UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

~~Form~~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 April ~~2, 2022~~1, 2023


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

Commission File ~~Number~~Number: 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)


Delaware						74-1648137
(State or other jurisdiction of incorporation or organization)						(~~IRS employer identification number)~~I.R.S. Employer Identification Number)

1390 Enclave Parkway, Houston, Texas 77077-2099

(Address of principal executive ~~offices and zip code)~~offices) (Zip Code)

Registrant’s ~~Telephone Number, Including Area Code:~~telephone number, including area code:

(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, $1.00 Par Value

SYY

New York Stock Exchange

1.25% Notes due June 2023

SYY 23

New York Stock Exchange

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

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

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

~~509,475,816~~506,682,318 shares of common stock were outstanding as of April ~~22, 2022.~~14, 2023.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)


		Apr. 2, 2022		Jul. 3, 2021				Apr. 1, 2023		Jul. 2, 2022
		(unaudited)						(unaudited)
ASSETS	ASSETS					ASSETS
Current assets	Current assets						Current assets
Cash and cash equivalents	Cash and cash equivalents	$	876,139	$	3,007,123		Cash and cash equivalents	$	757,867	$	867,086
Accounts receivable, less allowances of $126,580 and $117,695		4,777,660		3,781,510
Accounts receivable, less allowances of $81,190 and $70,790							Accounts receivable, less allowances of $81,190 and $70,790	5,227,387		4,838,912
Inventories	Inventories	4,409,094		3,695,219			Inventories	4,620,614		4,437,498

Prepaid expenses and other current assets	Prepaid expenses and other current assets	303,212		240,956			Prepaid expenses and other current assets	292,726		303,789

Income tax receivable	Income tax receivable	47,173		8,759			Income tax receivable	—		35,934
Total current assets	Total current assets	10,413,278		10,733,567			Total current assets	10,898,594		10,483,219
Plant and equipment at cost, less accumulated depreciation	Plant and equipment at cost, less accumulated depreciation	4,345,098		4,326,063			Plant and equipment at cost, less accumulated depreciation	4,649,356		4,456,420
Other long-term assets	Other long-term assets						Other long-term assets
Goodwill	Goodwill	4,703,777		3,944,139			Goodwill	4,613,805		4,542,315
Intangibles, less amortization	Intangibles, less amortization	1,042,878		746,073			Intangibles, less amortization	886,629		952,683

Deferred income taxes	Deferred income taxes	393,302		352,523			Deferred income taxes	435,800		377,604
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	787,347		709,163			Operating lease right-of-use assets, net	708,763		723,297
Other assets	Other assets	637,995		602,011			Other assets	509,086		550,150
Total other long-term assets	Total other long-term assets	7,565,299		6,353,909			Total other long-term assets	7,154,083		7,146,049
Total assets	Total assets	$	22,323,675	$	21,413,539		Total assets	$	22,702,033	$	22,085,688

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	Current liabilities						Current liabilities
Notes payable		$	8,655	$	8,782

Accounts payable	Accounts payable	5,721,705		4,884,781			Accounts payable	$	5,902,249	$	5,752,958
Accrued expenses	Accrued expenses	2,011,597		1,814,837			Accrued expenses	2,136,322		2,270,753
Accrued income taxes	Accrued income taxes	19,045		22,644			Accrued income taxes	123,892		40,042
Current operating lease liabilities	Current operating lease liabilities	113,157		102,659			Current operating lease liabilities	94,799		105,690
Current maturities of long-term debt	Current maturities of long-term debt	498,028		486,141			Current maturities of long-term debt	723,473		580,611
Total current liabilities	Total current liabilities	8,372,187		7,319,844			Total current liabilities	8,980,735		8,750,054
Long-term liabilities	Long-term liabilities						Long-term liabilities
Long-term debt	Long-term debt	10,608,840		10,588,184			Long-term debt	10,258,345		10,066,931
Deferred income taxes	Deferred income taxes	195,910		147,066			Deferred income taxes	212,407		250,171
Long-term operating lease liabilities	Long-term operating lease liabilities	701,929		634,481			Long-term operating lease liabilities	633,224		636,417
Other long-term liabilities	Other long-term liabilities	1,090,386		1,136,480			Other long-term liabilities	1,009,016		967,907
Total long-term liabilities	Total long-term liabilities	12,597,065		12,506,211			Total long-term liabilities	12,112,992		11,921,426

Noncontrolling interest	Noncontrolling interest	33,014		34,588			Noncontrolling interest	33,004		31,948
Shareholders’ equity	Shareholders’ equity						Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—		—			Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—		—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175		765,175			Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175		765,175
Paid-in capital	Paid-in capital	1,737,301		1,619,995			Paid-in capital	1,785,075		1,766,305
Retained earnings	Retained earnings	10,279,792		10,151,706			Retained earnings	10,829,909		10,539,722
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,299,004)		(1,148,764)			Accumulated other comprehensive loss	(1,280,885)		(1,482,054)
Treasury stock at cost, 256,507,982 and 253,342,595 shares		(10,161,855)		(9,835,216)
Treasury stock at cost, 258,761,015 and 256,531,543 shares							Treasury stock at cost, 258,761,015 and 256,531,543 shares	(10,523,972)		(10,206,888)
Total shareholders’ equity	Total shareholders’ equity	1,321,409		1,552,896			Total shareholders’ equity	1,575,302		1,382,260
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	22,323,675	$	21,413,539		Total liabilities and shareholders’ equity	$	22,702,033	$	22,085,688

Note: The July ~~3, 2021~~2, 2022 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

(In thousands, except for share and per share data)


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Sales	Sales	$	16,902,139	$	11,824,589	$	49,678,888	$	35,160,950	Sales	$	18,875,676	$	16,902,139	$	56,596,459	$	49,678,888
Cost of sales	Cost of sales	13,888,745		9,701,921		40,802,636		28,719,979		Cost of sales	15,444,316		13,888,745		46,326,628		40,802,636
Gross profit	Gross profit	3,013,394		2,122,668		8,876,252		6,440,971		Gross profit	3,431,360		3,013,394		10,269,831		8,876,252
Operating expenses	Operating expenses	2,517,665		1,886,751		7,303,932		5,573,413		Operating expenses	2,737,183		2,517,665		8,200,679		7,303,932
Operating income	Operating income	495,729		235,917		1,572,320		867,558		Operating income	694,177		495,729		2,069,152		1,572,320
Interest expense	Interest expense	124,018		145,773		495,131		438,988		Interest expense	134,931		124,018		391,123		495,131
Other income, net		(13,777)		(12,708)		(27,705)		(14,140)
Other expense (income), net (1)										Other expense (income), net (1)	5,209		(13,777)		350,614		(27,705)
Earnings before income taxes	Earnings before income taxes	385,488		102,852		1,104,894		442,710		Earnings before income taxes	554,037		385,488		1,327,415		1,104,894
Income taxes	Income taxes	82,163		13,925		256,115		69,594		Income taxes	124,433		82,163		291,027		256,115
Net earnings	Net earnings	$	303,325	$	88,927	$	848,779	$	373,116	Net earnings	$	429,604	$	303,325	$	1,036,388	$	848,779

Net earnings:	Net earnings:									Net earnings:
Basic earnings per share	Basic earnings per share	$	0.60	$	0.17	$	1.66	$	0.73	Basic earnings per share	$	0.85	$	0.60	$	2.04	$	1.66
Diluted earnings per share	Diluted earnings per share	0.59		0.17		1.65		0.73		Diluted earnings per share	0.84		0.59		2.03		1.65

Average shares outstanding	Average shares outstanding	508,368,159		511,110,670		510,642,876		510,081,610		Average shares outstanding	507,716,975		508,368,159		507,635,083		510,642,876
Diluted shares outstanding	Diluted shares outstanding	512,238,523		514,585,129		514,198,780		512,688,895		Diluted shares outstanding	509,842,400		512,238,523		510,123,782		514,198,780


(1)			Sysco’s second quarter of fiscal 2023 included a charge for $315.4 million in other expense related to pension settlement charges. See Note 9, “Company-Sponsored Employee Benefit Plans.”

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Net earnings	Net earnings	$	303,325	$	88,927	$	848,779	$	373,116	Net earnings	$	429,604	$	303,325	$	1,036,388	$	848,779
Other comprehensive (loss) income:
Other comprehensive income (loss):										Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(96,582)		9,805		(210,646)		345,452		Foreign currency translation adjustment	62,771		(96,582)		72,403		(210,646)
Items presented net of tax:	Items presented net of tax:									Items presented net of tax:
Amortization of cash flow hedges	Amortization of cash flow hedges	2,155		2,191		6,465		6,501		Amortization of cash flow hedges	2,170		2,155		6,495		6,465
Change in net investment hedges	Change in net investment hedges	12,041		9,388		30,568		(22,539)		Change in net investment hedges	(5,401)		12,041		(15,641)		30,568
Change in cash flow hedges	Change in cash flow hedges	18,375		9,135		11,845		8,503		Change in cash flow hedges	(22,455)		18,375		(48,642)		11,845

Reclassification adjustment for loss included in net income										Reclassification adjustment for loss included in net income	(7)		—		15		—
Amortization of prior service cost										Amortization of prior service cost	74		74		222		222
Amortization of actuarial loss										Amortization of actuarial loss	5,605		6,514		18,124		18,369

Amortization of prior service cost		74		137		222		411
Amortization of actuarial gain		6,514		7,820		18,369		23,378

Pension settlement charge										Pension settlement charge	—		—		236,591		—
Net actuarial loss arising in current year										Net actuarial loss arising in current year	—		—		(67,388)		—

Change in marketable securities	Change in marketable securities	(5,323)		(2,753)		(7,063)		(3,271)		Change in marketable securities	1,146		(5,323)		(1,010)		(7,063)
Total other comprehensive (loss) income		(62,746)		35,723		(150,240)		358,435
Total other comprehensive income (loss)										Total other comprehensive income (loss)	43,903		(62,746)		201,169		(150,240)
Comprehensive income	Comprehensive income	$	240,579	$	124,650	$	698,539	$	731,551	Comprehensive income	$	473,507	$	240,579	$	1,237,557	$	698,539

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In thousands, except for share data)

Quarter to Date

Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of January 1, 2022 765,174,900 $ 765,175 $ 1,690,487 $ 10,216,625 $ (1,236,258) 258,033,856 $ (10,214,957) $ 1,221,072
Net earnings 303,325 303,325
Foreign currency translation adjustment (96,582) (96,582)
Amortization of cash flow hedges, net of tax 2,155 2,155
Change in cash flow hedges, net of tax 18,375 18,375
Change in net investment hedges, net of tax 12,041 12,041
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 6,588 6,588
Change in marketable securities, net of tax (5,323) (5,323)
Dividends declared ($0.47 per common share) (240,158) (240,158)
Share-based compensation awards 46,814 (1,525,874) 53,102 99,916
Balance as of April 2, 2022 765,174,900 $ 765,175 $ 1,737,301 $ 10,279,792 $ (1,299,004) 256,507,982 $ (10,161,855) $ 1,321,409
Accumulated
Other Comprehensive
Loss
Common Stock Paid-in
Capital Retained
Earnings Treasury Stock
Shares Amount Shares Amounts Totals
Balance as of December 26, 2020 765,174,900 $ 765,175 $ 1,565,255 $ 10,383,493 $ (1,388,169) 255,176,469 $ (9,898,955) $ 1,426,799
Net earnings 88,927 88,927
Foreign currency translation adjustment 9,805 9,805
Amortization of cash flow hedges, net of tax 2,191 2,191
Change in cash flow hedges, net of tax 9,135 9,135
Change in net investment hedges, net of tax 9,388 9,388
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 7,957 7,957
Change in marketable securities, net of tax (2,753) (2,753)
Dividends declared ($0.45 per common share) (230,754) (230,754)
Share-based compensation awards 29,306 (1,359,456) 45,596 74,902
Balance as of March 27, 2021 765,174,900 $ 765,175 $ 1,594,561 $ 10,241,666 $ (1,352,446) 253,817,013 $ (9,853,359) $ 1,395,597


								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of December 31, 2022	765,174,900	$	765,175	$	1,774,141	$	10,649,338	$	(1,324,788)	257,846,972	$	(10,427,277)	$	1,436,589
Net earnings						429,604							429,604



Foreign currency translation adjustment								62,771					62,771
Amortization of cash flow hedges, net of tax								2,170					2,170
Change in cash flow hedges, net of tax								(22,455)					(22,455)
Change in net investment hedges, net of tax								(5,401)					(5,401)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								5,679					5,679


Change in marketable securities, net of tax								1,139					1,139

Dividends declared ($0.49 per common share)						(249,033)							(249,033)
Treasury stock purchases										1,530,029	(116,023)		(116,023)

Share-based compensation awards				10,934						(615,986)	19,328		30,262
Balance as of April 1, 2023	765,174,900	$	765,175	$	1,785,075	$	10,829,909	$	(1,280,885)	258,761,015	$	(10,523,972)	$	1,575,302

								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of January 1, 2022	765,174,900	$	765,175	$	1,690,487	$	10,216,625	$	(1,236,258)	258,033,856	$	(10,214,957)	$	1,221,072
Net earnings						303,325							303,325
Foreign currency translation adjustment								(96,582)					(96,582)
Amortization of cash flow hedges, net of tax								2,155					2,155
Change in cash flow hedges, net of tax								18,375					18,375
Change in net investment hedges, net of tax								12,041					12,041
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								6,588					6,588
Change in marketable securities, net of tax								(5,323)					(5,323)

Dividends declared ($0.47 per common share)						(240,158)							(240,158)


Share-based compensation awards				46,814						(1,525,874)	53,102		99,916
Balance as of April 2, 2022	765,174,900	$	765,175	$	1,737,301	$	10,279,792	$	(1,299,004)	256,507,982	$	(10,161,855)	$	1,321,409

Year to Date


													Accumulated Other Comprehensive Loss																													Accumulated Other Comprehensive Loss
		Common Stock			Paid-in Capital				Retained Earnings						Treasury Stock									Common Stock									Paid-in Capital			Retained Earnings								Treasury Stock
		Shares	Amount								Shares				Accumulated Other Comprehensive Loss		Amounts				Totals			Shares					Amount									Shares		Accumulated Other Comprehensive Loss						Amounts			Totals
Balance as of July 3, 2021		765,174,900	$	765,175			$	1,619,995			$	10,151,706					$	(1,148,764)				$	(9,835,216)				$	1,552,896
Balance as of July 2, 2022																						Balance as of July 2, 2022		765,174,900					$	765,175				$	1,766,305			$	10,539,722					$	(1,482,054)				$	(10,206,888)		$	1,382,260
Net earnings	Net earnings								848,779																848,779		Net earnings															1,036,388												1,036,388

Foreign currency translation adjustment	Foreign currency translation adjustment												(210,646)									(210,646)			Foreign currency translation adjustment																	72,403										72,403
Amortization of cash flow hedges, net of tax	Amortization of cash flow hedges, net of tax												6,465									6,465			Amortization of cash flow hedges, net of tax																	6,495										6,495
Change in cash flow hedges, net of tax	Change in cash flow hedges, net of tax												11,845									11,845			Change in cash flow hedges, net of tax																	(48,642)										(48,642)
Change in net investment hedges, net of tax	Change in net investment hedges, net of tax												30,568									30,568			Change in net investment hedges, net of tax																	(15,641)										(15,641)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax	Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax												18,591									18,591			Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax																	18,346										18,346
Pension settlement charge, net of tax																									Pension settlement charge, net of tax																	236,591										236,591
Net actuarial loss arising in current year																									Net actuarial loss arising in current year																	(67,388)										(67,388)
Change in marketable securities, net of tax																									Change in marketable securities, net of tax																	(995)										(995)

Dividends declared ($1.47 per common share)																									Dividends declared ($1.47 per common share)													(746,201)														(746,201)
Treasury stock purchases																									Treasury stock purchases																					4,629,297			(383,750)			(383,750)
Increase in ownership interest in subsidiaries																									Increase in ownership interest in subsidiaries									(2,077)																		(2,077)
Share-based compensation awards																									Share-based compensation awards									20,847												(2,399,825)			66,666			87,513
Balance as of April 1, 2023																									Balance as of April 1, 2023	765,174,900					$	765,175		$	1,785,075			$	10,829,909			$	(1,280,885)			258,761,015			$	(10,523,972)		$	1,575,302

																																										Accumulated Other Comprehensive Loss
																										Common Stock								Paid-in Capital				Retained Earnings						Treasury Stock
																										Shares					Amount									Shares				Accumulated Other Comprehensive Loss			Amounts				Totals
Balance as of July 3, 2021																									Balance as of July 3, 2021	765,174,900					$	765,175				$	1,619,995			$	10,151,706						$	(1,148,764)				$	(9,835,216)	$	1,552,896
Net earnings																									Net earnings													848,779														848,779
Foreign currency translation adjustment																									Foreign currency translation adjustment																	(210,646)										(210,646)
Amortization of cash flow hedges, net of tax																									Amortization of cash flow hedges, net of tax																	6,465										6,465
Change in cash flow hedges, net of tax																									Change in cash flow hedges, net of tax																	11,845										11,845
Change in net investment hedges, net of tax																									Change in net investment hedges, net of tax																	30,568										30,568
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax																									Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax																	18,591										18,591
Change in marketable securities, net of tax	Change in marketable securities, net of tax												(7,063)									(7,063)			Change in marketable securities, net of tax																	(7,063)										(7,063)

Dividends declared ($1.41 per common share)	Dividends declared ($1.41 per common share)								(720,693)													(720,693)			Dividends declared ($1.41 per common share)													(720,693)														(720,693)
Treasury stock purchases	Treasury stock purchases															5,679,298			(415,824)			(415,824)			Treasury stock purchases																					5,679,298			(415,824)			(415,824)
Increase in ownership interest in subsidiaries	Increase in ownership interest in subsidiaries				(304)																	(304)			Increase in ownership interest in subsidiaries									(304)																		(304)
Share-based compensation awards	Share-based compensation awards				117,610											(2,513,911)			89,185			206,795			Share-based compensation awards									117,610												(2,513,911)			89,185			206,795
Balance as of April 2, 2022	Balance as of April 2, 2022	765,174,900	$	765,175	$	1,737,301			$	10,279,792			$	(1,299,004)		256,507,982			$	(10,161,855)		$	1,321,409		Balance as of April 2, 2022	765,174,900					$	765,175		$	1,737,301			$	10,279,792			$	(1,299,004)			256,507,982			$	(10,161,855)		$	1,321,409

													Accumulated Other Comprehensive Loss
		Common Stock			Paid-in Capital				Retained Earnings						Treasury Stock
		Shares	Amount								Shares				Accumulated Other Comprehensive Loss		Amounts				Totals
Balance as of June 27, 2020		765,174,900	$	765,175			$	1,506,901			$	10,563,008					$	(1,710,881)				$	(9,965,590)				$	1,158,613
Net earnings									373,116													373,116
Foreign currency translation adjustment													345,452									345,452
Amortization of cash flow hedges, net of tax													6,501									6,501
Change in cash flow hedges, net of tax													8,503									8,503
Change in net investment hedges, net of tax													(22,539)									(22,539)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax													23,789									23,789
Change in marketable securities, net of tax													(3,271)									(3,271)
Adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), net of tax									(2,068)													(2,068)
Dividends declared ($1.35 per common share)									(692,390)													(692,390)

Share-based compensation awards					87,660											(3,098,812)			112,231			199,891
Balance as of March 27, 2021		765,174,900	$	765,175	$	1,594,561			$	10,241,666			$	(1,352,446)		253,817,013			$	(9,853,359)		$	1,395,597

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)


		39-Week Period Ended					39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings	Net earnings	$	848,779	$	373,116	Net earnings	$	1,036,388	$	848,779
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:
Pension settlement charge						Pension settlement charge	315,354		—
Share-based compensation expense	Share-based compensation expense	90,667		65,655		Share-based compensation expense	73,765		90,667
Depreciation and amortization	Depreciation and amortization	571,607		542,471		Depreciation and amortization	574,945		571,607
Operating lease asset amortization	Operating lease asset amortization	82,415		81,414		Operating lease asset amortization	83,959		82,415
Amortization of debt issuance and other debt-related costs	Amortization of debt issuance and other debt-related costs	16,160		19,485		Amortization of debt issuance and other debt-related costs	15,019		16,160

Deferred income taxes	Deferred income taxes	(110,058)		(161,824)		Deferred income taxes	(163,044)		(110,058)
Provision for losses on receivables	Provision for losses on receivables	572		(137,670)		Provision for losses on receivables	21,899		572
Loss on extinguishment of debt	Loss on extinguishment of debt	115,603		—		Loss on extinguishment of debt	—		115,603
Loss on sale of business		—		22,834

Other non-cash items	Other non-cash items	(8,945)		(7,507)		Other non-cash items	2,787		(8,945)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:	Additional changes in certain assets and liabilities, net of effect of businesses acquired:					Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables	Increase in receivables	(908,127)		(130,403)		Increase in receivables	(405,372)		(908,127)
Increase in inventories	Increase in inventories	(644,799)		(82,525)		Increase in inventories	(172,117)		(644,799)
Increase in prepaid expenses and other current assets	Increase in prepaid expenses and other current assets	(25,391)		(50,833)		Increase in prepaid expenses and other current assets	(6,242)		(25,391)
Increase in accounts payable	Increase in accounts payable	764,263		800,248		Increase in accounts payable	88,995		764,263
Increase in accrued expenses		131,376		9,065
(Decrease) increase in accrued expenses						(Decrease) increase in accrued expenses	(55,162)		131,376
Decrease in operating lease liabilities	Decrease in operating lease liabilities	(99,343)		(94,228)		Decrease in operating lease liabilities	(100,847)		(99,343)
(Decrease) increase in accrued income taxes		(42,013)		167,693
(Increase) decrease in other assets		(6,595)		23,345
(Decrease) increase in other long-term liabilities		(30,300)		39,448
Increase (decrease) in accrued income taxes						Increase (decrease) in accrued income taxes	119,784		(42,013)
Decrease (increase) in other assets						Decrease (increase) in other assets	23,843		(6,595)
Decrease in other long-term liabilities						Decrease in other long-term liabilities	(28,172)		(30,300)

Net cash provided by operating activities	Net cash provided by operating activities	745,871		1,479,784		Net cash provided by operating activities	1,425,782		745,871
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to plant and equipment	Additions to plant and equipment	(327,535)		(251,167)		Additions to plant and equipment	(474,456)		(327,535)
Proceeds from sales of plant and equipment	Proceeds from sales of plant and equipment	15,946		19,308		Proceeds from sales of plant and equipment	28,313		15,946
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(1,281,835)		—		Acquisition of businesses, net of cash acquired	(37,384)		(1,281,835)
Purchase of marketable securities	Purchase of marketable securities	(19,318)		(44,687)		Purchase of marketable securities	(15,078)		(19,318)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	16,648		30,773		Proceeds from sales of marketable securities	11,641		16,648
Other investing activities	Other investing activities	12,773		—		Other investing activities	5,610		12,773

Net cash used for investing activities	Net cash used for investing activities	(1,583,321)		(245,773)		Net cash used for investing activities	(481,354)		(1,583,321)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Bank and commercial paper borrowings, net		—		(411,200)

Other debt borrowings including senior notes	Other debt borrowings including senior notes	1,251,484		2,943		Other debt borrowings including senior notes	174,262		1,251,484
Other debt repayments		(38,370)		(1,489,431)
Redemption premiums and repayments of senior notes		(1,395,668)		—
Other debt repayments including senior notes						Other debt repayments including senior notes	(81,345)		(38,370)
Redemption premiums and repayments for senior notes						Redemption premiums and repayments for senior notes	—		(1,395,668)

Debt issuance costs	Debt issuance costs	(15,547)		—		Debt issuance costs	—		(15,547)

Cash received from termination of interest rate swap agreements	Cash received from termination of interest rate swap agreements	23,127		—		Cash received from termination of interest rate swap agreements	—		23,127
Proceeds from stock option exercises	Proceeds from stock option exercises	89,185		112,231		Proceeds from stock option exercises	67,115		89,185

Stock repurchases	Stock repurchases	(415,824)		—		Stock repurchases	(377,800)		(415,824)
Dividends paid	Dividends paid	(719,865)		(689,251)		Dividends paid	(747,378)		(719,865)

Other financing activities	Other financing activities	(19,456)		(15,024)		Other financing activities	(57,906)		(19,456)
Net cash used for financing activities	Net cash used for financing activities	(1,240,934)		(2,489,732)		Net cash used for financing activities	(1,023,052)		(1,240,934)
Effect of exchange rates on cash, cash equivalents and restricted cash	Effect of exchange rates on cash, cash equivalents and restricted cash	(13,623)		85,183		Effect of exchange rates on cash, cash equivalents and restricted cash	1,713		(13,623)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(2,092,007)		(1,170,538)		Net decrease in cash, cash equivalents and restricted cash	(76,911)		(2,092,007)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	3,037,100		6,095,570		Cash, cash equivalents and restricted cash at beginning of period	931,376		3,037,100
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	945,093	$	4,925,032	Cash, cash equivalents and restricted cash at end of period	$	854,465	$	945,093
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	456,996	$	386,753	Interest	$	343,402	$	456,996
Income taxes, net of refunds	Income taxes, net of refunds	395,065		71,435		Income taxes, net of refunds	306,174		395,065

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or ~~“the company”~~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:


		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022
		(In thousands)					(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	876,139	$	4,895,723	Cash and cash equivalents	$	757,867	$	876,139
Restricted cash (1)	Restricted cash (1)	68,954		29,309		Restricted cash (1)	96,598		68,954
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	945,093	$	4,925,032	Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	854,465	$	945,093


(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.

The following table sets forth the company’s non-cash investing and financing activities:


	Apr. 1, 2023		Apr. 2, 2022
	(In thousands)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs	$	111,771	$	—
Assets obtained in exchange for finance lease obligations	99,776		155,541

2. NEW ACCOUNTING STANDARDS

~~Government Assistance~~Liabilities – Supplier Financing Programs

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

The ~~new~~ guidance is effective for ~~all entities for annual reporting~~fiscal years and interim periods within those fiscal years beginning after December 15, ~~2021; however, early~~2022, which is the first quarter of fiscal 2024 for Sysco, except for the roll forward requirement, which is effective annually for fiscal years beginning after December 15, 2023, which is fiscal year 2025 for Sysco. Early adoption is permitted.

The guidance ~~may~~requires retrospective application to all periods in which a balance sheet is presented, except for the roll forward requirement, which will be applied either prospectively to all in-scope transactions that are reflected in the financial statements at the date of initial application and to new transactions that are entered into after the date of initial application, or retrospectively.prospectively. The company is currently reviewing the provisions of the new standard.

3. REVENUE

The company recognizes revenues when its performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, were ~~$4.5~~$4.9 billion and ~~$3.5~~$4.6 billion as of April 1, 2023 and July 2, 2022, ~~and July 3, 2021, respectively, with the increase reflective of the ongoing industry recovery and increasing customer sales following the COVID-19 pandemic.~~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 April ~~2, 2022,~~1, 2023, 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 Apr. 2, 2022											13-Week Period Ended Apr. 1, 2023
		US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total			US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
		(In thousands)											(In thousands)
Principal Product Categories	Principal Product Categories											Principal Product Categories
Canned and dry products												Canned and dry products	$	2,649,632	$	743,056	$	244,695	$	—	$	3,637,383
Fresh and frozen meats	Fresh and frozen meats	$	2,295,514	$	398,378	$	484,082	$	9	$	3,177,983	Fresh and frozen meats	2,378,124		474,824		461,897		—		3,314,845
Canned and dry products		2,194,073		593,156		203,184		77		2,990,490
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	1,597,129		514,418		282,246		—		2,393,793		Frozen fruits, vegetables, bakery and other	1,949,160		548,719		336,495		—		2,834,374
Dairy products												Dairy products	1,513,084		404,943		162,065		—		2,080,092
Poultry	Poultry	1,425,320		232,456		243,927		—		1,901,703		Poultry	1,266,096		288,185		272,727		—		1,827,008
Dairy products		1,230,092		308,260		138,414		—		1,676,766
Fresh produce	Fresh produce	1,162,694		222,765		60,738		—		1,446,197		Fresh produce	1,288,241		255,615		66,458		—		1,610,314
Paper and disposables	Paper and disposables	930,526		121,184		186,801		13,034		1,251,545		Paper and disposables	988,448		131,784		205,353		14,561		1,340,146
Seafood	Seafood	630,833		100,312		42,667		—		773,812		Seafood	587,726		111,779		51,077		—		750,582
Beverage products	Beverage products	264,087		116,590		124,058		19,218		523,953		Beverage products	328,221		145,013		144,703		21,957		639,894

Other (1)	Other (1)	275,895		226,570		28,720		234,712		765,897		Other (1)	308,787		240,203		26,588		265,460		841,038
Total Sales	Total Sales	$	12,006,163	$	2,834,089	$	1,794,837	$	267,050	$	16,902,139	Total Sales	$	13,257,519	$	3,344,121	$	1,972,058	$	301,978	$	18,875,676


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


		13-Week Period Ended Mar. 27, 2021											13-Week Period Ended Apr. 2, 2022
		US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total			US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
		(In thousands)											(In thousands)
Principal Product Categories	Principal Product Categories											Principal Product Categories
Fresh and frozen meats	Fresh and frozen meats	$	1,585,533	$	227,350	$	425,156	$	—	$	2,238,039	Fresh and frozen meats	$	2,295,514	$	398,378	$	484,082	$	9	$	3,177,983
Canned and dry products	Canned and dry products	1,513,681		338,853		46,583		—		1,899,117		Canned and dry products	2,194,073		593,156		203,184		77		2,990,490
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	1,141,919		337,477		277,766		—		1,757,162		Frozen fruits, vegetables, bakery and other	1,597,129		514,418		282,246		—		2,393,793
Poultry	Poultry	920,979		159,589		228,504		—		1,309,072		Poultry	1,425,320		232,456		243,927		—		1,901,703
Dairy products	Dairy products	812,887		188,212		143,028		—		1,144,127		Dairy products	1,230,092		308,260		138,414		—		1,676,766
Fresh produce												Fresh produce	1,162,694		222,765		60,738		—		1,446,197
Paper and disposables	Paper and disposables	752,996		93,205		189,337		10,122		1,045,660		Paper and disposables	930,526		121,184		186,801		13,034		1,251,545
Fresh produce		715,406		126,965		68,074		—		910,445
Seafood	Seafood	507,446		55,873		36,553		—		599,872		Seafood	630,833		100,312		42,667		—		773,812
Beverage products	Beverage products	186,211		56,963		145,704		11,080		399,958		Beverage products	264,087		116,590		124,058		19,218		523,953

Other (1)	Other (1)	223,183		138,639		19,990		139,325		521,137		Other (1)	275,895		226,570		28,720		234,712		765,897
Total Sales	Total Sales	$	8,360,241	$	1,723,126	$	1,580,695	$	160,527	$	11,824,589	Total Sales	$	12,006,163	$	2,834,089	$	1,794,837	$	267,050	$	16,902,139


(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.


		39-Week Period Ended Apr. 2, 2022											39-Week Period Ended Apr. 1, 2023
		US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total			US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
		(In thousands)											(In thousands)
Principal Product Categories	Principal Product Categories											Principal Product Categories
Canned and dry products												Canned and dry products	$	7,729,545	$	2,135,052	$	717,588	$	2,002	$	10,584,187
Fresh and frozen meats	Fresh and frozen meats	$	7,143,738	$	1,211,781	$	1,471,877	$	9	$	9,827,405	Fresh and frozen meats	7,234,503		1,373,206		1,377,707		—		9,985,416
Canned and dry products		6,358,629		1,735,674		496,396		107		8,590,806
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	4,606,909		1,550,944		847,579		—		7,005,432		Frozen fruits, vegetables, bakery and other	5,643,893		1,724,851		984,070		149		8,352,963
Dairy products												Dairy products	4,536,602		1,130,429		487,466		—		6,154,497
Poultry	Poultry	4,127,709		714,412		696,633		—		5,538,754		Poultry	4,169,417		866,378		815,461		—		5,851,256
Dairy products		3,445,668		902,752		418,373		—		4,766,793

Fresh produce	Fresh produce	3,187,379		656,552		191,349		—		4,035,280		Fresh produce	4,011,326		767,993		197,801		—		4,977,120
Paper and disposables	Paper and disposables	2,736,429		355,559		568,054		41,325		3,701,367		Paper and disposables	2,987,583		410,358		625,402		43,102		4,066,445
Seafood	Seafood	1,909,559		332,114		109,871		—		2,351,544		Seafood	1,773,891		342,270		129,010		—		2,245,171

Beverage products	Beverage products	766,829		340,966		393,089		60,133		1,561,017		Beverage products	947,633		415,004		419,541		67,929		1,850,107
Other (1)												Other (1)	902,662		744,726		85,005		796,904		2,529,297

Other (1)		824,432		734,854		76,972		664,232		2,300,490
Total Sales	Total Sales	$	35,107,281	$	8,535,608	$	5,270,193	$	765,806	$	49,678,888	Total Sales	$	39,937,055	$	9,910,267	$	5,839,051	$	910,086	$	56,596,459


(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.


		39-Week Period Ended Mar. 27, 2021											39-Week Period Ended Apr. 2, 2022
		US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total			US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
		(In thousands)											(In thousands)
Principal Product Categories	Principal Product Categories											Principal Product Categories
Fresh and frozen meats	Fresh and frozen meats	$	4,583,392	$	809,339	$	1,256,208	$	—	$	6,648,939	Fresh and frozen meats	$	7,143,738	$	1,211,781	$	1,471,877	$	9	$	9,827,405
Canned and dry products	Canned and dry products	4,325,880		1,113,600		109,023		11		5,548,514		Canned and dry products	6,358,629		1,735,674		496,396		107		8,590,806
Frozen fruits, vegetables, bakery and other	Frozen fruits, vegetables, bakery and other	3,269,395		1,158,748		809,975		—		5,238,118		Frozen fruits, vegetables, bakery and other	4,606,909		1,550,944		847,579		—		7,005,432
Poultry	Poultry	2,600,235		513,184		662,759		—		3,776,178		Poultry	4,127,709		714,412		696,633		—		5,538,754
Dairy products	Dairy products	2,467,961		629,376		433,023		—		3,530,360		Dairy products	3,445,668		902,752		418,373		—		4,766,793
Fresh produce												Fresh produce	3,187,379		656,552		191,349		—		4,035,280
Paper and disposables	Paper and disposables	2,149,596		276,819		550,605		30,435		3,007,455		Paper and disposables	2,736,429		355,559		568,054		41,325		3,701,367
Fresh produce		2,123,214		443,462		199,584		—		2,766,260
Seafood	Seafood	1,398,098		213,874		88,036		—		1,700,008		Seafood	1,909,559		332,114		109,871		—		2,351,544
Beverage products	Beverage products	535,130		207,851		436,503		33,018		1,212,502		Beverage products	766,829		340,966		393,089		60,133		1,561,017

Other (1)	Other (1)	753,016		488,355		79,528		411,717		1,732,616		Other (1)	824,432		734,854		76,972		664,232		2,300,490
Total Sales	Total Sales	$	24,205,917	$	5,854,608	$	4,625,244	$	475,181	$	35,160,950	Total Sales	$	35,107,281	$	8,535,608	$	5,270,193	$	765,806	$	49,678,888


(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.

4. ACQUISITIONS

During the first 39 weeks of fiscal ~~2022,~~2023, the company paid cash of ~~$1.3 billion~~$37.4 million for several acquisitions. Certain acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are achieved. As of April ~~2, 2022,~~1, 2023, aggregate contingent consideration outstanding was ~~$89.5~~$57.2 million, of which ~~$87.0~~$53.7 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.~~centers. 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 purchase price was allocated based on~~During the ~~company’s preliminary estimated~~first quarter of fiscal 2023, the company completed the determination of fair value of the assets acquired and liabilities assumed ~~as follows:~~for the Greco acquisition. The company recorded certain measurement period adjustments during each quarter of fiscal 2022 and the first quarter of fiscal 2023, none of which were individually or in aggregate material to the company’s financial statements.


	~~Preliminary Purchase Price Allocation~~
	~~(In millions)~~
~~Accounts receivable, net~~	$	69
~~Inventories~~	79
~~Plant and equipment~~	24
~~Other assets~~	~~151~~
~~Goodwill and other intangibles~~ ~~(1)~~	~~717~~
~~Total assets~~	~~1,040~~
~~Accounts payable~~	~~(73)~~
~~Accrued expenses~~	~~(17)~~
~~Deferred tax liabilities~~	~~(35)~~
~~Other liabilities~~	~~(154)~~
~~Total consideration~~	$	~~761~~

~~(1)~~ The excess purchase price of $717.1 million was assigned to goodwill and intangibles, a portion of which is deductible for income tax purposes. Goodwill of $491.6 million has been assigned to the U.S. Foodservice Operations reportable segment. Intangible assets include customer relationships of $116.0 million with a weighted average life of 8 years and trade names of $109.5 million with a weighted average life of 15 years. Amortization expense is being recognized on a straight-line basis and was $14.7 million for the first 39 weeks of fiscal 2022.

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

The first 39 weeks of fiscal 2022 includes the results of operations of Greco for the period from August 12, 2021 to April 2, 2022. The results were not material to the consolidated results of the company for the first 39 weeks of fiscal 2022.

5. FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest in only high-quality investments. The fair value of the company’s cash deposits and money market funds included in cash equivalents are valued using inputs that are considered a Level 1 measurement. Other cash equivalents, such as time deposits and highly liquid instruments with original maturities of three months or less, are valued using inputs that are considered a Level 2 measurement. The fair value of the company’s marketable securities are all measured using inputs that are considered a Level 2 measurement, as they rely on quoted prices in markets that are not actively traded or observable inputs over the full term of the asset. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 6, “Marketable Securities.” The fair value of the company’s derivative instruments are all measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair value of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 7, “Derivative Financial Instruments.”

The following tables present the company’s assets measured at fair value on a recurring basis as of April ~~2, 2022~~1, 2023 and July ~~3, 2021:~~2, 2022:


		Assets Measured at Fair Value as of Apr. 2, 2022									Assets Measured at Fair Value as of Apr. 1, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
		(In thousands)									(In thousands)
Assets:	Assets:									Assets:
Cash equivalents	Cash equivalents									Cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	862,187	$	3	$	—	$	862,190	Cash and cash equivalents	$	457,876	$	10,014	$	—	$	467,890

Other assets (1)	Other assets (1)	68,954		—		—		68,954		Other assets (1)	96,598		—		—		96,598

Total assets at fair value	Total assets at fair value	$	931,141	$	3	$	—	$	931,144	Total assets at fair value	$	554,474	$	10,014	$	—	$	564,488

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

Assets Measured at Fair Value as of Jul. 3, 2021
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents $ 2,805,961 $ 3 $ — $ 2,805,964
Other assets (1)
29,977 — — 29,977
Total assets at fair value $ 2,835,938 $ 3 $ — $ 2,835,941

~~(1)~~


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


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



Other assets (1)	64,290		—		—		64,290

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


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

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt, and is considered a Level 2 measurement. The fair value of total debt was approximately ~~$11.9~~$10.7 billion as of April ~~2, 2022~~1, 2023 and ~~$13.3~~$10.5 billion as of July ~~3, 2021,~~2, 2022, while the carrying value was ~~$11.1~~$11.0 billion as of ~~both~~ April 1, 2023 and $10.6 billion as of July 2, ~~2022 and July 3, 2021.~~2022.

1211

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~~12 months within prepaid expenses and other current assets and includes fixed income securities maturing in more than ~~twelve~~12 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 39 weeks of fiscal ~~2022.~~2023. The following table presents the company’s available-for-sale marketable securities as of April ~~2, 2022~~1, 2023 and July ~~3, 2021:~~2, 2022:


		Apr. 2, 2022													Apr. 1, 2023
		Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities			Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
		(In thousands)													(In thousands)
Fixed income securities:	Fixed income securities:													Fixed income securities:
Corporate bonds	Corporate bonds	$	95,571	$	265	$	(4,248)	$	91,588	$	3,025	$	88,563	Corporate bonds	$	98,637	$	277	$	(6,418)	$	92,496	$	7,812	$	84,684
Government bonds	Government bonds	30,141		760		(124)		30,777		—		30,777		Government bonds	29,851		—		(1,407)		28,444		—		28,444
Total marketable securities	Total marketable securities	$	125,712	$	1,025	$	(4,372)	$	122,365	$	3,025	$	119,340	Total marketable securities	$	128,488	$	277	$	(7,825)	$	120,940	$	7,812	$	113,128

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

As of April ~~2, 2022,~~1, 2023, 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.


	Apr. ~~2, 2022~~1, 2023
	(In thousands)
Due in one year or less	$	~~3,025~~7,812
Due after one year through five years	~~83,747~~66,939
Due after five years through ten years	~~35,593~~46,189

Total	$	~~122,365~~120,940

There were no significant realized gains or losses in marketable securities in the first 39 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.

1312

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 April ~~2, 2022~~1, 2023 are presented below:

Maturity Date of the Hedging Instrument

Currency / Unit of Measure

Notional Value

(In millions)

Hedging of interest rate risk

June 2023

Euro

500

Hedging of foreign currency risk

Various (April ~~2022~~2023 to August ~~2022)~~2023)

Swedish Krona

~~272~~373

Various ~~(April 2022~~(May 2023 to ~~December 2022)~~October 2023)

British Pound Sterling

2418

June 2023

Euro

500

Hedging of fuel risk

Various (April ~~2022~~2023 to ~~July 2023)~~June 2025)

Gallons

5879

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of April ~~2, 2022~~1, 2023 and July ~~3, 2021~~2, 2022 are as follows:


			Derivative Fair Value						Derivative Fair Value
		Balance Sheet location	Apr. 2, 2022		Jul. 3, 2021			Balance Sheet location	Apr. 1, 2023		Jul. 2, 2022
			(In thousands)						(In thousands)
Fair Value Hedges:	Fair Value Hedges:						Fair Value Hedges:

Interest rate swaps	Interest rate swaps	Other assets	$	376	$	43,217	Interest rate swaps	Other current liabilities	$	3,443	$	2,820

Cash Flow Hedges:	Cash Flow Hedges:						Cash Flow Hedges:
Fuel swaps	Fuel swaps	Other current assets	$	29,682	$	16,732	Fuel swaps	Other current assets	$	1,463	$	47,170
Foreign currency forwards	Foreign currency forwards	Other current assets	59		42		Foreign currency forwards	Other current assets	326		633

Fuel swaps	Fuel swaps	Other assets	3,112		—		Fuel swaps	Other assets	32		—

Fuel swaps	Fuel swaps	Other current liabilities	116		—		Fuel swaps	Other current liabilities	10,638		—
Foreign currency forwards	Foreign currency forwards	Other current liabilities	372		46		Foreign currency forwards	Other current liabilities	81		—
Fuel swaps	Fuel swaps	Other long-term liabilities	38		—		Fuel swaps	Other long-term liabilities	5,628		209

1413

Gains or losses recognized in the consolidated results of operations for cash flow hedging relationships are not significant for each of the periods presented. The location and amount of gains or losses recognized in the consolidated results of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:

13-Week Period Ended 39-Week Period Ended
Apr. 2, 2022 Mar. 27, 2021 Apr. 2, 2022 Mar. 27, 2021
(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded $ 124,018 $ 145,773 $ 495,131 $ 438,988
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items $ 1,656 $ 2,097 $ 29,011 $ (11,694)
Derivatives designated as hedging instruments (4,628) (6,239) (52,491) (3,078)


	13-Week Period Ended				39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
	(In thousands)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded	$	134,931	$	124,018	$	391,123	$	495,131
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items	$	(4,888)	$	1,656	$	(5,197)	$	29,011
Derivatives designated as hedging instruments	(394)		(4,628)		(5,008)		(52,491)

The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above consist of the following components for each of the periods presented:


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
		(In thousands)									(In thousands)
Interest expense	Interest expense	$	(1,938)	$	(9,737)	$	(13,830)	$	(34,306)	Interest expense	$	(1,940)	$	(1,938)	$	(5,819)	$	(13,830)
Decrease in fair value of debt	Decrease in fair value of debt	(3,594)		(11,834)		(42,841)		(22,612)		Decrease in fair value of debt	2,948		(3,594)		(622)		(42,841)
Hedged items	Hedged items	$	1,656	$	2,097	$	29,011	$	(11,694)	Hedged items	$	(4,888)	$	1,656	$	(5,197)	$	29,011

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 April 1, 2023 and April 2, 2022, ~~and March 27, 2021,~~ presented on a pretax basis, are as follows:

13-Week Period Ended Apr. 2, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 24,097 Operating expense $ 9,302
Foreign currency contracts (58) Cost of sales / Other income —
Total $ 24,039 $ 9,302
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 16,055 N/A $ —
Total $ 16,055 $ —
13-Week Period Ended Mar. 27, 2021
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 12,143 Operating expense $ (8,745)
Foreign currency contracts (100) Cost of sales / Other income —
Total $ 12,043 $ (8,745)
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 17,901 N/A $ —
Total $ 17,901 $ —

1614


	13-Week Period Ended Apr. 1, 2023
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(27,031)	Operating expense	$	(969)
Foreign currency contracts	(878)		Cost of sales / Other income	—

Total	$	(27,909)		$	(969)

Derivatives in net investment hedging relationships:

Foreign denominated debt	$	(7,201)	N/A	$	—


	13-Week Period Ended Apr. 2, 2022
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	24,097	Operating expense	$	9,302
Foreign currency contracts	(58)		Cost of sales / Other income	—

Total	$	24,039		$	9,302

Derivatives in net investment hedging relationships:

Foreign denominated debt	$	16,055	N/A	$	—

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 39-week periods ended April 1, 2023 and April 2, 2022, ~~and March 27, 2021,~~ presented on a pretax basis, are as follows:

39-Week Period Ended Apr. 2, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ 16,024 Operating expense $ 26,882
Foreign currency contracts (492) Cost of sales / Other income —
Total $ 15,532 $ 26,882
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 40,757 N/A $ —
Total $ 40,757 $ —
39-Week Period Ended Mar. 27, 2021
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ (34,686) Operating expense $ (8,688)
Foreign currency contracts 5,180 Cost of sales / Other income 3,626
Total $ (29,506) $ (5,062)
Derivatives in net investment hedging relationships:
Foreign currency contracts $ 51,354 N/A $ —
Foreign denominated debt 10,150 N/A —
Total $ 61,504 $ —


	39-Week Period Ended Apr. 1, 2023
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(62,186)	Operating expense	$	24,393
Foreign currency contracts	(543)		Cost of sales / Other income	—

Total	$	(62,729)		$	24,393

Derivatives in net investment hedging relationships:

Foreign denominated debt	$	(20,854)	N/A	$	—


	39-Week Period Ended Apr. 2, 2022
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	16,024	Operating expense	$	26,882
Foreign currency contracts	(492)		Cost of sales / Other income	—

Total	$	15,532		$	26,882

Derivatives in net investment hedging relationships:

Foreign denominated debt	$	40,757	N/A	$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of April ~~2, 2022~~1, 2023 are as follows:

Apr. 2, 2022
Carrying Amount of Hedged Assets (Liabilities) Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In thousands)
Balance sheet location:
Long-term debt $ (568,436) $ (376)


	Apr. 1, 2023
	Carrying Amount of Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:
Current maturities of long-term debt	$	(569,098)	$	3,443

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of July ~~3, 2021~~2, 2022 are as follows:

Jul. 3, 2021

Jul. 2, 2022

Carrying Amount of Hedged Assets (Liabilities)

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

Carrying Amount of Hedged Assets (Liabilities)

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

(In thousands)

Balance sheet location:

Current maturities of long-term debt

(568,601)

2,820

Long-term debt

(1,065,364)

(43,217)

8. DEBT

~~As of April 2, 2022, the company had~~Sysco has a ~~$2.0 billion~~ long-term revolving credit facility ~~($2.0 billion facility)~~ that would have expired on June 28, 2024. As of April 2, 2022, there were no borrowings outstanding under this facility. This credit facility was amended in the first quarter of fiscal 2022, 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) adjusted the covenant requiring Sysco to maintain a certain ratio of consolidated EBITDA to consolidated interest expense.

~~On April 29, 2022, Sysco entered into a new long-term revolving credit facility to replace the $2.0 billion facility. The new facility~~ includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to increase such commitments to $4.0 billion. ~~The new facility includes a covenant requiring Sysco to maintain a ratio~~As of ~~consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 over four consecutive fiscal quarters. This ratio is lower than the previous covenant that was included~~April 1, 2023, there were $108.5 million in ~~the $2.0 billion~~borrowings outstanding under this facility. ~~The new revolving credit facility expires on April 29, 2027.~~

Sysco has a ~~U.S.~~U.S commercial paper program allowing the company to issue short-term unsecured ~~notes in~~notes. On September 2, 2022, Sysco entered into an amended and restated commercial paper dealer agreement increasing the issuance allowance from an aggregate amount not to exceed $2.0 billion to an aggregate amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of April ~~2, 2022,~~1, 2023, there were no commercial paper issuances outstanding under this program. ~~During~~

The total carrying value of our debt was $11.0 billion as of April 1, 2023 and $10.6 billion as of July 2, 2022. The increase in the carrying value of our debt from the prior year was due to new financing leases in support of equipment and borrowings under our long-term revolving credit facility.

Information regarding the guarantors of our registered debt securities is contained in the section captioned Guarantor Summarized Financial Information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Form 10-Q.

9. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

Sysco has company-sponsored defined benefit and defined contribution retirement plans for its employees. Also, the company provides certain health care benefits to eligible retirees and their dependents.

On October 25, 2022, the Sysco Corporation Retirement Plan (the Plan) executed an agreement with Massachusetts Mutual Life Insurance Company (the Insurer). Under this agreement, the Plan purchased a nonparticipating single premium group annuity contract using Plan assets that transferred to the Insurer $695.0 million of the Plan’s defined benefit pension obligations related to certain pension benefits. The contract covers approximately 10,000 Sysco participants and beneficiaries (the Transferred Participants) in the U.S. pension plan (the U.S. Retirement Plan). Under the group annuity contract, the Insurer made an unconditional and irrevocable commitment to pay the pension benefits of each Transferred Participant that were due on or after January 1, 2023. The transaction resulted in no changes to the amount of benefits payable to the Transferred Participants.

As a result of the transaction, the company recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023 primarily related to the accelerated recognition of actuarial losses included within accumulated other comprehensive loss in the statement of changes in consolidated shareholders’ equity. The transaction also required the company to remeasure the benefit obligations and plan assets of the U.S. Retirement Plan. The remeasurement reflects the use of an updated discount rate and an expected rate of return on plan assets as of October 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

Funded Status

The following table presents the changes in benefit obligations and plan assets of the U.S. Retirement Plan affected by the interim remeasurements described above for the 39-week period ended April 1, 2023:


	U.S. Retirement Plan
	(In thousands)
Change in benefit obligation:
Benefit obligation at July 2, 2022	$	3,538,232
Service cost	6,247
Interest cost	116,508




Actuarial gain, net	(440,311)
Benefit payments	(96,768)
Settlements	(694,998)
Benefit obligation at April 1, 2023	2,428,910
Change in plan assets:
Fair value of plan assets at July 2, 2022	3,633,167
Actual return on plan assets	(420,775)
Benefit payments	(96,768)
Settlements	(694,998)
Fair value of plan assets at April 1, 2023	2,420,626
Funded status at April 1, 2023	$	(8,284)

Components of Net Benefit Costs

The components of net company-sponsored benefit cost for the U.S. Retirement Plan for the third quarter and first 39 weeks of fiscal 2023 and fiscal 2022 ~~there were no borrowing activities under our commercial paper programs, $2.0 billion facility or short-term bank notes.~~are as follows:

In December 2021, the company accessed favorable credit markets and undertook a refinancing of previously outstanding senior notes to increase its weighted-average maturity profile and lower its average interest rates on the company’s debt portfolio.~~As part of the refinancing, on December 14, 2021, Sysco issued senior notes (the “Notes”) totaling $1.25 billion. Details of the Notes are as follows:~~

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


	13-Week Period Ended				39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
	(In thousands)				(In thousands)
Service cost	$	1,890	$	3,382	$	6,247	$	10,146
Interest cost	35,904		34,792		116,508		104,376
Expected return on plan assets	(35,425)		(51,580)		(112,402)		(154,740)
Amortization of prior service cost	98		99		295		297
Amortization of actuarial loss	7,018		7,304		23,627		21,912
Settlement loss recognized	—		—		315,354		—
Net pension (benefits) costs	$	9,485	$	(6,003)	$	349,629	$	(18,009)

The ~~Notes initially~~components of net company-sponsored benefit costs other than the service cost component are ~~fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under~~reported in Other expense (income), net within the ~~indenture governing the Notes or any~~consolidated results 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~~operations.

Assumptions

The remeasurement of the ~~Notes may be redeemed, in whole or in part, at any time prior~~benefit obligations and plan assets of the U.S. Retirement Plan that took place on October 31, 2022 reflects an updated discount rate and an updated expected rate of return on plan assets. The discount rate used to ~~maturity. If Sysco elects to redeem (i)~~determine benefit obligations as of the ~~2031 Notes before the~~remeasurement date ~~that is three months prior~~was 6.07%, as compared to the ~~maturity date, or (ii) the 2051 Notes before the date~~discount rate of 4.91% 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.

was used

~~On December 14, 2021, Sysco redeemed $1.25 billion in combined aggregate principal amount~~to determine benefit obligations as of ~~its 5.650% Senior Notes due 2025 (the “5.650% Notes”) and 3.550% Senior Notes due 2025 (the “3.550% Notes”). Sysco~~July 2, 2022. The expected rate of return used to determine net company-sponsored benefit costs for the ~~net proceeds from the offering~~remainder of fiscal 2023 was updated to 6.00% as 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 interestremeasurement date, as compared to the ~~applicable redemption date. The redemption~~expected rate of return of 4.50% that was ~~considered~~calculated as of July 2, 2022 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~~determine net company-sponsored benefit 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.~~for fiscal 2023.

9.10. EARNINGS PER SHARE

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


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
		(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)				(In thousands, except for share and per share data)
Numerator:	Numerator:									Numerator:
Net earnings	Net earnings	$	303,325	$	88,927	$	848,779	$	373,116	Net earnings	$	429,604	$	303,325	$	1,036,388	$	848,779
Denominator:	Denominator:									Denominator:
Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	508,368,159		511,110,670		510,642,876		510,081,610		Weighted-average basic shares outstanding	507,716,975		508,368,159		507,635,083		510,642,876
Dilutive effect of share-based awards	Dilutive effect of share-based awards	3,870,364		3,474,459		3,555,904		2,607,285		Dilutive effect of share-based awards	2,125,425		3,870,364		2,488,699		3,555,904
Weighted-average diluted shares outstanding	Weighted-average diluted shares outstanding	512,238,523		514,585,129		514,198,780		512,688,895		Weighted-average diluted shares outstanding	509,842,400		512,238,523		510,123,782		514,198,780
Basic earnings per share	Basic earnings per share	$	0.60	$	0.17	$	1.66	$	0.73	Basic earnings per share	$	0.85	$	0.60	$	2.04	$	1.66
Diluted earnings per share	Diluted earnings per share	$	0.59	$	0.17	$	1.65	$	0.73	Diluted earnings per share	$	0.84	$	0.59	$	2.03	$	1.65

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was ~~approximatel~~yapproximately 2,264,000 and 1,105,000~~and 1,893,000~~ for the third quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively. The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was ~~approximatel~~yapproximately 1,835,000 and 1,731,000~~and 4,763,000~~ for the first 39 weeks of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

~~10.~~11. 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 ~~$240.6~~$473.5 million and ~~$124.7~~$240.6 million for the third quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively. Comprehensive income was ~~$698.5 million~~$1.2 billion and ~~$731.6~~$698.5 million for the first 39 weeks of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:

13-Week Period Ended Apr. 2, 2022
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost Other expense, net $ 99 $ 25 $ 74
Amortization of actuarial loss, net Other expense, net 8,668 2,154 6,514
Total reclassification adjustments 8,767 2,179 6,588
Foreign currency translation:
Foreign currency translation adjustment N/A (96,582) — (96,582)
Marketable securities:
   Change in marketable securities (1)
N/A (6,738) (1,415) (5,323)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
   Change in cash flow hedge
Operating expenses (2)
24,039 5,664 18,375
   Change in net investment hedge N/A 16,055 4,014 12,041
Total other comprehensive income before reclassification adjustments 40,094 9,678 30,416
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2,874 719 2,155
Total other comprehensive income (loss) $ (51,585) $ 11,161 $ (62,746)

~~(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 third~~ ~~quarter~~ ~~of fiscal 2022.~~

~~(2)~~


		13-Week Period Ended Apr. 1, 2023
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:







Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	99	$	25	$	74
Amortization of actuarial loss, net	Other expense, net	7,472		1,867		5,605
Total reclassification adjustments		7,571		1,892		5,679
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	62,771		—		62,771
Marketable securities:
Change in marketable securities (1)	N/A	1,441		302		1,139
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedge	Operating expenses (2)	(27,909)		(5,454)		(22,455)
Change in net investment hedge	N/A	(7,201)		(1,800)		(5,401)

Total other comprehensive income (loss) before reclassification adjustments		(35,110)		(7,254)		(27,856)
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,893		723		2,170

Total other comprehensive income (loss)		$	39,566	$	(4,337)	$	43,903


(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 third quarter of fiscal 2023.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.


			13-Week Period Ended Mar. 27, 2021								13-Week Period Ended Apr. 2, 2022
		Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount			Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
			(In thousands)								(In thousands)
Pension and other postretirement benefit plans:	Pension and other postretirement benefit plans:								Pension and other postretirement benefit plans:

Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of prior service cost	Amortization of prior service cost	Other expense, net	$	183	$	46	$	137	Amortization of prior service cost	Other expense, net	$	99	$	25	$	74
Amortization of actuarial loss, net	Amortization of actuarial loss, net	Other expense, net	10,421		2,601		7,820		Amortization of actuarial loss, net	Other expense, net	8,668		2,154		6,514

Total reclassification adjustments	Total reclassification adjustments		10,604		2,647		7,957		Total reclassification adjustments		8,767		2,179		6,588
Foreign currency translation:	Foreign currency translation:								Foreign currency translation:
Foreign currency translation adjustment	Foreign currency translation adjustment	N/A	9,805		—		9,805		Foreign currency translation adjustment	N/A	(96,582)		—		(96,582)
Marketable securities:	Marketable securities:								Marketable securities:
Change in marketable securities (1)	Change in marketable securities (1)	N/A	(3,485)		(732)		(2,753)		Change in marketable securities (1)	N/A	(6,738)		(1,415)		(5,323)
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)	12,043		2,908		9,135
Change in cash flow hedges									Change in cash flow hedges	Operating expenses (2)	24,039		5,664		18,375
Change in net investment hedges	Change in net investment hedges	N/A	17,901		8,513		9,388		Change in net investment hedges	N/A	16,055		4,014		12,041

Total other comprehensive income before reclassification adjustments	Total other comprehensive income before reclassification adjustments		29,944		11,421		18,523		Total other comprehensive income before reclassification adjustments		40,094		9,678		30,416
Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of cash flow hedges	Amortization of cash flow hedges	Interest expense	2,921		730		2,191		Amortization of cash flow hedges	Interest expense	2,874		719		2,155
Total other comprehensive income			$	49,789	$	14,066	$	35,723
Total other comprehensive income (loss)									Total other comprehensive income (loss)		$	(51,585)	$	11,161	$	(62,746)


(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~~ ~~third~~ ~~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 third quarter of fiscal 2022.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.


		39-Week Period Ended Apr. 1, 2023
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss, arising in the current year	Other expense, net	$	(89,851)	$	(22,463)	$	(67,388)
Settlements	Other expense, net	315,455		78,864		236,591
Total other comprehensive income before reclassification adjustments		225,604		56,401		169,203
Reclassification adjustments:
Amortization of prior service cost	Other expense, net	297		75		222
Amortization of actuarial loss, net	Other expense, net	24,158		6,034		18,124
Total reclassification adjustments		24,455		6,109		18,346




Foreign currency translation:

Foreign currency translation adjustment	N/A	72,403		—		72,403
Marketable securities:
Change in marketable securities (1)	N/A	(1,260)		(265)		(995)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges	Operating expenses (2)	(62,729)		(14,087)		(48,642)
Change in net investment hedges	N/A	(20,854)		(5,213)		(15,641)
Total other comprehensive income (loss) before reclassification adjustments		(83,583)		(19,300)		(64,283)

Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	8,660		2,165		6,495
Total other comprehensive income		$	246,279	$	45,110	$	201,169

39-Week Period Ended Apr. 2, 2022
Location of
Expense (Income) Recognized in
Net Earnings Before Tax
Amount Tax Net of Tax
Amount
(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost Other expense, net $ 297 $ 75 $ 222
Amortization of actuarial loss, net Other expense, net 24,555 6,186 18,369
Total reclassification adjustments 24,852 6,261 18,591
Foreign currency translation:
Other comprehensive income (loss) before reclassification adjustments:
Foreign currency translation adjustment N/A (210,646) — (210,646)
Marketable securities:
Change in marketable securities (1)
N/A (8,939) (1,876) (7,063)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
15,532 3,687 11,845
Change in net investment hedges N/A 40,757 10,189 30,568
Total other comprehensive income before reclassification adjustments 56,289 13,876 42,413
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 8,622 2,157 6,465
Total other comprehensive income (loss) $ (129,822) $ 20,418 $ (150,240)

~~(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~~ 39 ~~weeks of fiscal~~ ~~2022~~.

~~(2)~~


(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 39 weeks of fiscal 2023.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.


			39-Week Period Ended Mar. 27, 2021								39-Week Period Ended Apr. 2, 2022
		Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount			Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
			(In thousands)								(In thousands)
Pension and other postretirement benefit plans:	Pension and other postretirement benefit plans:								Pension and other postretirement benefit plans:

Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of prior service cost	Amortization of prior service cost	Other expense, net	$	549	$	138	$	411	Amortization of prior service cost	Other expense, net	$	297	$	75	$	222
Amortization of actuarial loss, net	Amortization of actuarial loss, net	Other expense, net	31,161		7,783		23,378		Amortization of actuarial loss, net	Other expense, net	24,555		6,186		18,369
Total reclassification adjustments									Total reclassification adjustments		24,852		6,261		18,591

Total reclassification adjustments			31,710		7,921		23,789

Foreign currency translation:	Foreign currency translation:								Foreign currency translation:

Foreign currency translation adjustment	Foreign currency translation adjustment	N/A	345,452		—		345,452		Foreign currency translation adjustment	N/A	(210,646)		—		(210,646)
Marketable securities:	Marketable securities:								Marketable securities:
Change in marketable securities (1)	Change in marketable securities (1)	N/A	(4,140)		(869)		(3,271)		Change in marketable securities (1)	N/A	(8,939)		(1,876)		(7,063)
Hedging instruments:	Hedging instruments:								Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:	Other comprehensive income (loss) before reclassification adjustments:								Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedge (3)		Operating expenses (2)	11,554		3,051		8,503
Change in cash flow hedges									Change in cash flow hedges	Operating expenses (2)	15,532		3,687		11,845
Change in net investment hedges	Change in net investment hedges	N/A	(30,052)		(7,513)		(22,539)		Change in net investment hedges	N/A	40,757		10,189		30,568
Total other comprehensive income before reclassification adjustments									Total other comprehensive income before reclassification adjustments		56,289		13,876		42,413

Total other comprehensive income before reclassification adjustments			(18,498)		(4,462)		(14,036)
Reclassification adjustments:	Reclassification adjustments:								Reclassification adjustments:
Amortization of cash flow hedges	Amortization of cash flow hedges	Interest expense	8,669		2,168		6,501		Amortization of cash flow hedges	Interest expense	8,622		2,157		6,465
Total other comprehensive (loss) income			$	363,193	$	4,758	$	358,435
Total other comprehensive income (loss)									Total other comprehensive income (loss)		$	(129,822)	$	20,418	$	(150,240)

~~(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 39 ~~weeks of fiscal~~ ~~2021~~.

~~(2)~~


(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 39 weeks of fiscal 2022.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as ~~cash flow hedges.~~ ~~(3)~~ ~~Change in cash flow hedges includes the termination of some~~ cash flow hedges.

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


		39-Week Period Ended Apr. 2, 2022											39-Week Period Ended Apr. 1, 2023
		Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities, net of tax		Total			Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities, net of tax		Total
		(In thousands)											(In thousands)
Balance as of Jul. 3, 2021		$	(1,061,991)	$	(40,092)	$	(51,096)	$	4,415	$	(1,148,764)
Balance as of Jul. 2, 2022												Balance as of Jul. 2, 2022	$	(1,011,335)	$	(501,517)	$	35,770	$	(4,972)	$	(1,482,054)

Net actuarial loss arising in the current year												Net actuarial loss arising in the current year	(67,388)		—		—		—		(67,388)
Settlements												Settlements	236,591		—		—		—		236,591
Equity adjustment from foreign currency translation	Equity adjustment from foreign currency translation	—		(210,646)		—		—		(210,646)		Equity adjustment from foreign currency translation	—		72,403		—		—		72,403

Amortization of cash flow hedges	Amortization of cash flow hedges	—		—		6,465		—		6,465		Amortization of cash flow hedges	—		—		6,495		—		6,495

Change in net investment hedges	Change in net investment hedges	—		—		30,568		—		30,568		Change in net investment hedges	—		—		(15,641)		—		(15,641)
Change in cash flow hedge	Change in cash flow hedge	—		—		11,845		—		11,845		Change in cash flow hedge	—		—		(48,642)		—		(48,642)

Amortization of unrecognized prior service cost	Amortization of unrecognized prior service cost	222		—		—		—		222		Amortization of unrecognized prior service cost	222		—		—		—		222
Amortization of unrecognized net actuarial losses	Amortization of unrecognized net actuarial losses	18,369		—		—		—		18,369		Amortization of unrecognized net actuarial losses	18,124		—		—		—		18,124
Change in marketable securities	Change in marketable securities	—		—		—		(7,063)		(7,063)		Change in marketable securities	—		—		—		(995)		(995)
Balance as of Apr. 2, 2022		$	(1,043,400)	$	(250,738)	$	(2,218)	$	(2,648)	$	(1,299,004)
Balance as of Apr. 1, 2023												Balance as of Apr. 1, 2023	$	(823,786)	$	(429,114)	$	(22,018)	$	(5,967)	$	(1,280,885)

39-Week Period Ended Mar. 27, 2021
Pension and Other Postretirement Benefit Plans,
net of tax Foreign Currency Translation Hedging,
net of tax Marketable Securities,
net of tax Total
(In thousands)
Balance as of Jun. 27, 2020 $ (1,265,714) $ (402,384) $ (49,878) $ 7,095 $ (1,710,881)
Equity adjustment from foreign currency translation — 345,452 — — 345,452
Amortization of cash flow hedges — — 6,501 — 6,501
Change in net investment hedges — — (22,539) — (22,539)
Change in cash flow hedge — — 8,503 — 8,503
Amortization of unrecognized prior service cost 411 — — — 411
Amortization of unrecognized net actuarial losses 23,378 — — — 23,378
Change in marketable securities — — — (3,271) (3,271)
Balance as of Mar. 27, 2021 $ (1,241,925) $ (56,932) $ (57,413) $ 3,824 $ (1,352,446)


	39-Week Period Ended Apr. 2, 2022
	Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities		Total
	(In thousands)
Balance as of Jul. 3, 2021	$	(1,061,991)	$	(40,092)	$	(51,096)	$	4,415	$	(1,148,764)

Equity adjustment from foreign currency translation	—		(210,646)		—		—		(210,646)
Amortization of cash flow hedges	—		—		6,465		—		6,465
Change in net investment hedges	—		—		30,568		—		30,568

Change in cash flow hedge	—		—		11,845		—		11,845

Amortization of unrecognized prior service cost	222		—		—		—		222
Amortization of unrecognized net actuarial losses	18,369		—		—		—		18,369
Change in marketable securities	—		—		—		(7,063)		(7,063)
Balance as of Apr. 2, 2022	$	(1,043,400)	$	(250,738)	$	(2,218)	$	(2,648)	$	(1,299,004)

~~11.~~12. 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 39 weeks of fiscal ~~2022,~~2023, options to purchase ~~1,224,150~~916,673 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 39 weeks of fiscal ~~2022~~2023 was ~~$17.39.~~$24.58.

In the first 39 weeks of fiscal ~~2022,~~2023, employees were granted ~~473,355~~441,153 performance share units (PSUs). Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs granted without dividend equivalents, the fair value was reduced by the present value of expected dividends during the

vesting period. The weighted average grant-date fair value per PSU granted during the first 39 weeks of fiscal ~~2022~~2023 was ~~$76.75.~~$85.31. 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 39 weeks of fiscal ~~2022,~~2023, employees were granted ~~736,709~~889,635 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 39 weeks of fiscal ~~2022~~2023 was ~~$80.24.~~$75.70.

Employee Stock Purchase Plan

Plan participants purchased ~~661,656~~792,411 shares of common stock under the ESPP during the first 39 weeks of fiscal ~~2022.~~2023. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was ~~$11.92~~$11.15 during the first 39 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 ~~$90.7~~$73.8 million and ~~$65.7~~$90.7 million for the first 39 weeks of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

As of April ~~2, 2022,~~1, 2023, there was ~~$144.2~~$149.4 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 ~~1.97~~2.05 years.

~~12.~~13. INCOME TAXES

Effective Tax Rate

The effective tax rates for the third quarter and first 39 weeks of fiscal 2023 were 22.46% and 21.92%, respectively. The third quarter was favorably impacted by a cumulative effect of the change in the effective tax rate. The first 39 weeks of fiscal 2023 were favorably impacted by the benefit of the pension buyout and excess tax benefits of equity-based compensation.

The effective tax rates for the third quarter and first 39 weeks of fiscal 2022 were 21.31% and 23.18%, respectively. ~~As compared to the company’s statutory tax rate, the~~ ~~higher~~ The effective tax rate for the third quarter and first 39 weeks of fiscal 2022 was favorably impacted by the excess tax benefits of equity-based compensation ~~that totaled $7.9 million and $10.8 million, respectively,~~ and the impact of non-taxable corporate-owned life insurance ~~policies that totaled $0.4 million and $1.4 million, respectively.~~policies. For the first 39 weeks of fiscal 2022, these were partially offset by the increase in our reserve for uncertain tax positions ~~of $12.0 million~~ recognized in the first quarter of fiscal 2022. The effective tax rates for the third quarter and first 39 weeks of fiscal 2021 were 13.54% and 15.72%, respectively. As compared to the company’s statutory tax rate, the lower effective tax rate for the third quarter and first 39 weeks of fiscal 2021 was impacted by the favorable impact of excess tax benefits of equity-based compensation that totaled $6.0 million and $12.6 million, respectively. The first 39 weeks of fiscal 2021 were also favorably impacted by the $7.6 million tax benefit attributable to the sale of the stock of Cake Corporation and the impact of changes in tax law in the U.K. of $5.5 million, both of which occurred in the first quarter of fiscal 2021.

Uncertain Tax Positions

As of April ~~2, 2022,~~1, 2023, the gross amount of unrecognized tax benefit and related accrued interest was $32.4 million and ~~$5.4~~$7.4 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 of the company will increase or decrease in the next ~~twelve~~12 months. At this time, an estimate of the range of the reasonably possible change cannot be made.

During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. In the fourth quarter (April 18th) of fiscal 2023, the company filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the company’s position regarding its foreign tax credits. Sysco has previously recorded a benefit of $131.0 million attributable to its interpretation of the TCJA and the Internal Revenue Code. If the company is ultimately unsuccessful in defending its position, it may be required to reverse all, or some portion, of the benefit previously recorded.

Other

The Inflation Reduction Act of 2022 (Inflation Reduction Act) was enacted on August 16, 2022. The Inflation Reduction Act imposes a new 15% corporate alternative minimum tax (CAMT) on “applicable corporations” for taxable years beginning after December 31, 2022. The CAMT is imposed to the extent the alternative minimum tax exceeds a corporation’s regular tax liability. A corporation that pays alternative minimum tax is eligible for a credit against income tax in future years.

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.~~United States (U.S.) federal and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

~~13.~~14. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Although the final results of legal proceedings cannot be predicted with certainty, based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company.

~~14.~~15. 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) ~~the company’s~~our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh ~~production~~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 ~~the operations of Sysco;~~our operations;

•International Foodservice Operations – includes operations ~~in the Americas (primarily~~ outside of the U.S. ~~and Europe)~~, which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the ~~U.K.~~United Kingdom (U.K.), France, Ireland and Sweden;

•SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and

•Other – primarily our hotel supply operations, Guest Worldwide.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.

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


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Sales:	Sales:	(In thousands)				(In thousands)				Sales:	(In thousands)				(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	12,006,163	$	8,360,241	$	35,107,281	$	24,205,917	U.S. Foodservice Operations	$	13,257,519	$	12,006,163	$	39,937,055	$	35,107,281
International Foodservice Operations	International Foodservice Operations	2,834,089		1,723,126		8,535,608		5,854,608		International Foodservice Operations	3,344,121		2,834,089		9,910,267		8,535,608
SYGMA	SYGMA	1,794,837		1,580,695		5,270,193		4,625,244		SYGMA	1,972,058		1,794,837		5,839,051		5,270,193
Other	Other	267,050		160,527		765,806		475,181		Other	301,978		267,050		910,086		765,806
Total	Total	$	16,902,139	$	11,824,589	$	49,678,888	$	35,160,950	Total	$	18,875,676	$	16,902,139	$	56,596,459	$	49,678,888

		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Operating income (loss):	Operating income (loss):	(In thousands)				(In thousands)				Operating income (loss):	(In thousands)				(In thousands)
U.S. Foodservice Operations	U.S. Foodservice Operations	$	746,467	$	545,502	$	2,220,812	$	1,619,162	U.S. Foodservice Operations	$	855,766	$	746,467	$	2,540,555	$	2,220,812
International Foodservice Operations	International Foodservice Operations	7,760		(121,487)		55,181		(201,973)		International Foodservice Operations	48,352		7,760		192,945		55,181
SYGMA	SYGMA	4,362		12,937		(4,814)		35,957		SYGMA	25,439		4,362		37,715		(4,814)
Other	Other	(3,972)		5,884		2,667		4,861		Other	11,836		(3,972)		33,255		2,667
Total segments	Total segments	754,617		442,836		2,273,846		1,458,007		Total segments	941,393		754,617		2,804,470		2,273,846
Global Support Center	Global Support Center	(258,888)		(206,919)		(701,526)		(590,449)		Global Support Center	(247,216)		(258,888)		(735,318)		(701,526)
Total operating income	Total operating income	495,729		235,917		1,572,320		867,558		Total operating income	694,177		495,729		2,069,152		1,572,320
Interest expense	Interest expense	124,018		145,773		495,131		438,988		Interest expense	134,931		124,018		391,123		495,131
Other (income) expense, net		(13,777)		(12,708)		(27,705)		(14,140)
Other expense (income), net										Other expense (income), net	5,209		(13,777)		350,614		(27,705)
Earnings before income taxes	Earnings before income taxes	$	385,488	$	102,852	$	1,104,894	$	442,710	Earnings before income taxes	$	554,037	$	385,488	$	1,327,415	$	1,104,894

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

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

Highlights

Our results for the third quarter of fiscal ~~2022 results~~2023 were ~~strong, reflecting sequential~~primarily driven by 11.7% sales growth ~~improvements~~compared to the third quarter of fiscal 2022. This double-digit sales growth was driven by volume growth, effective management of inflation, and ~~accelerating market~~continued share gains. Our ~~share gains in the U.S. and International segments~~gross profit growth this quarter outpaced operating expense, as we continued to ~~accelerate and demonstrated the impact of~~improve our supply chain productivity. We continued to make progress on our Recipe for Growth strategy, ~~on our business. Additionally, our teams made significant improvements in operating expense leverage,~~ with ~~lower business recovery costs, good progress~~advancement in our ~~operations productivity performance efforts~~digital tools, supply chain investments, and ~~continued re-investments to drive profitable growth.~~sales and merchandising initiatives, both domestically and internationally. Our net earnings for the first 39 weeks also includes a pension liability transfer, which resulted in a non-cash charge of $315.4 million recorded within Other expense (income), net. See below for a comparison of our fiscal ~~2022~~2023 results to our fiscal ~~2021~~2022 results, both including and excluding Certain Items (as defined below).

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

•Sales:

◦increased ~~42.9%~~11.7%, or ~~$5.1~~$2.0 billion, to ~~$16.9~~$18.9 billion;

•Operating income:

◦increased ~~110.1%~~40.0%, or ~~$259.8~~$198.4 million, to ~~$495.7~~$694.2 million;

◦adjusted operating income increased ~~124.6%~~27.8%, or ~~$319.2~~$160.1 million, to ~~$575.4~~$735.5 million;

•Net earnings:

◦increased ~~241.1%~~41.6%, or ~~$214.4~~$126.3 million, to ~~$303.3~~$429.6 million;

◦adjusted net earnings increased ~~216.1%~~26.9%, or ~~$248.1~~$97.6 million, to ~~$362.9~~$460.5 million;

•Basic earnings per share:

◦increased ~~252.9%~~41.7%, or ~~$0.43,~~$0.25, to ~~$0.60~~$0.85 per share;

•Diluted earnings per share:

◦increased ~~247.1%~~42.4%, or ~~$0.42,~~$0.25, to ~~$0.59~~$0.84 per share;

◦adjusted diluted earnings per share increased ~~222.7%~~26.8%, or ~~$0.49,~~$0.19, to ~~$0.71 in fiscal 2022;~~$0.90;

•EBITDA:

◦increased ~~65.2%~~25.8%, or ~~$277.6~~$181.6 million, to ~~$703.3~~$885.0 million; and

◦adjusted EBITDA increased ~~72.8%~~19.0%, or ~~$318.4~~$144.0 million, to ~~$755.8~~$899.7 million.

Comparisons of results from the first 39 weeks of fiscal ~~2022~~2023 to the first 39 weeks of fiscal ~~2021~~2022 are presented below:

•Sales:

◦increased ~~41.3%~~13.9%, or ~~$14.5~~$6.9 billion, to ~~$49.7~~$56.6 billion;

•Operating income:

◦increased ~~81.2%~~31.6%, or ~~$704.8~~$496.8 million, to ~~$1.6~~$2.1 billion;

◦adjusted operating income increased ~~105.4%~~24.6%, or ~~$901.2~~$431.7 million, to ~~$1.8~~$2.2 billion;

•Net earnings:

◦increased ~~127.5%~~22.1%, or ~~$475.7~~$187.6 million, to ~~$848.8 million;~~$1.0 billion;

◦adjusted net earnings increased ~~189.9%~~25.5%, or ~~$710.6~~$276.3 million, to ~~$1.1~~$1.4 billion;

•Basic earnings per share:

◦increased ~~127.4%~~22.9%, or ~~$0.93,~~$0.38, to ~~$1.66~~$2.04 per share;

•Diluted earnings per share:

◦increased ~~126.0%~~23.0%, or ~~$0.92,~~$0.38, to ~~$1.65~~$2.03 per share; and

◦adjusted diluted earnings per share increased ~~189.0%~~26.5%, or ~~$1.38,~~$0.56, to ~~$2.11 in fiscal 2022;~~$2.67;

•EBITDA:

◦increased ~~52.5%~~5.6%, or ~~$747.5~~$121.9 million, to ~~$2.2~~$2.3 billion; and

◦adjusted EBITDA increased ~~65.9%~~16.2%, or ~~$905.4~~$368.6 million, to ~~$2.3~~$2.6 billion.

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, ~~that~~as we believe these metrics provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of restructuring and transformational project costs consisting of: (1) restructuring charges, (2) expenses associated with our various transformation initiatives and (3) facility closure and severance charges; acquisition-related costs consisting of: ~~(1)~~(a) intangible amortization expense and ~~(2)~~(b) acquisition costs and due diligence costs related to our 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 fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory and a pension settlement charge that resulted from the ~~first 39 weeks~~purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Our results for fiscal 2022 were also impacted by ~~(1)~~ a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory, ~~(2)~~losses on the extinguishment of long-term debt ~~extinguishment costs~~ and ~~(3) the~~an increase in reserves for uncertain tax positions. ~~Our results for the first 39 weeks of fiscal 2021 were also impacted by losses on the sale of businesses.~~

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

Trends

Economic and Industry Trends

Sysco continues to outperform the foodservice market due to the success of the Recipe for Growth strategy. The food-away-from-home sector ~~continues~~is a healthy long-term market. Sysco is diversified and well positioned as the market leader in food service and remains on track to ~~experience an overall recovery as compared~~meet our stated goal of achieving growth at a rate of 1.35 times the U.S. foodservice industry in fiscal 2023. We delivered strong sales growth throughout the quarter, despite industry volumes decelerating to fiscal 2021. Our third quarter began with disruptions from the Omicron variant of COVID-19, which negatively impacted consumer demand and our customers due to the reintroduction of significant restrictions on their businesses. These conditions persisted through February; however, we experienced a strong market reboundslight growth beginning in ~~late February and during March, as the impact of this variant lessened and restrictions eased.~~March.

Sales and Gross Profit Trends

Our sales and gross profit performance ~~can be~~are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in the third quarter of fiscal ~~2022~~2023 was volume growth, as we experienced ~~strong results from both independent~~a 6.1% improvement in U.S. Foodservice case volume and ~~chain customers, driven by~~ a ~~14.1%~~4.2% improvement in local case volume ~~and an 18.8% improvement in total case volume~~ within our U.S. ~~Broadline operations,~~segment, in each instance as compared to the third quarter of fiscal ~~2021.~~2022. This volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds. This growth enabled us to gain market share during the third quarter of fiscal 2022. We have two customer business segments that remain impacted by the COVID-19 pandemic, namely “Business and Industry” (which includes, for example, office cafeterias) and “Travel and Hospitality.” We anticipate that both of these segments will make progress in their recovery in future quarters, which will contribute to our continued volume growth. We are on track to exceed our stated goal of achieving growth at a rate of 1.2 times the industry in fiscal 2022,2023, and we ~~believe that our Recipe for Growth strategy will enable us~~expect to ~~accelerate over the next three years~~continue to grow profitably with both new and ~~grow at 1.5 times the pace of the industry by the end of fiscal 2024.~~existing customers.

Product cost inflation has also been a driver of our sales and gross profit performance. We experienced inflation at a rate of ~~15.8%~~4.9% and ~~14.4%~~7.6% in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, ~~in our U.S. Broadline operations,~~at the total enterprise level, primarily driven by inflation in the ~~poultry, produce~~dairy and ~~dairy~~frozen categories. ~~We have been~~The rate of inflation, as compared to the prior year, declined at an accelerated rate, and this trend is continuing into the fourth quarter of fiscal 2023. During the quarter, we were successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin ~~decreased 12~~increased 35 and 4528 basis points in the third quarter and ~~the~~ first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the same prior year periods, ~~largely due to~~primarily driven by higher volumes, the ~~impact~~effective management of ~~product cost inflation. We are concerned about the long-term effect of elevated~~ inflation and we are taking actions to address it. We are actively working to improve our cost of goods sold to Sysco, so that we can pass along value to our customers. We are also pursuing Sysco brand penetration, as we believe that Sysco products can save our customers money. Lastly, we are workingprogress with our ~~customers to help them with their menu design and locate product alternatives to avoid highly inflationary items and sub-categories.~~partnership growth management initiatives.

Operating Expense Trends

Total operating expenses increased ~~33.4%~~8.7% and ~~31.0%~~12.3% during the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, driven by ~~the variable costs associated with significantly~~ increased volumes, cost inflation, continued operational cost pressures from the operating environment and our planned investments to drive our transformation initiatives under our Recipe for Growth ~~strategy,~~strategy. This quarter included transformation investments ~~in business recovery costs and expenses due to lower productivity resulting from high turnover in our teams. Our operating results in the third quarter and first 39 weeks~~ of fiscal 2022 included $48 million and $116 million, respectively, 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. We have made a purposeful response to the COVID-generated labor and safety environment in which we are operating, with $35 million and $165 million in business recovery operating investments such as recruiting costs, hiring marketing, vaccination promotion, contract labor and sign-on and retention bonuses during the third quarter and first 39 weeks of fiscal 2022, respectively.$60 million. We continued to improve our ~~staffing levels~~supply chain efficiency, while investing in ~~the third quarter of fiscal 2022,~~associate retention and best-in-class training, primarily for transportation and warehouse ~~staff. Incremental~~colleagues. Our Sysco Driver Academy and industry leading training programs are contributing to improved retention and overtime costs were approximately $30 million in the third quarter of fiscal 2022, which is lower than the approximately $40 million for these same costs in the second quarter of fiscal 2022. These efforts, along with productivity, ~~improvements from prior quarters, are lowering our business recovery costs,~~ and we expect ~~these expenses~~ to ~~continue~~see this trend improve as the percentage of drivers and warehouse colleagues trained from within Sysco continues to ~~decline~~grow. We believe the advancements we are making in our physical capabilities, and the ~~fourth quarter of fiscal 2022. Even with those significant business recovery~~investments we are making in improved training, will provide improved service levels to our customers and ~~transformation operating expense investments, offset by the continued benefit of our cost-savings efforts, we leveraged our adjusted operating expense structure.~~strengthen Sysco’s ability to profitably win market share.

~~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.

~~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 third quarter of fiscal 2022 to the third quarter of fiscal 2019 are presented below:~~

•~~Sales:~~

Pension Settlement Charge

◦

The Sysco Corporation Retirement Plan (the Plan) executed a commitment agreement to purchase a nonparticipating single premium group annuity contract that transferred $695.0 million of the Plan’s defined benefit pension obligations related to certain pension benefits. As a result of the transaction, we recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023. This charge has been treated as a Certain Item. The amount of on-going expense for the Plan has been remeasured for the remainder of the fiscal year. Pension expense is elevated over fiscal 2022 due to increased ~~15.3%~~interest rates and lower asset returns; the majority of the increase is included within Other expense (income), ~~or $2.2 billion,~~net in the consolidated results of operations. We expect pension expense within this line item to increase by approximately $16 million for the last 13 weeks of fiscal 2023, as compared to the same time period in fiscal ~~2019;~~

•~~Operating income:~~

◦~~decreased 6.4%, or $33.9 million, as compared to fiscal 2019;~~

◦~~adjusted operating income decreased 7.2%, or $44.8 million, as compared to fiscal 2019;~~

•~~EBITDA:~~

◦~~decreased 0.9%, or $6.3 million, as compared to fiscal 2019;~~

◦~~adjusted EBITDA decreased 2.7%, or $21.1 million, as compared to fiscal 2019;~~

•~~Diluted earnings per share:~~

◦~~decreased 30.6%, or $0.26, as compared to fiscal 2019; and~~

◦~~adjusted diluted earnings per share decreased 10.1%, or $0.08, as compared to fiscal 2019.~~

~~Comparisons of results from the first 39 weeks of fiscal 2022 to the first 39 weeks of fiscal 2019 are presented below:~~

•~~Sales:~~

◦~~increased 11.3%, or $5.0 billion, as compared to fiscal 2019;~~

•~~Operating income:~~

◦~~decreased 2.3%, or $37.3 million, as compared to fiscal 2019;~~

◦~~adjusted operating income decreased 8.3%, or $159.0 million, as compared to fiscal 2019;~~

•~~EBITDA:~~

◦~~increased 0.04%, or $0.9 million, as compared to fiscal 2019;~~

◦~~adjusted EBITDA decreased 4.5%, or $107.3 million, as compared to fiscal 2019;~~

•~~Diluted earnings per share:~~

◦~~decreased 24.0%, or $0.52, as compared to fiscal 2019; and~~

◦~~adjusted diluted earnings per share decreased 13.9%, or $0.34, as compared to fiscal 2019.~~

Key items impacting the comparability of Sysco’s results in the third quarter of fiscal 2022 to the third 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.2022.

Mergers and Acquisitions

We continue to focus on mergers and acquisitions as a part of our growth strategy, where we plan to reinforce our existing businesses while cultivating new channels, new segments and new capabilities. ~~We have completed~~In the ~~following acquisitions thus far in~~first and second quarters of fiscal ~~2022:~~2023, we acquired a total of three small U.S.-based independent Italian food distributors as part of our plan to meaningfully scale our growing Italian platform.

•InThe results of these acquisitions were not material to the ~~first quarter~~consolidated results of ~~fiscal 2022, we acquired Greco and Sons, a leading independent specialty Italian distributor in~~ the ~~United States.~~

•~~In 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.

•Incompany for the third quarter of fiscal ~~2022, we acquired The Coastal Companies, a leading fresh produce distributor and value-added processer on the East Coast.~~2023.

Strategy

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

Our various business transformation initiatives remain on track, ~~such as the centralized pricing tool project, which~~including promoting our specialty programs for produce, protein and Italian products and our customer growth initiatives. Our strategic initiative to enable omni-channel inventory fulfillment is substantially complete for U.S. local customers, and which enables Sysco to strategically manage the high levels of inflation that we are currently experiencing. Other initiatives, such as our personalization engine, continue to expand, while the sales transformation is helping our sales teams continue to win new business. Additionally, we are continuing to improve the efficiency of our organization, such as regionalizing the leadership structure of our U.S. Broadline and specialty business, as we reduce our structural expenses to fund our capital investments. In the third quarter of fiscal 2022, we converted our U.S. broadline operations from an industry traditional five-day work week to a full six-day delivery model, which provides a better schedule for our associates, increases efficiencyoperating in our ~~operations, increases weekly throughput without the need for additional~~

~~trucks or building expansions~~first test region, and ~~increases our ability~~we have made progress in expanding to ~~deliver to our customers on time.~~deliveries six days a week. From these actions as a part of our Recipe for Growth, ~~we can see~~ the benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making ~~towards~~toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will continue to accelerate. We are committed to profitably growing ~~1.2 times the market for fiscal 2022 and~~ 1.5 times the market by the end of fiscal 2024, the third year of our three-year strategic plan.

Results of Operations

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


		13-Week Period Ended				39-Week Period Ended					13-Week Period Ended				39-Week Period Ended
		Apr. 2, 2022		Mar. 27, 2021		Apr. 2, 2022		Mar. 27, 2021			Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Sales	Sales	100.0	%	100.0	%	100.0	%	100.0	%	Sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	Cost of sales	82.2		82.0		82.1		81.7		Cost of sales	81.8		82.2		81.9		82.1
Gross profit	Gross profit	17.8		18.0		17.9		18.3		Gross profit	18.2		17.8		18.1		17.9
Operating expenses	Operating expenses	14.9		16.0		14.7		15.8		Operating expenses	14.5		14.9		14.4		14.7
Operating income	Operating income	2.9		2.0		3.2		2.5		Operating income	3.7		2.9		3.7		3.2
Interest expense	Interest expense	0.7		1.2		1.0		1.2		Interest expense	0.8		0.7		0.7		1.0
Other (income) expense, net		(0.1)		(0.1)		—		—
Other expense (income), net										Other expense (income), net	—		(0.1)		0.7		—
Earnings before income taxes	Earnings before income taxes	2.3		0.9		2.2		1.3		Earnings before income taxes	2.9		2.3		2.3		2.2
Income taxes	Income taxes	0.5		0.1		0.5		0.2		Income taxes	0.6		0.5		0.5		0.5
Net earnings	Net earnings	1.8	%	0.8	%	1.7	%	1.1	%	Net earnings	2.3	%	1.8	%	1.8	%	1.7	%

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


		13-Week Period Ended		39-Week Period Ended			13-Week Period Ended		39-Week Period Ended
		Apr. 2, 2022		Apr. 2, 2022			Apr. 1, 2023		Apr. 1, 2023
Sales	Sales	42.9	%	41.3	%	Sales	11.7	%	13.9	%
Cost of sales	Cost of sales	43.2		42.1		Cost of sales	11.2		13.5
Gross profit	Gross profit	42.0		37.8		Gross profit	13.9		15.7
Operating expenses	Operating expenses	33.4		31.0		Operating expenses	8.7		12.3
Operating income	Operating income	110.1		81.2		Operating income	40.0		31.6
Interest expense	Interest expense	(14.9)		12.8		Interest expense	8.8		(21.0)
Other (income) expense, net (1) (2)		8.4		95.9
Other expense (income), net (1) (2)						Other expense (income), net (1) (2)	(137.8)		(1,365.5)
Earnings before income taxes	Earnings before income taxes	274.8		149.6		Earnings before income taxes	43.7		20.1
Income taxes	Income taxes	490.0		268.0		Income taxes	51.4		13.6
Net earnings	Net earnings	241.1	%	127.5	%	Net earnings	41.6	%	22.1	%
Basic earnings per share	Basic earnings per share	252.9	%	127.4	%	Basic earnings per share	41.7	%	22.9	%
Diluted earnings per share	Diluted earnings per share	247.1		126.0		Diluted earnings per share	42.4		23.0
Average shares outstanding	Average shares outstanding	(0.5)		0.1		Average shares outstanding	(0.1)		(0.6)
Diluted shares outstanding	Diluted shares outstanding	(0.5)		0.3		Diluted shares outstanding	(0.5)		(0.8)

~~(1)Other (income) expense, net was income of $13.8 million and income of $12.7 million in the third quarter of fiscal 2022 and fiscal 2021, respectively.~~

~~(2)Other (income) expense, net was income of $27.7 million and income of $14.1 million in the first 39 weeks of fiscal 2022 and fiscal 2021, respectively.~~


(1)			Other expense (income), net was expense of $5.2 million and income of $13.8 million in the third quarter of fiscal 2023 and fiscal 2022, respectively.
(2)			Other expense (income), net was expense of $350.6 million and income of $27.7 million in the first 39 weeks of fiscal 2023 and fiscal 2022, respectively.

The following tables represent our results by reportable segments:


		13-Week Period Ended Apr. 2, 2022																			13-Week Period Ended Apr. 1, 2023
		U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals				U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals
		(In thousands)																			(In thousands)
Sales	Sales	$	12,006,163		$	2,834,089		$	1,794,837		$	267,050		$	—		$	16,902,139		Sales	$	13,257,519		$	3,344,121		$	1,972,058		$	301,978		$	—		$	18,875,676
Sales increase (decrease)		43.6		%	64.5		%	13.5		%	66.4		%				42.9		%
Sales increase																				Sales increase	10.4		%	18.0		%	9.9		%	13.1		%				11.7		%
Percentage of total	Percentage of total	71.0		%	16.8		%	10.6		%	1.5		%				99.9		%	Percentage of total	70.2		%	17.7		%	10.4		%	1.7		%				100.0		%

Operating income (loss)	Operating income (loss)	$	746,467		$	7,760		$	4,362		$	(3,972)		$	(258,888)		$	495,729		Operating income (loss)	$	855,766		$	48,352		$	25,439		$	11,836		$	(247,216)		$	694,177
Operating income (loss) increase (decrease)	Operating income (loss) increase (decrease)	36.8		%	NM			(66.3)		%	NM			25.1		%	NM			Operating income (loss) increase (decrease)	14.6		%	NM			NM			NM			(4.5)		%	40.0		%
Percentage of total segments	Percentage of total segments	98.9		%	1.0		%	0.6		%	(0.5)		%				100.0		%	Percentage of total segments	90.9		%	5.1		%	2.7		%	1.3		%				100.0		%
Operating income (loss) as a percentage of sales		6.2		%	0.3		%	0.2		%	(1.5)		%				2.9		%
Operating income as a percentage of sales																				Operating income as a percentage of sales	6.5		%	1.4		%	1.3		%	3.9		%				3.7		%

13-Week Period Ended Mar. 27, 2021
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
(In thousands)
Sales $ 8,360,241 $ 1,723,126 $ 1,580,695 $ 160,527 $ — $ 11,824,589
Percentage of total 70.7 % 14.6 % 13.4 % 1.3 % 100.0 %
Operating income (loss) $ 545,502 $ (121,487) $ 12,937 $ 5,884 $ (206,919) $ 235,917
Percentage of total segments 123.2 % (27.4) % 2.9 % 1.3 % 100.0 %
Operating income as a percentage of sales 6.5 % (7.1) % 0.8 % 3.7 % 2.0 %

39-Week Period Ended Apr. 2, 2022
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
(In thousands)
Sales $ 35,107,281 $ 8,535,608 $ 5,270,193 $ 765,806 $ — $ 49,678,888
Sales increase (decrease) 45.0 % 45.8 % 13.9 % 61.2 % 41.3 %
Percentage of total 70.7 % 17.2 % 10.6 % 1.5 % 100.0 %
Operating income (loss) $ 2,220,812 $ 55,181 $ (4,814) $ 2,667 $ (701,526) $ 1,572,320
Operating income increase (decrease) 37.2 % 127.3 % (113.4) % (45.1) % 81.2 %
Percentage of total segments 97.7 % 2.4 % (0.2) % 0.1 % 100.0 %
Operating income as a percentage of sales 6.3 % 0.6 % (0.1) % 0.3 % 3.2 %

39-Week Period Ended Mar. 27, 2021
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
(In thousands)
Sales $ 24,205,917 $ 5,854,608 $ 4,625,244 $ 475,181 $ — $ 35,160,950
Percentage of total 68.8 % 16.7 % 13.2 % 1.3 % 100.0 %
Operating income (loss) $ 1,619,162 $ (201,973) $ 35,957 $ 4,861 $ (590,449) $ 867,558
Percentage of total segments 111.1 % (13.9) % 2.5 % 0.3 % 100.0 %
Operating income as a percentage of sales 6.7 % (3.4) % 0.8 % 1.0 % 2.5 %


	13-Week Period Ended Apr. 2, 2022
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center		Consolidated Totals
	(In thousands)
Sales	$	12,006,163		$	2,834,089		$	1,794,837		$	267,050		$	—	$	16,902,139

Percentage of total	71.0		%	16.8		%	10.6		%	1.6		%			100.0		%

Operating income (loss)	$	746,467		$	7,760		$	4,362		$	(3,972)		$	(258,888)	$	495,729

Percentage of total segments	98.9		%	1.0		%	0.6		%	(0.5)		%			100.0		%
Operating income (loss) as a percentage of sales	6.2		%	0.3		%	0.2		%	(1.5)		%			2.9		%

3231


	39-Week Period Ended Apr. 1, 2023
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals
	(In thousands)
Sales	$	39,937,055		$	9,910,267		$	5,839,051		$	910,086		$	—		$	56,596,459
Sales increase	13.8		%	16.1		%	10.8		%	18.8		%				13.9		%
Percentage of total	70.6		%	17.5		%	10.3		%	1.6		%				100.0		%

Operating income (loss)	$	2,540,555		$	192,945		$	37,715		$	33,255		$	(735,318)		$	2,069,152
Operating income (loss) increase	14.4		%	249.7		%	NM			NM			4.8		%	31.6		%
Percentage of total segments	90.6		%	6.9		%	1.3		%	1.2		%				100.0		%
Operating income as a percentage of sales	6.4		%	1.9		%	0.6		%	3.7		%				3.7		%


	39-Week Period Ended Apr. 2, 2022
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center		Consolidated Totals
	(In thousands)
Sales	$	35,107,281		$	8,535,608		$	5,270,193		$	765,806		$	—	$	49,678,888

Percentage of total	70.7		%	17.2		%	10.6		%	1.5		%			100.0		%

Operating income (loss)	$	2,220,812		$	55,181		$	(4,814)		$	2,667		$	(701,526)	$	1,572,320

Percentage of total segments	97.7		%	2.4		%	(0.2)		%	0.1		%			100.0		%
Operating income (loss) as a percentage of sales	6.3		%	0.6		%	(0.1)		%	0.3		%			3.2		%

Based on information in Note ~~14,~~15, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, U.S. Foodservice Operations and International Foodservice Operations collectively represented approximately ~~87.8%~~87.9% and ~~87.8%~~88.1% of Sysco’s overall sales and ~~99.9%~~96.0% and ~~100.1%~~97.5% of total segment operating income, respectively. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.

Results of U.S. Foodservice Operations

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

13-Week Period Ended Apr. 2, 2022 13-Week Period Ended Mar. 27, 2021 Change in Dollars % Change
(Dollars in thousands)
Sales $ 12,006,163 $ 8,360,241 $ 3,645,922 43.6 %
Gross profit 2,270,045 1,634,837 635,208 38.9
Operating expenses 1,523,578 1,089,335 434,243 39.9
Operating income $ 746,467 $ 545,502 $ 200,965 36.8 %
Gross profit $ 2,270,045 $ 1,634,837 $ 635,208 38.9 %
Adjusted operating expenses (Non-GAAP) 1,520,676 1,109,719 410,957 37.0
Adjusted operating income (Non-GAAP) $ 749,369 $ 525,118 $ 224,251 42.7 %
39-Week Period Ended Apr. 2, 2022 39-Week Period Ended Mar. 27, 2021 Change in Dollars % Change
(Dollars in thousands)
Sales $ 35,107,281 $ 24,205,917 $ 10,901,364 45.0 %
Gross profit 6,594,477 4,793,866 1,800,611 37.6
Operating expenses 4,373,665 3,174,704 1,198,961 37.8
Operating income $ 2,220,812 $ 1,619,162 $ 601,650 37.2 %
Gross profit $ 6,594,477 $ 4,793,866 $ 1,800,611 37.6 %
Adjusted operating expenses (Non-GAAP) 4,364,629 3,293,919 1,070,710 32.5
Adjusted operating income (Non-GAAP) $ 2,229,848 $ 1,499,947 $ 729,901 48.7 %

3332


	13-Week Period Ended Apr. 1, 2023		13-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	13,257,519	$	12,006,163	$	1,251,356	10.4	%
Gross profit	2,545,859		2,270,045		275,814		12.2
Operating expenses	1,690,093		1,523,578		166,515		10.9
Operating income	$	855,766	$	746,467	$	109,299	14.6	%

Gross profit	$	2,545,859	$	2,270,045	$	275,814	12.2	%
Adjusted operating expenses (Non-GAAP)	1,678,390		1,520,676		157,714		10.4
Adjusted operating income (Non-GAAP)	$	867,469	$	749,369	$	118,100	15.8	%

	39-Week Period Ended Apr. 1, 2023		39-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	39,937,055	$	35,107,281	$	4,829,774	13.8	%
Gross profit	7,651,291		6,594,477		1,056,814		16.0
Operating expenses	5,110,736		4,373,665		737,071		16.9
Operating income	$	2,540,555	$	2,220,812	$	319,743	14.4	%

Gross profit	$	7,651,291	$	6,594,477	$	1,056,814	16.0	%
Adjusted operating expenses (Non-GAAP)	5,079,140		4,364,629		714,511		16.4
Adjusted operating income (Non-GAAP)	$	2,572,151	$	2,229,848	$	342,303	15.4	%

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)				Increase (Decrease)
		13-Week Period				39-Week Period					13-Week Period				39-Week Period
		(Dollars in millions)				(Dollars in millions)					(Dollars in millions)				(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars		Percentage		Dollars		Cause of change	Percentage		Dollars		Percentage		Dollars
Case volume(1)	Case volume(1)	20.0	%	$	1,668.1	23.0	%	$	5,568.0	Case volume(1)	5.9	%	$	709.6	5.2	%	$	1,833.7
Inflation ~~(1)~~	Inflation ~~(1)~~	16.7		1,392.0		15.3		3,692.1		Inflation ~~(1)~~	4.2		510.0		7.6		2,664.2
Acquisitions (2)		4.5		373.6		3.4		832.9

Other ~~(3)~~(2)	Other ~~(3)~~(2)	2.4		212.2		3.3		808.4		Other ~~(3)~~(2)	0.3		31.8		1.0		331.9
Total change in sales	Total change in sales	43.6	%	$	3,645.9	45.0	%	$	10,901.4	Total change in sales	10.4	%	$	1,251.4	13.8	%	$	4,829.8




(1)			Case volumes increased 6.1% and 6.2% compared to the third quarter and first 39 weeks of fiscal 2022, respectively. This volume increase resulted in a 5.9% and 5.2% increase in the dollar value of sales compared to the third quarter and first 39 weeks of fiscal 2022, respectively.
(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.”

~~(1)Represents product cost inflation for~~The sales growth in our U.S. Foodservice Operations ~~which includes product cost~~was fueled by three factors: inflation, ~~of 15.8%~~market growth, and ~~14.4% for U.S. Broadline operations, respectively.~~

~~(2)Includes the impact of our fiscal 2022 acquisitions.~~

~~(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.”~~

The primary driver of the sales increase in the third quarter and the first 39 weeks of fiscal 2022 was the significant improvement in case volume in our U.S. Broadline operations as a result of two factors: (a) the ongoing business recovery from the COVID-19 pandemic and (b) the impact of our Recipe for Growth initiatives.strong market share gains. Case volumes from our U.S. ~~Broadline operations~~Foodservice Operations increased ~~18.8%~~6.1% and ~~23.1%~~6.2% in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal ~~2021.~~2022. This included a ~~14.1%~~4.2% and ~~18.5% improvement in local customer case growth in the third quarter and first 39 weeks of fiscal 2022, respectively, along with a 24.7% and 29.0%~~4.4% increase in ~~national~~local customer case volume in the third quarter and first 39 weeks of fiscal ~~2022, respectively. The increases in U.S. Broadline case volumes represent organic growth.~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal 2022.

Operating Income

The increase in operating income for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 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 third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, was driven primarily by ~~the improvement in local cases stemming from (a) the ongoing business recovery from the COVID-19 pandemic, (b) the impact of our Recipe for Growth initiative, (c)~~higher volumes, as well as continued progress with effective management of ~~higher~~product cost inflation and ~~(d) optimization of~~ our ~~business processes and performance.~~partnership growth management initiatives. The estimated change in product costs, an internal measure of inflation or deflation, ~~for~~increased in both the third quarter and first 39 weeks of fiscal ~~2022 for our U.S. Broadline operations was inflation of 15.8% and 14.4%, respectively.~~2023. For the third quarter and first 39 weeks of fiscal ~~2022,~~2023, this change in product costs was primarily driven by inflation in the ~~poultry, produce~~dairy and ~~dairy~~frozen food categories. Gross margin, which is gross profit as a percentage of sales, was ~~18.91% and 18.78%~~19.2% in each of the third quarter and first 39 weeks of fiscal ~~2022, respectively,~~2023 for our U.S. Foodservice Operations, which was ~~a decrease~~an increase of 6429 basis points compared to gross margin of ~~19.55%~~18.9% in the third quarter of fiscal ~~2021,~~2022, and ~~a decrease~~an increase of ~~102~~38 basis points compared to gross margin of ~~19.80%~~18.8% in the first 39 weeks of fiscal ~~2021, primarily attributable to inflationary pressure.~~2022.

The increase in operating expenses for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, was primarily driven by ~~variable costs associated with~~ increased volumes, cost inflation, operational pressures from the operating environment and largely from short-term expenses associated with the ongoing business recovery, including increases in costs for associates, which included recruiting costs, overtime costs, hiring marketing, vaccination promotion, contract labor and sign-on and retention bonuses. These business recovery costs were lower in the third quarter than the second quarter of fiscal 2022 dueour planned investments to ~~improved staffing levels and productivity increases. We have also experienced an increase in operating expenses due to investments for~~drive our Recipe for Growth strategy in the first 39 weeks of fiscal 2022. Additionally, we experienced a $108.4 million unfavorable comparison of bad debt expense in the first 39 weeks of fiscal 2022, as compared to the first 39 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 change in bad debt expense was not significant.transformation initiatives.

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 Apr. 2, 2022		13-Week Period Ended Mar. 27, 2021		Change in Dollars		% Change			13-Week Period Ended Apr. 1, 2023		13-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
		(Dollars in thousands)									(Dollars in thousands)
Sales	Sales	$	2,834,089	$	1,723,126	$	1,110,963	64.5	%	Sales	$	3,344,121	$	2,834,089	$	510,032	18.0	%
Gross profit	Gross profit	570,241		325,200		245,041		75.4		Gross profit	642,778		570,241		72,537		12.7
Operating expenses	Operating expenses	562,481		446,687		115,794		25.9		Operating expenses	594,426		562,481		31,945		5.7
Operating income (loss)		$	7,760	$	(121,487)	$	129,247	106.4	%
Operating income										Operating income	$	48,352	$	7,760	$	40,592	523.1	%

Gross profit	Gross profit	$	570,241	$	325,200	$	245,041	75.4	%	Gross profit	$	642,778	$	570,241	$	72,537	12.7	%
Adjusted operating expenses (Non-GAAP)	Adjusted operating expenses (Non-GAAP)	535,617		417,575		118,042		28.3		Adjusted operating expenses (Non-GAAP)	575,728		535,617		40,111		7.5
Adjusted operating income (loss) (Non-GAAP)		$	34,624	$	(92,375)	$	126,999	137.5	%
Adjusted operating income (Non-GAAP)										Adjusted operating income (Non-GAAP)	$	67,050	$	34,624	$	32,426	93.7	%

Sales on a constant currency basis (Non-GAAP)	Sales on a constant currency basis (Non-GAAP)	$	2,917,767	$	1,723,126	$	1,194,641	69.3	%	Sales on a constant currency basis (Non-GAAP)	$	3,550,782	$	2,834,089	$	716,693	25.3	%
Gross profit on a constant currency basis (Non-GAAP)	Gross profit on a constant currency basis (Non-GAAP)	590,595		325,200		265,395		81.6		Gross profit on a constant currency basis (Non-GAAP)	683,023		570,241		112,782		19.8
Adjusted operating expenses on a constant currency basis (Non-GAAP)	Adjusted operating expenses on a constant currency basis (Non-GAAP)	555,721		417,575		138,146		33.1		Adjusted operating expenses on a constant currency basis (Non-GAAP)	612,798		535,617		77,181		14.4
Adjusted operating income (loss) (Non-GAAP)		$	34,874	$	(92,375)	$	127,249	137.8	%
Adjusted operating income (Non-GAAP)										Adjusted operating income (Non-GAAP)	$	70,225	$	34,624	$	35,601	102.8	%

		39-Week Period Ended Apr. 2, 2022		39-Week Period Ended Mar. 27, 2021		Change in Dollars		% Change			39-Week Period Ended Apr. 1, 2023		39-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
		(Dollars in thousands)									(Dollars in thousands)
Sales	Sales	$	8,535,608	$	5,854,608	$	2,681,000	45.8	%	Sales	$	9,910,267	$	8,535,608	$	1,374,659	16.1	%
Gross profit	Gross profit	1,725,306		1,149,438		575,868		50.1		Gross profit	1,916,503		1,725,306		191,197		11.1
Operating expenses	Operating expenses	1,670,125		1,351,411		318,714		23.6		Operating expenses	1,723,558		1,670,125		53,433		3.2
Operating (loss) income		$	55,181	$	(201,973)	$	257,154	127.3	%
Operating income										Operating income	$	192,945	$	55,181	$	137,764	249.7	%

Gross profit	Gross profit	$	1,725,306	$	1,149,438	$	575,868	50.1	%	Gross profit	$	1,916,503	$	1,725,306	$	191,197	11.1	%
Adjusted operating expenses (Non-GAAP)	Adjusted operating expenses (Non-GAAP)	1,586,914		1,278,247		308,667		24.1		Adjusted operating expenses (Non-GAAP)	1,663,682		1,586,914		76,768		4.8
Adjusted operating (loss) income (Non-GAAP)		$	138,392	$	(128,809)	$	267,201	207.4	%
Adjusted operating income (Non-GAAP)										Adjusted operating income (Non-GAAP)	$	252,821	$	138,392	$	114,429	82.7	%

Sales on a constant currency basis (Non-GAAP)	Sales on a constant currency basis (Non-GAAP)	$	8,463,829	$	5,854,608	$	2,609,221	44.6	%	Sales on a constant currency basis (Non-GAAP)	$	10,758,433	$	8,535,608	$	2,222,825	26.0	%
Gross profit on a constant currency basis (Non-GAAP)	Gross profit on a constant currency basis (Non-GAAP)	1,718,893		1,149,438		569,455		49.5		Gross profit on a constant currency basis (Non-GAAP)	2,094,357		1,725,306		369,051		21.4
Adjusted operating expenses on a constant currency basis (Non-GAAP)	Adjusted operating expenses on a constant currency basis (Non-GAAP)	1,582,750		1,278,247		304,503		23.8		Adjusted operating expenses on a constant currency basis (Non-GAAP)	1,826,687		1,586,914		239,773		15.1
Adjusted operating (loss) income on a constant currency basis (Non-GAAP)		$	136,143	$	(128,809)	$	264,952	205.7	%
Adjusted operating income on a constant currency basis (Non-GAAP)										Adjusted operating income on a constant currency basis (Non-GAAP)	$	267,670	$	138,392	$	129,278	93.4	%

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)				Increase (Decrease)
		13-Week Period				39-Week Period					13-Week Period				39-Week Period
		(Dollars in millions)				(Dollars in millions)					(Dollars in millions)				(Dollars in millions)
Cause of change	Cause of change	Percentage		Dollars		Percentage		Dollars		Cause of change	Percentage		Dollars		Percentage		Dollars
Inflation	Inflation	7.9	%	$	136.1	7.5	%	$	440.0	Inflation	14.9	%	$	421.7	15.2	%	$	1,293.4

Foreign currency	Foreign currency	(4.9)		(83.8)		1.3		74.0		Foreign currency	(7.3)		(206.7)		(9.9)		(848.2)
Other (1)	Other (1)	61.5		1,058.7		37.0		2,167.0		Other (1)	10.4		295.0		10.8		929.5
Total change in sales	Total change in sales	64.5	%	$	1,111.0	45.8	%	$	2,681.0	Total change in sales	18.0	%	$	510.0	16.1	%	$	1,374.7

~~(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 third quarter and first 39 weeks of fiscal ~~2022~~2023 were higher, as compared to the third quarter and first 39 weeks of fiscal ~~2021, primarily~~2022, due to ~~the significant~~inflation, along with an improvement in ~~volume. Volume trends accelerated primarily due~~volume, some of which was attributable to ~~fewer cases of the Omicron variant of COVID-19 and the easing of government-imposed restrictions. The impact of~~ our Recipe for Growth ~~initiatives also contributed to volume growth.~~initiatives. Partially offsetting these increases was the negative impact of foreign currency translation.

Operating Income

The increase in operating income for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, was due to the continuing increase in sales volumes, along with specific efforts to optimize our gross profit while addressing our increased operating expenses.

The increase in gross profit dollars in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, was attributable to the increase in sales volume and the ~~pass through~~management of inflation, along with specific efforts to optimize our gross profit dollars.

The increase in operating expenses for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, was primarily due to ~~an increase in costs for associates including overtime~~increased volume and hiring associates to manage the ongoing business recovery. Additionally, we had an unfavorable comparison of bad debt expense, as fiscal 2021 included a reduction of reserves on pre-pandemic receivables Excluding the impact of these pre-pandemic receivables, our year-over-year change in bad debt expense was not significant.inflation.

Results of SYGMA and Other Segment

For SYGMA, sales were ~~13.5%~~9.9% and ~~13.9%~~10.8% higher in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022, primarily from inflation and fee increases ~~partially offset by a decrease in volume due~~ to ~~the planned exit of a large regional customer, as announced during fiscal 2021.~~customers. Operating income ~~decreased~~increased by ~~$8.6~~$21.1 million and ~~$40.8~~$42.5 million in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal 2021, as our increased investments in business recovery staffing drove an increase in operating expenses. SYGMA operated at a profit in the third quarter, primarily from fee increases to customers, but operated at a loss for the first 39 weeks of fiscal 2022, primarily due to ~~higher than expected transportation costs.~~fee increases to customers.

For the operations that are grouped within Other, operating income ~~decreased $9.9~~increased $15.8 million and ~~$2.2~~$30.6 million in the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal ~~2021, operating at a loss in~~2022, primarily due to the ~~third quarter, but reflecting a profit for the first 39 weeks~~recovery of ~~fiscal 2022.~~our hospitality business, Guest Worldwide. Volume for this business has improved as hospitality occupancy rates across the industry have grown from prior year ~~levels, and the loss for the third quarter is attributable to one-time costs related to the ongoing business recovery.~~levels.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the third quarter of fiscal ~~2022~~2023 increased ~~$31.2~~$15.0 million, or ~~15.7%~~6.6%, as compared to the third quarter of fiscal ~~2021,~~2022, primarily due to ~~investments for our Recipe for Growth strategy~~expenses associated with business technology transformation initiatives and ~~higher associate-related expenses.~~ increases in self-insurance reserves. These ~~expenses~~expenses in the first 39 weeks of fiscal ~~2022~~2023 increased ~~$86.7~~$62.9 million, or ~~15.0%~~9.4%, as compared to the first 39 weeks of fiscal ~~2021,~~2022, primarily due to ~~acquisition and due diligence costs, investments for our Recipe for Growth strategy, higher associate-related~~increases in self-insurance reserves, fuel hedging program expenses and ~~an increase in self-insurance reserves.~~expenses associated with business technology transformation initiatives.

Included in Global Support Center expenses are Certain Items that totaled $10.9 million and $27.2 million in the third quarter and first 39 weeks of fiscal 2023, as compared to $49.9 million and $91.6 million in the third quarter and first 39 weeks of fiscal 2022, ~~as compared to $15.0 million and $39.0 million in~~respectively. Certain Items impacting the third quarter and first 39 weeks of fiscal ~~2021, respectively.~~2023 were primarily expenses associated with our business technology transformation initiatives. Certain Items impacting the third quarter and first 39 weeks of fiscal 2022 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. ~~Certain Items impacting the third quarter and first 39 weeks of fiscal 2021 were primarily expenses associated with our business technology transformation initiatives.~~

Interest Expense

Interest expense ~~decreased $21.8~~increased $10.9 million and ~~increased $56.1~~decreased $104.0 million for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 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~~2022. The increase in the ~~second~~third quarter was primarily due to an increase in commercial paper borrowing activity compared to the third quarter of fiscal 2022. The decrease in the first 39 weeks of fiscal 2023 compared to the first 39 weeks of fiscal 2022 ~~partially offset by lower~~was primarily due to a $115.6 million charge taken for debt ~~volume.~~extinguished in fiscal 2022.

~~Net Earnings~~Other income and expense

~~Net earnings~~Other expense increased ~~241.1%~~$19.0 million and ~~127.5% in~~$378.3 million for the third quarter and first 39 weeks of fiscal ~~2022,~~2023, respectively, as compared to the third quarter and first 39 weeks of fiscal ~~2021,~~2022. The increase in the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022 was due to an increase in pension expenses, which were driven by increased interest rates and lower asset returns. The expense in the first 39 weeks of fiscal 2023 was primarily attributable to a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer, as well as higher on-going pension expense.

Net Earnings

Net earnings increased 41.6% and 22.1% in the third quarter and first 39 weeks of fiscal 2023, respectively, as compared to the third quarter and first 39 weeks of fiscal 2022, due primarily to the items noted above for operating income and ~~interest~~other expense, as well as items impacting our income taxes that are discussed in Note ~~12,~~13, “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 ~~216.1%~~26.9% and ~~189.9%~~25.5% in the third quarter and first 39 weeks of fiscal ~~2022, respectively,~~2023, primarily due to ~~a significant~~an increase in sales ~~volume, partially offset by an unfavorable tax expense compared to the prior year.~~volume.

Earnings Per Share

Basic earnings per share in the third quarter of fiscal ~~2022~~2023 were ~~$0.60,~~$0.85, a ~~252.9%~~41.7% increase from the comparable prior year amount of ~~$0.17~~$0.60 per share. Diluted earnings per share in the third quarter of fiscal ~~2022~~2023 were ~~$0.59,~~$0.84, a ~~247.1%~~42.4% increase from the comparable prior year period amount of ~~$0.17~~$0.59 per share. Adjusted diluted earnings per share, excluding Certain Items, in the third quarter of fiscal ~~2022~~2023 were ~~$0.71,~~$0.90, a ~~222.7%~~26.8% increase from the comparable prior year amount of ~~$0.22~~$0.71 per share.

Basic earnings per share in the first 39 weeks of fiscal ~~2022~~2023 were ~~$1.66,~~$2.04, a ~~127.4%~~22.9% increase from the comparable prior year amount of ~~$0.73~~$1.66 per share. Diluted earnings per share in the first 39 weeks of fiscal ~~2022~~2023 were ~~$1.65, an 126.0%~~$2.03, a 23.0% increase from the comparable prior year period amount of ~~0.73~~$1.65 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first 39 weeks of fiscal ~~2022~~2023 were ~~$2.11,~~$2.67, a ~~189.0%~~26.5% increase from the comparable prior year amount of ~~$0.73~~$2.11 per share.

Non-GAAP Reconciliations


Our discussion of our results includes certain non-GAAP financial measures, ~~including~~such as EBITDA and adjusted EBITDA, ~~that~~which 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 and a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Our results for fiscal 2022 were also impacted ~~by: (1)~~by a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory, ~~(2)~~losses on the extinguishment of long-term debt ~~extinguishment costs~~ and ~~(3) the~~an increase in reserves for uncertain tax positions. ~~Our results for the first 39 weeks of fiscal 2021 were also impacted by losses on the sale of businesses.~~

The results of our ~~foreign~~ operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our ~~total Sysco and our International Foodservice Operations~~ results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.

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

Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal ~~2022~~2023 and fiscal ~~2021.~~2022.

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


		13-Week Period Ended Apr. 2, 2022			13-Week Period Ended Mar. 27, 2021			Change in Dollars		% Change			13-Week Period Ended Apr. 1, 2023			13-Week Period Ended Apr. 2, 2022			Change in Dollars		% Change
Sales (GAAP)	Sales (GAAP)	$	16,902,139		$	11,824,589		$	5,077,550	42.9	%	Sales (GAAP)	$	18,875,676		$	16,902,139		$	1,973,537	11.7	%
Impact of currency fluctuations (1)												Impact of currency fluctuations (1)	211,164			—			211,164		1.2
Comparable sales using a constant currency basis (Non-GAAP)												Comparable sales using a constant currency basis (Non-GAAP)	$	19,086,840		$	16,902,139		$	2,184,701	12.9	%

Impact of currency fluctuations (1)		83,760			—			83,760		0.7
Comparable sales using a constant currency basis (Non-GAAP)		$	16,985,899		$	11,824,589		$	5,161,310	43.6	%

Cost of sales (GAAP)	Cost of sales (GAAP)	$	13,888,745		$	9,701,921		$	4,186,824	43.2	%	Cost of sales (GAAP)	$	15,444,316		$	13,888,745		$	1,555,571	11.2	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	(29,550)			—			(29,550)		(0.3)		Impact of inventory valuation adjustment (2)	—			(29,550)			29,550		0.2
Cost of sales adjusted for Certain Items (Non-GAAP)	Cost of sales adjusted for Certain Items (Non-GAAP)	$	13,859,195		$	9,701,921		$	4,157,274	42.9	%	Cost of sales adjusted for Certain Items (Non-GAAP)	$	15,444,316		$	13,859,195		$	1,585,121	11.4	%

Gross profit (GAAP)	Gross profit (GAAP)	$	3,013,394		$	2,122,668		$	890,726	42.0	%	Gross profit (GAAP)	$	3,431,360		$	3,013,394		$	417,966	13.9	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	29,550			—			29,550		1.4		Impact of inventory valuation adjustment (2)	—			29,550			(29,550)		(1.1)
Comparable gross profit adjusted for Certain Items (Non-GAAP)	Comparable gross profit adjusted for Certain Items (Non-GAAP)	3,042,944			2,122,668			920,276		43.4		Comparable gross profit adjusted for Certain Items (Non-GAAP)	3,431,360			3,042,944			388,416		12.8

Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	20,426			—			20,426		0.9		Impact of currency fluctuations (1)	41,794			—			41,794		1.3
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	3,063,370		$	2,122,668		$	940,702	44.3	%	Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	3,473,154		$	3,042,944		$	430,210	14.1	%

Gross margin (GAAP)	Gross margin (GAAP)	17.83		%	17.95		%			-12 bps		Gross margin (GAAP)	18.18		%	17.83		%			35 bps
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	0.17			—					17 bps		Impact of inventory valuation adjustment (2)	—			0.17					-17 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP)		18.00		%	17.95		%			5 bps

Comparable gross margin adjusted for Certain Items (Non-GAAP)												Comparable gross margin adjusted for Certain Items (Non-GAAP)	18.18			18.00					18 bps
Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	0.03			—					3 bps		Impact of currency fluctuations (1)	0.02			—					2 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	18.03		%	17.95		%			8 bps		Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	18.20		%	18.00		%			20 bps

Operating expenses (GAAP)	Operating expenses (GAAP)	$	2,517,665		$	1,886,751		$	630,914	33.4	%	Operating expenses (GAAP)	$	2,737,183		$	2,517,665		$	219,518	8.7	%
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	(19,171)			(34,953)			15,782		45.2		Impact of restructuring and transformational project costs (3)	(12,255)			(19,171)			6,916		36.1
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	(36,699)			(18,834)			(17,865)		(94.9)		Impact of acquisition-related costs (4)	(29,004)			(36,699)			7,695		21.0
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	5,717			33,473			(27,756)		(82.9)		Impact of bad debt reserve adjustments (5)	(90)			5,717			(5,807)		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	2,467,512			1,866,437			601,075		32.2		Operating expenses adjusted for Certain Items (Non-GAAP)	2,695,834			2,467,512			228,322		9.3
Impact of currency fluctuations (1)												Impact of currency fluctuations (1)	41,607			—			41,607		1.6
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)												Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	2,737,441		$	2,467,512		$	269,929	10.9	%

Impact of currency fluctuations (1)		21,006			—			21,006		1.1
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)		$	2,488,518		$	1,866,437		$	622,081	33.3	%

Operating expense as a percentage of sales (GAAP)												Operating expense as a percentage of sales (GAAP)	14.50		%	14.90		%			-40 bps
Impact of certain item adjustments												Impact of certain item adjustments	(0.22)			(0.30)					8 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)												Adjusted operating expense as a percentage of sales (Non-GAAP)	14.28		%	14.60		%			-32 bps

Operating income (GAAP)	Operating income (GAAP)	$	495,729		$	235,917		$	259,812	110.1	%	Operating income (GAAP)	$	694,177		$	495,729		$	198,448	40.0	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	29,550			—			29,550		NM		Impact of inventory valuation adjustment (2)	—			29,550			(29,550)		NM
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	19,171			34,953			(15,782)		(45.2)		Impact of restructuring and transformational project costs (3)	12,255			19,171			(6,916)		(36.1)
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	36,699			18,834			17,865		94.9		Impact of acquisition-related costs (4)	29,004			36,699			(7,695)		(21.0)
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	(5,717)			(33,473)			27,756		82.9		Impact of bad debt reserve adjustments (5)	90			(5,717)			5,807		NM

Operating income adjusted for Certain Items (Non-GAAP)	Operating income adjusted for Certain Items (Non-GAAP)	575,432			256,231			319,201		124.6		Operating income adjusted for Certain Items (Non-GAAP)	735,526			575,432			160,094		27.8

Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	(581)			—			(581)		(0.2)		Impact of currency fluctuations (1)	187			—			187		0.1
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	574,851		$	256,231		$	318,620	124.4	%	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	735,713		$	575,432		$	160,281	27.9	%

Other income (GAAP)		$	(13,777)		$	(12,708)		$	(1,069)	(8.4)	%
Impact of loss on sale of business		—			(10,790)			10,790		NM
Other income adjusted for Certain Items (Non-GAAP)		$	(13,777)		$	(23,498)		$	9,721	41.4	%

Net earnings (GAAP)		$	303,325		$	88,927		$	214,398	241.1	%
Operating margin (GAAP)												Operating margin (GAAP)	3.68		%	2.93		%			75 bps


											13-Week Period Ended Apr. 1, 2023			13-Week Period Ended Apr. 2, 2022			Change in Dollars		% Change
Operating margin adjusted for Certain Items (Non-GAAP)										Operating margin adjusted for Certain Items (Non-GAAP)	3.90		%	3.40		%			50 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)										Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	3.85		%	3.40		%			45 bps

Other expense (income) (GAAP)										Other expense (income) (GAAP)	$	5,209		$	(13,777)		$	18,986	NM
Impact of other non-routine gains and losses										Impact of other non-routine gains and losses	(448)			—			(448)		NM
Other expense (income) adjusted for Certain Items (Non-GAAP)										Other expense (income) adjusted for Certain Items (Non-GAAP)	$	4,761		$	(13,777)		$	18,538	NM

Net earnings (GAAP)										Net earnings (GAAP)	$	429,604		$	303,325		$	126,279	41.6	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	29,550		—		29,550		NM		Impact of inventory valuation adjustment (2)	—			29,550			(29,550)		NM
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	19,171		34,953		(15,782)		(45.2)		Impact of restructuring and transformational project costs (3)	12,255			19,171			(6,916)		(36.1)
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	36,699		18,834		17,865		94.9		Impact of acquisition-related costs (4)	29,004			36,699			(7,695)		(21.0)
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	(5,717)		(33,473)		27,756		82.9		Impact of bad debt reserve adjustments (5)	90			(5,717)			5,807		NM

Impact of loss on sale of business		—		10,790		(10,790)		NM

Impact of other non-routine gains and losses										Impact of other non-routine gains and losses	448			—			448		NM
Tax impact of inventory valuation adjustment (6)	Tax impact of inventory valuation adjustment (6)	(7,449)		—		(7,449)		NM		Tax impact of inventory valuation adjustment (6)	—			(7,449)			7,449		NM
Tax impact of restructuring and transformational project costs (6)	Tax impact of restructuring and transformational project costs (6)	(5,579)		(10,300)		4,721		45.8		Tax impact of restructuring and transformational project costs (6)	(3,190)			(5,579)			2,389		42.8
Tax impact of acquisition-related costs (6)	Tax impact of acquisition-related costs (6)	(8,537)		(5,573)		(2,964)		(53.2)		Tax impact of acquisition-related costs (6)	(7,550)			(8,537)			987		11.6
Tax impact of bad debt reserves adjustments (6)	Tax impact of bad debt reserves adjustments (6)	1,445		10,354		(8,909)		(86.0)		Tax impact of bad debt reserves adjustments (6)	(23)			1,445			(1,468)		NM

Tax impact of loss on sale of business (6)		—		301		(301)		NM

Tax impact of other non-routine gains and losses (6)										Tax impact of other non-routine gains and losses (6)	(117)			—			(117)		NM

Net earnings adjusted for Certain Items (Non-GAAP)	Net earnings adjusted for Certain Items (Non-GAAP)	$	362,908	$	114,813	$	248,095	216.1	%	Net earnings adjusted for Certain Items (Non-GAAP)	$	460,521		$	362,908		$	97,613	26.9	%

Diluted earnings per share (GAAP)	Diluted earnings per share (GAAP)	$	0.59	$	0.17	$	0.42	247.1	%	Diluted earnings per share (GAAP)	$	0.84		$	0.59		$	0.25	42.4	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	0.06		—		0.06		NM		Impact of inventory valuation adjustment (2)	—			0.06			(0.06)		NM
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	0.04		0.07		(0.03)		(42.9)		Impact of restructuring and transformational project costs (3)	0.02			0.04			(0.02)		(50.0)
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	0.07		0.04		0.03		75.0		Impact of acquisition-related costs (4)	0.06			0.07			(0.01)		(14.3)
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	(0.01)		(0.07)		0.06		85.7		Impact of bad debt reserve adjustments (5)	—			(0.01)			0.01		NM

Impact of loss on sale of business		—		0.02		(0.02)		NM

Tax impact of inventory valuation adjustment (6)	Tax impact of inventory valuation adjustment (6)	(0.01)		—		(0.01)		NM		Tax impact of inventory valuation adjustment (6)	—			(0.01)			0.01		NM
Tax impact of restructuring and transformational project costs (6)	Tax impact of restructuring and transformational project costs (6)	(0.01)		(0.02)		0.01		50.0		Tax impact of restructuring and transformational project costs (6)	(0.01)			(0.01)			—		—
Tax impact of acquisition-related costs (6)	Tax impact of acquisition-related costs (6)	(0.02)		(0.01)		(0.01)		(100.0)		Tax impact of acquisition-related costs (6)	(0.01)			(0.02)			0.01		50.0
Tax impact of bad debt reserves adjustments (6)		—		0.02		(0.02)		NM

Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)	Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)	$	0.71	$	0.22	$	0.49	222.7	%	Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)	$	0.90		$	0.71		$	0.19	26.8	%



(1)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.

(2)			~~Represents~~Fiscal 2022 represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(3)			Fiscal 2023 includes $2 million related to restructuring, severance, and facility closure charges and $10 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $7 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 2021 includes $21 million related to restructuring charges and $14 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)			Fiscal 2023 includes $27 million of intangible amortization expense and $2 million in acquisition and due diligence costs. Fiscal 2022 includes $27 million of intangible amortization expense and $10 million in acquisition and due diligence costs. ~~Fiscal 2021 represents intangible amortization expense.~~
(5)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(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.
(7)			Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

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

13-Week Period Ended Apr. 2, 2022 13-Week Period Ended Mar. 30, 2019 Change in Dollars % Change
Sales (GAAP) $ 16,902,139 $ 14,658,074 $ 2,244,065 15.3 %
Cost of sales (GAAP) $ 13,888,745 $ 11,903,776 $ 1,984,969 16.7 %
Impact of inventory valuation adjustment (1)
(29,550) — (29,550) (0.3)
Cost of sales adjusted for Certain Items (Non-GAAP) $ 13,859,195 $ 11,903,776 $ 1,955,419 16.4 %
Gross profit (GAAP) $ 3,013,394 $ 2,754,298 $ 259,096 9.4 %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 1.1
Comparable gross profit adjusted for Certain Items (Non-GAAP) $ 3,042,944 $ 2,754,298 $ 288,646 10.5 %
Gross margin (GAAP) 17.83 % 18.79 % -96 bps
Impact of inventory valuation adjustment (1)
0.17 — 17 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP) 18.00 % 18.79 % -79 bps
Operating expenses (GAAP) $ 2,517,665 $ 2,224,713 $ 292,952 13.2 %
Impact of restructuring and transformational project costs (2)
(19,171) (72,207) 53,036 73.4
Impact of acquisition-related costs (3)
(36,699) (18,398) (18,301) (99.5)
Impact of bad debt reserve adjustments (4)
5,717 — 5,717 NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $ 2,467,512 $ 2,134,108 $ 333,404 15.6 %
Operating income (GAAP) $ 495,729 $ 529,585 $ (33,856) (6.4) %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 NM
Impact of restructuring and transformational project costs (2)
19,171 72,207 (53,036) (73.4)
Impact of acquisition-related costs (3)
36,699 18,398 18,301 99.5
Impact of bad debt reserve adjustments (4)
(5,717) — (5,717) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 575,432 $ 620,190 $ (44,758) (7.2) %
Net earnings (GAAP) $ 303,325 $ 440,083 $ (136,758) (31.1) %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 NM
Impact of restructuring and transformational project costs (2)
19,171 72,207 (53,036) (73.4)
Impact of acquisition-related costs (3)
36,699 18,398 18,301 99.5
Impact of bad debt reserve adjustments (4)
(5,717) — (5,717) NM
Tax impact of inventory valuation adjustment (5)
(7,449) — (7,449) NM
Tax impact of restructuring and transformational project costs (5)
(5,579) (19,271) 13,692 71.0
Tax impact of acquisition-related costs (5)
(8,537) (4,899) (3,638) (74.3)
Tax impact of bad debt reserves adjustments (5)
1,445 — 1,445 NM
Impact of foreign tax credit benefit — (95,067) 95,067 NM
Impact of US transition tax — (269) 269 NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 362,908 $ 411,182 $ (48,274) (11.7) %
Diluted earnings per share (GAAP) $ 0.59 $ 0.85 $ (0.26) (30.6) %
Impact of inventory valuation adjustment (1)
0.06 — 0.06 NM
Impact of restructuring and transformational project costs (2)
0.04 0.14 (0.10) (71.4)
Impact of acquisition-related costs (3)
0.07 0.04 0.03 75.0
Impact of bad debt reserve adjustments (4)
(0.01) — (0.01) NM

Tax impact of inventory valuation adjustment (5)
(0.01) — (0.01) NM
Tax impact of restructuring and transformational project costs (5)
(0.01) (0.04) 0.03 75.0
Tax impact of acquisition-related costs (5)
(0.02) (0.01) (0.01) (100.0)
Impact of foreign tax credit benefit — (0.18) 0.18 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6)
$ 0.71 $ 0.79 $ (0.08) (10.1) %


~~(1)~~			~~Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.~~
~~(2)~~			Fiscal 2022 includes $7 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 $35 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $37 million related to restructuring, facility closure and severance charges.
~~(3)~~			~~Fiscal 2022 includes $27 million of intangible amortization expense and $10 million in acquisition and due diligence costs. Fiscal 2019 includes intangible amortization expense.~~
~~(4)~~			~~Fiscal 2022 represents 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.

4241


		39-Week Period Ended Apr. 2, 2022			39-Week Period Ended Mar. 27, 2021			Change in Dollars		% Change			39-Week Period Ended Apr. 1, 2023			39-Week Period Ended Apr. 2, 2022			Change in Dollars		% Change
Sales (GAAP)	Sales (GAAP)	$	49,678,888		$	35,160,950		$	14,517,938	41.3	%	Sales (GAAP)	$	56,596,459		$	49,678,888		$	6,917,571	13.9	%

Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	(77,043)			—			(77,043)		(0.2)		Impact of currency fluctuations (1)	862,752			—			862,752		1.8
Comparable sales using a constant currency basis (Non-GAAP)	Comparable sales using a constant currency basis (Non-GAAP)	$	49,601,845		$	35,160,950		$	14,440,895	41.1	%	Comparable sales using a constant currency basis (Non-GAAP)	$	57,459,211		$	49,678,888		$	7,780,323	15.7	%

Cost of sales (GAAP)	Cost of sales (GAAP)	$	40,802,636		$	28,719,979		$	12,082,657	42.1	%	Cost of sales (GAAP)	$	46,326,628		$	40,802,636		$	5,523,992	13.5	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	(29,550)			—			(29,550)		(0.1)		Impact of inventory valuation adjustment (2)	2,571			(29,550)			32,121		0.1
Cost of sales adjusted for Certain Items (Non-GAAP)	Cost of sales adjusted for Certain Items (Non-GAAP)	$	40,773,086		$	28,719,979		$	12,053,107	42.0	%	Cost of sales adjusted for Certain Items (Non-GAAP)	$	46,329,199		$	40,773,086		$	5,556,113	13.6	%

Gross profit (GAAP)	Gross profit (GAAP)	$	8,876,252		$	6,440,971		$	2,435,281	37.8	%	Gross profit (GAAP)	$	10,269,831		$	8,876,252		$	1,393,579	15.7	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	29,550			—			29,550		0.5		Impact of inventory valuation adjustment (2)	(2,571)			29,550			(32,121)		(0.4)
Comparable gross profit adjusted for Certain Items (Non-GAAP)	Comparable gross profit adjusted for Certain Items (Non-GAAP)	8,905,802			6,440,971			2,464,831		38.3	%	Comparable gross profit adjusted for Certain Items (Non-GAAP)	10,267,260			8,905,802			1,361,458		15.3
Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	(8,125)			—			(8,125)		(0.2)		Impact of currency fluctuations (1)	182,727			—			182,727		2.0
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	8,897,677		$	6,440,971		$	2,456,706	38.1	%	Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	10,449,987		$	8,905,802		$	1,544,185	17.3	%

Gross margin (GAAP)	Gross margin (GAAP)	17.87		%	18.32		%			-45 bps		Gross margin (GAAP)	18.15		%	17.87		%			28 bps
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	0.06			—					6 bps		Impact of inventory valuation adjustment (2)	(0.01)			0.06					-7 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP)		17.93		%	18.32		%			-39 bps

Comparable gross margin adjusted for Certain Items (Non-GAAP)												Comparable gross margin adjusted for Certain Items (Non-GAAP)	18.14			17.93					21 bps
Impact of currency fluctuations (1)												Impact of currency fluctuations (1)	0.05			—					5 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)												Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)	18.19		%	17.93		%			26 bps

Impact of currency fluctuations (1)		0.01			—					1 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)		17.94		%	18.32		%			-38 bps

Operating expenses (GAAP)	Operating expenses (GAAP)	$	7,303,932		$	5,573,413		$	1,730,519	31.0	%	Operating expenses (GAAP)	$	8,200,679		$	7,303,932		$	896,747	12.3	%
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	(70,058)			(95,078)			25,020		26.3		Impact of restructuring and transformational project costs (3)	(38,288)			(70,058)			31,770		45.3
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	(103,449)			(54,714)			(48,735)		(89.1)		Impact of acquisition-related costs (4)	(87,419)			(103,449)			16,030		15.5
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	19,216			162,372			(143,156)		(88.2)		Impact of bad debt reserve adjustments (5)	4,425			19,216			(14,791)		(77.0)

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	7,149,641		$	5,585,993		$	1,563,648	28.0	%	Operating expenses adjusted for Certain Items (Non-GAAP)	8,079,397			7,149,641			929,756		13.0

Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	(4,177)			—			(4,177)		(0.1)		Impact of currency fluctuations (1)	179,277			—			179,277		2.5
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	7,145,464		$	5,585,993		$	1,559,471	27.9	%	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	8,258,674		$	7,149,641		$	1,109,033	15.5	%

Operating expense as a percentage of sales (GAAP)												Operating expense as a percentage of sales (GAAP)	14.49		%	14.70		%			-21 bps
Impact of certain item adjustments												Impact of certain item adjustments	(0.21)			(0.31)					10 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)												Adjusted operating expense as a percentage of sales (Non-GAAP)	14.28		%	14.39		%			-11 bps

Operating income (GAAP)	Operating income (GAAP)	$	1,572,320		$	867,558		$	704,762	81.2	%	Operating income (GAAP)	$	2,069,152		$	1,572,320		$	496,832	31.6	%
Impact of inventory valuation adjustment (2)	Impact of inventory valuation adjustment (2)	29,550			—			29,550		NM		Impact of inventory valuation adjustment (2)	(2,571)			29,550			(32,121)		NM
Impact of restructuring and transformational project costs (3)	Impact of restructuring and transformational project costs (3)	70,058			95,078			(25,020)		(26.3)		Impact of restructuring and transformational project costs (3)	38,288			70,058			(31,770)		(45.3)
Impact of acquisition-related costs (4)	Impact of acquisition-related costs (4)	103,449			54,714			48,735		89.1		Impact of acquisition-related costs (4)	87,419			103,449			(16,030)		(15.5)
Impact of bad debt reserve adjustments (5)	Impact of bad debt reserve adjustments (5)	(19,216)			(162,372)			143,156		88.2		Impact of bad debt reserve adjustments (5)	(4,425)			(19,216)			14,791		77.0

Operating income adjusted for Certain Items (Non-GAAP)	Operating income adjusted for Certain Items (Non-GAAP)	$	1,756,161		$	854,978		$	901,183	105.4	%	Operating income adjusted for Certain Items (Non-GAAP)	2,187,863			1,756,161			431,702		24.6

Impact of currency fluctuations (1)	Impact of currency fluctuations (1)	(3,947)			—			(3,947)		(0.5)		Impact of currency fluctuations (1)	3,449			—			3,449		0.2
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,752,214		$	854,978		$	897,236	104.9	%	Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	2,191,312		$	1,756,161		$	435,151	24.8	%

Interest expense (GAAP)		$	495,131		$	438,988		$	56,143	12.8	%
Impact of loss on extinguishment of debt		(115,603)			—			(115,603)		NM
Interest expense adjusted for Certain Items (Non-GAAP)		$	379,528		$	438,988		$	(59,460)	(13.5)	%

Other income (GAAP)		$	(27,705)		$	(14,140)		$	(13,565)	(95.9)	%

4342

Impact of loss on sale of business — (22,834) 22,834 NM
Other income adjusted for Certain Items (Non-GAAP) $ (27,705) $ (36,974) $ 9,269 25.1 %
Net earnings (GAAP) $ 848,779 $ 373,116 $ 475,663 127.5 %
Impact of inventory valuation adjustment (2)
29,550 — 29,550 NM
Impact of restructuring and transformational project costs (3)
70,058 95,078 (25,020) (26.3)
Impact of acquisition-related costs (4)
103,449 54,714 48,735 89.1
Impact of bad debt reserve adjustments (5)
(19,216) (162,372) 143,156 88.2
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Impact of loss on sale of business — 22,834 (22,834) NM
Tax impact of inventory valuation adjustment (6)
(7,449) — (7,449) NM
Tax impact of restructuring and transformational project costs (6)
(17,661) (26,886) 9,225 34.3
Tax impact of acquisition-related costs (6)
(26,079) (15,471) (10,608) (68.6)
Tax impact of bad debt reserves adjustments (6)
4,844 45,913 (41,069) (89.4)
Tax impact of loss on extinguishment of debt (6)
(29,143) — (29,143) NM
Tax impact of loss on sale of business (6)
— (7,251) 7,251 NM
Impact of adjustments to uncertain tax positions 12,000 — 12,000 NM
Impact of foreign tax rate change — (5,548) 5,548 NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 1,084,735 $ 374,127 $ 710,608 189.9 %
Diluted earnings per share (GAAP) $ 1.65 $ 0.73 $ 0.92 126.0 %
Impact of inventory valuation adjustment (2)
0.06 — 0.06 NM
Impact of restructuring and transformational project costs (3)
0.14 0.19 (0.05) (26.3)
Impact of acquisition-related costs (4)
0.20 0.11 0.09 81.8
Impact of bad debt reserve adjustments (5)
(0.04) (0.32) 0.28 87.5
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Impact of loss on sale of business — 0.04 (0.04) NM
Tax impact of inventory valuation adjustment (6)
(0.01) — (0.01) NM
Tax impact of restructuring and transformational project costs (6)
(0.03) (0.05) 0.02 40.0
Tax impact of acquisition-related costs (6)
(0.05) (0.03) (0.02) (66.7)
Tax impact of bad debt reserves adjustments (6)
0.01 0.09 (0.08) (88.9)
Tax impact of loss on extinguishment of debt (6)
(0.06) — (0.06) NM
Tax impact of loss on sale of business (6)
— (0.01) 0.01 NM
Impact of adjustments to uncertain tax positions 0.02 — 0.02 NM
Impact of foreign tax rate change — (0.01) 0.01 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)
$ 2.11 $ 0.73 $ 1.38 189.0 %


	39-Week Period Ended Apr. 1, 2023		39-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change




Interest expense (GAAP)	$	391,123	$	495,131	$	(104,008)	(21.0)	%
Impact of loss on extinguishment of debt	—		(115,603)		115,603		NM
Interest expense adjusted for Certain Items (Non-GAAP)	$	391,123	$	379,528	$	11,595	3.1	%



Other expense (income) (GAAP)	$	350,614	$	(27,705)	$	378,319	NM
Impact of other non-routine gains and losses (6)	(315,326)		—		(315,326)		NM
Other expense (income) adjusted for Certain Items (Non-GAAP)	$	35,288	$	(27,705)	$	62,993	NM



Net earnings (GAAP)	$	1,036,388	$	848,779	$	187,609	22.1	%
Impact of inventory valuation adjustment (2)	(2,571)		29,550		(32,121)		NM
Impact of restructuring and transformational project costs (3)	38,288		70,058		(31,770)		(45.3)
Impact of acquisition-related costs (4)	87,419		103,449		(16,030)		(15.5)
Impact of bad debt reserve adjustments (5)	(4,425)		(19,216)		14,791		77.0

Impact of loss on extinguishment of debt	—		115,603		(115,603)		NM

Impact of other non-routine gains and losses (6)	315,326		—		315,326		NM
Tax impact of inventory valuation adjustment (7)	648		(7,449)		8,097		NM
Tax impact of restructuring and transformational project costs (7)	(9,649)		(17,661)		8,012		45.4
Tax impact of acquisition-related costs (7)	(22,031)		(26,079)		4,048		15.5
Tax impact of bad debt reserves adjustments (7)	1,115		4,844		(3,729)		(77.0)
Tax impact of loss on extinguishment of debt (7)	—		(29,143)		29,143		NM
Tax impact of other non-routine gains and losses (7)	(79,466)		—		(79,466)		NM
Impact of adjustments to uncertain tax positions	—		12,000		(12,000)		NM

Net earnings adjusted for Certain Items (Non-GAAP)	$	1,361,042	$	1,084,735	$	276,307	25.5	%



Diluted earnings per share (GAAP)	$	2.03	$	1.65	$	0.38	23.0	%
Impact of inventory valuation adjustment (2)	(0.01)		0.06		(0.07)		NM
Impact of restructuring and transformational project costs (3)	0.08		0.14		(0.06)		(42.9)
Impact of acquisition-related costs (4)	0.17		0.20		(0.03)		(15.0)
Impact of bad debt reserve adjustments (5)	(0.01)		(0.04)		0.03		75.0

Impact of loss on extinguishment of debt	—		0.22		(0.22)		NM
Impact of other non-routine gains and losses (6)	0.62		—		0.62		NM
Tax impact of inventory valuation adjustment (7)	—		(0.01)		0.01		NM
Tax impact of restructuring and transformational project costs (7)	(0.02)		(0.03)		0.01		33.3
Tax impact of acquisition-related costs (7)	(0.04)		(0.05)		0.01		20.0
Tax impact of bad debt reserves adjustments (7)	—		0.01		(0.01)		NM
Tax impact of loss on extinguishment of debt (7)	—		(0.06)		0.06		NM
Tax impact of other non-routine gains and losses (7)	(0.16)		—		(0.16)		NM
Impact of adjustments to uncertain tax positions	—		0.02		(0.02)		NM

Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8)	$	2.67	$	2.11	$	0.56	26.5	%

4443



(1)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)			~~Represents~~Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory. Fiscal 2022 represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(3)			Fiscal 2023 includes $12 million related to restructuring, severance, and facility closure charges and $26 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $39 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $31 million related to various restructuring, ~~charges,~~ severance, and facility closure charges. Fiscal 2021 includes $56 million related to restructuring, severance and facility closure charges, and $39 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)			Fiscal 2023 includes $78 million of intangible amortization expense and $9 million in acquisition and due diligence costs. Fiscal 2022 includes $75 million of intangible amortization expense and $28 million in acquisition and due diligence costs. ~~Fiscal 2021 represents intangible amortization expense.~~
(5)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)			Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7)			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.
~~(7)~~(8)			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.

4544

39-Week Period Ended Apr. 2, 2022 39-Week Period Ended Mar. 30, 2019 Change in Dollars % Change
Sales (GAAP) $ 49,678,888 $ 44,639,060 $ 5,039,828 11.3 %
Cost of sales (GAAP) $ 40,802,636 $ 36,209,265 $ 4,593,371 12.7 %
Impact of inventory valuation adjustment (1)
(29,550) — (29,550) NM
Cost of sales adjusted for Certain Items (Non-GAAP) $ 40,773,086 $ 36,209,265 $ 4,563,821 12.6 %
Gross profit (GAAP) $ 8,876,252 $ 8,429,795 $ 446,457 5.3 %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 NM
Comparable gross profit adjusted for Certain Items (Non-GAAP) $ 8,905,802 $ 8,429,795 $ 476,007 5.7 %
Gross margin (GAAP) 17.87 % 18.88 % -101 bps
Impact of inventory valuation adjustment (1)
0.06 — 6 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP) 17.93 % 18.88 % -95 bps
Operating expenses (GAAP) $ 7,303,932 $ 6,820,175 $ 483,757 7.1 %
Impact of restructuring and transformational project costs (2)
(70,058) (247,547) 177,489 71.7
Impact of acquisition-related costs (3)
(103,449) (58,042) (45,407) (78.2)
Impact of bad debt reserve adjustments (4)
19,216 — 19,216 NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $ 7,149,641 $ 6,514,586 $ 635,055 9.7 %
Operating income (GAAP) $ 1,572,320 $ 1,609,620 $ (37,300) (2.3) %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 NM
Impact of restructuring and transformational project costs (2)
70,058 247,547 (177,489) (71.7)
Impact of acquisition-related costs (3)
103,449 58,042 45,407 78.2
Impact of bad debt reserve adjustments (4)
(19,216) — (19,216) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 1,756,161 $ 1,915,209 $ (159,048) (8.3) %
Interest expense (GAAP) $ 495,131 $ 270,643 $ 224,488 82.9 %
Impact of loss on extinguishment of debt (115,603) — (115,603) NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 379,528 $ 270,643 $ 108,885 40.2 %
Net earnings (GAAP) $ 848,779 $ 1,138,505 $ (289,726) (25.4) %
Impact of inventory valuation adjustment (1)
29,550 — 29,550 NM
Impact of restructuring and transformational project costs (2)
70,058 247,547 (177,489) (71.7)
Impact of acquisition-related costs (3)
103,449 58,042 45,407 78.2
Impact of bad debt reserve adjustments (4)
(19,216) — (19,216) NM
Impact of loss on extinguishment of debt 115,603 — 115,603 NM
Tax impact of inventory valuation adjustment (5)
(7,449) — (7,449) NM
Tax impact of restructuring and transformational project costs (5)
(17,661) (64,831) 47,170 72.8
Tax impact of acquisition-related costs (5)
(26,079) (15,201) (10,878) (71.6)
Tax impact of bad debt reserves adjustments (5)
4,844 — 4,844 NM
Tax impact of loss on extinguishment of debt (5)
(29,143) — (29,143) NM
Impact of foreign tax credit benefit — (95,067) 95,067 NM


	13-Week Period Ended Apr. 1, 2023			13-Week Period Ended Apr. 2, 2022			Change in Dollars		%/bps Change
U.S. FOODSERVICE OPERATIONS


















Operating expenses (GAAP)	$	1,690,093		$	1,523,578		$	166,515	10.9	%
Impact of restructuring and transformational project costs	(159)			2,543			(2,702)		NM
Impact of acquisition-related costs (1)	(11,463)			(10,505)			(958)		(9.1)
Impact of bad debt reserve adjustments (2)	(81)			5,060			(5,141)		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,678,390		$	1,520,676		$	157,714	10.4	%





Operating income (GAAP)	$	855,766		$	746,467		$	109,299	14.6	%
Impact of restructuring and transformational project costs	159			(2,543)			2,702		NM
Impact of acquisition-related costs (1)	11,463			10,505			958		9.1
Impact of bad debt reserve adjustments (2)	81			(5,060)			5,141		NM

Operating income adjusted for Certain Items (Non-GAAP)	$	867,469		$	749,369		$	118,100	15.8	%





INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	3,344,121		$	2,834,089		$	510,032	18.0	%


Impact of currency fluctuations (3)	206,661			—			206,661		7.3
Comparable sales using a constant currency basis (Non-GAAP)	$	3,550,782		$	2,834,089		$	716,693	25.3	%

Gross profit (GAAP)	$	642,778		$	570,241		$	72,537	12.7	%
Impact of currency fluctuations (3)	40,245			—			40,245		7.1
Comparable gross profit using a constant currency basis (Non-GAAP)	$	683,023		$	570,241		$	112,782	19.8	%







Gross margin (GAAP)	19.22		%	20.12		%			-90 bps
Impact of currency fluctuations (3)	0.02			—					2 bps
Comparable gross margin using a constant currency basis (Non-GAAP)	19.24		%	20.12		%			-88 bps

Operating expenses (GAAP)	$	594,426		$	562,481		$	31,945	5.7	%
Impact of restructuring and transformational project costs (4)	(2,103)			(9,379)			7,276		77.6
Impact of acquisition-related costs (5)	(16,585)			(18,142)			1,557		8.6
Impact of bad debt reserve adjustments (2)	(10)			657			(667)		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	575,728			535,617			40,111		7.5


Impact of currency fluctuations (3)	37,070			—			37,070		6.9
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	612,798		$	535,617		$	77,181	14.4	%

Operating income (GAAP)	$	48,352		$	7,760		$	40,592	NM
Impact of restructuring and transformational project costs (4)	2,103			9,379			(7,276)		(77.6)
Impact of acquisition-related costs (5)	16,585			18,142			(1,557)		(8.6)
Impact of bad debt reserve adjustments (2)	10			(657)			667		NM

Operating income adjusted for Certain Items (Non-GAAP)	67,050			34,624			32,426		93.7


Impact of currency fluctuations (3)	3,175			—			3,175		NM
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	70,225		$	34,624		$	35,601	NM

SYGMA












Operating expenses (GAAP)	$	140,665		$	142,883		$	(2,218)	(1.6)	%








Operating income (GAAP)	25,439			4,362			21,077		NM








OTHER


















Operating expenses (GAAP)	$	67,615		$	59,369		$	8,246	13.9	%

4645

Impact of adjustments to uncertain tax positions 12,000 — 12,000 NM
Impact of US transition tax — 14,885 (14,885) NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 1,084,735 $ 1,283,880 $ (199,145) (15.5) %
Diluted earnings per share (GAAP) $ 1.65 $ 2.17 $ (0.52) (24.0) %
Impact of inventory valuation adjustment (1)
0.06 — 0.06 NM
Impact of restructuring and transformational project costs (2)
0.14 0.47 (0.33) (70.2)
Impact of acquisition-related costs (3)
0.20 0.11 0.09 81.8
Impact of bad debt reserve adjustments (4)
(0.04) — (0.04) NM
Impact of loss on extinguishment of debt 0.22 — 0.22 NM
Tax impact of inventory valuation adjustment (5)
(0.01) — (0.01) NM
Tax impact of restructuring and transformational project costs (5)
(0.03) (0.12) 0.09 75.0
Tax impact of acquisition-related costs (5)
(0.05) (0.03) (0.02) (66.7)
Tax impact of bad debt reserves adjustments (5)
0.01 — 0.01 NM
Tax impact of loss on extinguishment of debt (5)
(0.06) — (0.06) NM
Impact of foreign tax credit benefit — (0.18) 0.18 NM
Impact of adjustments to uncertain tax positions 0.02 — 0.02 NM
Impact of US transition tax — 0.03 (0.03) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6)
$ 2.11 $ 2.45 $ (0.34) (13.9) %


~~(1)~~			~~Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.~~
~~(2)~~			Fiscal 2022 includes $39 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $31 million related to restructuring charges, severance and facility closure charges. Fiscal 2019 includes $114 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 $133 million related to severance, restructuring and facility closure charges in Europe, Canada and at our Global Support Center, of which $58 million relates to our France restructuring as part of our integration of Brake France and Davigel into Sysco France.
~~(3)~~			Fiscal 2022 includes $75 million of intangible amortization expense and $28 million in acquisition and due diligence costs. Fiscal 2019 includes $57 million of intangible amortization expense and $1 million related to integration costs.
~~(4)~~			~~Fiscal 2022 represents 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.~~

13-Week Period Ended Apr. 2, 2022 13-Week Period Ended Mar. 27, 2021 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 1,523,578 $ 1,089,335 $ 434,243 39.9 %
Impact of restructuring and transformational project costs 2,543 (1,285) 3,828 297.9
Impact of acquisition-related costs (1)
(10,505) — (10,505) NM
Impact of bad debt reserve adjustments (2)
5,060 21,669 (16,609) (76.6)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 1,520,676 $ 1,109,719 $ 410,957 37.0 %
Operating income (GAAP) $ 746,467 $ 545,502 $ 200,965 36.8 %
Impact of restructuring and transformational project costs (2,543) 1,285 (3,828) (297.9)
Impact of acquisition-related costs (1)
10,505 — 10,505 NM
Impact of bad debt reserve adjustments (2)
(5,060) (21,669) 16,609 76.6
Operating income adjusted for Certain Items (Non-GAAP) $ 749,369 $ 525,118 $ 224,251 42.7 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 2,834,089 $ 1,723,126 $ 1,110,963 64.5 %
Impact of currency fluctuations (3)
83,678 — 83,678 4.8
Comparable sales using a constant currency basis (Non-GAAP) $ 2,917,767 $ 1,723,126 $ 1,194,641 69.3 %
Gross profit (GAAP) $ 570,241 $ 325,200 $ 245,041 75.4 %
Impact of currency fluctuations (3)
20,354 — 20,354 6.2
Comparable gross profit using a constant currency basis (Non-GAAP) $ 590,595 $ 325,200 $ 265,395 81.6 %
Gross margin (GAAP) 20.12 % 18.87 % 125 bps
Impact of currency fluctuations (3)
0.12 — 12 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 20.24 % 18.87 % 137 bps
Operating expenses (GAAP) $ 562,481 $ 446,687 $ 115,794 25.9 %
Impact of restructuring and transformational project costs (4)
(9,379) (18,635) 9,256 49.7
Impact of acquisition-related costs (5)
(18,142) (18,834) 692 3.7
Impact of bad debt reserve adjustments (2)
657 8,357 (7,700) (92.1)
Operating expenses adjusted for Certain Items (Non-GAAP) 535,617 417,575 118,042 28.3
Impact of currency fluctuations (3)
20,104 — 20,104 4.8
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 555,721 $ 417,575 $ 138,146 33.1 %
Operating income (loss) (GAAP) $ 7,760 $ (121,487) $ 129,247 106.4 %
Impact of restructuring and transformational project costs (4)
9,379 18,635 (9,256) (49.7)
Impact of acquisition-related costs (5)
18,142 18,834 (692) (3.7)
Impact of bad debt reserve adjustments (2)
(657) (8,357) 7,700 92.1
Operating income (loss) adjusted for Certain Items (Non-GAAP) 34,624 (92,375) 126,999 137.5
Impact of currency fluctuations (3)
250 — 250 0.3
Comparable operating income (loss) adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 34,874 $ (92,375) $ 127,249 137.8 %
SYGMA
Operating expenses (GAAP) $ 142,883 $ 120,541 $ 22,342 18.5 %
Operating income (GAAP) 4,362 12,937 (8,575) (66.3)
OTHER
Operating expenses (GAAP) $ 59,369 $ 32,027 $ 27,342 85.4 %


Impact of bad debt reserve adjustments (2)		—		3,447		(3,447)		NM
											13-Week Period Ended Apr. 1, 2023		13-Week Period Ended Apr. 2, 2022		Change in Dollars		%/bps Change
Operating expenses adjusted for Certain Items (Non-GAAP)		$	59,369	$	35,474	$	23,895	67.4	%
Operating income (loss) (GAAP)										Operating income (loss) (GAAP)	$	11,836	$	(3,972)	$	15,808	NM

Operating (loss) income (GAAP)		$	(3,972)	$	5,884	$	(9,856)	(167.5)	%

Impact of bad debt reserve adjustments (2)		—		(3,447)		3,447		NM

Operating (loss) income adjusted for Certain Items (Non-GAAP)		$	(3,972)	$	2,437	$	(6,409)	(263.0)	%

GLOBAL SUPPORT CENTER	GLOBAL SUPPORT CENTER									GLOBAL SUPPORT CENTER

Gross loss (GAAP)	Gross loss (GAAP)	$	(29,534)	$	(8,758)	$	(20,776)	(237.2)	%	Gross loss (GAAP)	$	(2,832)	$	(29,534)	$	26,702	90.4	%
Impact of inventory valuation adjustment (6)	Impact of inventory valuation adjustment (6)	29,550		—		29,550		337.4		Impact of inventory valuation adjustment (6)	—		29,550		(29,550)		NM
Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP)		$	16	$	(8,758)	$	8,774	100.2	%
Comparable gross (loss) profit adjusted for Certain Items (Non-GAAP)										Comparable gross (loss) profit adjusted for Certain Items (Non-GAAP)	$	(2,832)	$	16	$	(2,848)	NM

Operating expenses (GAAP)	Operating expenses (GAAP)	$	229,354	$	198,161	$	31,193	15.7	%	Operating expenses (GAAP)	$	244,384	$	229,354	$	15,030	6.6	%
Impact of restructuring and transformational project costs (7)	Impact of restructuring and transformational project costs (7)	(12,335)		(15,033)		2,698		17.9		Impact of restructuring and transformational project costs (7)	(9,992)		(12,335)		2,343		19.0
Impact of acquisition-related costs (8)	Impact of acquisition-related costs (8)	(8,052)		—		(8,052)		NM		Impact of acquisition-related costs (8)	(956)		(8,052)		7,096		88.1

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	208,967	$	183,128	$	25,839	14.1	%	Operating expenses adjusted for Certain Items (Non-GAAP)	$	233,436	$	208,967	$	24,469	11.7	%

Operating loss (GAAP)	Operating loss (GAAP)	$	(258,888)	$	(206,919)	$	(51,969)	(25.1)	%	Operating loss (GAAP)	$	(247,216)	$	(258,888)	$	11,672	4.5	%
Impact of inventory valuation adjustment (6)	Impact of inventory valuation adjustment (6)	29,550		—		29,550		NM		Impact of inventory valuation adjustment (6)	—		29,550		(29,550)		NM
Impact of restructuring and transformational project costs (7)	Impact of restructuring and transformational project costs (7)	12,335		15,033		(2,698)		(17.9)		Impact of restructuring and transformational project costs (7)	9,992		12,335		(2,343)		(19.0)
Impact of acquisition-related costs (8)	Impact of acquisition-related costs (8)	8,052		—		8,052		NM		Impact of acquisition-related costs (8)	956		8,052		(7,096)		(88.1)

Operating loss adjusted for Certain Items (Non-GAAP)	Operating loss adjusted for Certain Items (Non-GAAP)	$	(208,951)	$	(191,886)	$	(17,065)	(8.9)	%	Operating loss adjusted for Certain Items (Non-GAAP)	$	(236,268)	$	(208,951)	$	(27,317)	(13.1)	%


(1)			Fiscal 2023 and fiscal 2022 ~~includes~~include intangible amortization expense and acquisition costs.
(2)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)			Includes restructuring and facility closure costs primarily in Europe.
(5)			Represents intangible amortization expense.

(6)			~~Represents~~Fiscal 2022 represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(7)			Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(8)			Represents due diligence costs.


			NM represents that the percentage change is not meaningful.

4946


													39-Week Period Ended Apr. 1, 2023			39-Week Period Ended Apr. 2, 2022			Change in Dollars		% Change
U.S. FOODSERVICE OPERATIONS	U.S. FOODSERVICE OPERATIONS	39-Week Period Ended Apr. 2, 2022			39-Week Period Ended Mar. 27, 2021			Change in Dollars		% Change		U.S. FOODSERVICE OPERATIONS

Operating expenses (GAAP)	Operating expenses (GAAP)	$	4,373,665		$	3,174,704		$	1,198,961	37.8	%	Operating expenses (GAAP)	$	5,110,736		$	4,373,665		$	737,071	16.9	%
Impact of restructuring and transformational project costs	Impact of restructuring and transformational project costs	(383)			(4,010)			3,627		90.4		Impact of restructuring and transformational project costs	(203)			(383)			180		47.0
Impact of acquisition-related costs (1)	Impact of acquisition-related costs (1)	(25,382)			—			(25,382)		NM		Impact of acquisition-related costs (1)	(35,563)			(25,382)			(10,181)		(40.1)
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	16,729			123,225			(106,496)		(86.4)		Impact of bad debt reserve adjustments (2)	4,170			16,729			(12,559)		(75.1)

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	4,364,629		$	3,293,919		$	1,070,710	32.5	%	Operating expenses adjusted for Certain Items (Non-GAAP)	$	5,079,140		$	4,364,629		$	714,511	16.4	%

Operating income (GAAP)	Operating income (GAAP)	$	2,220,812		$	1,619,162		$	601,650	37.2	%	Operating income (GAAP)	$	2,540,555		$	2,220,812		$	319,743	14.4	%
Impact of restructuring and transformational project costs	Impact of restructuring and transformational project costs	383			4,010			(3,627)		(90.4)		Impact of restructuring and transformational project costs	203			383			(180)		(47.0)
Impact of acquisition-related costs (1)	Impact of acquisition-related costs (1)	25,382			—			25,382		NM		Impact of acquisition-related costs (1)	35,563			25,382			10,181		40.1
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	(16,729)			(123,225)			106,496		86.4		Impact of bad debt reserve adjustments (2)	(4,170)			(16,729)			12,559		75.1

Operating income adjusted for Certain Items (Non-GAAP)	Operating income adjusted for Certain Items (Non-GAAP)	$	2,229,848		$	1,499,947		$	729,901	48.7	%	Operating income adjusted for Certain Items (Non-GAAP)	$	2,572,151		$	2,229,848		$	342,303	15.4	%

INTERNATIONAL FOODSERVICE OPERATIONS	INTERNATIONAL FOODSERVICE OPERATIONS											INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	Sales (GAAP)	$	8,535,608		$	5,854,608		$	2,681,000	45.8	%	Sales (GAAP)	$	9,910,267		$	8,535,608		$	1,374,659	16.1	%

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(71,779)			—			(71,779)		(1.2)		Impact of currency fluctuations (3)	848,166			—			848,166		9.9
Comparable sales using a constant currency basis (Non-GAAP)	Comparable sales using a constant currency basis (Non-GAAP)	$	8,463,829		$	5,854,608		$	2,609,221	44.6	%	Comparable sales using a constant currency basis (Non-GAAP)	$	10,758,433		$	8,535,608		$	2,222,825	26.0	%

Gross profit (GAAP)	Gross profit (GAAP)	$	1,725,306		$	1,149,438		$	575,868	50.1	%	Gross profit (GAAP)	$	1,916,503		$	1,725,306		$	191,197	11.1	%

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(6,413)			—			(6,413)		(0.6)		Impact of currency fluctuations (3)	177,854			—			177,854		10.3
Comparable gross profit using a constant currency basis (Non-GAAP)	Comparable gross profit using a constant currency basis (Non-GAAP)	$	1,718,893		$	1,149,438		$	569,455	49.5	%	Comparable gross profit using a constant currency basis (Non-GAAP)	$	2,094,357		$	1,725,306		$	369,051	21.4	%

Gross margin (GAAP)	Gross margin (GAAP)	20.21		%	19.63		%			58 bps		Gross margin (GAAP)	19.34		%	20.21		%			-87 bps
Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	0.10			—					10 bps		Impact of currency fluctuations (3)	0.13			—					13 bps
Comparable gross margin using a constant currency basis (Non-GAAP)	Comparable gross margin using a constant currency basis (Non-GAAP)	20.31		%	19.63		%			68 bps		Comparable gross margin using a constant currency basis (Non-GAAP)	19.47		%	20.21		%			-74 bps

Operating expenses (GAAP)	Operating expenses (GAAP)	$	1,670,125		$	1,351,411		$	318,714	23.6	%	Operating expenses (GAAP)	$	1,723,558		$	1,670,125		$	53,433	3.2	%
Impact of restructuring and transformational project costs (4)	Impact of restructuring and transformational project costs (4)	(30,426)			(52,033)			21,607		41.5		Impact of restructuring and transformational project costs (4)	(11,597)			(30,426)			18,829		61.9
Impact of acquisition-related costs (5)	Impact of acquisition-related costs (5)	(55,273)			(54,714)			(559)		(1.0)		Impact of acquisition-related costs (5)	(48,534)			(55,273)			6,739		12.2
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	2,488			33,583			(31,095)		(92.6)		Impact of bad debt reserve adjustments (2)	255			2,488			(2,233)		(89.8)

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	1,586,914			1,278,247			308,667		24.1		Operating expenses adjusted for Certain Items (Non-GAAP)	1,663,682			1,586,914			76,768		4.8

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(4,164)			—			(4,164)		(0.3)		Impact of currency fluctuations (3)	163,005			—			163,005		10.3
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,582,750		$	1,278,247		$	304,503	23.8	%	Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,826,687		$	1,586,914		$	239,773	15.1	%

Operating income (loss) (GAAP)		$	55,181		$	(201,973)		$	257,154	127.3	%
Operating income (GAAP)												Operating income (GAAP)	$	192,945		$	55,181		$	137,764	NM
Impact of restructuring and transformational project costs (4)	Impact of restructuring and transformational project costs (4)	30,426			52,033			(21,607)		(41.5)		Impact of restructuring and transformational project costs (4)	11,597			30,426			(18,829)		(61.9)
Impact of acquisition-related costs (5)	Impact of acquisition-related costs (5)	55,273			54,714			559		1.0		Impact of acquisition-related costs (5)	48,534			55,273			(6,739)		(12.2)
Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	(2,488)			(33,583)			31,095		92.6		Impact of bad debt reserve adjustments (2)	(255)			(2,488)			2,233		89.8

Operating income (loss) adjusted for Certain Items (Non-GAAP)		138,392			(128,809)			267,201		207.4
Operating income adjusted for Certain Items (Non-GAAP)												Operating income adjusted for Certain Items (Non-GAAP)	252,821			138,392			114,429		82.7

Impact of currency fluctuations (3)	Impact of currency fluctuations (3)	(2,249)			—			(2,249)		NM		Impact of currency fluctuations (3)	14,849			—			14,849		10.7
Comparable operating income (loss) adjusted for Certain Items using a constant currency basis (Non-GAAP)		$	136,143		$	(128,809)		$	264,952	205.7	%

SYGMA
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)												Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	267,670		$	138,392		$	129,278	93.4	%

5047


Operating expenses (GAAP)		$	427,168	$	358,361	$	68,807	19.2	%
Impact of restructuring and transformational project costs		—		(7)		7		NM
											39-Week Period Ended Apr. 1, 2023			39-Week Period Ended Apr. 2, 2022			Change in Dollars		% Change
SYGMA										SYGMA
Sales (GAAP)										Sales (GAAP)	$	5,839,051		$	5,270,193		$	568,858	10.8	%

Operating expenses adjusted for Certain Items (Non-GAAP)		$	427,168	$	358,354	$	68,814	19.2	%
Gross profit (GAAP)										Gross profit (GAAP)	470,458			422,354			48,104		11.4

Operating (loss) income (GAAP)		$	(4,814)	$	35,957	$	(40,771)	(113.4)	%
Impact of restructuring and transformational project costs		—		7		(7)		NM
Gross margin (GAAP)										Gross margin (GAAP)	8.06		%	8.01		%			5 bps

Operating (loss) income adjusted for Certain Items (Non-GAAP)		$	(4,814)	$	35,964	$	(40,778)	(113.4)	%
Operating expenses (GAAP)										Operating expenses (GAAP)	$	432,743		$	427,168		$	5,575	1.3	%

Operating income (loss) (GAAP)										Operating income (loss) (GAAP)	37,715			(4,814)			42,529		NM

OTHER	OTHER									OTHER

Operating expenses (GAAP)	Operating expenses (GAAP)	$	166,560	$	109,247	$	57,313	52.5	%	Operating expenses (GAAP)	$	204,345		$	166,560		$	37,785	22.7	%

Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	(1)		5,564		(5,565)		(100.0)		Impact of bad debt reserve adjustments (2)	—			(1)			1		NM

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	166,559	$	114,811	$	51,748	45.1	%	Operating expenses adjusted for Certain Items (Non-GAAP)	$	204,345		$	166,559		$	37,786	22.7	%

Operating (loss) income (GAAP)		$	2,667	$	4,861	$	(2,194)	(45.1)	%

Operating income (GAAP)										Operating income (GAAP)	$	33,255		$	2,667		$	30,588	NM

Impact of bad debt reserve adjustments (2)	Impact of bad debt reserve adjustments (2)	1		(5,564)		5,565		100.0		Impact of bad debt reserve adjustments (2)	—			1			(1)		NM

Operating (loss) income adjusted for Certain Items (Non-GAAP)		$	2,668	$	(703)	$	3,371	NM
Operating income adjusted for Certain Items (Non-GAAP)										Operating income adjusted for Certain Items (Non-GAAP)	$	33,255		$	2,668		$	30,587	NM

GLOBAL SUPPORT CENTER	GLOBAL SUPPORT CENTER									GLOBAL SUPPORT CENTER

Gross loss (GAAP)	Gross loss (GAAP)	$	(35,112)	$	(10,759)	$	(24,353)	(226.4)	%	Gross loss (GAAP)	$	(6,021)		$	(35,112)		$	29,091	82.9	%
Impact of inventory valuation adjustment (6)	Impact of inventory valuation adjustment (6)	29,550		—		29,550		NM		Impact of inventory valuation adjustment (6)	(2,571)			29,550			(32,121)		NM
Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP)		$	(5,562)	$	(10,759)	$	5,197	48.3	%
Comparable gross loss adjusted for Certain Items (Non-GAAP)										Comparable gross loss adjusted for Certain Items (Non-GAAP)	$	(8,592)		$	(5,562)		$	(3,030)	(54.5)	%

Operating expenses (GAAP)	Operating expenses (GAAP)	$	666,414	$	579,690	$	86,724	15.0	%	Operating expenses (GAAP)	$	729,297		$	666,414		$	62,883	9.4	%
Impact of restructuring and transformational project costs (7)	Impact of restructuring and transformational project costs (7)	(39,249)		(39,028)		(221)		(0.6)		Impact of restructuring and transformational project costs (7)	(26,488)			(39,249)			12,761		32.5
Impact of acquisition-related costs (8)	Impact of acquisition-related costs (8)	(22,794)		—		(22,794)		NM		Impact of acquisition-related costs (8)	(3,322)			(22,794)			19,472		85.4

Operating expenses adjusted for Certain Items (Non-GAAP)	Operating expenses adjusted for Certain Items (Non-GAAP)	$	604,371	$	540,662	$	63,709	11.8	%	Operating expenses adjusted for Certain Items (Non-GAAP)	$	699,487		$	604,371		$	95,116	15.7	%

Operating loss (GAAP)	Operating loss (GAAP)	$	(701,526)	$	(590,449)	$	(111,077)	(18.8)	%	Operating loss (GAAP)	$	(735,318)		$	(701,526)		$	(33,792)	(4.8)	%
Impact of inventory valuation adjustment (6)	Impact of inventory valuation adjustment (6)	29,550		—		29,550		NM		Impact of inventory valuation adjustment (6)	(2,571)			29,550			(32,121)		NM
Impact of restructuring and transformational project costs (7)	Impact of restructuring and transformational project costs (7)	39,249		39,028		221		0.6		Impact of restructuring and transformational project costs (7)	26,488			39,249			(12,761)		(32.5)
Impact of acquisition-related costs (8)	Impact of acquisition-related costs (8)	22,794		—		22,794		NM		Impact of acquisition-related costs (8)	3,322			22,794			(19,472)		(85.4)

Operating loss adjusted for Certain Items (Non-GAAP)	Operating loss adjusted for Certain Items (Non-GAAP)	$	(609,933)	$	(551,421)	$	(58,512)	(10.6)	%	Operating loss adjusted for Certain Items (Non-GAAP)	$	(708,079)		$	(609,933)		$	(98,146)	(16.1)	%


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


			NM represents that the percentage change is not meaningful.

EBITDA and Adjusted EBITDA

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


		13-Week Period Ended Apr. 2, 2022		13-Week Period Ended Mar. 27, 2021		Change in Dollars		% Change			13-Week Period Ended Apr. 1, 2023		13-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
Net earnings (GAAP)	Net earnings (GAAP)	$	303,325	$	88,927	$	214,398	241.1	%	Net earnings (GAAP)	$	429,604	$	303,325	$	126,279	41.6	%
Interest (GAAP)	Interest (GAAP)	124,018		145,773		(21,755)		(14.9)		Interest (GAAP)	134,931		124,018		10,913		8.8
Income taxes (GAAP)	Income taxes (GAAP)	82,163		13,925		68,238		NM		Income taxes (GAAP)	124,433		82,163		42,270		51.4
Depreciation and amortization (GAAP)	Depreciation and amortization (GAAP)	193,843		177,139		16,704		9.4		Depreciation and amortization (GAAP)	195,996		193,843		2,153		1.1
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	703,349	$	425,764	$	277,585	65.2	%	EBITDA (Non-GAAP)	$	884,964	$	703,349	$	181,615	25.8	%
Certain Item adjustments:	Certain Item adjustments:									Certain Item adjustments:
Impact of inventory valuation adjustment (1)	Impact of inventory valuation adjustment (1)	$	29,550	$	—	$	29,550	NM		Impact of inventory valuation adjustment (1)	$	—	$	29,550	$	(29,550)	NM
Impact of restructuring and transformational project costs (2)	Impact of restructuring and transformational project costs (2)	18,746		34,301		(15,555)		(45.3)		Impact of restructuring and transformational project costs (2)	11,890		18,746		(6,856)		(36.6)
Impact of acquisition-related costs (3)	Impact of acquisition-related costs (3)	9,861		—		9,861		NM		Impact of acquisition-related costs (3)	2,349		9,861		(7,512)		(76.2)
Impact of bad debt reserve adjustments (4)	Impact of bad debt reserve adjustments (4)	(5,717)		(33,473)		27,756		82.9		Impact of bad debt reserve adjustments (4)	90		(5,717)		5,807		101.6

Impact of loss on sale of business		—		10,790		(10,790)		NM

Impact of other non-routine gains and losses										Impact of other non-routine gains and losses	448		—		448		NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)	EBITDA adjusted for Certain Items (Non-GAAP) (5)	$	755,789	$	437,382	$	318,407	72.8	%	EBITDA adjusted for Certain Items (Non-GAAP) (5)	$	899,741	$	755,789	$	143,952	19.0	%


(1)			~~Represents~~Fiscal 2022 represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(2)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(3)			Fiscal 2023 and fiscal 2022 ~~includes~~include acquisition and due diligence costs.
(4)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $2$7 million and $5$2 million ~~for fiscal 2022 and fiscal 2021, respectively,~~ or non-cash stock compensation expense of ~~$30~~$21 million and ~~$19~~$30 million in fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.

			NM represents that the percentage change is not meaningful.

5249


		13-Week Period Ended Apr. 2, 2022		13-Week Period Ended Mar. 30, 2019		Change in Dollars		% Change			39-Week Period Ended Apr. 1, 2023		39-Week Period Ended Apr. 2, 2022		Change in Dollars		% Change
Net earnings (GAAP)	Net earnings (GAAP)	$	303,325	$	440,083	$	(136,758)	(31.1)	%	Net earnings (GAAP)	$	1,036,388	$	848,779	$	187,609	22.1	%
Interest (GAAP)	Interest (GAAP)	124,018		94,514		29,504		31.2		Interest (GAAP)	391,123		495,131		(104,008)		(21.0)
Income taxes (GAAP)	Income taxes (GAAP)	82,163		(9,132)		91,295		NM		Income taxes (GAAP)	291,027		256,115		34,912		13.6
Depreciation and amortization (GAAP)	Depreciation and amortization (GAAP)	193,843		184,183		9,660		5.2		Depreciation and amortization (GAAP)	574,945		571,606		3,339		0.6
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	703,349	$	709,648	$	(6,299)	(0.9)	%	EBITDA (Non-GAAP)	$	2,293,483	$	2,171,631	$	121,852	5.6	%
Certain Item adjustments:	Certain Item adjustments:									Certain Item adjustments:
Impact of inventory valuation adjustment (1)	Impact of inventory valuation adjustment (1)	$	29,550	$	—	$	29,550	NM		Impact of inventory valuation adjustment (1)	$	(2,571)	$	29,550	$	(32,121)	(108.7)	%
Impact of restructuring and transformational project costs (2)	Impact of restructuring and transformational project costs (2)	18,746		67,266		(48,520)		(72.1)		Impact of restructuring and transformational project costs (2)	37,192		69,093		(31,901)		(46.2)
Impact of acquisition-related costs (3)	Impact of acquisition-related costs (3)	9,861		19		9,842		NM		Impact of acquisition-related costs (3)	8,944		28,260		(19,316)		(68.4)
Impact of bad debt reserve adjustments (4)	Impact of bad debt reserve adjustments (4)	(5,717)		—		(5,717)		NM		Impact of bad debt reserve adjustments (4)	(4,425)		(19,216)		14,791		77.0
EBITDA adjusted for Certain Items (Non-GAAP) (5)		$	755,789	$	776,933	$	(21,144)	(2.7)	%

Impact of other non-routine gains and losses (5)										Impact of other non-routine gains and losses (5)	315,326		—		315,326		NM
EBITDA adjusted for Certain Items (Non-GAAP) (6)										EBITDA adjusted for Certain Items (Non-GAAP) (6)	$	2,647,949	$	2,279,318	$	368,631	16.2	%


(1)			~~Represents~~Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory. Fiscal 2022 represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(2)			Fiscal ~~2022~~2023 and fiscal ~~2019~~2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(3)			Fiscal ~~2022 includes acquisition~~2023 and ~~due diligence costs. Fiscal 2019 represents acquisition costs.~~
~~(4)~~			~~Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.~~
~~(5)~~			~~In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $2 million and $5 million for~~ fiscal 2022 ~~and fiscal 2019, respectively, or non-cash stock compensation expense of $30 million and $24 million in fiscal 2022 and fiscal 2019, respectively.~~
			~~NM represents that the percentage change is not meaningful.~~

39-Week Period Ended Apr. 2, 2022 39-Week Period Ended Mar. 27, 2021 Change in Dollars % Change
Net earnings (GAAP) $ 848,779 $ 373,116 $ 475,663 127.5 %
Interest (GAAP) 495,131 438,988 56,143 12.8
Income taxes (GAAP) 256,115 69,594 186,521 268.0
Depreciation and amortization (GAAP) 571,606 542,471 29,135 5.4
EBITDA (Non-GAAP) $ 2,171,631 $ 1,424,169 $ 747,462 52.5 %
Certain Item adjustments:
Impact of inventory valuation adjustment (1)
$ 29,550 $ — $ 29,550 NM
Impact of restructuring and transformational project costs (2)
69,093 89,253 (20,160) (22.6)
Impact of acquisition-related costs (3)
28,260 — 28,260 NM
Impact of bad debt reserve adjustments (4)
(19,216) (162,372) 143,156 88.2
Impact of loss on sale of business — 22,834 (22,834) NM
EBITDA adjusted for Certain Items (Non-GAAP) (5) $ 2,279,318 $ 1,373,884 $ 905,434 65.9 %


~~(1)~~			~~Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.~~
~~(2)~~			~~Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.~~
~~(3)~~			~~Fiscal 2022 includes~~include acquisition and due diligence costs.
(4)			Fiscal ~~2022~~2023 and fiscal ~~2021~~2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)			Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6)			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $5$15 million and ~~$12~~$5 million or non-cash stock compensation expense of ~~$91~~$73 million and ~~$65~~$91 million for fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively.
			NM represents that the percentage change is not meaningful.

39-Week Period Ended Apr. 2, 2022 39-Week Period Ended Mar. 30, 2019 Change in Dollars % Change
Net earnings (GAAP) $ 848,779 $ 1,138,505 $ (289,726) (25.4) %
Interest (GAAP) 495,131 270,643 224,488 82.9
Income taxes (GAAP) 256,115 185,023 71,092 38.4
Depreciation and amortization (GAAP) 571,606 576,596 (4,990) (0.9)
EBITDA (Non-GAAP) $ 2,171,631 $ 2,170,767 $ 864 0.04 %
Certain Item adjustments:
Impact of inventory valuation adjustment (1)
$ 29,550 $ — $ 29,550 NM
Impact of restructuring and transformational project costs (2)
69,093 215,051 (145,958) (67.9)
Impact of acquisition-related costs (3)
28,260 824 27,436 NM
Impact of bad debt reserve adjustments (4)
(19,216) — (19,216) NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)
$ 2,279,318 $ 2,386,642 $ (107,324) (4.5) %


~~(1)~~			~~Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.~~
~~(2)~~			Fiscal 2022 and fiscal 2019 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.
~~(3)~~			~~Fiscal 2022 includes acquisition and due diligence costs. Fiscal 2019 represents acquisition costs.~~
~~(4)~~			~~Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.~~
~~(5)~~			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $5 million and $4 million or non-cash stock compensation expense of $91 million and $78 million for fiscal 2022 and fiscal 2019, respectively.
			~~NM represents that the percentage change is not meaningful.~~

Liquidity and Capital Resources

Highlights

~~As of April 2, 2022, we had $876.1 million in cash and cash equivalents.~~ We produced positive free cash flow in a period of higher ~~working~~ capital ~~investments, one-time and short-term costs related to the business recovery~~expenditures and investments towards our Recipe for Growth strategy. Our results for the first 39 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 39 weeks of fiscal ~~2022~~2023 to the first 39 weeks of fiscal ~~2021~~2022 are provided.

39-Week Period Ended Apr. 2, 2022 39-Week Period Ended Mar. 27, 2021
(In thousands)
Net cash provided by operating activities (GAAP) $ 745,871 $ 1,479,784
Additions to plant and equipment (327,535) (251,167)
Proceeds from sales of plant and equipment 15,946 19,308
Free Cash Flow (Non-GAAP) (1)
$ 434,282 $ 1,247,925
Acquisition of businesses, net of cash acquired $ (1,281,835) $ —
Debt borrowings (repayments), net 1,213,114 (1,897,688)
Redemption premiums and repayments of senior notes (1,395,668) —
Stock repurchases (415,824) —
Dividends paid (719,865) (689,251)
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.


	39-Week Period Ended Apr. 1, 2023		39-Week Period Ended Apr. 2, 2022
Source of cash (use of cash)	(In thousands)
Net cash provided by operating activities (GAAP)	$	1,425,782	$	745,871
Additions to plant and equipment	(474,456)		(327,535)
Proceeds from sales of plant and equipment	28,313		15,946
Free Cash Flow (Non-GAAP) (1)	$	979,639	$	434,282

Acquisition of businesses, net of cash acquired	$	(37,384)	$	(1,281,835)

Debt borrowings (repayments), net	92,917		1,213,114
Redemption premiums and repayments for senior notes	—		(1,395,668)
Stock repurchases	(377,800)		(415,824)
Dividends paid	(747,378)		(719,865)


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

Sources and Uses of Cash

Sysco generates cash in the U.S and internationally. As of April ~~2, 2022,~~1, 2023, we had ~~$876.1~~$757.9 million in cash and cash equivalents, approximately ~~38%~~75% 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~~12 months, while maintaining sufficient liquidity for normal operating purposes.

Cash Flows

Operating Activities

We generated ~~$745.9 million~~$1.4 billion in cash flows from operations in the first 39 weeks of fiscal ~~2022,~~2023, compared to cash flows from ~~operating activities~~operations of ~~$1.5 billion~~$745.9 million in the first 39 weeks of fiscal ~~2021.~~2022. In the first 39 weeks of fiscal 2022, these amounts included year-over-year unfavorable comparisons on working capital due to investment in business recovery and accrued income taxes, partially offset by higher operating results and a favorable comparison on accrued expenses. In the first 39 weeks of fiscal 2021,2023, these amounts included year-over-year favorable comparisons on working capital of $300.2 million due to a favorable comparison on accounts receivable and ~~accrued income taxes,~~inventory, partially offset by ~~lower operating results.~~

~~Changes in working capital had a negative impact of $1.4 billion on cash flow from operations period-over-period. There were unfavorable comparisons primarily on receivables and inventories. The~~an unfavorable comparison ~~in cash flows~~on accounts payable. Accrued expenses also had an unfavorable comparison, primarily from ~~accounts receivables is primarily due to our customers beginning to purchase more~~accrued payroll in the first 39 weeks of fiscal ~~2022, coupled with significantly lower sales~~2023 in comparison to the first 39 weeks of fiscal 2022. Income taxes positively impacted cash flows from operations, as estimated payments made in the first 39 weeks of fiscal 2021 resulting from the COVID-19 pandemic. In the first 39 weeks of fiscal 2021, we recorded a net credit to the provision for losses on receivables totaling $137.7 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 39 weeks of2023 were lower than in fiscal 2022 ~~we invested heavily in inventory, which has helped us ship product on time and in full during the ongoing business recovery from the COVID-19 pandemic.~~

~~Income taxes negatively impacted cash flow from operations, as estimated payments were made~~due to overpayments in the ~~third quarter of fiscal 2022. Tax payments in the first 39 weeks of fiscal 2022 were higher than in the first 39 weeks of fiscal 2021 due to higher earnings compared to the~~ prior year.

Included in the change in accrued expenses was a positive comparison, primarily from favorable comparisons of incentive payment accruals, earnout liabilities related to our acquisitions in the first 39 weeks of fiscal 2022 and customer rebate payments resulting from an increase in volume purchase incentives earned by our customers, as sales volumes increased through the first 39 weeks of fiscal 2022.

Investing Activities

Our capital expenditures in the first 39 weeks of fiscal ~~2022~~2023 consisted primarily ~~consisted~~ of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 39 weeks of fiscal ~~2022~~2023 were ~~$76.4~~$146.9 million higher than in the first 39 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 39 weeks of fiscal ~~2022,~~2023, we paid ~~$1.3 billion,~~$37.4 million, net of cash acquired, for ~~acquisitions. There were no such~~acquisitions compared to $1.3 billion in acquisitions made in the first 39 weeks of fiscal ~~2021.~~2022.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $67.1 million in the first 39 weeks of fiscal 2023, as compared to $89.2 million in the first 39 weeks of fiscal ~~2022, as compared to $112.2 million in the first 39 weeks of fiscal 2021.~~2022. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized. We commenced our share repurchase program during the second quarter of fiscal 2022. We repurchased ~~5.7~~4.6 million shares for ~~$415.8~~$377.8 million during the first 39 weeks of fiscal ~~2022.~~2023, and intend to repurchase $500 million in fiscal 2023. As of April ~~2, 2022,~~1, 2023, we had a remaining authorization of approximately ~~$4.6~~$4.1 billion.

Dividends paid in the first 39 weeks of fiscal ~~2022~~2023 were $747.4 million, or $1.47 per share, as compared to $719.9 million, or $1.41 per share, ~~as compared to $689.3 million, or $1.35 per share,~~ in the ~~third quarter~~first 39 weeks of fiscal ~~2021.~~2022. In February ~~2022,~~2023, we declared our regular quarterly dividend for the third quarter of fiscal ~~2022~~2023 of ~~$0.47~~$0.49 per share, which was paid in April. In April ~~2022,~~2023, we declared our regular quarterly dividend for the fourth quarter of fiscal ~~2022~~2023 of ~~$0.49~~$0.50 per share, representing an increase of ~~$0.02~~$0.01 per share. ~~We intend to maintain our quarterly~~This dividend ~~payout at this amount until the fourth quarter of fiscal 2023, when it~~ will be ~~reassessed.~~

payable in July 2023.

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 April ~~2, 2022~~1, 2023 are disclosed within that note, which also provides details regarding our issuance of $800 million in senior notes with an interest rate of 3.15% that mature on December 14, 2051. We achieved an all-time low in financing costs for a thirty-year tenor issuance by Sysco, in advance of an increase in global interest rates.

On April 29, 2022, Sysco entered into a new long-term revolving credit facility to replace the $2.0 billion facility. The new facility includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to increase such commitments to $4.0 billion. The new facility includes a covenant requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 over four consecutive fiscal quarters. This ratio is lower than the previous covenant that was included in the $2.0 billion facility. The new revolving credit facility expires on April 29, 2027.note.

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 now $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of April ~~2, 2022,~~1, 2023, Sysco had a total of ~~$10.5~~$10.0 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal ~~2021~~2022 Form 10-K for additional information regarding the terms of the guarantees.

Basis of Preparation of the Summarized Financial Information

The summarized financial information of Sysco Corporation (issuer), and certain wholly owned U.S. Broadline subsidiaries (guarantors) (together, the obligor group) is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated. Investments in and equity in the earnings of our non-guarantor subsidiaries, which are not members of the obligor group, have been excluded from the summarized financial information. The obligor group’s amounts due to, amounts due from and transactions with non-guarantor subsidiaries have been presented in separate line items, if they are material to the obligor financials. The following tables include summarized financial information of the obligor group for the periods presented.

5852


Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Apr. 2, 2022		Jul. 3, 2021		Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet	Apr. 1, 2023		Jul. 2, 2022
		(In thousands)					(In thousands)
ASSETS	ASSETS					ASSETS
Receivables due from non-obligor subsidiaries	Receivables due from non-obligor subsidiaries	$	503,761	$	171,718	Receivables due from non-obligor subsidiaries	$	129,217	$	264,378
Current assets	Current assets	5,617,406		6,661,284		Current assets	5,596,334		5,658,972
Total current assets	Total current assets	$	6,121,167	$	6,833,002	Total current assets	$	5,725,551	$	5,923,350
Notes receivable from non-obligor subsidiaries	Notes receivable from non-obligor subsidiaries	$	85,520	$	83,457	Notes receivable from non-obligor subsidiaries	$	88,433	$	91,067
Other noncurrent assets	Other noncurrent assets	3,936,594		3,933,833		Other noncurrent assets	4,052,080		3,910,951
Total noncurrent assets	Total noncurrent assets	$	4,022,114	$	4,017,290	Total noncurrent assets	$	4,140,513	$	4,002,018

LIABILITIES	LIABILITIES					LIABILITIES
Payables due to non-obligor subsidiaries	Payables due to non-obligor subsidiaries	$	54,625	$	203,365	Payables due to non-obligor subsidiaries	$	59,808	$	62,441
Other current liabilities	Other current liabilities	2,471,341		2,299,674		Other current liabilities	2,793,576		2,765,756
Total current liabilities	Total current liabilities	$	2,525,966	$	2,503,039	Total current liabilities	$	2,853,384	$	2,828,197
Notes payable to non-obligor subsidiaries	Notes payable to non-obligor subsidiaries	$	166,211	$	269,709	Notes payable to non-obligor subsidiaries	$	178,392	$	315,753
Long-term debt	Long-term debt	10,053,274		10,139,596		Long-term debt	9,709,004		9,501,842
Other noncurrent liabilities	Other noncurrent liabilities	1,253,153		1,209,598		Other noncurrent liabilities	1,246,097		1,190,177
Total noncurrent liabilities	Total noncurrent liabilities	$	11,472,638	$	11,618,903	Total noncurrent liabilities	$	11,133,493	$	11,007,772

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations

39-Week Period Ended Apr. ~~2, 2022~~1, 2023

(In thousands)

Sales

~~31,739,026~~35,614,819

Gross profit

~~5,677,552~~6,442,097

Operating income

~~1,588,760~~1,791,173

Interest expense from non-obligor subsidiaries

~~45,904~~13,991

Net earnings

~~824,163~~792,757

Critical Accounting Policies and Estimates

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

Company-Sponsored Pension Plans

Amounts related to defined benefit plans recognized in the financial statements are determined on an actuarial basis. Two of the more critical assumptions in the actuarial calculations are the discount rate for determining the current value of plan benefits and the expected rate of return on plan assets. Our U.S. Retirement Plan is largely frozen and is only open to a small number of employees. Our Supplemental Executive Retirement Plan is frozen and is not open to any employees. None of these plans have a significant sensitivity to changes in discount rates specific to our results of operations, but such changes could impact our balance sheet due to a change in our funded status. Due to the low level of active employees in our retirement plans, our assumption for the rate of increase in future compensation is not a critical assumption.

In the second quarter of fiscal 2023, The Sysco Corporation Retirement Plan (the Plan), executed a commitment agreement to purchase a nonparticipating single premium group annuity contract that transferred $695.0 million of the Plan’s defined benefit pension obligations related to certain pension benefits. As a result of the transaction, we recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023.

As a result of this transaction occurring, the expected long-term rate of return used in the calculation of on-going company-sponsored benefit costs for the U.S. Retirement Plan for the remainder of fiscal 2023 was reassessed and updated to 6.00% in the second quarter of fiscal 2023, as compared to the expected long-term rate of return of 4.50% that was determined for fiscal 2023 in our fiscal 2022 Form 10-K. This update is primarily due to increases in interest rates, given that 70% of the Plan’s assets are invested in fixed income. The expectations of future returns are derived from a mathematical asset model that incorporates assumptions as to the various asset class returns, reflecting a combination of historical performance analysis and the forward-looking views of the financial markets regarding the yield on bonds, historical returns of the major stock markets and returns on alternative investments. The rate of return assumption is reviewed annually and revised as deemed appropriate.

Pension accounting standards require the recognition of the funded status of our defined benefit plans in the statement of financial position, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of April 1, 2023 was a charge, net of tax, of $823.8 million, as compared to a charge, net of tax, of $1.0 billion as of July 2, 2022. The decrease in the amount reflected in accumulated other comprehensive loss is due to a portion of it being recognized in earnings as a result of the settlement that took place in the second quarter of fiscal 2023.

Forward-Looking Statements

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

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

•our expectations of an improving market over the course of fiscal 2023;

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

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

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

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

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

•our expectations regarding the impact of inflation on sales, gross margin rates and gross profit dollars;

•our expectations regarding gross margins in fiscal 2023;

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

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

•~~our targeted growth rates compared to the industry for fiscal 2022 and fiscal 2024;~~

•~~our~~ belief that our ~~Recipe for Growth strategy~~purpose will ~~enable~~allow us ~~to accelerate over the next three years to meet our growth target by the end of fiscal 2024;~~

•~~our expectations regarding our business recovery operating expenses in the fourth 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 that our Business and Industry and Travel and Hospitality segments will make progress in their recovery in future quarters, which will continue to our continued volume growth;

•~~our expectations regarding inflation;~~

•~~our plans regarding mergers and acquisitions and our growth strategy;~~

•~~our ability~~ to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth ~~transformation;~~

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

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

•our expectations regarding ~~labor costs;~~the use and investment of remaining cash generated from operations;

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

•the sufficiency of our ~~expectations regarding growth in customers and gains in market share;~~available liquidity to sustain our operations for multiple years;

•estimates regarding the outcome of legal proceedings;

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

•estimates regarding our capital expenditures and the sources of financing for our capital expenditures;

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

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

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

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

•our expectations regarding ~~the amount of the unrecognized~~our effective tax ~~benefit with respect to certain of the company’s unrecognized tax positions;~~rate in fiscal 2023;

•the sufficiency of our ~~expectations~~mechanisms for managing working capital and competitive pressures, and our beliefs regarding the ~~recognition~~impact 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 $538.6 million of debt in the next 12 months;

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

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

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

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

•

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•the potential impact of product liability claims;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

~~Fuel Price Risk~~

Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel fluctuates due to changes in production, seasonality, and other market factors that are generally outside of our control. Increased fuel costs may have a negative impact on our results of operations in three areas. First, the high cost of fuel can negatively impact consumer confidence and discretionary spending and, thus, reduce the frequency and amount spent by consumers for food-away-from-home purchases. Second, the high cost of fuel can increase the price we pay for product purchases, and we may not be able to pass these costs fully to our customers. Third, increased fuel costs impact the costs we incur to deliver product to our customers. Fuel costs related to outbound deliveries represented approximately 0.5% of sales during the first 39 weeks of fiscal 2022 and fiscal 2021.

Our activities to mitigate fuel costs include routing optimization with the goal of reducing miles driven, improving fleet utilization by adjusting idling time and maximum speeds and using fuel surcharges that primarily track with the change in market prices of fuel. We use diesel fuel swap contracts to fix the price of a portion of our projected monthly diesel fuel requirements, typically 80% to 90% of our projected bulk fuel purchases. As of April 2, 2022, we had diesel fuel swaps with a total notional amount of approximately 58 million gallons through July 2023. These swaps are expected to lock in the price of approximately 60% of our projected fuel purchase needs for the remainder of fiscal 2022. Additional swaps have been entered into for hedging activity in fiscal 2023. As of April 2, 2022, we had diesel fuel swaps with a total notional amount of approximately 46 million gallons specific to fiscal 2023, which target 80% of our bulk fuel forecasted purchases during this time period. Our remaining fuel purchase needs will occur at market rates, unless contracted for a fixed price or hedged at a later date.

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 April ~~2, 2022.~~1, 2023. 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 April ~~2, 2022,~~1, 2023, 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 April ~~2, 2022,~~1, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

6358

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Environmental Matters

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

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

Item 1A. Risk Factors

~~Except as provided below, there were no material changes from~~An investment in our securities involves various risks. You should consider carefully all of the risk factors ~~disclosed~~described in Item 1A of our fiscal ~~2021~~2022 Form ~~10-K.~~

~~Conditions beyond~~10-K and our ~~control can interrupt our supplies, increase our product costs and impair our ability to deliver products and services to our customers~~.

We obtain substantially all of our foodservice and related products from third-party suppliers. Although our purchasing volume can provide benefits when dealing with suppliers, suppliers may not be able to provide the foodservice products and supplies that we need in the quantities and at the prices that we request due to conditions outside of their control. We are also subject to delays caused by interruptions in production and increases in product costs based on conditions outside of our control. These conditions include shortages of qualified labor for our suppliers, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, short-term weather conditions or more prolonged climate change, crop and other agricultural conditions, water shortages, transportation interruptions (such as shortages of ocean cargo containers), unavailability of fuel or increases in fuel costs, product recalls, competitive demands, civil insurrection or social unrest, terrorist attacks or international hostilities and natural disasters, epidemics, pandemics (such as the COVID-19 pandemic) or other human or animal disease outbreaks or other catastrophic events (including, but not limited to, foodborne illnesses). Many of these conditions outside of our control could also impair our ability to provide our products and services to our customers or increase the cost of doing so. Our current operating environment is constantly shifting in response to COVID-19, placing significant pressure on the food-away-from-home supply chain. Customer demand is currently outpacing available supply in certain categories. Certain suppliers are struggling to meet demand for our orders. Future supply shortages could have an adverse effect on the company’s financial condition and results of operations.

In addition, the global economy has been negatively impacted by the military conflict between Russia and Ukraine. Meanwhile, governments in the U.S., United Kingdom, and European Union have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine to date, it is impossible to predict the extent to which our operations, or those of our suppliers and customers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets. Any or all of these factors could disrupt our business directly and could disrupt the business of our customers, which could have an adverse effect on our business and results of operations. Any such disruptions may also magnify the impact of other risks described in this Form 10-Q ~~and our fiscal 2021 Form 10-K.~~

Further, increased frequency or duration of extreme weather conditions, whether due to global climate change or otherwise, could also impair production capabilities, disrupt our supply chain or adversely affect demand for ~~our products. At any time, input costs could increase for a prolonged period for a large portion of~~ the products that we sell. Additionally, we procure products from suppliers outside of the U.S., and we are subject to the risks associated with political or financial instability, military conflict, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, including health and safety restrictions related to epidemics and pandemics (such as the COVID-19 pandemic), any or all of which could delay our receipt of products or increase our input costs.

Our inability to obtain adequate supplies of foodservice and related products and/or to timely provide our products and services and fulfill our other obligations to our customers, whether as a result of any of the foregoing factors or otherwise could mean that we could not fulfill our obligations to customers, could have an adverse effect on our business, results of operations and financial condition, as our customers may turn to other distributors.

In addition, as a foodservice distributor, it is necessary for us to maintain an inventory of products. Declines in product pricing levels between the time we purchase a product from our suppliers and the time we sell the product to our customers could reduce our margin on that inventory, adversely affecting our results of operations.

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)three months ended 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,2022, as well as ~~the extent of possible financial, trade, regulatory~~other information included and ~~legal implications of Brexit. Brexit also contributes to global political and economic uncertainty, which may cause, among other consequences, volatility~~incorporated by reference 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.this report.

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 third quarter of fiscal ~~2022:~~2023:


ISSUER PURCHASES OF EQUITY SECURITIES	ISSUER PURCHASES OF EQUITY SECURITIES						ISSUER PURCHASES OF EQUITY SECURITIES
Period	Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs	Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1	Month #1						Month #1
January 2 - January 29		1,297	$	77.07	99,960	—
January 1 - January 28							January 1 - January 28	—	$	—	—	—
Month #2	Month #2						Month #2
January 30 - February 26		4,932	83.80		413,303	—
January 29 - February 25							January 29 - February 25	540,019	77.11		540,019	—
Month #3	Month #3						Month #3
February 27 - April 2		—	—		—	—
February 26 - April 1							February 26 - April 1	912,993	74.93		912,993	—
Totals	Totals	6,229	$	82.40	513,263	—	Totals	1,453,012	$	75.74	1,453,012	—

~~(1)The total number of shares purchased includes 1,297, 4,932 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 no shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 or Month #3.
(2)			See the discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Equity Transactions” for additional information regarding Sysco’s share repurchase program.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

~~None~~On March 5, 2023, Sysco became aware of a cybersecurity event perpetrated by a threat actor believed to have begun on January 14, 2023. Immediately upon detection, Sysco initiated an investigation, with the assistance of cybersecurity and forensics professionals. The investigation determined that the threat actor extracted certain company data, including data relating to operation of the business, customers, employees and personal data. This data extraction has not impacted Sysco’s operational systems and related business functions, and its service to customers continued uninterrupted. Sysco also notified federal law enforcement. The investigation is ongoing, and Sysco has begun the process of preparing to comply with its obligations with respect to the extracted data.

Item 6. Exhibits

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

6660

EXHIBIT INDEX


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

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

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

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

10.1†#	—







		Letter Agreement, dated as of February 28, 2023, by and between Kenny Cheung and Sysco Corporation.

~~22.1#~~10.2†#	—	Letter Agreement, dated as of March 25, 2023, by and between Neil Russell and Sysco Corporation.

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

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

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

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

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

101.SCH#	—	Inline XBRL Taxonomy Extension Schema Document

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

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

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

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

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

___________

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

# Filed herewith

6761

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: May ~~10, 2022~~2, 2023	By:	/s/ KEVIN P. HOURICAN
		Kevin P. Hourican
		President and Chief Executive Officer

Date: May ~~10, 2022~~2, 2023	By:	/s/ ~~AARON E. ALT~~KENNY K. CHEUNG
		~~Aaron E. Alt~~Kenny K. Cheung
		Executive Vice President and
		Chief Financial Officer

Date: May ~~10, 2022~~2, 2023	By:	/s/ ~~ANITA A. ZIELINSKI~~SCOTT B. STONE
		~~Anita A. Zielinski~~Scott B. Stone
		~~Senior~~ Vice President ~~and~~of Financial Reporting
		and Interim Chief Accounting Officer



	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2728
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6257
Item 4.	Controls and Procedures	6357
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	6458
Item 1A.	Risk Factors	6458
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6558
Item 3.	Defaults Upon Senior Securities	6658
Item 4.	Mine Safety Disclosures	6658
Item 5.	Other Information	6659
Item 6.	Exhibits	6659

Signatures		6861


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


Impact of loss on sale of business	—		(22,834)		22,834		NM
Other income adjusted for Certain Items (Non-GAAP)	$	(27,705)	$	(36,974)	$	9,269	25.1	%



Net earnings (GAAP)	$	848,779	$	373,116	$	475,663	127.5	%
Impact of inventory valuation adjustment (2)	29,550		—		29,550		NM
Impact of restructuring and transformational project costs (3)	70,058		95,078		(25,020)		(26.3)
Impact of acquisition-related costs (4)	103,449		54,714		48,735		89.1
Impact of bad debt reserve adjustments (5)	(19,216)		(162,372)		143,156		88.2

Impact of loss on extinguishment of debt	115,603		—		115,603		NM
Impact of loss on sale of business	—		22,834		(22,834)		NM
Tax impact of inventory valuation adjustment (6)	(7,449)		—		(7,449)		NM
Tax impact of restructuring and transformational project costs (6)	(17,661)		(26,886)		9,225		34.3
Tax impact of acquisition-related costs (6)	(26,079)		(15,471)		(10,608)		(68.6)
Tax impact of bad debt reserves adjustments (6)	4,844		45,913		(41,069)		(89.4)
Tax impact of loss on extinguishment of debt (6)	(29,143)		—		(29,143)		NM
Tax impact of loss on sale of business (6)	—		(7,251)		7,251		NM
Impact of adjustments to uncertain tax positions	12,000		—		12,000		NM
Impact of foreign tax rate change	—		(5,548)		5,548		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	1,084,735	$	374,127	$	710,608	189.9	%



Diluted earnings per share (GAAP)	$	1.65	$	0.73	$	0.92	126.0	%
Impact of inventory valuation adjustment (2)	0.06		—		0.06		NM
Impact of restructuring and transformational project costs (3)	0.14		0.19		(0.05)		(26.3)
Impact of acquisition-related costs (4)	0.20		0.11		0.09		81.8
Impact of bad debt reserve adjustments (5)	(0.04)		(0.32)		0.28		87.5

Impact of loss on extinguishment of debt	0.22		—		0.22		NM
Impact of loss on sale of business	—		0.04		(0.04)		NM
Tax impact of inventory valuation adjustment (6)	(0.01)		—		(0.01)		NM
Tax impact of restructuring and transformational project costs (6)	(0.03)		(0.05)		0.02		40.0
Tax impact of acquisition-related costs (6)	(0.05)		(0.03)		(0.02)		(66.7)
Tax impact of bad debt reserves adjustments (6)	0.01		0.09		(0.08)		(88.9)
Tax impact of loss on extinguishment of debt (6)	(0.06)		—		(0.06)		NM
Tax impact of loss on sale of business (6)	—		(0.01)		0.01		NM
Impact of adjustments to uncertain tax positions	0.02		—		0.02		NM
Impact of foreign tax rate change	—		(0.01)		0.01		NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)	$	2.11	$	0.73	$	1.38	189.0	%


	39-Week Period Ended Apr. 2, 2022			39-Week Period Ended Mar. 30, 2019			Change in Dollars		% Change
Sales (GAAP)	$	49,678,888		$	44,639,060		$	5,039,828	11.3	%

Cost of sales (GAAP)	$	40,802,636		$	36,209,265		$	4,593,371	12.7	%
Impact of inventory valuation adjustment (1)	(29,550)			—			(29,550)		NM
Cost of sales adjusted for Certain Items (Non-GAAP)	$	40,773,086		$	36,209,265		$	4,563,821	12.6	%

Gross profit (GAAP)	$	8,876,252		$	8,429,795		$	446,457	5.3	%
Impact of inventory valuation adjustment (1)	29,550			—			29,550		NM
Comparable gross profit adjusted for Certain Items (Non-GAAP)	$	8,905,802		$	8,429,795		$	476,007	5.7	%

Gross margin (GAAP)	17.87		%	18.88		%			-101 bps
Impact of inventory valuation adjustment (1)	0.06			—					6 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP)	17.93		%	18.88		%			-95 bps

Operating expenses (GAAP)	$	7,303,932		$	6,820,175		$	483,757	7.1	%
Impact of restructuring and transformational project costs (2)	(70,058)			(247,547)			177,489		71.7
Impact of acquisition-related costs (3)	(103,449)			(58,042)			(45,407)		(78.2)
Impact of bad debt reserve adjustments (4)	19,216			—			19,216		NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP)	$	7,149,641		$	6,514,586		$	635,055	9.7	%

Operating income (GAAP)	$	1,572,320		$	1,609,620		$	(37,300)	(2.3)	%
Impact of inventory valuation adjustment (1)	29,550			—			29,550		NM
Impact of restructuring and transformational project costs (2)	70,058			247,547			(177,489)		(71.7)
Impact of acquisition-related costs (3)	103,449			58,042			45,407		78.2
Impact of bad debt reserve adjustments (4)	(19,216)			—			(19,216)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	1,756,161		$	1,915,209		$	(159,048)	(8.3)	%

Interest expense (GAAP)	$	495,131		$	270,643		$	224,488	82.9	%
Impact of loss on extinguishment of debt	(115,603)			—			(115,603)		NM
Interest expense adjusted for Certain Items (Non-GAAP)	$	379,528		$	270,643		$	108,885	40.2	%





Net earnings (GAAP)	$	848,779		$	1,138,505		$	(289,726)	(25.4)	%
Impact of inventory valuation adjustment (1)	29,550			—			29,550		NM
Impact of restructuring and transformational project costs (2)	70,058			247,547			(177,489)		(71.7)
Impact of acquisition-related costs (3)	103,449			58,042			45,407		78.2
Impact of bad debt reserve adjustments (4)	(19,216)			—			(19,216)		NM
Impact of loss on extinguishment of debt	115,603			—			115,603		NM
Tax impact of inventory valuation adjustment (5)	(7,449)			—			(7,449)		NM
Tax impact of restructuring and transformational project costs (5)	(17,661)			(64,831)			47,170		72.8
Tax impact of acquisition-related costs (5)	(26,079)			(15,201)			(10,878)		(71.6)
Tax impact of bad debt reserves adjustments (5)	4,844			—			4,844		NM
Tax impact of loss on extinguishment of debt (5)	(29,143)			—			(29,143)		NM
Impact of foreign tax credit benefit	—			(95,067)			95,067		NM