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 JanuaryOctober 1, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6544
________________
syy-20221001_g1.jpg
Sysco Corporation
(Exact name of registrant as specified in its charter)
Delaware74-1648137
(State or other jurisdiction of incorporation or organization)(IRS employer identification number)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller Reporting Company
(Do not check if a smaller reporting company)Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No þ

507,447,464506,767,526 shares of common stock were outstanding as of January 21,October 14, 2022.

1


TABLE OF CONTENTS
  
 PART I – FINANCIAL INFORMATIONPage No.
 PART II – OTHER INFORMATION 
   
 







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, 2022Jul. 3, 2021 Oct. 1, 2022Jul. 2, 2022
(unaudited) (unaudited)
ASSETSASSETSASSETS
Current assetsCurrent assetsCurrent assets
Cash and cash equivalentsCash 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 $117,6954,219,868 3,781,510 
Accounts receivable, less allowances of $74,002 and $70,790Accounts receivable, less allowances of $74,002 and $70,7905,336,857 4,838,912 
InventoriesInventories4,115,683 3,695,219 Inventories4,682,609 4,437,498 
Prepaid expenses and other current assetsPrepaid expenses and other current assets252,351 240,956 Prepaid expenses and other current assets310,131 303,789 
Income tax receivableIncome tax receivable100,973 8,759 Income tax receivable— 35,934 
Total current assetsTotal current assets10,063,151 10,733,567 Total current assets10,767,267 10,483,219 
Plant and equipment at cost, less accumulated depreciationPlant and equipment at cost, less accumulated depreciation4,307,156 4,326,063 Plant and equipment at cost, less accumulated depreciation4,462,608 4,456,420 
Other long-term assetsOther long-term assetsOther long-term assets
GoodwillGoodwill4,416,912 3,944,139 Goodwill4,434,476 4,542,315 
Intangibles, less amortizationIntangibles, less amortization906,328 746,073 Intangibles, less amortization906,385 952,683 
Deferred income taxesDeferred income taxes387,050 352,523 Deferred income taxes382,778 377,604 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net724,861 709,163 Operating lease right-of-use assets, net704,664 723,297 
Other assetsOther assets621,304 602,011 Other assets552,765 550,150 
Total other long-term assetsTotal other long-term assets7,056,455 6,353,909 Total other long-term assets6,981,068 7,146,049 
Total assetsTotal assets$21,426,762 $21,413,539 Total assets$22,210,943 $22,085,688 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilitiesCurrent liabilitiesCurrent liabilities
Notes payable$8,574 $8,782 
Accounts payableAccounts payable5,019,052 4,884,781 Accounts payable$6,018,227 $5,752,958 
Accrued expensesAccrued expenses1,980,293 1,814,837 Accrued expenses2,177,793 2,270,753 
Accrued income taxesAccrued income taxes3,631 22,644 Accrued income taxes113,388 40,042 
Current operating lease liabilitiesCurrent operating lease liabilities94,603 102,659 Current operating lease liabilities94,027 105,690 
Current maturities of long-term debtCurrent maturities of long-term debt487,407 486,141 Current maturities of long-term debt555,829 580,611 
Total current liabilitiesTotal current liabilities7,593,560 7,319,844 Total current liabilities8,959,264 8,750,054 
Long-term liabilitiesLong-term liabilitiesLong-term liabilities
Long-term debtLong-term debt10,593,390 10,588,184 Long-term debt10,263,331 10,066,931 
Deferred income taxesDeferred income taxes160,718 147,066 Deferred income taxes241,748 250,171 
Long-term operating lease liabilitiesLong-term operating lease liabilities659,136 634,481 Long-term operating lease liabilities628,861 636,417 
Other long-term liabilitiesOther long-term liabilities1,166,196 1,136,480 Other long-term liabilities971,190 967,907 
Total long-term liabilitiesTotal long-term liabilities12,579,440 12,506,211 Total long-term liabilities12,105,130 11,921,426 
Noncontrolling interestNoncontrolling interest32,690 34,588 Noncontrolling interest31,208 31,948 
Shareholders’ equityShareholders’ equityShareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued nonePreferred 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 sharesCommon stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares765,175 765,175 Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares765,175 765,175 
Paid-in capitalPaid-in capital1,690,487 1,619,995 Paid-in capital1,754,409 1,766,305 
Retained earningsRetained earnings10,216,625 10,151,706 Retained earnings10,757,136 10,539,722 
Accumulated other comprehensive lossAccumulated 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 sharesTreasury stock at cost, 258,414,989 and 256,531,543 shares(10,450,054)(10,206,888)
Total shareholders’ equityTotal shareholders’ equity1,221,072 1,552,896 Total shareholders’ equity1,115,341 1,382,260 
Total liabilities and shareholders’ equityTotal 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, 20212, 2022 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements
1


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In thousands, except for share and per share data)
13-Week Period Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
SalesSales$16,320,203 $11,558,982 $32,776,749 $23,336,361 Sales$19,126,830 $16,456,546 
Cost of salesCost of sales13,429,053 9,460,524 26,913,891 19,018,058 Cost of sales15,637,975 13,484,838 
Gross profitGross profit2,891,150 2,098,458 5,862,858 4,318,303 Gross profit3,488,855 2,971,708 
Operating expensesOperating expenses2,446,241 1,886,396 4,786,267 3,686,662 Operating expenses2,754,522 2,340,026 
Operating incomeOperating income444,909 212,062 1,076,591 631,641 Operating income734,333 631,682 
Interest expenseInterest expense242,899 146,498 371,113 293,215 Interest expense124,150 128,214 
Other income, net(10,676)(15,556)(13,928)(1,432)
Other expense (income), netOther expense (income), net15,281 (3,252)
Earnings before income taxesEarnings before income taxes212,686 81,120 719,406 339,858 Earnings before income taxes594,902 506,720 
Income taxesIncome taxes45,245 13,831 173,952 55,669 Income taxes129,334 128,707 
Net earningsNet earnings$167,441 $67,289 $545,454 $284,189 Net earnings$465,568 $378,013 
Net earnings:Net earnings:  Net earnings:  
Basic earnings per shareBasic earnings per share$0.33 $0.13 $1.07 $0.56 Basic earnings per share$0.92 $0.74 
Diluted earnings per shareDiluted earnings per share0.33 0.13 1.06 0.56 Diluted earnings per share0.91 0.73 
Average shares outstandingAverage shares outstanding511,044,400 510,006,754 511,780,234 509,567,080 Average shares outstanding507,578,576 512,516,067 
Diluted shares outstandingDiluted shares outstanding514,574,889 512,742,792 515,178,910 511,740,778 Diluted shares outstanding510,383,149 515,782,928 

See Notes to Consolidated Financial Statements
2


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
13-Week Period Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
Net earningsNet 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 adjustmentForeign 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 hedgesAmortization of cash flow hedges2,155 2,155 4,310 4,310 Amortization of cash flow hedges2,155 2,155 
Change in net investment hedgesChange in net investment hedges8,362 (20,666)18,527 (31,927)Change in net investment hedges23,509 10,165 
Change in cash flow hedgesChange in cash flow hedges(6,101)12,335 (6,530)(632)Change in cash flow hedges(26,390)(429)
Amortization of prior service costAmortization of prior service cost74 137 148 274 Amortization of prior service cost74 74 
Amortization of actuarial gain5,488 7,793 11,855 15,558 
Amortization of actuarial lossAmortization of actuarial loss6,891 6,367 
Change in marketable securitiesChange 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 lossTotal other comprehensive loss(229,271)(69,173)
Comprehensive incomeComprehensive income$149,120 $291,506 $457,960 $606,901 Comprehensive income$236,297 $308,840 

See Notes to Consolidated Financial Statements
3



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

Quarter to Date
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of October 2, 2021765,174,900 $765,175 $1,655,110 $10,288,291 $(1,217,937)252,825,080 $(9,817,347)$1,673,292 
Net earnings167,441 167,441 
Foreign currency translation adjustment(26,870)(26,870)
Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of tax(6,101)(6,101)
Change in net investment hedges, net of tax8,362 8,362 
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax5,562 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 purchases5,679,298 (415,824)(415,824)
Increase in ownership interest in subsidiaries(304)(304)
Share-based compensation awards35,681 (470,522)18,214 53,895 
Balance as of January 1, 2022765,174,900 $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 StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of September 26, 2020765,174,900 $765,175 $1,534,281 $10,546,598 $(1,612,386)256,075,772 $(9,933,657)$1,300,011 
Net earnings67,289 67,289 
Foreign currency translation adjustment222,507 222,507 
Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of tax12,335 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 tax7,930 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 awards30,974 (899,303)34,702 65,676 
Balance as of December 26, 2020765,174,900 $765,175 $1,565,255 $10,383,493 $(1,388,169)255,176,469 $(9,898,955)$1,426,799 

4


Year to Date
Accumulated
Other Comprehensive
Loss
Accumulated
Other Comprehensive
Loss
Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock  Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
SharesAmountSharesAccumulated
Other Comprehensive
Loss
AmountsTotals SharesAmountSharesAccumulated
Other Comprehensive
Loss
AmountsTotals
Balance as of July 3, 2021765,174,900 $765,175 $1,619,995 $10,151,706 $(1,148,764)$(9,835,216)$1,552,896 
Balance as of July 2, 2022Balance as of July 2, 2022765,174,900 $765,175 $1,766,305 $10,539,722 $(1,482,054)$(10,206,888)$1,382,260 
Net earningsNet earnings   545,454    545,454 Net earnings465,568 465,568 
Foreign currency translation adjustmentForeign currency translation adjustment    (114,064)  (114,064)Foreign currency translation adjustment(232,182)(232,182)
Amortization of cash flow hedges, net of taxAmortization of cash flow hedges, net of tax    4,310   4,310 Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of taxChange 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 taxChange in net investment hedges, net of tax18,527 18,527 Change in net investment hedges, net of tax23,509 23,509 
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of taxReclassification 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 tax6,965 6,965 
Change in marketable securities, net of taxChange 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 purchasesTreasury stock purchases5,679,298 (415,824)(415,824)Treasury stock purchases3,099,268 (267,727)(267,727)
Increase in ownership interest in subsidiaries(304)(304)
Share-based compensation awardsShare-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, 2022765,174,900 $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, 2022Balance as of October 1, 2022765,174,900 $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 StockPaid-in
Capital
Retained
Earnings
Treasury Stock  Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
SharesAmountSharesAccumulated
Other Comprehensive
Loss
AmountsTotals SharesAmountSharesAccumulated
Other Comprehensive
Loss
AmountsTotals
Balance as of June 27, 2020765,174,900 $765,175 $1,506,901 $10,563,008 $(1,710,881)$(9,965,590)$1,158,613 
Balance as of July 3, 2021Balance as of July 3, 2021765,174,900 $765,175 $1,619,995 $10,151,706 $(1,148,764)$(9,835,216)$1,552,896 
Net earningsNet earnings   284,189    284,189 Net earnings378,013 378,013 
Foreign currency translation adjustmentForeign currency translation adjustment    335,647   335,647 Foreign currency translation adjustment(87,194)(87,194)
Amortization of cash flow hedges, net of taxAmortization of cash flow hedges, net of tax    4,310   4,310 Amortization of cash flow hedges, net of tax2,155 2,155 
Change in cash flow hedges, net of taxChange 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 taxChange in net investment hedges, net of tax(31,927)(31,927)Change in net investment hedges, net of tax10,165 10,165 
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of taxReclassification 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 tax6,441 6,441 
Change in marketable securities, net of taxChange 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 awardsShare-based compensation awards  58,354   (1,739,356)66,635 124,989 Share-based compensation awards35,115 (517,515)17,869 52,984 
Balance as of December 26, 2020765,174,900 $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, 2021Balance as of October 2, 2021765,174,900 $765,175 $1,655,110 $10,288,291 $(1,217,937)252,825,080 $(9,817,347)$1,673,292 

See Notes to Consolidated Financial Statements

54


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In thousands)
26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net earningsNet 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 expenseShare-based compensation expense60,254 47,122 Share-based compensation expense27,224 29,313 
Depreciation and amortizationDepreciation and amortization377,763 365,332 Depreciation and amortization188,924 186,466 
Operating lease asset amortizationOperating lease asset amortization54,856 55,231 Operating lease asset amortization27,542 28,221 
Amortization of debt issuance and other debt-related costsAmortization of debt issuance and other debt-related costs11,014 12,946 Amortization of debt issuance and other debt-related costs5,435 5,577 
Deferred income taxesDeferred income taxes(72,892)(107,821)Deferred income taxes(31,226)(30,452)
Provision for losses on receivablesProvision for losses on receivables1,508 (94,242)Provision for losses on receivables3,865 2,097 
Loss on extinguishment of debt115,603 — 
Loss on sale of business— 12,043 
Other non-cash itemsOther non-cash items1,103 (9,312)Other non-cash items5,011 (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 receivablesIncrease in receivables(576,585)(478,671)
Increase in inventoriesIncrease in inventories(283,252)(294,517)
Increase in prepaid expenses and other current assetsIncrease 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 payableIncrease in accounts payable83,214 84,708 Increase in accounts payable288,517 329,523 
Increase in accrued expenses95,388 20,108 
Decrease in accrued expensesDecrease in accrued expenses(10,893)(103,483)
Decrease in operating lease liabilitiesDecrease 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 liabilities40,034 38,962 
Increase in accrued income taxesIncrease in accrued income taxes109,280 69,256 
Decrease (increase) in other assetsDecrease (increase) in other assets17,627 (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 activitiesNet cash provided by operating activities377,047 936,678 Net cash provided by operating activities158,606 110,812 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Additions to plant and equipmentAdditions to plant and equipment(181,374)(163,944)Additions to plant and equipment(167,260)(85,019)
Proceeds from sales of plant and equipmentProceeds from sales of plant and equipment5,450 15,510 Proceeds from sales of plant and equipment22,448 5,627 
Acquisition of businesses, net of cash acquiredAcquisition of businesses, net of cash acquired(769,658)— Acquisition of businesses, net of cash acquired(32,651)(714,010)
Purchase of marketable securitiesPurchase of marketable securities(18,539)(36,121)Purchase of marketable securities(3,296)(9,925)
Proceeds from sales of marketable securitiesProceeds from sales of marketable securities16,648 20,797 Proceeds from sales of marketable securities2,650 8,700 
Other investing activitiesOther investing activities6,651 — Other investing activities3,274 6,022 
Net cash used for investing activitiesNet 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, netBank and commercial paper borrowings, net— 6,463 Bank and commercial paper borrowings, net97,000 — 
Other debt borrowings including senior notesOther debt borrowings including senior notes1,249,995 4,094 Other debt borrowings including senior notes59,063 
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 notesOther debt repayments including senior notes(18,104)(10,051)
Cash received from termination of interest rate swap agreements23,127 — 
Proceeds from stock option exercisesProceeds from stock option exercises36,083 66,635 Proceeds from stock option exercises24,561 17,881 
Stock repurchasesStock repurchases(415,824)— Stock repurchases(267,727)— 
Dividends paidDividends paid(481,386)(458,717)Dividends paid(249,294)(240,561)
Other financing activitiesOther financing activities(5,297)(873)Other financing activities(45,851)(5,003)
Net cash used for financing activitiesNet 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 cashEffect 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 cashNet 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 periodCash, cash equivalents and restricted cash at beginning of period3,037,100 6,095,570 Cash, cash equivalents and restricted cash at beginning of period931,376 3,037,100 
Cash, cash equivalents and restricted cash at end of periodCash, 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:
InterestInterest$258,436 $290,926 Interest$84,010 $225,031 
Income taxes, net of refundsIncome taxes, net of refunds342,628 110,453 Income taxes, net of refunds47,985 76,712 

See Notes to Consolidated Financial Statements
65


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, 2022Dec. 26, 2020Oct. 1, 2022Oct. 2, 2021
(In thousands)(In thousands)
Cash and cash equivalentsCash 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 flowsTotal 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 AssistanceLiabilities – 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),” which2022-04, 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 transactionsdisclose in the scopeannual 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 natureoutstanding amount of the transaction, including significant terms and conditions,obligations as well asof the amounts and specificend 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 reportingfiscal years and interim periods within those fiscal years beginning after December 15, 2021; however, early2022, 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 mayrequires 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.

76


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 JanuaryOctober 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 JanuaryOctober 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, 202213-Week Period Ended Oct. 1, 2022
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotalUS Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)(In thousands)
Principal Product CategoriesPrincipal Product CategoriesPrincipal Product Categories
Canned and dry productsCanned and dry products$2,577,255 $691,374 $236,168 $2,068 $3,506,865 
Fresh and frozen meatsFresh and frozen meats$2,403,763 $396,232 $513,138 $— $3,313,133 Fresh and frozen meats2,465,450 453,364 463,440 — 3,382,254 
Canned and dry products2,087,808 560,623 155,615 30 2,804,076 
Frozen fruits, vegetables, bakery and otherFrozen fruits, vegetables, bakery and other1,508,462 518,271 292,185 — 2,318,918 Frozen fruits, vegetables, bakery and other1,843,464 580,032 309,197 149 2,732,842 
PoultryPoultry1,351,188 240,755 223,348 — 1,815,291 Poultry1,574,251 292,849 277,464 — 2,144,564 
Dairy productsDairy products1,114,145 289,380 139,735 — 1,543,260 Dairy products1,525,483 366,847 164,648 — 2,056,978 
Fresh produceFresh produce1,037,683 214,823 64,048 — 1,316,554 Fresh produce1,337,919 254,737 65,244 — 1,657,900 
Paper and disposablesPaper and disposables894,553 114,634 193,010 12,792 1,214,989 Paper and disposables1,022,904 144,068 209,358 15,056 1,391,386 
SeafoodSeafood585,713 110,337 33,980 — 730,030 Seafood638,405 121,201 40,124 — 799,730 
Beverage productsBeverage products246,365 107,156 131,517 18,827 503,865 Beverage products315,619 136,475 138,169 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 SalesTotal 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.

87


13-Week Period Ended Dec. 26, 202013-Week Period Ended Oct. 2, 2021
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotalUS Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)(In thousands)
Principal Product CategoriesPrincipal Product CategoriesPrincipal Product Categories
Fresh and frozen meatsFresh 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 productsCanned and dry products1,406,053 383,170 32,867 — 1,822,090 Canned and dry products2,076,779 581,895 137,597 — 2,796,271 
Frozen fruits, vegetables, bakery and otherFrozen fruits, vegetables, bakery and other1,070,227 394,706 275,422 — 1,740,355 Frozen fruits, vegetables, bakery and other1,501,293 518,255 273,148 — 2,292,696 
PoultryPoultry844,377 174,717 217,621 — 1,236,715 Poultry1,351,200 241,202 229,357 — 1,821,759 
Dairy productsDairy products818,810 208,208 142,966 — 1,169,984 Dairy products1,101,423 305,112 140,224 — 1,546,759 
Fresh produceFresh produce986,998 218,963 66,563 — 1,272,524 
Paper and disposablesPaper and disposables715,775 92,954 182,094 8,675 999,498 Paper and disposables911,350 119,740 188,243 15,499 1,234,832 
Fresh produce696,879 145,565 66,528 — 908,972 
SeafoodSeafood407,955 69,680 26,387 — 504,022 Seafood693,013 121,465 33,224 — 847,702 
Beverage productsBeverage products168,902 73,422 142,208 10,728 395,260 Beverage products256,385 117,220 137,515 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 SalesTotal 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 OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Fresh and frozen meats$4,848,224 $813,403 $987,794 $— $6,649,421 
Canned and dry products4,164,582 1,142,518 293,212 30 5,600,342 
Frozen fruits, vegetables, bakery and other3,009,755 1,036,526 565,332 — 4,611,613 
Poultry2,702,388 481,956 452,706 — 3,637,050 
Dairy products2,215,569 594,492 279,959 — 3,090,020 
Fresh produce2,024,685 433,786 130,611 — 2,589,082 
Paper and disposables1,805,903 234,374 381,253 28,291 2,449,821 
Seafood1,278,726 231,802 67,204 — 1,577,732 
Beverage products502,750 224,377 269,032 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.
9


26-Week Period Ended Dec. 26, 2020
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Fresh and frozen meats$2,997,869 $581,989 $831,053 $— $4,410,911 
Canned and dry products2,812,198 774,747 62,440 — 3,649,385 
Frozen fruits, vegetables, bakery and other2,127,476 821,271 532,209 — 3,480,956 
Poultry1,679,256 353,743 434,255 — 2,467,254 
Dairy products1,655,075 441,164 289,995 — 2,386,234 
Paper and disposables1,396,600 183,663 361,268 20,313 1,961,844 
Fresh produce1,407,799 316,103 131,510 — 1,855,412 
Seafood890,652 158,247 51,483 — 1,100,382 
Beverage products348,919 150,888 290,799 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 subscription sales for our former Sysco Labs business, and other janitorial products, medical supplies and smallwares.
(1)Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.

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 JanuaryOctober 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 resultsDuring the first quarter of Greco are reflected infiscal 2023, the company’s consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing fromcompany 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.

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Preliminary Purchase Price Allocation
(In millions)
Accounts receivable, net$69 
Inventories79 
Plant and equipment24 
Other assets151 
Goodwill and other intangibles (1)
717 
Total assets1,040 
Accounts payable(73)
Accrued expenses(17)
Deferred tax liabilities(35)
Other liabilities(154)
Total consideration$761 

(1) The excess purchase price of $717.1 million was assigned to goodwill and intangibles, a portion of which is deductible for income tax purposes. Goodwill of $491.6 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.”

11


The following tables present the company’s assets measured at fair value on a recurring basis as of JanuaryOctober 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 1Level 2Level 3Total Level 1Level 2Level 3Total
(In thousands) (In thousands)
Assets:Assets:Assets:
Cash equivalentsCash equivalentsCash equivalents
Cash and cash equivalentsCash 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 valueTotal 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 1Level 2Level 3Total
 (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents$2,805,961 $$— $2,805,964 
Other assets (1)
29,977 — — 29,977 
Total assets at fair value$2,835,938 $$— $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 1Level 2Level 3Total
 (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 JanuaryOctober 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 JanuaryOctober 1, 2022 and $10.6 billion as of July 3, 2021.2, 2022.

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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 JanuaryOctober 1, 2022 and July 3, 2021:2, 2022:
Jan. 1, 2022Oct. 1, 2022
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable SecuritiesAmortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)(In thousands)
Fixed income securities:Fixed income securities:Fixed income securities:
Corporate bondsCorporate bonds$95,077 $1,588 $(1,123)$95,542 $— $95,542 Corporate bonds$96,457 $— $(8,615)$87,842 $5,955 $81,887 
Government bondsGovernment bonds30,213 2,950 (24)33,139 — 33,139 Government bonds29,997 — (1,885)28,112 — 28,112 
Total marketable securitiesTotal 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, 2021Jul. 2, 2022
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable SecuritiesAmortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)(In thousands)
Fixed income securities:Fixed income securities:Fixed income securities:
Corporate bondsCorporate bonds$92,547 $2,491 $(456)$94,582 $11,570 $83,012 Corporate bonds$96,167 $$(5,995)$90,180 $5,983 $84,197 
Government bondsGovernment bonds31,552 3,556 — 35,108 — 35,108 Government bonds30,070 — (302)29,768 — 29,768 
Total marketable securitiesTotal marketable securities$124,099 $6,047 $(456)$129,690 $11,570 $118,120 Total marketable securities$126,237 $$(6,297)$119,948 $5,983 $113,965 

As of JanuaryOctober 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 years88,08471,062 
Due after five years through ten years40,59738,937 
Total$128,681115,954 

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 JanuaryOctober 1, 2022 are presented below:
Maturity Date of the Hedging InstrumentCurrency / Unit of MeasureNotional Value
(In millions)
Hedging of interest rate risk
June 2023Euro500
Hedging of foreign currency risk
Various (January(October 2022 to April 2022)January 2023)Swedish Krona245131
Various (January(October 2022 to JuneDecember 2022)British Pound Sterling2010
June 2023Euro500
Hedging of fuel risk
Various (JanuaryOctober 2022 to June 2022)December 2024)Gallons2259

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of JanuaryOctober 1, 2022 and July 3, 20212, 2022 are as follows:
Derivative Fair Value Derivative Fair Value
Balance Sheet locationJan. 1, 2022Jul. 3, 2021 Balance Sheet locationOct. 1, 2022Jul. 2, 2022
(In thousands)(In thousands)
Fair Value Hedges:Fair Value Hedges:Fair Value Hedges:
Interest rate swapsInterest rate swapsOther assets$3,970 $43,217 Interest rate swapsOther current liabilities$7,136 $2,820 
Cash Flow Hedges:Cash Flow Hedges:Cash Flow Hedges:
Fuel swapsFuel swapsOther current assets$8,766 $16,732 Fuel swapsOther current assets$16,188 $47,170 
Foreign currency forwardsForeign currency forwardsOther current assets183 42 Foreign currency forwardsOther current assets945 633 
Fuel swapsFuel swapsOther assets— 
Fuel swapsFuel swapsOther current liabilities102 — Fuel swapsOther current liabilities1,647 — 
Foreign currency forwardsOther current liabilities473 46 
Fuel swapsFuel swapsOther long-term liabilities3,844 209 

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 Ended26-Week Period Ended13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020Oct. 1, 2022Oct. 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 recordedTotal 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 itemsHedged items$29,787 $(3,793)$27,355 $(13,791)Hedged items$2,376 $(2,433)
Derivatives designated as hedging instrumentsDerivatives 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 Ended26-Week Period Ended13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020Oct. 1, 2022Oct. 2, 2021
(In thousands)(In thousands)
Interest expenseInterest expense$(5,367)$(9,735)$(11,892)$(24,568)Interest expense$(1,939)$(6,526)
Decrease in fair value of debtDecrease in fair value of debt(35,154)(5,942)(39,247)(10,777)Decrease in fair value of debt(4,315)(4,093)
Hedged itemsHedged 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 JanuaryOctober 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 DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(7,588)Operating expense$9,608 
Foreign currency contracts(356)Cost of sales / Other income— 
Total$(7,944)$9,608 
Derivatives in net investment hedging relationships:
Foreign denominated debt$11,149 N/A$— 
Total$11,149 $— 
13-Week Period Ended Dec. 26, 2020
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$16,939 Operating expense$(7,613)
Foreign currency contracts(587)Cost of sales / Other income— 
Total$16,352 $(7,613)
Derivatives in net investment hedging relationships:
Foreign denominated debt$(27,554)N/A$— 
Total$(27,554)$— 

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 26-week periods ended January 1, 2022 and December 26, 2020, presented on a pretax basis, are as follows:
13-Week Period Ended Oct. 1, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(36,295)Operating expense$12,985 
Foreign currency contracts286 Cost of sales / Other income— 
Total$(36,009)$12,985 
Derivatives in net investment hedging relationships:
Foreign denominated debt$31,346 N/A$— 
Total$31,346 $— 
13-Week Period Ended Oct. 2, 2021
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(485)Operating expense$7,972 
Foreign currency contracts(78)Cost of sales / Other income— 
Total$(563)$7,972 
Derivatives in net investment hedging relationships:
Foreign denominated debt$13,553 N/A$— 
Total$13,553 $— 

1613


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


The location and carrying amount of hedged liabilities in the consolidated balance sheet as of JanuaryOctober 1, 2022 are as follows:
Jan. 1, 2022Oct. 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)(In thousands)
Balance sheet location:Balance sheet location:Balance sheet location:
Current maturities of long-term debtCurrent 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, 20212, 2022 are as follows:
17


Jul. 3, 2021Jul. 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)(In thousands)
Balance sheet location:Balance sheet location:Balance sheet location:
Current maturities of long-term debtCurrent maturities of long-term debt$(568,601)$2,820 
Long-term debt$(1,065,364)$(43,217)

8. DEBT

The companySysco has a $2.0 billion long-term revolving credit facility that expires on June 28, 2024, subjectincludes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to extension.increase such commitments to $4.0 billion. As of JanuaryOctober 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 innotes. 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 JanuaryOctober 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 DatePar Value
(in millions)
Coupon RatePricing
(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.

18


9.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
13-Week Period Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 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 earningsNet earnings$167,441 $67,289 $545,454 $284,189 Net earnings$465,568 $378,013 
Denominator:Denominator:Denominator:
Weighted-average basic shares outstandingWeighted-average basic shares outstanding511,044,400 510,006,754 511,780,234 509,567,080 Weighted-average basic shares outstanding507,578,576 512,516,067 
Dilutive effect of share-based awardsDilutive effect of share-based awards3,530,489 2,736,038 3,398,676 2,173,698 Dilutive effect of share-based awards2,804,573 3,266,861 
Weighted-average diluted shares outstandingWeighted-average diluted shares outstanding514,574,889 512,742,792 515,178,910 511,740,778 Weighted-average diluted shares outstanding510,383,149 515,782,928 
Basic earnings per shareBasic earnings per share$0.33 $0.13 $1.07 $0.56 Basic earnings per share$0.92 $0.74 
Diluted earnings per shareDiluted 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 6,287,0001,963,000 for the secondfirst quarter of fiscal 20222023 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.

14


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 weeksquarter of fiscal 20222023 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:
19


  13-Week Period Ended Oct. 1, 2022
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Reclassification adjustments:
Amortization of prior service costOther expense, net$99 $25 $74 
Amortization of actuarial loss, netOther expense, net9,186 2,295 6,891 
Total reclassification adjustments9,285 2,320 6,965 
Foreign currency translation:
Foreign currency translation adjustmentN/A(232,182)— (232,182)
Marketable securities:
   Change in marketable securities (1)
N/A(4,212)(884)(3,328)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
   Change in cash flow hedge
Operating expenses (2)
(36,009)(9,619)(26,390)
   Change in net investment hedgeN/A31,346 7,837 23,509 
Total other comprehensive income before reclassification adjustments(4,663)(1,782)(2,881)
Reclassification adjustments:    
Amortization of cash flow hedgesInterest expense2,874 719 2,155 
Total other comprehensive income (loss)$(228,898)$373 $(229,271)
  13-Week Period Ended Jan. 1, 2022
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Reclassification adjustments:
Amortization of prior service costOther expense, net$99 $25 $74 
Amortization of actuarial loss, netOther expense, net7,401 1,913 5,488 
Total reclassification adjustments7,500 1,938 5,562 
Foreign currency translation:
Foreign currency translation adjustmentN/A(26,870)— (26,870)
Marketable securities:
   Change in marketable securities (1)
N/A(1,808)(379)(1,429)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
   Change in cash flow hedge
Operating expenses (2)
(7,944)(1,843)(6,101)
   Change in net investment hedgeN/A11,149 2,787 8,362 
Total other comprehensive income before reclassification adjustments3,205 944 2,261 
Reclassification adjustments:    
Amortization of cash flow hedgesInterest expense2,874 719 2,155 
Total other comprehensive loss$(15,099)$3,222 $(18,321)
(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 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
TaxNet of Tax
Amount
Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet 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 costAmortization of prior service costOther expense, net$183 $46 $137 Amortization of prior service costOther expense, net$99 $25 $74 
Amortization of actuarial loss, netAmortization of actuarial loss, netOther expense, net10,387 2,594 7,793 Amortization of actuarial loss, netOther expense, net8,486 2,119 6,367 
Total reclassification adjustmentsTotal reclassification adjustments10,570 2,640 7,930 Total reclassification adjustments8,585 2,144 6,441 
Foreign currency translation:Foreign currency translation:Foreign currency translation:
Foreign currency translation adjustmentForeign currency translation adjustmentN/A222,507 — 222,507 Foreign currency translation adjustmentN/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 hedgesChange in cash flow hedges
Operating expenses (2)
(563)(134)(429)
Change in net investment hedgesChange in net investment hedgesN/A(27,554)(6,888)(20,666)Change in net investment hedgesN/A13,553 3,388 10,165 
Total other comprehensive income before reclassification adjustmentsTotal other comprehensive income before reclassification adjustments(11,202)(2,871)(8,331)Total other comprehensive income before reclassification adjustments12,990 3,254 9,736 
Reclassification adjustments:Reclassification adjustments:Reclassification adjustments:
Amortization of cash flow hedgesAmortization of cash flow hedgesInterest expense2,874 719 2,155 Amortization of cash flow hedgesInterest expense2,874 719 2,155 
Total other comprehensive incomeTotal 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
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Reclassification adjustments:
Amortization of prior service costOther expense, net$198 $50 $148 
Amortization of actuarial loss, netOther expense, net15,887 4,032 11,855 
Total reclassification adjustments16,085 4,082 12,003 
Foreign currency translation:
Other comprehensive income (loss) before reclassification adjustments:
Foreign currency translation adjustmentN/A(114,064)— (114,064)
Marketable securities:
Change in marketable securities (1)
N/A(2,201)(461)(1,740)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
(8,507)(1,977)(6,530)
Change in net investment hedgesN/A24,702 6,175 18,527 
Total other comprehensive income before reclassification adjustments16,195 4,198 11,997 
Reclassification adjustments:    
Amortization of cash flow hedgesInterest expense5,748 1,438 4,310 
Total other comprehensive income (loss)$(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.


22


  26-Week Period Ended Dec. 26, 2020
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Reclassification adjustments:    
Amortization of prior service costOther expense, net$366 $92 $274 
Amortization of actuarial loss, netOther expense, net20,740 5,182 15,558 
Total reclassification adjustments21,106 5,274 15,832 
Foreign currency translation:
Foreign currency translation adjustmentN/A335,647 — 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 hedgesN/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 hedgesInterest expense5,748 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.
23




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 TranslationHedging,
net of tax
Marketable Securities,
net of tax
Total Pension and Other Postretirement Benefit Plans,
net of tax
Foreign Currency TranslationHedging,
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 $(1,148,764)
Balance as of Jul. 2, 2022Balance as of Jul. 2, 2022$(1,011,335)$(501,517)$35,770 $(4,972)$(1,482,054)
Equity adjustment from foreign currency translationEquity adjustment from foreign currency translation— (114,064)— — (114,064)Equity adjustment from foreign currency translation— (232,182)— — (232,182)
Amortization of cash flow hedgesAmortization of cash flow hedges— — 4,310 — 4,310 Amortization of cash flow hedges— — 2,155 — 2,155 
Change in net investment hedgesChange in net investment hedges— — 18,527 — 18,527 Change in net investment hedges— — 23,509 — 23,509 
Change in cash flow hedgeChange in cash flow hedge— — (6,530)— (6,530)Change in cash flow hedge— — (26,390)— (26,390)
Amortization of unrecognized prior service costAmortization of unrecognized prior service cost148 — — — 148 Amortization of unrecognized prior service cost74 — — — 74 
Amortization of unrecognized net actuarial lossesAmortization of unrecognized net actuarial losses11,855 — — — 11,855 Amortization of unrecognized net actuarial losses6,891 — — — 6,891 
Change in marketable securitiesChange 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 $(1,236,258)
Balance as of Oct. 1, 2022Balance as of Oct. 1, 2022$(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 TranslationHedging,
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 $(1,710,881)
Equity adjustment from foreign currency translation— 335,647 — — 335,647 
Amortization of cash flow hedges— — 4,310 — 4,310 
Change in net investment hedges— — (31,927)— (31,927)
Change in cash flow hedge— — (632)— (632)
Amortization of unrecognized prior service cost274 — — — 274 
Amortization of unrecognized net actuarial losses15,558 — — — 15,558 
Change in marketable securities— — — (518)(518)
Balance as of Dec. 26, 2020$(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 TranslationHedging,
net of tax
Marketable SecuritiesTotal
 (In thousands)
Balance as of Jul. 3, 2021$(1,061,991)$(40,092)$(51,096)$4,415 $(1,148,764)
Equity adjustment from foreign currency translation— (87,194)— — (87,194)
Amortization of cash flow hedges— — 2,155 — 2,155 
Change in net investment hedges— — 10,165 — 10,165 
Change in cash flow hedge— — (429)— (429)
Amortization of unrecognized prior service cost74 — — — 74 
Amortization of unrecognized net actuarial losses6,367 — — — 6,367 
Change in marketable securities— — — (311)(311)
Balance as of Oct. 2, 2021$(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 1,224,150882,359 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 20222023 was $17.39.$24.58.

In the first 2613 weeks of fiscal 2022,2023, employees were granted 470,720420,627 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
24


vesting period. The weighted average grant-date fair value per PSU granted during the first 2613 weeks of fiscal 20222023 was $76.75. $85.43.
17


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 201,922172,987 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 2613 weeks of fiscal 20222023 was $76.49.$85.38.

Employee Stock Purchase Plan

Plan participants purchased 465,814326,226 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 20222023 and fiscal 2021,2022, respectively.

As of JanuaryOctober 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 1.862.16 years.

12.  INCOME TAXES

Effective Tax Rate

The effective tax ratesrate for the secondfirst 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 weeksquarter 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 secondfirst 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. The 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 JanuaryOctober 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.

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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.

18


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.

26


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

13-Week Period Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
Sales:Sales:(In thousands)(In thousands)Sales:(In thousands)
U.S. Foodservice OperationsU.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 OperationsInternational Foodservice Operations2,806,272 1,967,789 5,701,519 4,131,482 International Foodservice Operations3,283,735 2,895,247 
SYGMASYGMA1,771,323 1,520,401 3,475,356 3,044,549 SYGMA1,933,457 1,704,033 
OtherOther244,453 146,649 498,756 314,654 Other307,156 254,303 
TotalTotal$16,320,203 $11,558,982 $32,776,749 $23,336,361 Total$19,126,830 $16,456,546 
13-Week Period Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
Operating income (loss):Operating income (loss):(In thousands)(In thousands)Operating income (loss):(In thousands)
U.S. Foodservice OperationsU.S. Foodservice Operations$676,822 $485,251 $1,474,345 $1,073,660 U.S. Foodservice Operations$903,828 $797,523 
International Foodservice OperationsInternational Foodservice Operations10,745 (79,949)47,421 (80,486)International Foodservice Operations87,208 36,676 
SYGMASYGMA(6,729)11,328 (9,176)23,020 SYGMA5,471 (2,447)
OtherOther183 (1,018)6,639 (1,023)Other11,538 6,456 
Total segmentsTotal segments681,021 415,612 1,519,229 1,015,171 Total segments1,008,045 838,208 
Global Support CenterGlobal Support Center(236,112)(203,550)(442,638)(383,530)Global Support Center(273,712)(206,526)
Total operating incomeTotal operating income444,909 212,062 1,076,591 631,641 Total operating income734,333 631,682 
Interest expenseInterest expense242,899 146,498 371,113 293,215 Interest expense124,150 128,214 
Other (income) expense, net(10,676)(15,556)(13,928)(1,432)
Other expense (income), netOther expense (income), net15,281 (3,252)
Earnings before income taxesEarnings before income taxes$212,686 $81,120 $719,406 $339,858 Earnings before income taxes$594,902 $506,720 

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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.

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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, 20212, 2022 (our fiscal 20212022 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 secondfirst quarter of fiscal 20222023 results were primarily attributablereflected 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 asgenerated 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 forFor Growth strategy. Our financial results demonstratestrategy, 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 20222023 results to our fiscal 20212022 results, both including and excluding Certain Items (as defined below).

Comparisons of results from the secondfirst quarter of fiscal 20222023 to the secondfirst quarter of fiscal 20212022 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:
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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, thatas 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 20222023 and fiscal 20212022 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.

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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 secondfirst quarter of fiscal 2022. While such restrictions2023. Restaurants continued to be resilient and our travel/hospitality and business/industry segments results posted year-over-year improvements. We are slowly startingclosely 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 easethe year in February, these types of restrictions impactboth 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. Instated 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.
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non-commercial sector.

Sales and Gross Profit Trends

Our sales and gross profit performance can beare influenced by multiple factors, including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in the secondfirst quarter of fiscal 20222023 was volume growth, as we experienced strong results from both independentnational and chainlocal 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 secondfirst quarter of fiscal 2021. Sysco continues to lead the industry2022. 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 hasgrowth enabled us to gain market share during the secondfirst 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 passedseeing 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 1.21.5 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 secondfirst 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 meatdairy and poultryfrozen categories. We have beencontinue to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin decreased 44 and 62increased 18 basis points in the secondfirst quarter and the first 26 weeks of fiscal 2022, respectively,2023, as compared to the same prior year periods, largely due toperiod, primarily driven by higher volumes, the impacteffective 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021,2022, driven by the variable costs associated with significantly increased volumes, increased labor costs stemmingcost inflation, continued operational cost pressures from supply chain issuesthe 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 madeof $63.4 million, new-associate related productivity costs of $41.1 million and a purposeful response to the COVID-generated labor and safety environmentsequential 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 staffingphysical 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 transportation2023. The actual charge will depend on finalization of the actuarial and warehouse staff. Onboardingother 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, someamount of ouron-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
29


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 cultivatereinforce 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 leadingtwo small U.S.-based independent specialty Italian distributor in the United States. We expect this acquisitionfood 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.

22

In
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.

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Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another,Another.whichPurpose driven companies are believed to perform better, and we believe our purpose will allowassist 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 continuethat is currently under construction and has proved to expand, while the sales transformation is helpingbe beneficial to our sales teams continue to win new business.pilot customers. Additionally, we are continuingimproving 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, suchsupport 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 stagesa 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 gainingincreasing 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 Ended26-Week Period Ended 13-Week Period Ended
Jan. 1, 2022Dec. 26, 2020Jan. 1, 2022Dec. 26, 2020 Oct. 1, 2022Oct. 2, 2021
SalesSales100.0 %100.0 %100.0 %100.0 %Sales100.0 %100.0 %
Cost of salesCost of sales82.3 81.8 82.1 81.5 Cost of sales81.8 81.9 
Gross profitGross profit17.7 18.2 17.9 18.5 Gross profit18.2 18.1 
Operating expensesOperating expenses15.0 16.3 14.6 15.8 Operating expenses14.4 14.2 
Operating incomeOperating income2.7 1.9 3.3 2.7 Operating income3.8 3.8 
Interest expenseInterest expense1.5 1.3 1.1 1.3 Interest expense0.6 0.8 
Other (income) expense, netOther (income) expense, net(0.1)(0.1)— — Other (income) expense, net0.1 — 
Earnings before income taxesEarnings before income taxes1.3 0.7 2.2 1.4 Earnings before income taxes3.1 3.1 
Income taxesIncome taxes0.3 0.1 0.5 0.2 Income taxes0.7 0.8 
Net earningsNet earnings1.0 %0.6 %1.7 %1.2 %Net earnings2.4 %2.3 %

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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 Ended26-Week Period Ended
Jan. 1, 2022Jan. 1, 2022
Sales41.2 %40.5 %
Cost of sales41.9 41.5 
Gross profit37.8 35.8 
Operating expenses29.7 29.8 
Operating income109.8 70.4 
Interest expense65.8 26.6 
Other (income) expense, net (1) (2)
(31.4)872.6 
Earnings before income taxes162.2 111.7 
Income taxes227.1 212.5 
Net earnings148.8 %91.9 %
Basic earnings per share153.8 %91.1 %
Diluted earnings per share153.8 89.3 
Average shares outstanding0.2 0.4 
Diluted shares outstanding0.4 0.7 
13-Week Period Ended
Oct. 1, 2022
Sales16.2 %
Cost of sales16.0 
Gross profit17.4 
Operating expenses17.7 
Operating income16.3 
Interest expense(3.2)
Other (income) expense, net (1)
(569.9)
Earnings before income taxes17.4 
Income taxes0.5 
Net earnings23.2 %
Basic earnings per share24.3 %
Diluted earnings per share24.7 
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 OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
(In thousands) (In thousands)
SalesSales$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 increaseSales increase17.2 %13.4 %13.5 %20.8 %16.2 %
Percentage of totalPercentage of total70.5 %17.2 %10.9 %1.4 %100.0 %Percentage of total71.1 %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 %NMNMNM16.0 %NM
Operating income (loss) increaseOperating income (loss) increase13.3 %137.8 %NM78.7 %32.5 %16.3 %
Percentage of total segmentsPercentage of total segments99.4 %1.6 %(1.0)%— %100.0 %Percentage of total segments89.7 %8.7 %0.5 %1.1 %100.0 %
Operating income (loss) as a percentage of sales5.9 %0.4 %(0.4)%0.1 %2.7 %
Operating income as a percentage of salesOperating income as a percentage of sales6.6 %2.7 %0.3 %3.8 %3.8 %

 13-Week Period Ended Dec. 26, 2020
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
 (In thousands)
Sales$7,924,143 $1,967,789 $1,520,401 $146,649 $— $11,558,982 
Percentage of total68.6 %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 segments116.8 %(19.2)%2.7 %(0.3)%100.0 %
Operating income as a percentage of sales6.1 %(4.1)%0.7 %(0.7)%1.8 %

32


 26-Week Period Ended Jan. 1, 2022
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
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 total70.5 %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)%NM70.4 %
Percentage of total segments97.0 %3.1 %(0.6)%0.5 %100.0 %
Operating income as a percentage of sales6.4 %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 OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
(In thousands) (In thousands)
SalesSales$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 totalPercentage of total67.9 %17.7 %13.0 %1.4 %100.0 %Percentage of total70.5 %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 segmentsPercentage of total segments105.8 %(7.9)%2.3 %(0.2)%100.0 %Percentage of total segments95.1 %4.4 %(0.3)%0.8 %100.0 %
Operating income as a percentage of sales6.8 %(1.9)%0.8 %(0.3)%2.7 %
Operating income (loss) as a percentage of salesOperating income (loss) as a percentage of sales6.9 %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 secondfirst 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.
24



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:

33


13-Week Period Ended Jan. 1, 202213-Week Period Ended Dec. 26, 2020Change in Dollars% Change 13-Week Period Ended Oct. 1, 202213-Week Period Ended Oct. 2, 2021Change in Dollars% Change
(Dollars in thousands) (Dollars in thousands)
SalesSales$11,498,155 $7,924,143 $3,574,012 45.1 %Sales$13,602,482 $11,602,963 $1,999,519 17.2 %
Gross profitGross profit2,139,278 1,559,322 579,956 37.2 Gross profit2,612,343 2,185,154 427,189 19.5 
Operating expensesOperating expenses1,462,456 1,074,071 388,385 36.2 Operating expenses1,708,515 1,387,631 320,884 23.1 
Operating incomeOperating income$676,822 $485,251 $191,571 39.5 %Operating income$903,828 $797,523 $106,305 13.3 %
Gross profitGross 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, 202226-Week Period Ended Dec. 26, 2020Change in Dollars % Change
(Dollars in thousands)
Sales$23,101,118 $15,845,676 $7,255,442 45.8 %
Gross profit4,324,432 3,159,029 1,165,403 36.9 
Operating expenses2,850,087 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 Period26-Week Period13-Week Period
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Cause of changeCause of changePercentageDollarsPercentageDollarsCause of changePercentageDollars
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 salesTotal change in sales45.1 %$3,574.0 45.8 %$7,255.4 Total change in sales17.2 %$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 driverdrivers of the sales increase in the secondfirst quarter and the first 26 weeks of fiscal 2022 was the significant2023 were inflation, along with an improvement in case volume in our U.S. Broadline operations as aFoodservice 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 operationsFoodservice Operations increased 22.5% and 25.3%7.3% in the secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021.2022. This included a 17.6% and 20.8% improvement5.4% 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively. The increases in U.S. Broadline case volumes represent organic growth.
34


2023.

Operating Income

The increase in operating income for the secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst 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 secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021,2022, was driven primarily by the improvement in local cases andstemming 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 secondfirst quarter and first 26 weeks of fiscal 20222023 for our U.S. Broadline operations was inflation of 14.6% and 13.8%, respectively.12.0%. For the secondfirst quarter of fiscal 2022,2023, this change in product costs was primarily driven by inflation in the meatdairy and poultryfrozen categories. Gross margin, which is gross profit as a percentage of sales, was 18.61% and 18.72%19.2% in the secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023 for our U.S. Foodservice Operations, which was a decreasean increase of 10737 basis points compared to gross margin of 19.68%18.8% in the secondfirst 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.

25


The increase in operating expenses for the secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst 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-onemployee 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 duedesigned 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.

35


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, 202213-Week Period Ended Dec. 26, 2020Change in Dollars% Change 13-Week Period Ended Oct. 1, 202213-Week Period Ended Oct. 2, 2021Change in Dollars% Change
(Dollars in thousands) (Dollars in thousands)
SalesSales$2,806,272 $1,967,789 $838,483 42.6 %Sales$3,283,735 $2,895,247 $388,488 13.4 %
Gross profitGross profit565,931 373,840 192,091 51.4 Gross profit649,265 589,134 60,131 10.2 
Operating expensesOperating expenses555,186 453,789 101,397 22.3 Operating expenses562,057 552,458 9,599 1.7 
Operating income (loss)$10,745 $(79,949)$90,694 NM
Operating incomeOperating income$87,208 $36,676 $50,532 137.8 %
Gross profitGross 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, 202226-Week Period Ended Dec. 26, 2020Change in Dollars % Change
(Dollars in thousands)
Sales$5,701,519 $4,131,482 $1,570,037 38.0 %
Gross profit1,155,065 824,238 330,827 40.1 
Operating expenses1,107,644 904,724 202,920 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

36


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 Period26-Week Period13-Week Period
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Cause of changeCause of changePercentageDollarsPercentageDollarsCause of changePercentageDollars
InflationInflation6.2 %$121.1 7.1 %$293.9 Inflation14.5 %$418.5 
Foreign currencyForeign currency1.8 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 salesTotal change in sales42.6 %$838.5 38.0 %$1,570.0 Total change in sales13.4 %$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 secondfirst quarter and first 26 weeks of fiscal 20222023 were higher, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021,2022, primarily due to the significantinflation along with an improvement in volume. Volume trends were accelerating prior to the onsetvolume, 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 impactwas attributable to our customers and our business as international restrictions are starting to ease, including in Ireland andRecipe 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 secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst 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.

26


The increase in gross profit dollars in the secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst 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 secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to the secondfirst 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021,2022, primarily from an increase in case volumevolumes driven by the success of national and regional quick-servicequick service restaurants partially offset by a decrease in volume due to the planned exit of a large regional customer.and inflation. Operating income decreasedincreased by $18.1 million and $32.2$7.9 million in the secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst 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 offsetthe 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst quarter and first 26 weeks of fiscal 2021,2022, primarily due to the recovery of our hospitality business, Guest Worldwide. ThisVolume for this business has improved, as hospitality occupancy rates have grown from prior year levels.

37


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 secondfirst quarter of fiscal 20222023 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 weeksquarter 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 secondfirst quarter and first 26 weeks of fiscal 2022,2023, as compared to $12.0 million and $24.0$27.7 million in the secondfirst quarter and first 26 weeks of fiscal 2021, respectively.2022. Certain Items impacting the secondfirst quarter andof fiscal 2023 were primarily expenses associated with our business technology transformation initiatives. Certain Items impacting the first 26 weeksquarter 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 $77.9decreased $4.1 million for the secondfirst 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 byprimarily 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, as compared to the secondfirst 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 secondfirst quarter and first 26 weeks of fiscal 2022, respectively,2023, primarily due to a significantan 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 secondfirst quarter of fiscal 20222023 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 secondfirst quarter of fiscal 20222023 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 weeksquarter of fiscal 20222023 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, includingsuch 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 thean 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 20222023 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.
39


13-Week Period Ended Jan. 1, 202213-Week Period Ended Dec. 26, 2020Change 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 debt115,603 — 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 debt0.22 — 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, 202213-Week Period Ended Oct. 2, 2021Change 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
29


13-Week Period Ended Oct. 1, 202213-Week Period Ended Oct. 2, 2021Change 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 20222023 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 20212022 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 20222023 includes $27$26 million of intangible amortization expense and $7$4 million in acquisition and due diligence costs. Fiscal 2021 represents2022 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 20222023 and fiscal 20212022 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.
41


13-Week Period Ended Jan. 1, 202213-Week Period Ended Dec. 29, 2018Change 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 debt115,603 — 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 debt0.22 — 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, 202213-Week Period Ended Oct. 2, 2021Change 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 costs48 (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)(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, 202226-Week Period Ended Dec. 26, 2020Change 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 debt115,603 — 115,603 NM
Impact of loss on sale of business— 12,043 (12,043)NM
44


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 positions12,000 — $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 debt0.22 — 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 positions0.02 — 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.

45



26-Week Period Ended Jan. 1, 202226-Week Period Ended Dec. 29, 2018Change 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 debt115,603 — 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 positions12,000 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 debt0.22 — 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 positions0.02 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)%
46


(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.
47



13-Week Period Ended Jan. 1, 202213-Week Period Ended Dec. 26, 2020Change 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 costs16 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)NM
Operating expenses adjusted for Certain Items (Non-GAAP)$143,681 $117,977 $25,704 21.8 %
48


Operating (loss) income (GAAP)$(6,729)$11,328 $(18,057)(159.4)%
Impact of restructuring and transformational project costs— (6)NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)$(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)
(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)$(30,581)(16.0)%
13-Week Period Ended Oct. 1, 202213-Week Period Ended Oct. 2, 2021Change in Dollars%/bps Change
GLOBAL SUPPORT CENTER
Gross (loss) profit (GAAP)$(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 includesinclude intangible amortization expense and acquisition costs.
(2)Fiscal 20222023 and fiscal 20212022 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.

49



U.S. FOODSERVICE OPERATIONS26-Week Period Ended Jan. 1, 202226-Week Period Ended Dec. 26, 2020Change 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 costs19 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
50


Operating expenses (GAAP)$284,285 $237,820 $46,465 19.5 %
Impact of restructuring and transformational project costs— (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 $(32,196)(139.9)%
Impact of restructuring and transformational project costs— (7)NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)$(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)
(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 20212022 Form 10-K for discussions aroundregarding 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, 202213-Week Period Ended Dec. 26, 2020Change in Dollars% Change13-Week Period Ended Oct. 1, 202213-Week Period Ended Oct. 2, 2021Change 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 20222023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(2)Fiscal 2023 and fiscal 2021 includes2022 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 includesinclude acquisition and due diligence costs.
(3)(4)Fiscal 20222023 and fiscal 20212022 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, 202213-Week Period Ended Dec. 29, 2018Change 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)%
52


(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, 202226-Week Period Ended Dec. 26, 2020Change 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.

53


26-Week Period Ended Jan. 1, 202226-Week Period Ended Dec. 29, 2018Change 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 forin fiscal 20222023 and fiscal 2019,2022, respectively.
NM represents that the percentage change is not meaningful.



5433


Liquidity and Capital Resources

Highlights

As of JanuaryOctober 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 recoverycapital 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 20222023 to the first 2613 weeks of fiscal 20212022 are provided.

 26-Week Period Ended Jan. 1, 202226-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 equipment5,450 15,510 
Free Cash Flow (Non-GAAP) (1)
$201,123 $788,244 
Acquisition of businesses, net of cash acquired$(769,658)$— 
Debt borrowings (repayments), net1,226,945 (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, 202213-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 equipment22,448 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), net137,959 (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 20212022 Form 10-K for discussions aroundregarding this non-GAAP performance metric.


Sources and Uses of Cash

Sysco generates cash in the U.S and internationally. As of JanuaryOctober 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 activitiesoperations of $936.7$110.8 million in the first 2613 weeks of fiscal 2021. These2022. In the first 13 weeks of fiscal 2023, these amounts includeincluded year-over-year unfavorable comparisons on working capital and accrued income taxes, partially offset bydue to higher operating resultsaccounts receivables and a favorable comparison on accrued expenses.

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decrease in accounts payable. Changes in working capital had a negative impact of $974.0$127.7 million on cash flowflows 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.
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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 awere positive comparison,comparisons, primarily from favorable comparisons ofaccrued interest, earnout liabilities, related to our acquisitionsand self-insurance in the first 2613 weeks of fiscal 2022 and customer rebate payments resulting from an increase2023 in volume purchase incentives earned by our customers, as sales volumes increased throughcomparison to the first half13 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 20222023 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 20222023 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 suchacquisitions 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 5.73.1 million shares for $415.8$267.7 million during the first 2613 weeks of fiscal 2022.2023. As of JanuaryOctober 1, 2022, we had a remaining authorization of approximately $4.6$4.2 billion.

Dividends paid in the first 26 weeksquarter of fiscal 20222023 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 secondfirst quarter of fiscal 2021.2022. In November,August 2022, we declared our regular quarterly dividend for the secondfirst quarter of fiscal 20222023 of $0.47$0.49 per share, which was paid in JanuaryOctober 2022.

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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 JanuaryOctober 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 $2.0now $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of JanuaryOctober 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 20212022 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
35


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 SheetCombined Parent and Guarantor Subsidiaries Summarized Balance SheetJan. 1, 2022Jul. 3, 2021Combined Parent and Guarantor Subsidiaries Summarized Balance SheetOct. 1, 2022Jul. 2, 2022
(In thousands)(In thousands)
ASSETSASSETSASSETS
Receivables due from non-obligor subsidiariesReceivables due from non-obligor subsidiaries$118,561 $171,718 Receivables due from non-obligor subsidiaries$218,392 $264,378 
Current assetsCurrent assets5,469,809 6,661,284 Current assets5,714,872 5,658,972 
Total current assetsTotal current assets$5,588,370 $6,833,002 Total current assets$5,933,264 $5,923,350 
Notes receivable from non-obligor subsidiariesNotes receivable from non-obligor subsidiaries$82,833 $83,457 Notes receivable from non-obligor subsidiaries$91,138 $91,067 
Other noncurrent assetsOther noncurrent assets3,926,680 3,933,833 Other noncurrent assets3,969,771 3,910,951 
Total noncurrent assetsTotal noncurrent assets$4,009,513 $4,017,290 Total noncurrent assets$4,060,909 $4,002,018 
LIABILITIESLIABILITIESLIABILITIES
Payables due to non-obligor subsidiariesPayables due to non-obligor subsidiaries$49,591 $203,365 Payables due to non-obligor subsidiaries$60,283 $62,441 
Other current liabilitiesOther current liabilities2,436,064 2,299,674 Other current liabilities2,826,594 2,765,756 
Total current liabilitiesTotal current liabilities$2,485,655 $2,503,039 Total current liabilities$2,886,877 $2,828,197 
Notes payable to non-obligor subsidiariesNotes payable to non-obligor subsidiaries$194,365 $269,709 Notes payable to non-obligor subsidiaries$272,099 $315,753 
Long-term debtLong-term debt10,072,559 10,139,596 Long-term debt9,718,645 9,501,842 
Other noncurrent liabilitiesOther noncurrent liabilities1,298,851 1,209,598 Other noncurrent liabilities1,206,767 1,190,177 
Total noncurrent liabilitiesTotal noncurrent liabilities$11,565,775 $11,618,903 Total noncurrent liabilities$11,197,511 $11,007,772 

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Combined Parent and Guarantor Subsidiaries Summarized Results of Operations26-Week13-Week Period Ended Jan.Oct. 1, 2022
(In thousands)
Sales$20,994,09512,200,611 
Gross profit3,764,5292,216,571 
Operating income1,079,080630,507 
Interest expense from non-obligor subsidiaries32,2395,588 
Net earnings522,457375,655 

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 20212022 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:
36



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 businessfiscal 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 returnthree 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 Grecoinflation 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;
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our abilityplans 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 beliefplans with respect to our strategic pillars that oursupport 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 expectationsfree cash flow;
estimates regarding our capital expenditures and the usesources 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 beliefexpectations 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 ofin fiscal 2022;2023;
37


the sufficiency of our expectationsmechanisms for managing working capital and competitive pressures, and our beliefs regarding the amountimpact 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 20212022 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 nationalmulti-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 onthe risk that our productefforts 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 Americathe 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
59


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;
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the risk that competition in our industry and the impact of group purchasing organizationsGPOs 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 complementarycomplimentary 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;
39


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
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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 20212022 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 20212022 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 JanuaryOctober 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 JanuaryOctober 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 JanuaryOctober 1, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

Environmental Matters

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

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

Item 1A.  Risk Factors

Except as provided below, thereThere were no material changes from the risk factors disclosed in Item 1A of our fiscal 20212022 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
62


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 secondfirst quarter of fiscal 2022:2023:

ISSUER PURCHASES OF EQUITY SECURITIESISSUER PURCHASES OF EQUITY SECURITIESISSUER PURCHASES OF EQUITY SECURITIES
PeriodPeriod
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 ProgramsPeriod
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 #1Month #1    Month #1    
October 3 - October 307,059 $83.27 587,789 — 
July 3 - July 30July 3 - July 303,099,268 $86.37 267,680,804 — 
Month #2Month #2Month #2
October 31 - November 271,796,269 75.87 136,285,833 — 
July 31 - Aug 27July 31 - Aug 274,638 86.18 399,720 — 
Month #3Month #3Month #3
November 28 - January 13,883,029 71.99 279,538,437 — 
Aug 28 - October 1Aug 28 - October 11,191 83.89 99,913 — 
TotalsTotals5,686,357 $73.23 416,412,059 — Totals3,105,097 $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

41


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
   
3.2
   
3.3
   
3.4
4.110.1#
4.210.2#
10.1†10.3†#
10.4†#
10.2†10.5†#
10.6†#
10.7†
10.3†#
22.1#22.1
31.1#
   
31.2#
   
32.1#
   
32.2#
   
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
43


101.LAB#Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE#Inline XBRL Taxonomy Extension Presentation Linkbase Document
64


104Cover 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
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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, 2022By:/s/ KEVIN P. HOURICAN
 Kevin P. Hourican
  President and Chief Executive Officer
Date: February 8,November 1, 2022By:/s/ AARON E. ALT
 Aaron E. Alt
  Executive Vice President and
Chief Financial Officer
Date: February 8,November 1, 2022By:/s/ ANITA A. ZIELINSKISCOTT B. STONE
 Anita A. ZielinskiScott B. Stone
 Senior Vice President andof Financial Reporting
 and Interim Chief Accounting Officer

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