loss on extinguishment of debt	115,603			—			115,603		NM
Tax impact of restructuring and transformational project costs (4)	(12,082)			(45,560)			33,478		73.5
Tax impact of acquisition-related costs (4)	(17,541)			(10,302)			(7,239)		(70.3)
Tax impact of bad debt reserves adjustments (4)	3,399			—			3,399		NM
Tax impact of loss on extinguishment of debt (4)	(29,111)			—			(29,111)		NM
Impact of adjustments to uncertain tax positions	12,000			15,154			(3,154)		(20.8)
Net earnings adjusted for Certain Items (Non-GAAP)	$	721,861		$	872,698		$	(150,837)	(17.3)	%

Diluted earnings per share (GAAP)	$	1.06		$	1.33		$	(0.27)	(20.3)	%
Impact of restructuring and transformational project costs (1)	0.09			0.33			(0.24)		(72.7)
Impact of acquisition-related costs (2)	0.14			0.08			0.06		75.0
Impact of bad debt reserve adjustments (3)	(0.03)			—			(0.03)		NM
Impact of loss on extinguishment of debt	0.22			—			0.22		NM
Tax impact of restructuring and transformational project costs (4)	(0.02)			(0.09)			0.07		77.8
Tax impact of acquisition-related costs (4)	(0.03)			(0.02)			(0.01)		(50.0)
Tax impact of bad debt reserves adjustments (4)	0.01			—			0.01		NM
Tax impact of loss on extinguishment of debt (4)	(0.06)			—			(0.06)		NM
Impact of adjustments to uncertain tax positions	0.02			0.03			(0.01)		(33.3)
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)	$	1.40		$	1.66		$	(0.26)	(15.7)	%


Operating expenses (GAAP)	$	284,285	$	237,820	$	46,465	19.5	%
Impact of restructuring and transformational project costs	—		(7)		7		NM



Operating expenses adjusted for Certain Items (Non-GAAP)	$	284,285	$	237,813	$	46,472	19.5	%



Operating (loss) income (GAAP)	$	(9,176)	$	23,020	$	(32,196)	(139.9)	%
Impact of restructuring and transformational project costs	—		7		(7)		NM



Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(9,176)	$	23,027	$	(32,203)	(139.8)	%



OTHER












Operating expenses (GAAP)	$	107,191	$	77,220	$	29,971	38.8	%


Impact of bad debt reserve adjustments (2)	(1)		2,116		(2,117)		(100.0)

Operating expenses adjusted for Certain Items (Non-GAAP)	$	107,190	$	79,336	$	27,854	35.1	%



Operating income (loss) (GAAP)	$	6,639	$	(1,023)	$	7,662	NM


Impact of bad debt reserve adjustments (2)	1		(2,116)		2,117		100.0

Operating income (loss) adjusted for Certain Items (Non-GAAP)	$	6,640	$	(3,139)	$	9,779	NM



GLOBAL SUPPORT CENTER




Operating expenses (GAAP)	$	437,060	$	381,529	$	55,531	14.6	%
Impact of restructuring and transformational project costs (6)	(26,914)		(23,995)		(2,919)		(12.2)
Impact of acquisition-related costs (7)	(14,742)		—		(14,742)		NM


Operating expenses adjusted for Certain Items (Non-GAAP)	$	395,404	$	357,534	$	37,870	10.6	%



Operating loss (GAAP)	$	(442,638)	$	(383,530)	$	(59,108)	(15.4)	%
Impact of restructuring and transformational project costs (6)	26,914		23,995		2,919		12.2
Impact of acquisition-related costs (7)	14,742		—		14,742		NM


Operating loss adjusted for Certain Items (Non-GAAP)	$	(400,982)	$	(359,535)	$	(41,447)	(11.5)	%