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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-6544
________________
syylogoa03.jpg
Sysco Corporation
(Exact name of registrant as specified in its charter)
Delaware 74-1648137
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

1390 Enclave Parkway, Houston, Texas                       77077-2099
(Address of principal executive offices)                     (Zip Code)

Registrant’s telephone number, including area code:
(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, $1.00 Par Value SYY New York Stock Exchange

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

497,829,748 shares of common stock were outstanding as of January 12, 2024.

1

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






PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
  Dec. 30, 2023 Jul. 1, 2023
  (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 962,165  $ 745,201 
Accounts receivable, less allowances of $79,179 and $45,599
 5,291,552  5,091,970 
Inventories 4,722,499  4,480,812 
Prepaid expenses and other current assets 327,569  284,566 
Income tax receivable 5,815  5,815 
Total current assets 11,309,600  10,608,364 
Plant and equipment at cost, less accumulated depreciation 5,157,150  4,915,049 
Other long-term assets
Goodwill 5,255,010  4,645,754 
Intangibles, less amortization 1,174,151  859,530 
Deferred income taxes 444,180  420,450 
Operating lease right-of-use assets, net 824,390  731,766 
Other assets 576,120  640,232 
Total other long-term assets 8,273,851  7,297,732 
Total assets $ 24,740,601  $ 22,821,145 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 5,737,726  $ 6,025,757 
Accrued expenses 2,266,062  2,251,181 
Accrued income taxes 46,772  101,894 
Current operating lease liabilities 119,397  99,051 
Current maturities of long-term debt 84,513  62,550 
Total current liabilities 8,254,470  8,540,433 
Long-term liabilities
Long-term debt 12,028,122  10,347,997 
Deferred income taxes 303,878  302,904 
Long-term operating lease liabilities 737,354  656,269 
Other long-term liabilities 979,376  931,708 
Total long-term liabilities 14,048,730  12,238,878 
Noncontrolling interest 33,367  33,212 
Shareholders’ equity
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
 765,175  765,175 
Paid-in capital 1,877,201  1,814,681 
Retained earnings 11,724,251  11,310,664 
Accumulated other comprehensive loss (1,189,753) (1,252,590)
Treasury stock at cost, 261,472,819 and 260,062,834 shares
 (10,772,840) (10,629,308)
Total shareholders’ equity 2,404,034  2,008,622 
Total liabilities and shareholders’ equity $ 24,740,601  $ 22,821,145 
Note: The July 1, 2023 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements
1

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In thousands, except for share and per share data)
  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
Sales $ 19,287,942  $ 18,593,953  $ 38,908,396  $ 37,720,783 
Cost of sales 15,774,309  15,244,337  31,746,991  30,882,312 
Gross profit 3,513,633  3,349,616  7,161,405  6,838,471 
Operating expenses 2,813,590  2,708,793  5,657,780  5,460,847 
Operating income 700,043  640,823  1,503,625  1,377,624 
Interest expense 149,680  132,042  284,014  256,192 
Other expense (income), net (1) (2)
 5,245  330,305  11,885  348,054 
Earnings before income taxes 545,118  178,476  1,207,726  773,378 
Income taxes 129,876  37,260  289,092  166,594 
Net earnings $ 415,242  $ 141,216  $ 918,634  $ 606,784 
  
Net earnings:    
Basic earnings per share $ 0.82  $ 0.28  $ 1.82  $ 1.20 
Diluted earnings per share 0.82  0.28  1.81  1.19 
Average shares outstanding 504,312,633  507,609,696  504,719,562  507,594,137 
Diluted shares outstanding 505,929,342  510,145,794  506,499,390  510,264,473 
(1)
Gains and losses related to the disposition of fixed assets have been recognized within operating expenses. Prior year amounts have been reclassified to conform to this presentation.
(2)
Sysco’s second quarter of fiscal 2023 included a charge of $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
2

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
Net earnings $ 415,242  $ 141,216  $ 918,634  $ 606,784 
Other comprehensive income (loss):
Foreign currency translation adjustment 163,084  241,814  54,890  9,632 
Items presented net of tax:
Amortization of cash flow hedges 2,170  2,170  4,340  4,325 
Change in net investment hedges (16,741) (33,749) (16,741) (10,240)
Change in cash flow hedges (20,225) 203  6,923  (26,187)
Changes in excluded components of fair value hedge 158  —  138  — 
Amortization of prior service cost 146  74  292  148 
Amortization of actuarial loss 5,011  5,628  9,993  12,519 
Pension settlement charge —  236,591  —  236,591 
Net actuarial (loss) gain arising in current year —  (67,388) 503  (67,388)
Change in marketable securities 3,444  1,194  2,499  (2,134)
Total other comprehensive income 137,047  386,537  62,837  157,266 
Comprehensive income $ 552,289  $ 527,753  $ 981,471  $ 764,050 

See Notes to Consolidated Financial Statements
3

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

Quarter to Date

Accumulated
Other Comprehensive
Loss
  Common Stock Paid-in
Capital		 Retained
Earnings		 Treasury Stock  
  Shares Amount Shares Amounts Totals
Balance as of September 30, 2023 765,174,900  $ 765,175  $ 1,838,986  $ 11,560,924  $ (1,326,800) 260,971,761  $ (10,712,486) $ 2,125,799 
Net earnings 415,242  415,242 
Foreign currency translation adjustment 163,084  163,084 
Amortization of cash flow hedges, net of tax 2,170  2,170 
Change in cash flow hedges, net of tax (20,225) (20,225)
Changes in excluded components of fair value hedge, net of tax 158  158 
Change in net investment hedges, net of tax (16,741) (16,741)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 5,157  5,157 
Change in marketable securities, net of tax 3,444  3,444 
Dividends declared ($0.50 per common share)
 (251,915) (251,915)
Treasury stock purchases 1,479,720  (99,973) (99,973)
Share-based compensation awards 38,215  (978,662) 39,619  77,834 
Balance as of December 30, 2023 765,174,900  $ 765,175  $ 1,877,201  $ 11,724,251  $ (1,189,753) 261,472,819  $ (10,772,840) $ 2,404,034 
Accumulated
Other Comprehensive
Loss
  Common Stock Paid-in
Capital		 Retained
Earnings		 Treasury Stock  
  Shares Amount Shares Amounts Totals
Balance as of October 1, 2022 765,174,900  $ 765,175  $ 1,754,409  $ 10,757,136  $ (1,711,325) 258,414,989  $ (10,450,054) $ 1,115,341 
Net earnings 141,216  141,216 
Foreign currency translation adjustment 241,814  241,814 
Amortization of cash flow hedges, net of tax 2,170  2,170 
Change in cash flow hedges, net of tax 203  203 
Change in net investment hedges, net of tax (33,749) (33,749)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 5,702  5,702 
Pension settlement charge, net of tax 236,591  236,591 
Net actuarial loss arising in current year, net of tax (67,388) (67,388)
Change in marketable securities, net of tax 1,194  1,194 
Dividends declared ($0.49 per common share) (249,014) (249,014)
Increase in ownership interest in subsidiaries (2,077) (2,077)
Share-based compensation awards 21,809  (568,017) 22,777  44,586 
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 

See Notes to Consolidated Financial Statements
4

Year to Date
Accumulated
Other Comprehensive
Loss
  Common Stock Paid-in
Capital		 Retained
Earnings		 Treasury Stock  
  Shares Amount Shares Amounts Totals
Balance as of July 1, 2023 765,174,900  $ 765,175  $ 1,814,681  $ 11,310,664  $ (1,252,590) 260,062,834  $ (10,629,308) $ 2,008,622 
Net earnings       918,634        918,634 
Foreign currency translation adjustment         54,890      54,890 
Amortization of cash flow hedges, net of tax         4,340      4,340 
Change in cash flow hedges, net of tax 6,923  6,923 
Change in net investment hedges, net of tax (16,741) (16,741)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax         10,285      10,285 
Net actuarial gain arising in current year, net of tax 503  503 
Change in marketable securities, net of tax 2,499  2,499 
Changes in excluded components of fair value hedge, net of tax 138  138 
Dividends declared ($1.00 per common share)
       (505,047)       (505,047)
Treasury stock purchases 2,862,667  (199,947) (199,947)
Share-based compensation awards     62,520      (1,452,682) 56,415  118,935 
Balance as of December 30, 2023 765,174,900  $ 765,175  $ 1,877,201  $ 11,724,251  $ (1,189,753) 261,472,819  $ (10,772,840) $ 2,404,034 
Accumulated
Other Comprehensive
Loss
  Common Stock Paid-in
Capital		 Retained
Earnings		 Treasury Stock  
  Shares Amount Shares Amounts Totals
Balance as of July 2, 2022 765,174,900  $ 765,175  $ 1,766,305  $ 10,539,722  $ (1,482,054) 256,531,543  $ (10,206,888) $ 1,382,260 
Net earnings       606,784        606,784 
Foreign currency translation adjustment         9,632      9,632 
Amortization of cash flow hedges, net of tax         4,325      4,325 
Change in cash flow hedges, net of tax         (26,187)     (26,187)
Change in net investment hedges, net of tax (10,240) (10,240)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax         12,667      12,667 
Pension settlement charge, net of tax 236,591  236,591 
Net actuarial loss arising in current year, net of tax (67,388) (67,388)
Change in marketable securities, net of tax (2,134) (2,134)
Dividends declared ($0.98 per common share)
       (497,168)       (497,168)
Treasury stock purchases 3,099,268  (267,727) (267,727)
Increase in ownership interest in subsidiaries (2,077) (2,077)
Share-based compensation awards     9,913      (1,783,839) 47,338  57,251 
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 

See Notes to Consolidated Financial Statements
5

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In thousands)
  26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022
Cash flows from operating activities:
Net earnings $ 918,634  $ 606,784 
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge —  315,354 
Share-based compensation expense 52,821  52,679 
Depreciation and amortization 425,465  378,949 
Operating lease asset amortization 59,127  55,884 
Amortization of debt issuance and other debt-related costs 9,117  10,315 
Deferred income taxes (28,689) (123,187)
Provision for losses on receivables 29,784  9,732 
Other non-cash items (3,782) 11,525 
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables (25,431) (87,190)
Increase in inventories (98,047) (222,650)
Decrease (increase) in prepaid expenses and other current assets 3,362  (8,915)
Decrease in accounts payable (404,411) (390,124)
Increase (decrease) in accrued expenses 17,033  (62,779)
Decrease in operating lease liabilities (64,112) (57,234)
(Decrease) increase in accrued income taxes (55,123) 3,108 
Decrease in other assets 21,942  22,156 
Decrease in other long-term liabilities (1,793) (10,941)
Net cash provided by operating activities 855,897  503,466 
Cash flows from investing activities:
Additions to plant and equipment (346,797) (309,664)
Proceeds from sales of plant and equipment 18,347  25,493 
Acquisition of businesses, net of cash acquired (1,174,608) (37,699)
Purchase of marketable securities (1,878) (14,019)
Proceeds from sales of marketable securities —  11,641 
Other investing activities —  4,840 
Net cash used for investing activities (1,504,936) (319,408)
Cash flows from financing activities:
Bank and commercial paper borrowings, net 500,000  155,000 
Other debt borrowings including senior notes 1,132,475  140,024 
Other debt repayments including senior notes (187,720) (57,270)
Debt issuance costs (13,035) — 
Proceeds from stock option exercises 57,347  47,339 
Stock repurchases (199,947) (267,727)
Dividends paid (505,588) (498,323)
Other financing activities (5,775) (46,517)
Net cash provided by (used for) financing activities 777,757  (527,474)
Effect of exchange rates on cash, cash equivalents and restricted cash 905  (2,314)
Net increase (decrease) in cash, cash equivalents and restricted cash 129,623  (345,730)
Cash, cash equivalents and restricted cash at beginning of period 966,033  931,376 
Cash, cash equivalents and restricted cash at end of period $ 1,095,656  $ 585,646 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 266,002  $ 244,530 
Income taxes, net of refunds 371,855  289,413 

See Notes to Consolidated Financial Statements
6

Sysco Corporation and its Consolidated Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or the “company” as used in this Form 10-Q refer to Sysco Corporation together with its consolidated subsidiaries and divisions.

1.  BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without an audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, 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, 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 1, 2023. 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 our 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:
Dec. 30, 2023 Dec. 31, 2022
(In thousands)
Cash and cash equivalents $ 962,165  $ 500,340 
Restricted cash (1)
 133,491  85,306 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows $ 1,095,656  $ 585,646 
(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 our non-cash investing and financing activities:
Dec. 30, 2023 Dec. 31, 2022
(In thousands)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs $ 158,454  $ 52,360 
Assets obtained in exchange for finance lease obligations 52,367  81,799 

7

2. NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Guidance

Liabilities – Supplier Financing Programs

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

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which is the first quarter of fiscal 2024 for Sysco, except for the 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 requires retrospective application to all periods in which a balance sheet is presented, except for the roll forward requirement, which will be applied prospectively.

Sysco completed its assessment of the disclosures required under ASU 2022-04 and adopted the standard, with the exception of the roll forward requirement, in the first quarter of fiscal 2024 on a retrospective basis. The company has agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been confirmed as valid require payment by Sysco upon the due date of the obligation.

The company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:
Dec. 30, 2023 Jul. 1, 2023 Dec. 31, 2022 Jul. 2, 2022
(In thousands)
Financed payment obligations $ 83,528  $ 99,606  $ 81,018  $ 90,267 


Recent Accounting Guidance Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, which is fiscal 2025 for Sysco, and interim periods for our fiscal years beginning after December 15, 2024, which is the first quarter of fiscal 2026 for Sysco, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-07 on our disclosures.

Income Taxes

In December 2023, the FASB issued 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, which is fiscal 2026 for Sysco, on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.

8

3. REVENUE

We recognize revenues when our 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 $5.0 billion and $4.7 billion as of December 30, 2023 and July 1, 2023, 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 on a straight-line basis. As of December 30, 2023, our contract assets were not significant. We have 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 Dec. 30, 2023
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Canned and dry products $ 2,601,298  $ 801,170  $ 228,632  $ —  $ 3,631,100 
Fresh and frozen meats 2,574,453  503,387  504,102  —  3,581,942 
Frozen fruits, vegetables, bakery and other 1,996,667  682,027  315,778  —  2,994,472 
Dairy products 1,448,604  388,401  141,137  —  1,978,142 
Poultry 1,340,095  285,312  261,300  —  1,886,707 
Fresh produce 1,308,581  265,417  65,891  —  1,639,889 
Paper and disposables 971,489  129,881  188,075  14,099  1,303,544 
Seafood 507,958  110,121  44,056  —  662,135 
Beverage products 335,748  164,368  139,137  21,330  660,583 
Other (1)
 409,550  266,374  25,607  247,897  949,428 
Total Sales $ 13,494,443  $ 3,596,458  $ 1,913,715  $ 283,326  $ 19,287,942 
(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.

9

13-Week Period Ended Dec. 31, 2022
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Canned and dry products $ 2,502,665  $ 700,622  $ 236,726  $ —  $ 3,440,013 
Fresh and frozen meats 2,390,929  445,018  452,370  —  3,288,317 
Frozen fruits, vegetables, bakery and other 1,851,344  596,100  338,379  —  2,785,823 
Dairy products 1,498,039  358,639  160,753  —  2,017,431 
Poultry 1,329,071  285,343  265,269  —  1,879,683 
Fresh produce 1,385,083  257,641  66,099  —  1,708,823 
Paper and disposables 976,231  134,507  210,691  13,484  1,334,913 
Seafood 547,760  109,290  37,810  —  694,860 
Beverage products 303,789  133,515  136,668  21,318  595,290 
Other (1)
 292,143  261,736  28,771  266,150  848,800 
Total Sales $ 13,077,054  $ 3,282,411  $ 1,933,536  $ 300,952  $ 18,593,953 
(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.


26-Week Period Ended Dec. 30, 2023
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Canned and dry products $ 5,285,985  $ 1,632,713  $ 461,617  $ —  $ 7,380,315 
Fresh and frozen meats 5,143,634  1,023,128  984,691  —  7,151,453 
Frozen fruits, vegetables, bakery and other 4,024,601  1,355,575  621,077  —  6,001,253 
Dairy products 2,902,553  802,572  282,568  —  3,987,693 
Poultry 2,701,790  576,635  535,008  —  3,813,433 
Fresh produce 2,669,938  540,135  136,209  —  3,346,282 
Paper and disposables 1,965,326  304,206  374,618  30,380  2,674,530 
Seafood 1,085,593  235,145  87,572  —  1,408,310 
Beverage products 698,413  334,921  285,359  45,196  1,363,889 
Other (1)
 740,409  474,638  51,010  515,181  1,781,238 
Total Sales $ 27,218,242  $ 7,279,668  $ 3,819,729  $ 590,757  $ 38,908,396 
(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.

10

26-Week Period Ended Dec. 31, 2022
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Canned and dry products $ 5,079,917  $ 1,391,996  $ 472,894  $ 1,931  $ 6,946,738 
Fresh and frozen meats 4,856,379  898,382  915,810  —  6,670,571 
Frozen fruits, vegetables, bakery and other 3,694,811  1,176,132  647,576  149  5,518,668 
Dairy products 3,023,521  725,486  325,401  —  4,074,408 
Poultry 2,903,321  578,193  542,733  —  4,024,247 
Fresh produce 2,723,003  512,378  131,343  —  3,366,724 
Paper and disposables 1,999,135  278,574  420,049  28,541  2,726,299 
Seafood 1,186,165  230,491  77,934  —  1,494,590 
Beverage products 619,407  269,991  274,835  45,974  1,210,207 
Other (1)
 593,877  504,523  58,418  531,513  1,688,331 
Total Sales $ 26,679,536  $ 6,566,146  $ 3,866,993  $ 608,108  $ 37,720,783 
(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.

11

4.  ACQUISITIONS

During the first 26 weeks of fiscal 2024, we paid cash of $1.2 billion for several acquisitions.

Edward Don & Company

On November 27, 2023, Sysco consummated its acquisition of Edward Don & Company (Edward Don or the acquiree) through a merger between Edward Don and a wholly owned subsidiary of Sysco Corporation, in which Sysco acquired 100% of the members’ equity of the acquiree for cash consideration of $969.4 million. Edward Don is a leading distributor of foodservice equipment, supplies and disposables and has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies across the Sysco network. The acquisition allows Sysco to add strategic capabilities and diversified offerings to complement its existing business and create a specialty equipment and supplies platform that will provide better selection and service to customers.

The assets, liabilities and operating results of Edward Don are reflected in our consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition date. The purchase price was allocated based on the company’s preliminary estimated fair value of the assets acquired and liabilities assumed, and the excess was assigned to goodwill and intangibles. Goodwill of $447.6 million is assigned to the U.S. Foodservice Operations reportable segment and represents synergies and disposable, supply and foodservice equipment capabilities and offerings expected to benefit Sysco’s existing business.

In certain circumstances, purchase price allocations may be based upon preliminary estimates and assumptions. Accordingly, allocations are subject to revision until Sysco receives final information and completes its analysis during the measurement period. This includes finalizing the valuation of acquired tangible and intangible assets and related tax attributes.

5.  FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest in only high-quality investments. The fair values of our 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 our marketable securities is 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 our derivative instruments is 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 values of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 7, “Derivative Financial Instruments.”

12

The following tables present the company’s assets measured at fair value on a recurring basis as of December 30, 2023 and July 1, 2023:
  Assets Measured at Fair Value as of Dec. 30, 2023
  Level 1 Level 2 Level 3 Total
  (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents $ 573,597  $ 3  $ —  $ 573,600 
Other assets (1)
 133,491  —  —  133,491 
Total assets at fair value $ 707,088  $ 3  $ —  $ 707,091 
(1)
 Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

  Assets Measured at Fair Value as of Jul. 1, 2023
  Level 1 Level 2 Level 3 Total
  (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents $ 308,952  $ 10,021  $ —  $ 318,973 
Other assets (1)
 220,831  —  —  220,831 
Total assets at fair value $ 529,783  $ 10,021  $ —  $ 539,804 
(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 our 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 billion as of December 30, 2023 and $9.8 billion as of July 1, 2023, while the carrying value was $12.1 billion as of December 30, 2023 and $10.4 billion as of July 1, 2023.

13

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. We include fixed income securities maturing in less than 12 months within prepaid expenses and other current assets. Fixed income securities maturing in more than 12 months are included within other assets in the accompanying consolidated balance sheets. We record 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 26 weeks of fiscal 2024.

The following table presents our available-for-sale marketable securities as of December 30, 2023 and July 1, 2023:
Dec. 30, 2023
Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-Term Marketable Securities Long-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds $ 100,865  $ 523  $ (4,585) $ 96,803  $ 23,032  $ 73,771 
Government bonds 29,628  —  (1,368) 28,260  —  28,260 
Total marketable securities $ 130,493  $ 523  $ (5,953) $ 125,063  $ 23,032  $ 102,031 
Jul. 1, 2023
Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-Term Marketable Securities Long-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds $ 99,501  $ 96  $ (6,777) $ 92,820  $ 12,767  $ 80,053 
Government bonds 29,777  —  (1,913) 27,864  —  27,864 
Total marketable securities $ 129,278  $ 96  $ (8,690) $ 120,684  $ 12,767  $ 107,917 

As of December 30, 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.

Dec. 30, 2023
(In thousands)
Due in one year or less $ 23,032 
Due after one year through five years 62,334 
Due after five years 39,697 
Total $ 125,063 

There were no significant realized gains or losses in marketable securities in the first 26 weeks of fiscal 2024.

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.

14

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 2024, we entered into forward swap agreements to trade the fixed interest rate on $500 million of 6.00% senior notes with variable rates, starting in November 2024. The interest rate swap agreements are designated as fair value hedges and valued based on an income approach using observable market inputs including Secured Overnight Financing Rate (SOFR) yield curves. The company has incorporated credit valuation adjustments to appropriately reflect the risk of default in the fair value measurements. Changes in the fair value of the hedge and the carrying value of the hedged item attributable to changes in the benchmark interest rates being hedged are recognized in interest expense.

Hedging of foreign currency risk

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.

Sysco has cross-currency swaps designated as fair value hedges for the purpose of hedging foreign currency risk associated with changes in spot rates on foreign denominated intercompany loans. Sysco has elected to exclude the changes in fair value of the forward points from the assessments of hedge effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of the excluded components. Unrealized gains or losses on components excluded from hedge effectiveness are recorded as a component of accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument. Except for the excluded components, changes in the fair value of the hedge are offset against changes in the fair value of the hedged assets or liabilities through earnings.

In the second quarter of fiscal 2024, Sysco entered into a cross-currency swap to hedge the foreign currency exposure of our net investment in certain foreign operations. This cross-currency swap is designated as a net investment hedge with gains and losses recognized within accumulated other comprehensive income (loss).

Cross-currency swaps are valued based on an income approach using observable market inputs including foreign currency rates and interest rates in both countries subject to the swap.

Hedging of fuel price risk

Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel fuel on anticipated future purchases. These swaps have been designated as cash flow hedges.

15

None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of December 30, 2023 are presented below:
Maturity Date of the Hedging Instrument Currency / Unit of Measure Notional Value
(In millions)
Hedging of interest rate risk
January 2034 U.S. Dollar 500
Hedging of foreign currency risk
Various (January 2024) Swedish Krona 101
Various (January 2024 to April 2024) British Pound Sterling 17
May 2024 Mexican Peso 439
April 2025 Canadian Dollar 180
January 2029 Euro 470
Hedging of fuel risk
Various (January 2024 to March 2026) Gallons 57

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 30, 2023 and July 1, 2023 are as follows:
  Derivative Fair Value
  Balance Sheet location Dec. 30, 2023 Jul. 1, 2023
(In thousands)
Fair Value Hedges:
Cross currency swaps Other assets $ 1,198  $ — 
Interest rate swaps Other assets 24,557  — 
Cross currency swaps Other current liabilities 1,497  1,262 
Cash Flow Hedges:
Fuel swaps Other current assets $ 168  $ 102 
Foreign currency forwards Other current assets 74  624 
Fuel swaps Other assets 136  40 
Fuel swaps Other current liabilities 10,372  17,932 
Foreign currency forwards Other current liabilities 642  404 
Fuel swaps Other long-term liabilities 2,794  5,637 
Net Investment Hedges:
Cross currency swaps Other current assets $ 3,377  $ — 
Cross currency swaps Other long-term liabilities 25,738  — 

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:
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13-Week Period Ended 26-Week Period Ended
Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 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 $ 154,925  $ 132,042  $ 295,899  $ 256,192 
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items $ (30,298) $ (2,685) $ (30,298) $ (309)
Derivatives designated as hedging instruments 22,066  742  22,066  (5,501)
Cross currency swaps:
Hedged items $ (2,711) $ —  $ 285  $ — 
Derivatives designated as hedging instruments 2,711  —  (285) — 

The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above consist of the following components for each of the periods presented:
13-Week Period Ended 26-Week Period Ended
Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
(In thousands)
Interest expense $ (3,250) $ (1,940) $ (3,250) $ (3,879)
Decrease in fair value of debt 27,048  745  27,048  (3,570)
Foreign currency gain (loss) (2,711) —  285  — 
Hedged items $ (33,009) $ (2,685) $ (30,013) $ (309)

The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 13-week periods ended December 30, 2023 and December 31, 2022, presented on a pretax basis, are as follows:
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13-Week Period Ended Dec. 30, 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 $ (24,524) Operating expense $ 669 
Foreign currency contracts (507) Cost of sales / Other income — 
Total $ (25,031) $ 669 
Derivatives in net investment hedging relationships:
Cross currency contracts $ (22,361) N/A $ — 
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge $ 210  Other expense (income) $ — 
13-Week Period Ended Dec. 31, 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 $ 1,140  Operating expense $ 12,377 
Foreign currency contracts 49  Cost of sales / Other income — 
Total $ 1,189  $ 12,377 
Derivatives in net investment hedging relationships:
Foreign denominated debt $ (44,999) N/A $ — 

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The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 26-week periods ended December 30, 2023 and December 31, 2022, presented on a pretax basis, are as follows:

26-Week Period Ended Dec. 30, 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 $ 9,975  Operating expense $ 3,003 
Foreign currency contracts (791) Cost of sales / Other income — 
Total $ 9,184  $ 3,003 
Derivatives in net investment hedging relationships:
Cross currency contracts $ (22,361) N/A $ — 
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge $ 184  Other expense (income) $ — 
26-Week Period Ended Dec. 31, 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 $ (35,155) Operating expense $ 25,362 
Foreign currency contracts 335  Cost of sales / Other income — 
Total $ (34,820) $ 25,362 
Derivatives in net investment hedging relationships:
Foreign denominated debt $ (13,653) N/A $ — 
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The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 30, 2023 are as follows:
Dec. 30, 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:
Long-term debt $ (518,622) $ (27,048)

The carrying amount of hedged liabilities in the consolidated balance sheet as of July 1, 2023 is zero.

8. DEBT

Sysco has a long-term revolving credit facility that includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to increase such commitments to $4.0 billion. As of December 30, 2023, there were no borrowings outstanding under this facility.

We have a U.S commercial paper program allowing the company to issue short-term unsecured notes in 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 December 30, 2023, there were $500.0 million in commercial paper issuances outstanding under this program.

On November 17, 2023, Sysco issued senior notes (the Notes) totaling $1.0 billion. Details of the Notes are as follows:

Maturity Date Par Value
(in millions)		 Coupon Rate Pricing
(percentage of par)
January 17, 2029 (the 2029 Notes) $ 500  5.75  % 99.784  %
January 17, 2034 (the 2034 Notes) 500  6.00  99.037 

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness. Interest on the Notes will be paid semi-annually in arrears on July 17 and January 17, beginning July 17, 2024. At Sysco’s option, any or all of the Notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the 2029 Notes before the date that is one month prior to the maturity date, or (ii) the 2034 Notes before the date that is three 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 plus accrued and unpaid interest 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.

The total carrying value of our debt was $12.1 billion as of December 30, 2023 and $10.4 billion as of July 1, 2023. The increase in the carrying value of our debt from the prior year was due to the issuance of senior notes, new borrowings under our commercial paper program and new financing leases in support of equipment.

On October 17, 2023, we entered into a new commercial paper dealer agreement in Europe for a commercial paper program with borrowings not to exceed €250 million. As of December 30, 2023, there were no commercial paper issuances outstanding under this program.

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

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Sysco has company-sponsored defined benefit and defined contribution retirement plans for its employees. We also provide 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, we 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 us to remeasure the benefit obligations and plan assets of the U.S. Retirement Plan. The remeasurement reflected 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.

Components of Net Benefit Costs

The components of net company-sponsored benefit cost for the U.S. Retirement Plan are as follows:

  13-Week Period 26-Week Period
   Ended (1)
   Ended (1)
  Dec. 31, 2022 Dec. 31, 2022
(In thousands) (In thousands)
Service cost $ 2,034  $ 4,357 
Interest cost 38,103  80,604 
Expected return on plan assets (36,957) (76,977)
Amortization of prior service cost 98  197 
Amortization of actuarial loss 7,661  16,609 
Settlement loss recognized 315,354  315,354 
Net pension costs $ 326,293  $ 340,144 
(1)
Net pension costs were not material for the second quarter and first 26 weeks of fiscal 2024.

The components of net company-sponsored benefit costs other than the service cost component are reported in other expense (income), net within the consolidated results of operations.
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10.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
  (In thousands, except for share
and per share data)		 (In thousands, except for share
and per share data)
Numerator:    
Net earnings $ 415,242  $ 141,216  $ 918,634  $ 606,784 
Denominator:
Weighted-average basic shares outstanding 504,312,633  507,609,696  504,719,562  507,594,137 
Dilutive effect of share-based awards 1,616,709  2,536,098  1,779,828  2,670,336 
Weighted-average diluted shares outstanding 505,929,342  510,145,794  506,499,390  510,264,473 
Basic earnings per share $ 0.82  $ 0.28  $ 1.82  $ 1.20 
Diluted earnings per share $ 0.82  $ 0.28  $ 1.81  $ 1.19 

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 6,451,000 and 1,848,000 for the second quarter of fiscal 2024 and 2023, respectively, and approximately 6,219,000 and 1,620,000 for the first 26 weeks of fiscal 2024 and 2023, respectively.

Accelerated Share Repurchase Program

On December 15, 2023, we entered into a Master Confirmation and Supplemental Confirmation (collectively, the ASR Agreement) with Goldman, Sachs & Co. (Goldman) relating to an accelerated share repurchase program (the ASR Program). Pursuant to the terms of the ASR Agreement, effective January 3, 2024, we agreed to repurchase $500 million of our common stock from Goldman under the share repurchase program authorized by our Board of Directors in May 2021.

In connection with the ASR Program, we paid $500 million to Goldman on January 11, 2024, in exchange for 6,026,110 shares of Sysco’s outstanding common stock, which represents a substantial majority of the shares owed to Sysco by Goldman; however, the number of shares ultimately delivered to us by Goldman is subject to adjustment based on the volume-weighted average share price of Sysco’s common stock during the term of the ASR Agreement, less an agreed discount. We expect all purchases under the ASR Program to be completed by the end of March 2024, although the exact date of completion will depend on whether or when Goldman exercises an acceleration option that it has under the ASR Agreement. At settlement, we may be entitled to receive additional shares of common stock from Goldman or, under certain circumstances, may be required to issue additional shares or make a payment to Goldman at our option. In the third quarter of fiscal 2024, the shares received will be recognized in treasury stock and reduce the number of weighted average shares outstanding. The incremental consideration to be received or issued upon settlement of the ASR Program was evaluated as an unsettled forward contract indexed to our common stock and will be classified within stockholders’ equity in the third quarter of fiscal 2024, if the ASR Program has not concluded by the end of the third quarter of fiscal 2024.

The ASR Agreement contains the principal terms and provisions governing the ASR Program, including, but not limited to, the mechanism used to determine the number of shares that will be delivered, the required timing of delivery of the shares, the specific circumstances under which Goldman may delay any date of valuation or settlement under the ASR Program (such as upon the occurrence of certain market disruptions), the specific circumstances under which Goldman is permitted to make adjustments to the terms of the ASR Program or to terminate the ASR Program (such as upon the announcement of certain fundamental transactions affecting Sysco), and various acknowledgments, representations and warranties made by Sysco and Goldman to one another.

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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 $552.3 million and $527.8 million for the second quarter of fiscal 2024 and fiscal 2023, respectively. Comprehensive income was $981.5 million and $764.1 million for the first 26 weeks of fiscal 2024 and fiscal 2023, 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 Dec. 30, 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 $ 195  $ 49  $ 146 
Amortization of actuarial loss, net Other expense, net 6,676  1,665  5,011 
Total reclassification adjustments 6,871  1,714  5,157 
Foreign currency translation:
Foreign currency translation adjustment N/A 163,084  —  163,084 
Marketable securities:
   Change in marketable securities (1)
N/A 4,359  915  3,444 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
  hedge		 Other expense, net 210  52  158 
Change in cash flow hedges
Operating expenses (2)
(25,031) (4,806) (20,225)
Change in net investment hedges N/A (22,361) (5,620) (16,741)
Total other comprehensive (loss) before reclassification adjustments (47,182) (10,374) (36,808)
Reclassification adjustments:        
Amortization of cash flow hedges Interest expense 2,893  723  2,170 
Total other comprehensive income (loss) $ 130,025  $ (7,022) $ 137,047 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2024.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.





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    13-Week Period Ended Dec. 31, 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:        
Other comprehensive income before reclassification adjustments:
Net actuarial gain, 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 99  25  74 
Amortization of actuarial loss, net Other expense, net 7,500  1,872  5,628 
Total reclassification adjustments 7,599  1,897  5,702 
Foreign currency translation:
Foreign currency translation adjustment N/A 241,814  —  241,814 
Marketable securities:
Change in marketable securities (1)
 N/A 1,511  317  1,194 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
 1,189  986  203 
Change in net investment hedges N/A (44,999) (11,250) (33,749)
Total other comprehensive (loss) before reclassification adjustments (43,810) (10,264) (33,546)
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2,893  723  2,170 
Total other comprehensive income $ 435,611  $ 49,074  $ 386,537 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2023.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

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    26-Week Period Ended Dec. 30, 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 $ 672  $ 169  $ 503 
Reclassification adjustments:
Amortization of prior service cost Other expense, net 390  98  292 
Amortization of actuarial loss, net Other expense, net 13,317  3,324  9,993 
Total reclassification adjustments 13,707  3,422  10,285 
Foreign currency translation:
Foreign currency translation adjustment N/A 54,890  —  54,890 
Marketable securities:
Change in marketable securities (1)
 N/A 3,163  664  2,499 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
  hedge		 Other expense, net 184  46  138 
Change in cash flow hedges
Operating expenses (2)
 9,184  2,261  6,923 
Change in net investment hedges N/A (22,361) (5,620) (16,741)
Total other comprehensive (loss) before reclassification adjustments (12,993) (3,313) (9,680)
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 5,786  1,446  4,340 
Total other comprehensive income $ 65,225  $ 2,388  $ 62,837 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first 26 weeks of fiscal 2024.
(2)
 Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

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    26-Week Period Ended Dec. 31, 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:
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 198  50  148 
Amortization of actuarial loss, net Other expense, net 16,686  4,167  12,519 
Total reclassification adjustments 16,884  4,217  12,667 
Foreign currency translation:
Foreign currency translation adjustment N/A 9,632  —  9,632 
Marketable securities:
Change in marketable securities (1)
 N/A (2,701) (567) (2,134)
Hedging instruments:
Other comprehensive (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
 (34,820) (8,633) (26,187)
   Change in net investment hedges N/A (13,653) (3,413) (10,240)
Total other comprehensive (loss) before reclassification adjustments (48,473) (12,046) (36,427)
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 5,767  1,442  4,325 
Total other comprehensive income $ 206,713  $ 49,447  $ 157,266 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first 26 weeks of fiscal 2023.
(2)
 Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
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The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:
  26-Week Period Ended Dec. 30, 2023
  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 Jul. 1, 2023 $ (839,541) $ (374,290) $ (31,966) $ (6,793) $ (1,252,590)
Net actuarial loss arising in the current year 503  —  —  —  503 
Equity adjustment from foreign currency translation —  54,890  —  —  54,890 
Amortization of cash flow hedges —  —  4,340  —  4,340 
Change in net investment hedges (16,741) (16,741)
Change in excluded component of fair value hedge —  —  138  —  138 
Change in cash flow hedge —  —  6,923  —  6,923 
Amortization of unrecognized prior service cost 292  —  —  —  292 
Amortization of unrecognized net actuarial losses 9,993  —  —  —  9,993 
Change in marketable securities —  —  —  2,499  2,499 
Balance as of Dec. 30, 2023 $ (828,753) $ (319,400) $ (37,306) $ (4,294) $ (1,189,753)

  26-Week Period Ended Dec. 31, 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. 2, 2022 $ (1,011,335) $ (501,517) $ 35,770  $ (4,972) $ (1,482,054)
Net actuarial loss arising in the current year (67,388) —  —  —  (67,388)
Settlements 236,591  —  —  —  236,591 
Equity adjustment from foreign currency translation —  9,632  —  —  9,632 
Amortization of cash flow hedges —  —  4,325  —  4,325 
Change in net investment hedges —  —  (10,240) —  (10,240)
Change in cash flow hedges —  —  (26,187) —  (26,187)
Amortization of unrecognized prior service cost 148  —  —  —  148 
Amortization of unrecognized net actuarial losses 12,519  —  —  —  12,519 
Change in marketable securities —  —  —  (2,134) (2,134)
Balance as of Dec. 31, 2022 $ (829,465) $ (491,885) $ 3,668  $ (7,106) $ (1,324,788)

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).

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Stock Incentive Plans

In the first 26 weeks of fiscal 2024, options to purchase 808,279 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 26 weeks of fiscal 2024 was $19.27.

In the first 26 weeks of fiscal 2024, employees were granted 521,082 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 26 weeks of fiscal 2024 was $73.58. The PSUs will convert into shares of Sysco’s 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 26 weeks of fiscal 2024, employees were granted 366,883 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 26 weeks of fiscal 2024 was $71.93.

Employee Stock Purchase Plan

Plan participants purchased 594,056 shares of common stock under the ESPP during the first 26 weeks of fiscal 2024. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $10.33 during the first 26 weeks of fiscal 2024. 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 $52.8 million and $52.7 million for the first 26 weeks of fiscal 2024 and fiscal 2023, respectively.

As of December 30, 2023, there was $143.6 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 1.95 years.

13.  INCOME TAXES

Effective Tax Rate

The effective tax rates for the second quarter and first 26 weeks of fiscal 2024 were 23.83% and 23.94%, respectively. These rates are higher than the company’s 21.00% statutory tax rate primarily because of state income taxes. The rates are partially offset by a foreign income tax benefit and the equity-based compensation excess tax benefits.

The effective tax rates for the second quarter and first 26 weeks of fiscal 2023 were 20.88% and 21.54%, respectively. The second quarter was favorably impacted by the benefit of the pension buyout of $4.9 million and excess benefits of equity-based compensation, which totaled $1.4 million. The first 26 weeks of fiscal 2023 were favorably impacted by excess tax benefits of equity-based compensation, which totaled $10.3 million.

Uncertain Tax Positions

As of December 30, 2023, the gross amount of unrecognized tax benefit and related accrued interest was $32.4 million and $9.7 million, respectively. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions of the company will increase or decrease in the next 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 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 were 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.
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If we are ultimately unsuccessful in defending our position, we may be required to reverse all, or some portion, of the benefit previously recorded.

Other

On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One expands a country’s authority to tax profits from companies that make sales into their country but do not have a physical location in the country. Pillar Two includes an agreement on international tax reform, including rules to ensure that large corporations pay a minimum rate of corporate income tax. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD continues to release additional guidance on the two-pillar framework, with widespread implementation anticipated by 2024. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislation adoption and/or guidance by individual countries, with the rules being effective for tax years beginning on or after January 1, 2024. For Sysco, Pillar Two will be effective in fiscal 2025.

The determination of the company’s provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. The company’s provision for income taxes reflects income earned and taxed in the various U.S. federal and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

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.

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 three reportable segments. “Other” financial information is attributable to our other operating segments that do not meet the quantitative disclosure thresholds.

•U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, 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 produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Edward Don, acquired in the second quarter of fiscal 2024, which distributes restaurant equipment and supplies, our Asian specialty distribution company and a number of other small specialty businesses that are not material to our operations;
•International Foodservice Operations – includes operations outside of the U.S., which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom, 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.
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The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.

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

  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
Sales: (In thousands) (In thousands)
U.S. Foodservice Operations $ 13,494,443  $ 13,077,054  $ 27,218,242  $ 26,679,536 
International Foodservice Operations 3,596,458  3,282,411  7,279,668  6,566,146 
SYGMA 1,913,715  1,933,536  3,819,729  3,866,993 
Other 283,326  300,952  590,757  608,108 
Total $ 19,287,942  $ 18,593,953  $ 38,908,396  $ 37,720,783 
  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
Operating income (loss): (In thousands) (In thousands)
U.S. Foodservice Operations $ 839,036  $ 780,968  $ 1,780,007  $ 1,686,679 
International Foodservice Operations 82,930  57,413  176,413  144,393 
SYGMA 16,346  6,847  29,113  12,544 
Other 8,387  9,870  20,210  21,408 
Total segments 946,699  855,098  2,005,743  1,865,024 
Global Support Center (246,656) (214,275) (502,118) (487,400)
Total operating income 700,043  640,823  1,503,625  1,377,624 
Interest expense 149,680  132,042  284,014  256,192 
Other expense, net 5,245  330,305  11,885  348,054 
Earnings before income taxes $ 545,118  $ 178,476  $ 1,207,726  $ 773,378 

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

This discussion should be read in conjunction with our consolidated financial statements as of July 1, 2023, 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 1, 2023 (our fiscal 2023 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 improved second quarter of fiscal 2024 results were attributable to sales growth that surpassed second quarter of fiscal 2023 levels by 3.7%. The increase in sales was driven by a combination of positive case volume growth and product cost inflation. Our gross profit growth this quarter outpaced operating expense due to effective management of product cost fluctuations, strategic sourcing, progress achieved in improving the performance of our supply chain, and delivery of our cost-out measures. See below for a comparison of our fiscal 2024 results to our fiscal 2023 results, both including and excluding Certain Items (as defined below).

Comparisons of results from the second quarter of fiscal 2024 to the second quarter of fiscal 2023 are presented below:

•Sales:
◦increased 3.7%, or $694.0 million, to $19.3 billion;
•Operating income:
◦increased 9.2%, or $59.2 million, to $700.0 million;
◦adjusted operating income increased 9.2%, or $62.6 million, to $744.9 million;
•Net earnings:
◦increased 194.0%, or $274.0 million, to $415.2 million;
◦adjusted net earnings increased 10.1%, or $41.1 million, to $449.0 million;
•Basic earnings per share:
◦increased 192.9%, or $0.54, to $0.82 per share;
•Diluted earnings per share:
◦increased 192.9%, or $0.54, to $0.82 per share;
◦adjusted diluted earnings per share increased 11.3%, or $0.09, to $0.89;
•EBITDA:
◦increased 82.7%, or $413.7 million, to $914.3 million; and
◦adjusted EBITDA increased 11.6%, or $96.2 million, to $927.5 million.

Comparisons of results from the first 26 weeks of fiscal 2024 to the first 26 weeks of fiscal 2023 are presented below:

•Sales:
◦increased 3.1%, or $1.2 billion, to $38.9 billion;
•Operating income:
◦increased 9.1%, or $126.0 million, to $1.5 billion;
◦adjusted operating income increased 9.9%, or $144.2 million, to $1.6 billion;
•Net earnings:
◦increased 51.4%, or $311.9 million, to $918.6 million;
◦adjusted net earnings increased 10.0%, or $90.1 million, to $1.0 billion;
•Basic earnings per share:
◦increased 51.7%, or $0.62, to $1.82 per share;
•Diluted earnings per share:
◦increased 52.1%, or $0.62, to $1.81 per share;
◦adjusted diluted earnings per share increased 11.4%, or $0.20, to $1.96;
•EBITDA:
◦increased 36.1%, or $508.7 million, to $1.9 billion; and
◦adjusted EBITDA increased 11.7%, or $203.7 million, to $2.0 billion.

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The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, 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 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.

The fiscal 2024 and fiscal 2023 items discussed above are collectively referred to as “Certain Items.” The results of our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our results on a constant currency basis.

Trends

Economic and Industry Trends

Sysco continues to outperform the foodservice market. The food-away-from-home sector is a healthy, long-term growth market. Sysco is diversified and well positioned as a market leader in food service. We expect slightly positive rates of industry volume growth for fiscal 2024.

Sales and Gross Profit Trends

Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in the second quarter and first 26 weeks of fiscal 2024 was volume growth. We experienced a 3.4% and 2.5% improvement in U.S. Foodservice case volume in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. Local case volume within our U.S. Foodservice segment increased 2.9% and 1.3% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This volume reflects our broadline and specialty businesses, except for our specialty meats and equipment businesses which are measured in different units.

We experienced inflation at a rate of 1.1% in the second quarter of fiscal 2024, at the total enterprise level, primarily driven by inflation in the meat and frozen categories. We continued to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin increased 21 and 28 basis points in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This was primarily driven by higher volumes, the effective management of product cost fluctuations and progress from our strategic sourcing efforts. We expect total enterprise level inflation to be slightly positive in fiscal 2024.

Operating Expense Trends

Total operating expenses increased 3.9% and 3.6% during the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, driven by increased volumes. We continued to improve the performance of our supply chain, while investing in colleague retention and training. These efficiency efforts are expected to continue to improve in fiscal 2024. We believe the advancements we are making in our physical capabilities, and the investments we are making in improved training, will provide higher service levels to our customers and strengthen Sysco’s ability to profitably increase market share.

Interest Expense Trends

Interest expense for fiscal 2024 is expected to increase by approximately $70 million, as compared to fiscal 2023, primarily due to higher debt associated with our acquisition of Edward Don.

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.

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In the first quarter of fiscal 2024, we acquired BIX Produce Company, a leading produce specialty distributor based in Minnesota. This acquisition is expected to provide a strategic opportunity for specialty produce operations to expand its geographic footprint in an area of the country where it does not currently have operations. This company’s results are included within U.S. Foodservice Operations and were not material to our results for the second quarter and first 26 weeks of fiscal 2024.

In the second quarter of fiscal 2024, we acquired Edward Don, one of the largest kitchen equipment and supplies distributors, based out of Chicago. Edward Don has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies. This acquisition further demonstrates our Recipe for Growth strategy of focusing on building strategic specialty platforms that help us better support restaurant and hospitality customers. This company’s results are included within the U.S. Foodservice Operations segment and were not material to our results for the second quarter and first 26 weeks of fiscal 2024.


Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another.” Purpose driven companies are believed to perform better. We believe our purpose will 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, 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 operating in our first test region, and we have made progress in expanding to deliveries six days a week. From these actions as a part of our Recipe for Growth, the benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will deliver profitable and consistent growth.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:
  13-Week Period Ended 26-Week Period Ended
  Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
Sales 100.0  % 100.0  % 100.0  % 100.0  %
Cost of sales 81.8  82.0  81.6  81.9 
Gross profit 18.2  18.0  18.4  18.1 
Operating expenses 14.6  14.6  14.5  14.5 
Operating income 3.6  3.4  3.9  3.6 
Interest expense 0.8  0.7  0.8  0.7 
Other expense (income), net —  1.7  —  0.8 
Earnings before income taxes 2.8  1.0  3.1  2.1 
Income taxes 0.6  0.2  0.7  0.5 
Net earnings 2.2  % 0.8  % 2.4  % 1.6  %

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The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:
  13-Week Period Ended 26-Week Period Ended
Dec. 30, 2023 Dec. 30, 2023
Sales 3.7  % 3.1  %
Cost of sales 3.5  2.8 
Gross profit 4.9  4.7 
Operating expenses 3.9  3.6 
Operating income 9.2  9.1 
Interest expense 13.4  10.9 
Other expense (income), net (1) (2)
(98.4) (96.6)
Earnings before income taxes 205.4  56.2 
Income taxes 248.6  73.5 
Net earnings 194.0  % 51.4  %
Basic earnings per share 192.9  % 51.7  %
Diluted earnings per share 192.9  52.1 
Average shares outstanding (0.6) (0.6)
Diluted shares outstanding (0.8) (0.7)
(1)
Other expense (income), net was expense of $5.2 million and $330.3 million in the second quarter of fiscal 2024 and fiscal 2023, respectively.
(2)
Other expense (income), net was expense of $11.9 million and $348.1 million in the first 26 weeks of fiscal 2024 and fiscal 2023, respectively.

The following tables represent our results by reportable segments:
  13-Week Period Ended Dec. 30, 2023
  U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
  (In thousands)
Sales $ 13,494,443  $ 3,596,458  $ 1,913,715  $ 283,326  $ —  $ 19,287,942 
Sales increase (decrease) 3.2  % 9.6  % (1.0) % (5.9) % 3.7  %
Percentage of total 70.0  % 18.6  % 9.9  % 1.5  % 100.0  %
Operating income (loss) $ 839,036  $ 82,930  $ 16,346  $ 8,387  $ (246,656) $ 700,043 
Operating income (loss) increase (decrease) 7.4  % 44.4  % NM (15.0) % 15.1  % 9.2  %
Percentage of total segments 88.6  % 8.8  % 1.7  % 0.9  % 100.0  %
Operating income as a percentage of sales 6.2  % 2.3  % 0.9  % 3.0  % 3.6  %

  13-Week Period Ended Dec. 31, 2022
  U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
  (In thousands)
Sales $ 13,077,054  $ 3,282,411  $ 1,933,536  $ 300,952  $ —  $ 18,593,953 
Percentage of total 70.3  % 17.7  % 10.4  % 1.6  % 100.0  %
Operating income (loss) $ 780,968  $ 57,413  $ 6,847  $ 9,870  $ (214,275) $ 640,823 
Percentage of total segments 91.3  % 6.7  % 0.8  % 1.2  % 100.0  %
Operating income as a percentage of sales 6.0  % 1.7  % 0.4  % 3.3  % 3.4  %
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  26-Week Period Ended Dec. 30, 2023
  U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
  (In thousands)
Sales $ 27,218,242  $ 7,279,668  $ 3,819,729  $ 590,757  $ —  $ 38,908,396 
Sales increase (decrease) 2.0  % 10.9  % (1.2) % (2.9) % 3.1  %
Percentage of total 70.0  % 18.7  % 9.8  % 1.5  % 100.0  %
Operating income (loss) $ 1,780,007  $ 176,413  $ 29,113  $ 20,210  $ (502,118) $ 1,503,625 
Operating income (loss) increase (decrease) 5.5  % 22.2  % NM (5.6) % 3.0  % 9.1  %
Percentage of total segments 88.7  % 8.8  % 1.5  % 1.0  % 100.0  %
Operating income as a percentage of sales 6.5  % 2.4  % 0.8  % 3.4  % 3.9  %
  26-Week Period Ended Dec. 31, 2022
  U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated
Totals
  (In thousands)
Sales $ 26,679,536  $ 6,566,146  $ 3,866,993  $ 608,108  $ —  $ 37,720,783 
Percentage of total 70.7  % 17.4  % 10.3  % 1.6  % 100.0  %
Operating income (loss) $ 1,686,679  $ 144,393  $ 12,544  $ 21,408  $ (487,400) $ 1,377,624 
Percentage of total segments 90.4  % 7.8  % 0.7  % 1.1  % 100.0  %
Operating income as a percentage of sales 6.3  % 2.2  % 0.3  % 3.5  % 3.7  %

Based on information in Note 15, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, in the second quarter and first 26 weeks of fiscal 2024, U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 88.6% and 88.7% of Sysco’s overall sales and 97.4% and 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:

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  13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
  (Dollars in thousands)
Sales $ 13,494,443  $ 13,077,054  $ 417,389  3.2  %
Gross profit 2,577,694  2,493,089  84,605  3.4 
Operating expenses 1,738,658  1,712,121  26,537  1.5 
Operating income $ 839,036  $ 780,968  $ 58,068  7.4  %
Gross profit $ 2,577,694  $ 2,493,089  $ 84,605  3.4  %
Adjusted operating expenses (Non-GAAP) 1,726,568  1,702,173  24,395  1.4 
Adjusted operating income (Non-GAAP) $ 851,126  $ 790,916  $ 60,210  7.6  %
  26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars  % Change
  (Dollars in thousands)
Sales $ 27,218,242  $ 26,679,536  $ 538,706  2.0  %
Gross profit 5,262,469  5,105,432  157,037  3.1 
Operating expenses 3,482,462  3,418,753  63,709  1.9 
Operating income $ 1,780,007  $ 1,686,679  $ 93,328  5.5  %
Gross profit $ 5,262,469  $ 5,105,432  $ 157,037  3.1  %
Adjusted operating expenses (Non-GAAP) 3,457,770  3,398,859  58,911  1.7 
Adjusted operating income (Non-GAAP) $ 1,804,699  $ 1,706,573  $ 98,126  5.7  %

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)
13-Week Period 26-Week Period
(Dollars in millions) (Dollars in millions)
Cause of change Percentage Dollars Percentage Dollars
Case volume (1)
 4.2  % $ 541.4  2.7  % $ 728.9 
Deflation (0.7) (94.2) (0.5) (139.3)
Other (2)
 (0.3) (29.8) (0.2) (50.9)
Total change in sales 3.2  % $ 417.4  2.0  % $ 538.7 
(1)
Case volumes increased 3.4% and 2.5% compared to the second quarter and first 26 weeks of fiscal 2023, respectively. This volume increase resulted in a 4.2% and 2.7% increase in the dollar value of sales compared to the second quarter and first 26 weeks of fiscal 2023, respectively.
(2)
Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds, and Edward Don. Any impact in volumes from these operations are included within “Other.”

The sales growth in our U.S. Foodservice Operations was fueled by volume growth. Case volumes from our U.S. Foodservice Operations increased 3.4% and 2.5% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This included a 2.9% increase in local customer case volume in the second quarter of fiscal 2024 and a 1.3% increase in the first 26 weeks of fiscal 2024.

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Operating Income

The increase in operating income for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, was driven by gross profit dollar growth and case volume growth, partially offset by an increase in operating expenses.

Gross profit dollar growth in the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was driven primarily by case volume growth, improvements in supply chain productivity and our strategic sourcing efforts. The estimated change in product costs, an internal measure of inflation or deflation, decreased in the second quarter and first 26 weeks of fiscal 2024. Gross margin, which is gross profit as a percentage of sales, was 19.1% and 19.3% in the second quarter and first 26 weeks of fiscal 2024, respectively, for our U.S. Foodservice Operations, which was an increase of 4 basis points compared to gross margin of 19.1% in the second quarter of fiscal 2023, and an increase of 19 basis points compared to gross margin of 19.1% in the first 26 weeks of fiscal 2023.

The increase in operating expenses for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was primarily driven by increased volumes.

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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 Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
  (Dollars in thousands)
Sales $ 3,596,458  $ 3,282,411  $ 314,047  9.6  %
Gross profit 708,100  624,460  83,640  13.4 
Operating expenses 625,170  567,047  58,123  10.3 
Operating income $ 82,930  $ 57,413  $ 25,517  44.4  %
Gross profit $ 708,100  $ 624,460  $ 83,640  13.4  %
Adjusted operating expenses (Non-GAAP) 605,720  545,789  59,931  11.0 
Adjusted operating income (Non-GAAP) $ 102,380  $ 78,671  $ 23,709  30.1  %
Sales on a constant currency basis (Non-GAAP) $ 3,491,860  $ 3,282,411  $ 209,449  6.4  %
Gross profit on a constant currency basis (Non-GAAP) 683,974  624,460  59,514  9.5 
Adjusted operating expenses on a constant currency basis (Non-GAAP) 583,393  545,789  37,604  6.9 
Adjusted operating income on a constant currency basis (Non-GAAP) $ 100,581  $ 78,671  $ 21,910  27.9  %
  26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars  % Change
  (Dollars in thousands)
Sales $ 7,279,668  $ 6,566,146  $ 713,522  10.9  %
Gross profit 1,440,139  1,273,725  166,414  13.1 
Operating expenses 1,263,726  1,129,332  134,394  11.9 
Operating income $ 176,413  $ 144,393  $ 32,020  22.2  %
Gross profit $ 1,440,139  $ 1,273,725  $ 166,414  13.1  %
Adjusted operating expenses (Non-GAAP) 1,221,576  1,088,153  133,423  12.3 
Adjusted operating income (Non-GAAP) $ 218,563  $ 185,572  $ 32,991  17.8  %
Sales on a constant currency basis (Non-GAAP) $ 7,069,567  $ 6,566,146  $ 503,421  7.7  %
Gross profit on a constant currency basis (Non-GAAP) 1,389,302  1,273,725  115,577  9.1 
Adjusted operating expenses on a constant currency basis (Non-GAAP) 1,173,833  1,088,153  85,680  7.9 
Adjusted operating income on a constant currency basis (Non-GAAP) $ 215,469  $ 185,572  $ 29,897  16.1  %

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Sales

The following tables set forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.
Increase (Decrease) Increase (Decrease)
13-Week Period 26-Week Period
(Dollars in millions) (Dollars in millions)
Cause of change Percentage Dollars Percentage Dollars
Inflation 3.7  % $ 122.4  5.6  % $ 370.6 
Foreign currency 3.2  104.6  3.2  210.1 
Other (1)
 2.7  87.0  2.1  132.8 
Total change in sales 9.6  % $ 314.0  10.9  % $ 713.5 
(1)
The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.

Sales for the second quarter and first 26 weeks of fiscal 2024 were higher, as compared to the second quarter and first 26 weeks of fiscal 2023, due to inflation, a positive impact of foreign currency translation, and an improvement in volume primarily attributable to our Recipe for Growth initiatives.

Operating Income

The increase in operating income for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was due to the continuing increase in sales volumes, along with specific efforts to optimize our gross profit, including the ability to effectively manage product cost fluctuations, incremental progress from our strategic sourcing efforts and local case volume growth.

The increase in gross profit dollars in the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was attributable to the increase in sales volume and the management of inflation, along with specific efforts to optimize our gross profit dollars.

The increase in operating expenses for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was primarily due to increased volumes, colleague-related costs and the impact of foreign currency translation.

Results of SYGMA and Other Segment

For SYGMA, sales were 1.0% and 1.2% lower in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily driven by the planned exit of customers that did not meet our disciplined profit thresholds. Operating income increased by $9.5 million and $16.6 million in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, due to decreases in operating expenses driven by the planned exit of customers.

For the operations that are grouped within Other, operating income decreased $1.5 million and $1.2 million in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. The operations of this group mainly consist of our hospitality business, Guest Worldwide.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the second quarter of fiscal 2024 increased $34.4 million, or 15.7%, as compared to the second quarter of fiscal 2023, primarily due to increases in self-insurance reserves and colleague-related costs. These expenses in the first 26 weeks of fiscal 2024 increased $24.4 million, or 5.0%, as compared to the first 26 weeks of fiscal 2023, primarily due to increases in self-insurance reserves, colleague-related costs, and depreciation expense, partially offset by decreases in fuel hedging program expenses.

39

Included in Global Support Center expenses are Certain Items that totaled $13.3 million and $28.7 million in the second quarter and first 26 weeks of fiscal 2024, as compared to $10.2 million and $16.3 million in the second quarter and first 26 weeks of fiscal 2023, respectively. Certain Items impacting the second quarter and first 26 weeks of fiscal 2024 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. Certain Items impacting the second quarter and the first 26 weeks of fiscal 2023 were primarily expenses associated with our business technology transformation initiatives.

Interest Expense

Interest expense increased $17.6 million and $27.8 million for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. The increase was primarily due to new issuances of senior notes, an increase in commercial paper borrowing activity and increased interest rates on borrowings.

Other income and expense

Other expense, net decreased $325.1 million and $336.2 million for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily due to a one-time pension settlement charge that was incurred in the second quarter and first 26 weeks of fiscal 2023 and an increase in interest income earned in the second quarter and first 26 weeks of fiscal 2024.

Net Earnings

Net earnings increased 194.0% and 51.4% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily due to the items noted above for operating income and other expense, as well as items impacting our income taxes that are discussed in Note 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 10.1% and 10.0% in the second quarter and first 26 weeks of fiscal 2024, respectively, primarily due to an increase in sales volume.

Earnings Per Share

Basic earnings per share in the second quarter of fiscal 2024 were $0.82, a 192.9% increase from the comparable prior year amount of $0.28 per share. Diluted earnings per share in the second quarter of fiscal 2024 were $0.82, a 192.9% increase from the comparable prior year period amount of $0.28 per share. Adjusted diluted earnings per share, excluding Certain Items, in the second quarter of fiscal 2024 were $0.89, an 11.3% increase from the comparable prior year amount of $0.80 per share.

Basic earnings per share in the first 26 weeks of fiscal 2024 were $1.82, a 51.7% increase from the comparable prior year amount of $1.20 per share. Diluted earnings per share in the first 26 weeks of fiscal 2024 were $1.81, a 52.1% increase from the comparable prior year amount of $1.19 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first 26 weeks of fiscal 2024 were $1.96, an 11.4% increase from the comparable prior year amount of $1.76 per share.


40

Non-GAAP Reconciliations

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, 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 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.
The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our 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 results on a constant currency basis provides an important perspective with respect to our underlying business trends and results. It 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 year 2024 and fiscal year 2023.
Set forth on the following page 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 be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
41

13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
Sales (GAAP) $ 19,287,942  $ 18,593,953  $ 693,989  3.7  %
Impact of currency fluctuations (1)
 (104,758) —  (104,758) (0.5)
Comparable sales using a constant currency basis (Non-GAAP) $ 19,183,184  $ 18,593,953  $ 589,231  3.2  %
Cost of sales (GAAP) $ 15,774,309  $ 15,244,337  $ 529,972  3.5  %
Gross profit (GAAP) $ 3,513,633  $ 3,349,616  $ 164,017  4.9  %
Impact of currency fluctuations (1)
 (24,183) —  (24,183) (0.7)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 3,489,450  $ 3,349,616  $ 139,834  4.2  %
Gross margin (GAAP) 18.22  % 18.01  % 21 bps
Impact of currency fluctuations (1)
 (0.03) —  -3 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.19  % 18.01  % 18 bps
Operating expenses (GAAP) $ 2,813,590  $ 2,708,793  $ 104,797  3.9  %
Impact of restructuring and transformational project costs (2)
 (13,500) (14,388) 888  6.2 
Impact of acquisition-related costs (3)
 (31,341) (28,960) (2,381) (8.2)
Impact of bad debt reserve adjustments (4)
 —  1,923  (1,923) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 2,768,749  2,667,368  101,381  3.8 
Impact of currency fluctuations (1)
 (23,102) —  (23,102) (0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 2,745,647  $ 2,667,368  $ 78,279  2.9  %
Operating expense as a percentage of sales (GAAP) 14.59  % 14.57  % 2 bps
Impact of certain item adjustments (0.24) (0.22) -2 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.35  % 14.35  % 0 bps
Operating income (GAAP) $ 700,043  $ 640,823  $ 59,220  9.2  %
Impact of restructuring and transformational project costs (2)
 13,500  14,388  (888) (6.2)
Impact of acquisition-related costs (3)
 31,341  28,960  2,381  8.2 
Impact of bad debt reserve adjustments (4)
 —  (1,923) 1,923  NM
Operating income adjusted for Certain Items (Non-GAAP) 744,884  682,248  62,636  9.2 
Impact of currency fluctuations (1)
 (1,081) —  (1,081) (0.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 743,803  $ 682,248  $ 61,555  9.0  %
Operating margin (GAAP) 3.63  % 3.45  % 18 bps
Operating margin adjusted for Certain Items (Non-GAAP) 3.86  % 3.67  % 19 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 3.88  % 3.67  % 21 bps
Other expense (GAAP) $ 5,245  $ 330,305  $ (325,060) (98.4) %
Impact of other non-routine gains and losses (5)
 —  (314,878) 314,878  NM
Other expense adjusted for Certain Items (Non-GAAP) $ 5,245  $ 15,427  $ (10,182) (66.0) %
42

13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
Net earnings (GAAP) $ 415,242  $ 141,216  $ 274,026  NM
Impact of restructuring and transformational project costs (2)
 13,500  14,388  (888) (6.2)
Impact of acquisition-related costs (3)
 31,341  28,960  2,381  8.2 
Impact of bad debt reserve adjustments (4)
 —  (1,923) 1,923  NM
Impact of other non-routine gains and losses (5)
 —  314,878  (314,878) NM
Tax impact of restructuring and transformational project costs (6)
 (3,335) (3,618) 283  7.8 
Tax impact of acquisition-related costs (6)
 (7,744) (7,283) (461) (6.3)
Tax impact of bad debt reserves adjustments (6)
 —  484  (484) NM
Tax impact of other non-routine gains and losses (6)
 —  (79,185) 79,185  NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 449,004  $ 407,917  $ 41,087  10.1  %
Diluted earnings per share (GAAP) $ 0.82  $ 0.28  $ 0.54  NM
Impact of restructuring and transformational project costs (2)
 0.03  0.03  —  — 
Impact of acquisition-related costs (3)
 0.06  0.06  —  — 
Impact of other non-routine gains and losses (5)
 —  0.62  (0.62) NM
Tax impact of restructuring and transformational project costs (6)
 (0.01) (0.01) —  — 
Tax impact of acquisition-related costs (6)
 (0.02) (0.01) (0.01) (100.0)
Tax impact of other non-routine gains and losses (6)
 —  (0.16) 0.16  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)
 $ 0.89  $ 0.80  $ 0.09  11.3  %
43

(1)
Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)
Fiscal 2024 includes $2 million related to restructuring and severance charges and $11 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $5 million related to restructuring and severance charges and $9 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)
Fiscal 2024 includes $29 million of intangible amortization expense and $2 million in acquisition and due diligence costs. Fiscal 2023 includes $26 million of intangible amortization expense and $3 million in acquisition and due diligence costs.
(4)
 Fiscal 2023 represents 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)
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 equal the total presented when added 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.
44


26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
Sales (GAAP) $ 38,908,396  $ 37,720,783  $ 1,187,613  3.1  %
Impact of currency fluctuations (1)
 (208,824) —  (208,824) (0.5)
Comparable sales using a constant currency basis (Non-GAAP) $ 38,699,572  $ 37,720,783  $ 978,789  2.6  %
Cost of sales (GAAP) $ 31,746,991  $ 30,882,312  $ 864,679  2.8  %
Impact of inventory valuation adjustment (2)
 —  2,571  (2,571) — 
Cost of sales adjusted for Certain Items (Non-GAAP) $ 31,746,991  $ 30,884,883  $ 862,108  2.8  %
Gross profit (GAAP) $ 7,161,405  $ 6,838,471  $ 322,934  4.7  %
Impact of inventory valuation adjustment (2)
 —  (2,571) 2,571  0.1 
Gross profit adjusted for Certain Items (Non-GAAP) 7,161,405  6,835,900  325,505  4.8 
Impact of currency fluctuations (1)
 (50,367) —  (50,367) (0.8)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 7,111,038  $ 6,835,900  $ 275,138  4.0  %
Gross margin (GAAP) 18.41  % 18.13  % 28 bps
Impact of inventory valuation adjustment (2)
 —  (0.01) 1 bps
Gross margin adjusted for Certain Items (Non-GAAP) 18.41  18.12  29 bps
Impact of currency fluctuations (1)
 (0.04) —  -4 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.37  % 18.12  % 25 bps
Operating expenses (GAAP) $ 5,657,780  $ 5,460,847  $ 196,933  3.6  %
Impact of restructuring and transformational project costs (3)
 (33,175) (26,034) (7,141) (27.4)
Impact of acquisition-related costs (4)
 (62,379) (58,415) (3,964) (6.8)
Impact of bad debt reserve adjustments (5)
 —  4,515  (4,515) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 5,562,226  5,380,913  181,313  3.4 
Impact of currency fluctuations (1)
 (48,940) —  (48,940) (0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 5,513,286  $ 5,380,913  $ 132,373  2.5  %
Operating expense as a percentage of sales (GAAP) 14.54  % 14.48  % 6 bps
Impact of certain item adjustments (0.24) (0.21) -3 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.30  % 14.27  % 3 bps
Operating income (GAAP) $ 1,503,625  $ 1,377,624  $ 126,001  9.1  %
Impact of inventory valuation adjustment (2)
 —  (2,571) 2,571  NM
Impact of restructuring and transformational project costs (3)
 33,175  26,034  7,141  27.4 
Impact of acquisition-related costs (4)
 62,379  58,415  3,964  6.8 
Impact of bad debt reserve adjustments (5)
 —  (4,515) 4,515  NM
Operating income adjusted for Certain Items (Non-GAAP) 1,599,179  1,454,987  144,192  9.9 
Impact of currency fluctuations (1)
 (1,427) —  (1,427) (0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,597,752  $ 1,454,987  $ 142,765  9.8  %
45

26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
Other expense (GAAP) $ 11,885  $ 348,054  $ (336,169) (96.6) %
Impact of other non-routine gains and losses (6)
 —  (314,878) 314,878  NM
Other expense adjusted for Certain Items (Non-GAAP) $ 11,885  $ 33,176  $ (21,291) (64.2) %
Net earnings (GAAP) $ 918,634  $ 606,784  $ 311,850  51.4  %
Impact of inventory valuation adjustment (2)
 —  (2,571) 2,571  NM
Impact of restructuring and transformational project costs (3)
 33,175  26,034  7,141  27.4 
Impact of acquisition-related costs (4)
 62,379  58,415  3,964  6.8 
Impact of bad debt reserve adjustments (5)
 —  (4,515) 4,515  NM
Impact of other non-routine gains and losses (6)
 —  314,878  (314,878) NM
Tax impact of inventory valuation adjustment (7)
 —  646  (646) NM
Tax impact of restructuring and transformational project costs (7)
 (8,184) (6,538) (1,646) (25.2)
Tax impact of acquisition-related costs (7)
 (15,388) (14,670) (718) (4.9)
Tax impact of bad debt reserves adjustments (7)
 —  1,134  (1,134) NM
Tax impact of other non-routine gains and losses (7)
 —  (79,075) 79,075  NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 990,616  $ 900,522  $ 90,094  10.0  %
Diluted earnings per share (GAAP) $ 1.81  $ 1.19  $ 0.62  52.1  %
Impact of inventory valuation adjustment (2)
 —  (0.01) 0.01  NM
Impact of restructuring and transformational project costs (3)
 0.07  0.05  0.02  40.0 
Impact of acquisition-related costs (4)
 0.12  0.11  0.01  9.1 
Impact of bad debt reserve adjustments (5)
 —  (0.01) 0.01  NM
Impact of other non-routine gains and losses (6)
 —  0.62  (0.62) NM
Tax impact of restructuring and transformational project costs (7)
 (0.02) (0.01) (0.01) (100.0)
Tax impact of acquisition-related costs (7)
 (0.03) (0.03) —  — 
Tax impact of other non-routine gains and losses (7)
 —  (0.15) 0.15  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8)
 $ 1.96  $ 1.76  $ 0.20  11.4  %
(1)
Represents a constant currency adjustment which eliminates the impact of foreign currency fluctuations on the current year results.
(2)
 Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(3)
Fiscal 2024 includes $8 million related to restructuring and severance charges and $25 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $10 million related to restructuring and severance charges and $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)
Fiscal 2024 includes $57 million of intangible amortization expense and $5 million in acquisition and due diligence costs. Fiscal 2023 includes $52 million of intangible amortization expense and $6 million in acquisition and due diligence costs.
(5)
Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)
Fiscal 2023 primarily includes 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.
(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.

46


13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 1,738,658  $ 1,712,121  $ 26,537  1.5  %
Impact of restructuring and transformational project costs (65) (92) 27  29.3 
Impact of acquisition-related costs (1)
 (12,025) (11,514) (511) (4.4)
Impact of bad debt reserve adjustments (2)
 —  1,658  (1,658) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 1,726,568  $ 1,702,173  $ 24,395  1.4  %
Operating income (GAAP) $ 839,036  $ 780,968  $ 58,068  7.4  %
Impact of restructuring and transformational project costs 65  92  (27) (29.3)
Impact of acquisition-related costs (1)
 12,025  11,514  511  4.4 
Impact of bad debt reserve adjustments (2)
 —  (1,658) 1,658  NM
Operating income adjusted for Certain Items (Non-GAAP) $ 851,126  $ 790,916  $ 60,210  7.6  %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 3,596,458  $ 3,282,411  $ 314,047  9.6  %
Impact of currency fluctuations (3)
 (104,598) —  (104,598) (3.2)
Comparable sales using a constant currency basis (Non-GAAP) $ 3,491,860  $ 3,282,411  $ 209,449  6.4  %
Gross profit (GAAP) $ 708,100  $ 624,460  $ 83,640  13.4  %
Impact of currency fluctuations (3)
 (24,126) —  (24,126) (3.9)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 683,974  $ 624,460  $ 59,514  9.5  %
Gross margin (GAAP) 19.69  % 19.02  % 67 bps
Impact of currency fluctuations (3)
 (0.10) —  -10 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.59  % 19.02  % 57 bps
Operating expenses (GAAP) $ 625,170  $ 567,047  $ 58,123  10.3  %
Impact of restructuring and transformational project costs (4)
 (2,603) (5,588) 2,985  53.4 
Impact of acquisition-related costs (5)
 (16,847) (15,935) (912) (5.7)
Impact of bad debt reserve adjustments (2)
 —  265  (265) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 605,720  545,789  59,931  11.0 
Impact of currency fluctuations (3)
 (22,327) —  (22,327) (4.1)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 583,393  $ 545,789  $ 37,604  6.9  %
Operating income (GAAP) $ 82,930  $ 57,413  $ 25,517  44.4  %
Impact of restructuring and transformational project costs (4)
 2,603  5,588  (2,985) (53.4)
Impact of acquisition-related costs (5)
 16,847  15,935  912  5.7 
Impact of bad debt reserve adjustments (2)
 —  (265) 265  NM
Operating income adjusted for Certain Items (Non-GAAP) 102,380  78,671  23,709  30.1 
Impact of currency fluctuations (3)
 (1,799) —  (1,799) (2.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 100,581  $ 78,671  $ 21,910  27.9  %
SYGMA
Operating expenses (GAAP) $ 132,161  $ 143,614  $ (11,453) (8.0) %
Operating income (GAAP) 16,346  6,847  9,499  NM
OTHER
Operating expenses (GAAP) $ 64,620  $ 67,441  $ (2,821) (4.2) %
Operating income (GAAP) 8,387  9,870  (1,483) (15.0)
47

13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
GLOBAL SUPPORT CENTER
Gross profit (GAAP) $ 6,325  $ 4,295  $ 2,030  47.3  %
Operating expenses (GAAP) $ 252,981  $ 218,570  $ 34,411  15.7  %
Impact of restructuring and transformational project costs (6)
 (10,832) (8,708) (2,124) (24.4)
Impact of acquisition-related costs (7)
 (2,469) (1,511) (958) (63.4)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 239,680  $ 208,351  $ 31,329  15.0  %
Operating loss (GAAP) $ (246,656) $ (214,275) $ (32,381) (15.1) %
Impact of restructuring and transformational project costs (6)
 10,832  8,708  2,124  24.4 
Impact of acquisition-related costs (7)
 2,469  1,511  958  63.4 
Operating loss adjusted for Certain Items (Non-GAAP) $ (233,355) $ (204,056) $ (29,299) (14.4) %
(1)
Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)
Fiscal 2023 represents 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 costs primarily in Europe.
(5)
Represents intangible amortization expense.
(6)
 Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(7)
 Represents due diligence costs.
NM Represents that the percentage change is not meaningful.

48


26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 3,482,462  $ 3,418,753  $ 63,709  1.9  %
Impact of restructuring and transformational project costs (120) (44) (76) NM
Impact of acquisition-related costs (1)
 (24,572) (24,100) (472) (2.0)
Impact of bad debt reserve adjustments (2)
 —  4,250  (4,250) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 3,457,770  $ 3,398,859  $ 58,911  1.7  %
Operating income (GAAP) $ 1,780,007  $ 1,686,679  $ 93,328  5.5  %
Impact of restructuring and transformational project costs 120  44  76  NM
Impact of acquisition-related costs (1)
 24,572  24,100  472  2.0 
Impact of bad debt reserve adjustments (2)
 —  (4,250) 4,250  NM
Operating income adjusted for Certain Items (Non-GAAP) $ 1,804,699  $ 1,706,573  $ 98,126  5.7  %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 7,279,668  $ 6,566,146  $ 713,522  10.9  %
Impact of currency fluctuations (3)
 (210,101) —  (210,101) (3.2)
Comparable sales using a constant currency basis (Non-GAAP) $ 7,069,567  $ 6,566,146  $ 503,421  7.7  %
Gross profit (GAAP) $ 1,440,139  $ 1,273,725  $ 166,414  13.1  %
Impact of currency fluctuations (3)
 (50,837) —  (50,837) (4.0)
Comparable gross profit using a constant currency basis (Non-GAAP) $ 1,389,302  $ 1,273,725  $ 115,577  9.1  %
Gross margin (GAAP) 19.78  % 19.40  % 38 bps
Impact of currency fluctuations (3)
 (0.13) —  -13 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.65  % 19.40  % 25 bps
Operating expenses (GAAP) $ 1,263,726  $ 1,129,332  $ 134,394  11.9  %
Impact of restructuring and transformational project costs (4)
 (8,406) (9,495) 1,089  11.5 
Impact of acquisition-related costs (5)
 (33,744) (31,949) (1,795) (5.6)
Impact of bad debt reserve adjustments (2)
 —  265  (265) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 1,221,576  1,088,153  133,423  12.3 
Impact of currency fluctuations (3)
 (47,743) —  (47,743) (4.4)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,173,833  $ 1,088,153  $ 85,680  7.9  %
Operating income (GAAP) $ 176,413  $ 144,393  $ 32,020  22.2  %
Impact of restructuring and transformational project costs (4)
 8,406  9,495  (1,089) (11.5)
Impact of acquisition-related costs (5)
 33,744  31,949  1,795  5.6 
Impact of bad debt reserve adjustments (2)
 —  (265) 265  NM
Operating income adjusted for Certain Items (Non-GAAP) 218,563  185,572  32,991  17.8 
Impact of currency fluctuations (3)
 (3,094) —  (3,094) (1.7)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 215,469  $ 185,572  $ 29,897  16.1  %
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26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
SYGMA
Sales (GAAP) $ 3,819,729  $ 3,866,993  $ (47,264) (1.2) %
Gross profit (GAAP) 301,317  304,354  (3,037) (1.0)
Gross margin (GAAP) 7.89  % 7.87  % 2 bps
Operating expenses (GAAP) $ 272,204  $ 291,810  $ (19,606) (6.7) %
Operating income (GAAP) 29,113  12,544  16,569  NM
OTHER
Operating expenses (GAAP) $ 130,772  $ 136,741  $ (5,969) (4.4) %
Operating income (GAAP) 20,210  21,408  (1,198) (5.6)
GLOBAL SUPPORT CENTER
Gross profit (loss) (GAAP) $ 6,498  $ (3,189) $ 9,687  NM
Impact of inventory valuation adjustment (6)
 —  (2,571) 2,571  NM
Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP) $ 6,498  $ (5,760) $ 12,258  NM
Operating expenses (GAAP) $ 508,616  $ 484,211  $ 24,405  5.0  %
Impact of restructuring and transformational project costs (7)
 (24,649) (16,495) (8,154) (49.4)
Impact of acquisition-related costs (8)
 (4,063) (2,365) (1,698) (71.8)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 479,904  $ 465,351  $ 14,553  3.1  %
Operating loss (GAAP) $ (502,118) $ (487,400) $ (14,718) (3.0) %
Impact of inventory valuation adjustment (6)
 —  (2,571) 2,571  NM
Impact of restructuring and transformational project costs (7)
 24,649  16,495  8,154  49.4 
Impact of acquisition-related costs (8)
 4,063  2,365  1,698  71.8 
Operating loss adjusted for Certain Items (Non-GAAP) $ (473,406) $ (471,111) $ (2,295) (0.5) %
(1)
 Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)
Fiscal 2023 represents 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 severance costs, primarily in Europe.
(5)
Represents intangible amortization expense.
(6)
 Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(7)
Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(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 2023 Form 10-K for discussions 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):
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13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
Net earnings (GAAP) $ 415,242  $ 141,216  $ 274,026  NM
Interest (GAAP) 149,680  132,042  17,638  13.4 
Income taxes (GAAP) 129,876  37,260  92,616  NM
Depreciation and amortization (GAAP) 219,458  190,025  29,433  15.5 
EBITDA (Non-GAAP) $ 914,256  $ 500,543  $ 413,713  82.7  %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
 10,910  14,793  (3,883) (26.2)
Impact of acquisition-related costs (2)
 2,332  3,049  (717) (23.5)
Impact of bad debt reserve adjustments (3)
 —  (1,923) 1,923  NM
Impact of other non-routine gains and losses (4)
 —  314,878  (314,878) NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)
 $ 927,498  $ 831,340  $ 96,158  11.6  %
Other expense (income), net, as adjusted (Non-GAAP) (6)
 5,245  15,427  (10,182) (66.0)
Depreciation and amortization, as adjusted (Non-GAAP) (7)
 (187,859) (164,519) (23,340) (14.2)
Operating income adjusted for Certain Items (Non-GAAP) $ 744,884  $ 682,248  $ 62,636  9.2  %
(1)
Fiscal 2024 and fiscal 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)
 Fiscal 2024 and fiscal 2023 include acquisition and due diligence costs.
(3)
 Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(4)
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.
(5)
In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $9 million and $5 million or non-cash stock compensation expense of $29 million and $24 million in fiscal 2024 and fiscal 2023, respectively.
(6)
 Fiscal 2024 represents $5 million in GAAP other expense (income), net. Fiscal 2023 represents $330 million in GAAP other expense (income), net less $315 million due to the certain items impact of 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.
(7)
 Fiscal 2024 includes $219 million in GAAP depreciation and amortization expense, less $32 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $190 million in GAAP depreciation and amortization expense, less $26 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NM Represents that the percentage change is not meaningful.

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26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
Net earnings (GAAP) $ 918,634  $ 606,784  $ 311,850  51.4  %
Interest (GAAP) 284,014  256,192  27,822  10.9 
Income taxes (GAAP) 289,092  166,594  122,498  73.5 
Depreciation and amortization (GAAP) 425,465  378,949  46,516  12.3 
EBITDA (Non-GAAP) $ 1,917,205  $ 1,408,519  $ 508,686  36.1  %
Certain Item adjustments:
Impact of inventory valuation adjustment (1)
 $ —  $ (2,571) $ 2,571  NM
Impact of restructuring and transformational project costs (2)
 29,743  25,302  4,441  17.6 
Impact of acquisition-related costs (3)
 4,961  6,595  (1,634) (24.8)
Impact of bad debt reserve adjustments (4)
 —  (4,515) 4,515  NM
Impact of other non-routine gains and losses (5)
 —  314,878  (314,878) NM
EBITDA adjusted for Certain Items (Non-GAAP) (6)
 $ 1,951,909  $ 1,748,208  $ 203,701  11.7  %
Other expense (income), net, as adjusted (Non-GAAP) (7)
 11,885  33,176  (21,291) (64.2)
Depreciation and amortization, as adjusted (Non-GAAP) (8)
 (364,615) (326,397) (38,218) (11.7)
Operating income adjusted for Certain Items (Non-GAAP) $ 1,599,179  $ 1,454,987  $ 144,192  9.9  %
(1)
 Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(2)
Fiscal 2024 and 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy and exclude charges related to accelerated depreciation.
(3)
 Fiscal 2024 and 2023 include acquisition and due diligence costs.
(4)
 Fiscal 2023 represents 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 exclude interest income of $20 million and $8 million or non-cash stock compensation expense of $53 million and $52 million for fiscal 2024 and fiscal 2023, respectively.
(7)
 Fiscal 2024 represents $12 million in GAAP other expense (income), net. Fiscal 2023 represents $348 million in GAAP other expense (income), net less $315 million due to the certain items impact of 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.
(8)
 Fiscal 2024 includes $425 million in GAAP depreciation and amortization expense, less $61 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $379 million in GAAP depreciation and amortization expense, less $53 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NM Represents that the percentage change is not meaningful.

Liquidity and Capital Resources

Highlights

We produced positive free cash flow, impacted by higher capital expenditures, timing and historical seasonality, and investments toward our Recipe for Growth strategy. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of the significant cash flows from the first 26 weeks of fiscal 2024 to the first 26 weeks of fiscal 2023 are provided.

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  26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022
Source of cash (use of cash) (In thousands)
Net cash provided by operating activities (GAAP) $ 855,897  $ 503,466 
Additions to plant and equipment (346,797) (309,664)
Proceeds from sales of plant and equipment 18,347  25,493 
Free Cash Flow (Non-GAAP) (1)
 $ 527,447  $ 219,295 
Acquisition of businesses, net of cash acquired $ (1,174,608) $ (37,699)
Debt borrowings (repayments), net 1,444,755  237,754 
Stock repurchases (199,947) (267,727)
Dividends paid (505,588) (498,323)
(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 2023 Form 10-K for discussions regarding this non-GAAP performance metric.

We are increasing our share repurchase expectations from the prior guidance of $750.0 million to $1.25 billion for fiscal 2024. Including both share repurchases and dividends, Sysco is expected to return $2.25 billion to its shareholders in fiscal 2024.

Sources and Uses of Cash

Sysco generates cash in the U.S. and internationally. As of December 30, 2023, we had $962.2 million in cash and cash equivalents, approximately 57% of which was held by our international subsidiaries. Sysco’s strategic objectives are funded primarily by cash from operations and external borrowings. Traditionally, our operations have produced significant cash flow. Due to our strong financial position, we believe 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. The 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 programs 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 12 months, while maintaining sufficient liquidity for normal operating purposes.

Cash Flows

Operating Activities

We generated $855.9 million in cash flows from operations in the first 26 weeks of fiscal 2024, compared to cash flows from operations of $503.5 million in the first 26 weeks of fiscal 2023. In the first 26 weeks of fiscal 2024, these amounts included year-over-year favorable comparisons on working capital of $172.1 million due to a favorable comparison on inventory and accounts receivable, partially offset by an unfavorable comparison on accounts payable. Accrued expenses also had a favorable comparison, primarily from accrued payroll in the first 26 weeks of fiscal 2024 in comparison to the first 26 weeks of fiscal 2023. Income taxes negatively impacted cash flows from operations, as estimated payments made in the first 26 weeks of fiscal 2024 increased compared to the first 26 weeks of fiscal 2023.

Investing Activities

Our capital expenditures in the first 26 weeks of fiscal 2024 consisted primarily of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 26 weeks of fiscal 2024 were $37.1 million higher than in the first 26 weeks of fiscal 2023, as we made investments to advance our Recipe for Growth strategy.
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During the first 26 weeks of fiscal 2024, we paid $1.2 billion, net of cash acquired, for acquisitions compared to $37.7 million in acquisitions made in the first 26 weeks of fiscal 2023. These payments increased in the first 26 weeks of fiscal 2024 compared to the first 26 weeks of fiscal 2023 primarily due to the acquisition of Edward Don.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $57.3 million in the first 26 weeks of fiscal 2024, as compared to $47.3 million in the first 26 weeks of fiscal 2023. 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 repurchased 2,862,667 shares for $199.9 million during the first 26 weeks of fiscal 2024, and intend to repurchase $1.25 billion in fiscal 2024. As of December 30, 2023, we had a remaining authorization of approximately $3.8 billion. We repurchased 6,026,110 additional shares for $500.0 million under our authorization through January 12, 2024.

Dividends paid in the first 26 weeks of fiscal 2024 were $505.6 million, or $1.00 per share, as compared to $498.3 million, or $0.98 per share, in the first 26 weeks of fiscal 2023. In November 2023, we declared our regular quarterly dividend for the second quarter of fiscal 2024 of $0.50 per share, which was paid in January 2024.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, if any, and our borrowing availability are 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 as of December 30, 2023 are disclosed within that 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, 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 $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of December 30, 2023, Sysco had a total of $10.5 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 2023 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.

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Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet Dec. 30, 2023 Jul. 1, 2023
(In thousands)
ASSETS
Receivables due from non-obligor subsidiaries $ 190,948  $ 321,476 
Current assets 5,761,746  5,149,509 
Total current assets $ 5,952,694  $ 5,470,985 
Notes receivable from non-obligor subsidiaries $ 94,103  $ 108,380 
Other noncurrent assets 4,442,629  4,254,145 
Total noncurrent assets $ 4,536,732  $ 4,362,525 
LIABILITIES
Payables due to non-obligor subsidiaries $ 200,696  $ 71,175 
Other current liabilities 2,019,075  2,305,435 
Total current liabilities $ 2,219,771  $ 2,376,610 
Notes payable to non-obligor subsidiaries $ 239,035  $ 240,874 
Long-term debt 11,452,539  9,793,541 
Other noncurrent liabilities 1,187,496  1,121,884 
Total noncurrent liabilities $ 12,879,070  $ 11,156,299 

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations 26-Week Period Ended Dec. 30, 2023
(In thousands)
Sales $ 24,197,326 
Gross profit 4,380,114 
Operating income 1,235,310 
Interest expense from non-obligor subsidiaries 11,781 
Net earnings 699,757 

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 and inventory valuation, which are described in Item 7 of our fiscal 2023 Form 10-K.

Forward-Looking Statements

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

•our expectations of an improving market over the course of fiscal 2024;
•our expectations regarding the ability of our supply chain and facilities to remain in place and operational;
55

•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 2024 sales and our rate of sales growth in fiscal 2024 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 2024;
•our plans regarding cost savings, including our target for cost savings through fiscal 2024 and the impact of costs savings on the company;
•our belief that our purpose will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation, and statements regarding our plans with respect to our strategic pillars that support this growth transformation;
•our expectations regarding the use and investment of remaining cash generated from operations;
•the 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;
•the expected long-term rate of return on plan assets of the U.S. Retirement Plan;
•the sufficiency of our available liquidity to sustain our operations for multiple years;
•estimates regarding the outcome of legal proceedings;
•the impact of seasonal trends on our 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 expectations regarding real sales growth in the U.S. foodservice market and trends in produce markets;
•our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;
•our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;
•our expectations regarding our effective tax rate in fiscal 2024;
•the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of 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;
•future compliance with the covenants under our revolving credit facility;
•our ability to effectively access the commercial paper market and long-term capital markets; and
•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.
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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 Form 10-Q and those discussed in Item 1A of our fiscal 2023 Form 10-K:

•the risk that if sales from our locally managed customers do not grow at the same rate as sales from multi-unit customers, 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;
•the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs 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 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 impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;
•the risk that the actual costs of any business initiatives may be greater or less than currently expected;
•the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;
•the risk that our relationships with long-term customers may be materially diminished or terminated;
•the risk that changes in consumer eating habits could materially and adversely affect our business, financial condition, or results of operations;
•the impact and effects of public health crises, pandemics and epidemics, such as the outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations;
•the risk that changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;
•the risk that we may not be able to fully compensate for increases in fuel costs, and forward purchase commitments intended to contain fuel costs could result in above market fuel costs;
•the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;
•the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;
•risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;
•the risk that we may not realize anticipated benefits from our operating cost reduction efforts;
•difficulties in successfully expanding into international markets and complimentary lines of business;
•the potential impact of product liability claims;
•the risk that we fail to comply with requirements imposed by applicable law or government regulations;
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•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 future labor disruptions or disputes could disrupt the integration of Brakes France and Davigel into Sysco France and our operations in France and the European Union 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 of negative impacts to our business and our relationships with customers from a cybersecurity incident and/or other technology disruptions;
•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;
•the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to 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 2023 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 2023 Form 10-K. There have been no significant changes to our market risks since July 1, 2023.


58

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 December 30, 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 December 30, 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 December 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
59

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

For a discussion of our risk factors, see the section entitled “Risk Factors” in our 2023 Annual Report on Form 10-K.

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

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

We made the following share repurchases during the second quarter of fiscal 2024:

ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of Shares Purchased (1)
 Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
 Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1        
October 1 - October 28 569,405  $ 64.48  569,405  — 
Month #2
October 29 - November 25 574,847  67.62  574,847  — 
Month #3
November 26 - December 30 338,707  72.61  338,707  — 
Totals 1,482,959  $ 67.56  1,482,959  — 
(1)
The total number of shares purchased includes 0, 1,637 and 1,602 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.

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 repurchased 2,862,667 shares for $199.9 million during fiscal 2024. As of December 30, 2023, we had a remaining authorization of approximately $3.8 billion. We purchased 6,026,110 additional shares under our authorization through January 12, 2024.

Item 3. Defaults Upon Senior Securities Item 4.

None
60


Mine Safety Disclosures

Not applicable

Item 5.  Other Information

Insider Trading Arrangements and Policies

The table below shows the plans or other arrangements (each, a (Plan)) adopted or terminated during the quarter ended December 30, 2023 providing for the purchase and/or sale of Sysco securities by Sysco’s directors and Section 16 officers:
Name Title Action Date Trading Arrangement Number of Securities Covered
Expiration Date (3)
Rule 10b5-1 (1)
Non-Rule 10b5-1 (2)
Kevin Hourican President and Chief Executive Officer Adopt December 13, 2023 X
75,019 shares to be sold
 December 31, 2024
Neil Russell Senior Vice President,
Corporate Affairs and Chief Administrative Officer		 Adopt December 7, 2023 X
5,129 shares to be sold
 December 31, 2024
Chris Jasper Senior Vice President and President, U.S. Broadline and Foodservice Operations Adopt December 13, 2023 X
4,000 shares to be sold
December 31, 2024
(1)
 Intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c).
(2)
 Non-Rule Rule 10b5-1 trading arrangement as defined in Item 408 of Regulation S-K.
(3)
 Each Plan terminates on the earlier of: (i) the expiration date listed in the table above; (ii) the first date on which all trades set forth in the Plan have been executed; or (iii) such date the Plan is otherwise terminated according to its terms.

Item 6.  Exhibits

The exhibits listed on the Exhibit Index below are filed as a part of this Quarterly Report on Form 10-Q.
61

EXHIBIT INDEX
3.1 —
     
3.2 —
     
3.3 —
     
3.4 —
4.1 —
4.2 —
10.1†# —
10.2†# —
10.3†# —
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 1, 2023 filed on August 25, 2023 (File No. 1-6544).
31.1# —
     
31.2# —
     
32.1# —
     
32.2# —
     
101.SCH# — Inline XBRL Taxonomy Extension Schema Document
101.CAL# — Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF# — Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB# — Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE# — Inline XBRL Taxonomy Extension Presentation Linkbase Document
62

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 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.
# Filed herewith
63
SIGNATURES


Sysco Corporation
(Registrant)
Date: January 30, 2024 By: /s/ KEVIN P. HOURICAN
  Kevin P. Hourican
    President and Chief Executive Officer
Date: January 30, 2024 By: /s/ KENNY K. CHEUNG
  Kenny K. Cheung
    Executive Vice President and
Chief Financial Officer
Date: January 30, 2024 By: /s/ JENNIFER L. JOHNSON
  Jennifer L. Johnson
  Senior Vice President and
  Chief Accounting Officer

EX-10.1 2 exhibit1012023rsagrmt-nond.htm EX-10.1 Document
EXHIBIT 10.1
SYSCO CORPORATION
2018 OMNIBUS INCENTIVE PLAN

2023 RESTRICTED STOCK AWARD AGREEMENT


    This Restricted Stock Award Agreement (“Agreement”) was made and entered into as of November 17, 2023 (“Date of Grant”), by and between Sysco Corporation, a Delaware corporation (hereinafter “Sysco”), and ____________, a director of Sysco (hereinafter “Director”).

W I T N E S S E T H:

    WHEREAS, the Board of Directors of Sysco has adopted, and Sysco’s stockholders have approved, the Sysco Corporation 2018 Omnibus Incentive Plan (the “Plan”), the purpose of which is to promote the interests of Sysco and its stockholders by enhancing Sysco’s ability to attract and retain the services of experienced and knowledgeable directors and by encouraging such directors to acquire an increased proprietary interest in Sysco through the ownership of common stock, $1.00 par value, of Sysco (“Common Stock”); and

    WHEREAS, the Plan provides that non-employee directors may receive awards of restricted shares of Sysco Common Stock; and

    WHEREAS, Director desires to continue to serve on the Board of Directors of Sysco and to accept an award of restricted stock in accordance with the terms and provisions of the Plan and this Agreement;

    NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:

1.    GRANT OF RESTRICTED SHARES; VESTING

    (a)    Grant of Restricted Shares. Sysco, as authorized by the Board of Directors, hereby grants to Director ______ [Full amount of grant] shares of restricted Common Stock pursuant to the provisions of the Plan.

    (b)    Vesting. The Restricted Stock Award shall be subject to vesting as set forth in the Plan and summarized below:

(i)    One-hundred percent (100%) of the Restricted Stock Award shall vest on the first anniversary of the Date of Grant.

(ii)    Any unvested portion of a Restricted Stock Award shall vest upon the occurrence of a Change in Control. For purposes of this Agreement, “Change in Control” means that a person or persons who are acting together for the purpose of acquiring an equity interest in Sysco acquire beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 20% or more of the outstanding Common Stock.

2.    RESTRICTION ON TRANSFER.

The restricted Common Stock granted as a Restricted Stock Award under this Agreement shall not be sold, pledged, assigned, transferred, or encumbered prior to the time the Restricted Stock Award vests as described herein. Any attempt to sell, pledge, assign, transfer, encumber or otherwise dispose of the shares of Common Stock contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the shares, shall be null, void and without effect.



3.    FORM; REMOVAL OF RESTRICTIONS.

Each share of restricted Common Stock granted as a Restricted Stock Award hereunder shall be issued in uncertificated form and credited to a restricted account at a brokerage firm selected by the Company, registered in the name of the Director. If the Restricted Stock vests and all terms and conditions of this Agreement are complied with in full, all restrictions on the restricted Common Stock shall lapse and such restrictions shall be removed from the Director’s restricted brokerage account.

4.    CERTAIN RIGHTS OF DIRECTOR.

    Except as otherwise set forth herein, Director, as owner of shares of restricted Common Stock granted as a Restricted Stock Award hereunder shall have all the rights of a stockholder with respect to such shares of restricted Common Stock, including, but not limited to, the right to vote such shares and the right to receive all dividends paid with respect to such shares; provided, that all such rights shall be forfeited in respect to any portion of the Restricted Stock Award as of the date all or any portion of such award is forfeited. Cash dividends paid on the Restricted Stock Award shall accrue during the vesting period and shall be subject to vesting and forfeiture to the same extent as the shares of Common Stock with respect to which such cash dividends have been declared.

    In the event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event during the vesting period, the shares or other property issued or declared with respect to the non-vested Restricted Stock Award shall be subject to the same terms and conditions relating to vesting as the shares to which they relate.




5.    CESSATION OF SERVICE.

    Except as set forth below and unless otherwise determined by the Board, if Director ceases to be a Non-Employee Director (as defined in the Plan) prior to the vesting of any portion of the Restricted Stock Award then Director shall forfeit the portion of the Restricted Stock Award which is not vested on the date he ceases to be a Non-Employee Director; provided, however, that unless otherwise determined by the Board, if (a) Director serves out his or her term but does not stand for re-election at the end thereof, or (b) Director shall retire from service on the Board (for reasons other than death) prior to the expiration of his or her term and on or after the date he or she attains age 71, Director’s Restricted Stock Award shall remain in effect and vest, as if Director had remained a Non-Employee Director of Sysco. Upon the death of Director, any unvested portion of the Restricted Stock Award shall vest.

6.    ADJUSTMENT TO AWARD IN CERTAIN EVENTS.

    In the event of a change in the capitalization of Sysco due to a stock split, stock dividend, recapitalization, merger, consolidation, combination, or similar event, the aggregate shares of restricted Common Stock subject to this Agreement shall be adjusted to reflect such change pursuant to the Plan.

7.    WITHHOLDING.

    If and to the extent required by applicable law, distributions under the Plan are subject to withholding of all applicable taxes, and Sysco may condition the delivery of any shares or other Plan benefits on satisfaction of the applicable withholding obligations. Sysco, in its discretion, may either: (a) require Director to pay to Sysco an amount sufficient to satisfy any local, state, Federal and foreign income tax, employment tax and insurance withholding requirements prior to the delivery of any payment or stock owing to Director pursuant to the Restricted Stock Award; or, in its discretion, (b) permit Director to surrender shares of Common Stock which Director already owns, or reduces the number of shares to be delivered to Director by that number of shares of the Restricted Stock Award, in each case in an amount sufficient to satisfy all or a portion of such tax or other withholding requirements, but only to the extent of the minimum amount required to be withheld under applicable law. Any such shares of Common Stock surrendered or otherwise tendered shall be valued at the Fair Market Value thereof, as defined in the Plan.

8.    REGULATORY AUTHORITY.

    Notwithstanding any other provision of this Agreement to the contrary, Director agrees that Sysco shall not be obligated to deliver any shares of Common Stock, if counsel to Sysco determines such delivery would violate any law or regulation of any governmental authority or agreement between Sysco and any national securities exchange upon which the Common Stock is listed.



9.    PLAN CONTROLS.

    The Restricted Stock Award is subject to the terms of the Plan, which is incorporated herein by this reference. In the event of a conflict between the terms of this Agreement and the Plan, the Plan shall be the controlling document.
    
10.     DATA PRIVACY.



To the extent that consent is required, Director hereby consents to the collection, use and transfer, in electronic or other form, of Director’s personal data as described in this Agreement and any other materials by and among the Company and for the purpose of implementing, administering and managing Director’s participation in the Plan.

Director understands that the Company and any Affiliated Companies may hold certain personal information about Director, including but not limited to his or her name, home address, email address, telephone number, date of birth, social security number, passport number or other identification number, salary, nationality, any shares of Stock or directorships held in the Company and details of all Awards or any other entitlements to shares of Stock awarded, cancelled, vested, unvested, or outstanding in Director’s favor (“Data”), for the purpose of implementing, administering or managing the Plan. Certain Data may also constitute “sensitive personal data” within the meaning of applicable local law. Such Data includes, but is not limited to, the information provided above and any changes thereto and other appropriate personal and financial data about Director. Director hereby provides explicit consent to the Company, the Employer and any Affiliated Companies to process any such Data to the extent it is necessary for the purposes of implementing, administering and managing Director’s participation in the Plan.

Director understands that Data will be transferred, for the purposes of implementing, administering and managing Director’s participation in the Plan, to such equity plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Director understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have data privacy laws and protections which provide standards of protection that are different to, or lower than, the standards provided by the data privacy laws in Director’s country. Director understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the stock plan administrator of the Company. Director authorizes the Company, the Company’s equity service plan provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Director understands that Data will be held only as long as is necessary to implement, administer and manage Director’s participation in the Plan. Further, Director understands that he or she is providing the consents herein on a purely voluntary basis. If Director does not consent, or if Director later seeks to revoke his or her consent, his or her status with the Company will not be affected; the only consequence of refusing or withdrawing Director’s consent is that the Company would not be able to grant Director Awards or other equity awards or administer or maintain such awards. Therefore, Director understands that refusing or withdrawing his or her consent may affect Director’s ability to participate in the Plan.

Finally, Director understands that the Company may rely on a different legal basis for the processing and/or transfer of Data in the future and/or request Director to provide an executed acknowledgment or data privacy consent form (or any other acknowledgments, agreements or consents) to the Company that the Company may deem necessary to obtain under the data privacy laws in Director’s country, either now or in the future. Director understands that he or she will not be able to participate in the Plan if he or she fails to execute any such acknowledgment, agreement or consent requested by the Company.



    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Sysco Corporation



                            
By:     Kevin P. Hourican
President and Chief Executive Officer


DIRECTOR:



                            
Name:


EX-10.2 3 exhibit102-2023rsagmtxdefe.htm EX-10.2 Document
EXHIBIT 10.2
SYSCO CORPORATION
2018 OMNIBUS INCENTIVE PLAN

2023 RESTRICTED STOCK AWARD AGREEMENT

SHARE UNITS


    This Restricted Stock Award Agreement (“Agreement”) was made and entered into as of November 17, 2023 (“Date of Grant”), by and between Sysco Corporation, a Delaware corporation (hereinafter “Sysco”), and ________, a director of Sysco (hereinafter “Director”).

W I T N E S S E T H:

    WHEREAS, the Board of Directors of Sysco has adopted, and Sysco’s stockholders have approved, the Sysco Corporation 2018 Omnibus Incentive Plan (the “Plan”), the purpose of which, among other things, is to promote the interests of Sysco and its stockholders by enhancing Sysco’s ability to attract and retain the services of experienced and knowledgeable directors and by encouraging such directors to acquire an increased proprietary interest in Sysco through the ownership of common stock, $1.00 par value, of Sysco (“Common Stock”); and

    WHEREAS, the Board of Directors of Sysco has adopted the Sysco Corporation 2009 Board of Directors Stock Deferral Plan (the “Stock Deferral Plan”), the purpose of which is to provide its non-employee directors the opportunity to defer receipt of stock that would otherwise be transferred to them during their service on the Board of Directors of Sysco Corporation under the Plan in order to allow them to participate in the long-term success of Sysco and to promote a greater alignment of interests between the non-employee directors and the shareholders;

    WHEREAS, the Plan provides that non-employee directors may receive awards of restricted shares of Sysco Common Stock and may defer the receipt of such shares under the Stock Deferral Plan; and

    WHEREAS, Director desires to continue to serve on the Board of Directors of Sysco and to accept an award of restricted stock in accordance with the terms and provisions of the Plan and this Agreement;

    NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:



1.    GRANT OF RESTRICTED SHARES; CONVERSION TO SHARE UNITS; VESTING

    (a)    Grant of Restricted Shares. Sysco, as authorized by the Board of Directors, hereby grants to Director [Full amount of grant] shares of restricted Common Stock pursuant to the provisions of the Plan.

    (b)    Exchange for Share Units. Pursuant to Director’s Restricted Share Deferral Election (as defined in the Stock Deferral Plan), Director elected to defer receipt of 100% of the shares of restricted Common Stock granted during calendar year 2023. As a result, [X,XXX] shares of restricted Common Stock (the “Exchanged Shares”) granted to Director pursuant to paragraph 1(a) of this Agreement are hereby exchanged for Share Units (as defined in the Stock Deferral Plan) under the Stock Deferral Plan and the Director shall have no rights to receive the Exchanged Shares. The Director’s rights with respect to the Share Units received in exchange for the Exchanged Shares, as well as the terms and conditions of the Share Units, are those as described in the Stock Deferral Plan; provided, however, vesting of the Share Units and the rights to the Share Units upon Director’s Cessation of Service on the Board shall be determined under Section 1(c) and Section 2 of this Agreement, as applicable.

    (c)    Vesting. The Share Units received in exchange for the Exchanged Shares shall be subject to vesting as follows:

(i)    One-hundred percent (100%) of the Share Units received in exchange for the Exchanged Shares shall vest on the first anniversary of the Date of Grant.

(ii)    Any unvested portion of the Share Units received in exchange for the Exchanged Shares shall vest upon the occurrence of a Change in Control. For purposes of this Agreement, “Change in Control” means that a person or persons who are acting together for the purpose of acquiring an equity interest in Sysco acquire beneficial ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 20% or more of the outstanding Common Stock.

    2.    CESSATION OF SERVICE.

    Except as set forth below and unless otherwise determined by the Board, if Director ceases to be a Non-Employee Director (as defined in the Plan) prior to the vesting of any portion of the Share Units received in exchange for the Exchanged Shares then Director shall forfeit the portion of the Share Units received in exchange for the Exchanged Shares which is not vested on the date he ceases to be a Non-Employee Director; provided, however, that unless otherwise determined by the Board, if (a) Director serves out his or her term but does not stand for re-election at the end thereof, or (b) Director shall retire from service on the Board (for reasons other than death) prior to the expiration of his or her term and on or after the date he or she attains age 71, Director’s Share Units received in exchange for the Exchanged Shares shall remain in effect and vest, as if Director had remained a Non-Employee Director of Sysco. Upon the death of Director, any unvested portion of the Share Units received in exchange for the Exchanged Shares shall vest.

3.    ADJUSTMENT TO AWARD IN CERTAIN EVENTS.

    In the event of a change in the capitalization of Sysco due to a stock split, stock dividend, recapitalization, merger, consolidation, combination, or similar event, the Share Units subject to this Agreement shall be adjusted to reflect such change pursuant to the Plan.

4.    NO SHAREHOLDER RIGHTS; DIVIDEND EQUIVALENTS.



Director shall have no rights and privileges of a shareholder with respect to shares of Common Stock underlying the Share Units, including voting or dividend rights, until certificates for shares have been issued upon payment of vested Share Units. Cash dividends paid on shares underlying the Share Units shall be converted to additional Share Units as described in the Stock Deferral Plan. Such additional Share Units shall be subject to vesting and forfeiture to the same extent as the underlying Share Units and shall be paid at the same time as the underlying Share Units are paid pursuant to the Stock Deferral Plan.

5.    WITHHOLDING.

    If and to the extent required by applicable law, distributions under the Plan are subject to withholding of all applicable taxes, and Sysco may condition the delivery of any shares or other Plan benefits on satisfaction of the applicable withholding obligations. Sysco, in its discretion, may either: (a) require Director to pay to Sysco an amount sufficient to satisfy any local, state, Federal and foreign income tax, employment tax and insurance withholding requirements prior to the delivery of any payment or stock owing to Director pursuant to the Restricted Stock Award; or, in its discretion, (b) permit Director to surrender shares of Common Stock which Director already owns, or reduces the number of shares to be delivered to Director by that number of shares of the Restricted Stock Award, in each case in an amount sufficient to satisfy all or a portion of such tax or other withholding requirements, but only to the extent of the minimum amount required to be withheld under applicable law. Any such shares of Common Stock surrendered or otherwise tendered shall be valued at the Fair Market Value thereof, as defined in the Plan.

6.    REGULATORY AUTHORITY.

    Notwithstanding any other provision of this Agreement to the contrary, Director agrees that Sysco shall not be obligated to deliver any shares of Common Stock, if counsel to Sysco determines such delivery would violate any law or regulation of any governmental authority or agreement between Sysco and any national securities exchange upon which the Common Stock is listed.

7.    PLAN CONTROLS.

    The Share Units are subject to the terms of the Plan and the Stock Deferral Plan, which are incorporated herein by this reference. In the event of a conflict between the terms of this Agreement and the Plan or the Deferral Plan, the Plan or the Deferral Plan, as applicable, shall be the controlling document.



8.    RESTRICTION ON TRANSFER; UNFUNDED ARRANGEMENT.

    The Share Units may not be sold, pledged, assigned, transferred, or encumbered. Any attempt to sell, pledge, assign, transfer, encumber or otherwise dispose of the Share Units contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the shares, shall be null, void and without effect. The Share Units are an unfunded arrangement, and Director shall have no rights with respect to the Share Units other than those of a general creditor of Sysco.

9.    SECTION 409A.

This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code, consistent with Section 5.12 of the Plan.

10.     DATA PRIVACY.

To the extent that consent is required, Director hereby consents to the collection, use and transfer, in electronic or other form, of Director’s personal data as described in this Agreement and any other materials by and among the Company and for the purpose of implementing, administering and managing Director’s participation in the Plan.



Director understands that the Company and any Affiliated Companies may hold certain personal information about Director, including but not limited to his or her name, home address, email address, telephone number, date of birth, social security number, passport number or other identification number, salary, nationality, any shares of Stock or directorships held in the Company and details of all Awards or any other entitlements to shares of Stock awarded, cancelled, vested, unvested, or outstanding in Director’s favor (“Data”), for the purpose of implementing, administering or managing the Plan. Certain Data may also constitute “sensitive personal data” within the meaning of applicable local law. Such Data includes, but is not limited to, the information provided above and any changes thereto and other appropriate personal and financial data about Director. Director hereby provides explicit consent to the Company, the Employer and any Affiliated Companies to process any such Data to the extent it is necessary for the purposes of implementing, administering and managing Director’s participation in the Plan.

Director understands that Data will be transferred, for the purposes of implementing, administering and managing Director’s participation in the Plan, to such equity plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Director understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have data privacy laws and protections which provide standards of protection that are different to, or lower than, the standards provided by the data privacy laws in Director’s country. Director understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the stock plan administrator of the Company. Director authorizes the Company, the Company’s equity service plan provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Director understands that Data will be held only as long as is necessary to implement, administer and manage Director’s participation in the Plan. Further, Director understands that he or she is providing the consents herein on a purely voluntary basis. If Director does not consent, or if Director later seeks to revoke his or her consent, his or her status with the Company will not be affected; the only consequence of refusing or withdrawing Director’s consent is that the Company would not be able to grant Director Awards or other equity awards or administer or maintain such awards. Therefore, Director understands that refusing or withdrawing his or her consent may affect Director’s ability to participate in the Plan.

Finally, Director understands that the Company may rely on a different legal basis for the processing and/or transfer of Data in the future and/or request Director to provide an executed acknowledgment or data privacy consent form (or any other acknowledgments, agreements or consents) to the Company that the Company may deem necessary to obtain under the data privacy laws in Director’s country, either now or in the future. Director understands that he or she will not be able to participate in the Plan if he or she fails to execute any such acknowledgment, agreement or consent requested by the Company.


    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Sysco Corporation





                            
By:     Kevin P. Hourican
President and Chief Executive Officer


DIRECTOR:



                            
Name:












EX-10.3 4 exhibit103summaryofcompens.htm EX-10.3 Document

EXHIBIT 10.3

Summary of Non-Employee
Director Compensation Program for CY2024

•Each non-employee director will receive an annual base retainer of $110,000. The Chairman of the Board, as well as the Committee Chairpersons, will receive additional annual retainer amounts as follows:

oChairman of the Board:                        $250,000
oAudit Committee Chair:                        $30,000
oCompensation & Leadership Development Committee Chair:    $20,000
oCorporate Governance & Nominating Committee Chair:        $20,000
oSustainability Committee Chair:                    $20,000
oTechnology Committee Chair:                    $20,000

•The payments described above will continue to be paid on a quarterly basis.

•The Board will continue to issue annual restricted stock awards (currently, each non-employee director receives stock with a value of $205,000). These awards shall be subject to a minimum one-year vesting.

•Board members will be able to elect to receive up to 100% of their annual base retainer in stock; in addition, the Chairman of the Board and the Committee Chairpersons may elect to receive up to 100% of their additional amounts in stock.

•To the extent that a director does not choose to receive stock in lieu of cash, he or she may defer the cash under the Non-Employee Director Deferred Compensation Plan.

Directors may elect to defer up to 100% of the equity they receive under the 2009 Non-Employee Directors Stock Deferral Plan.


EX-31.1 5 exhibit311ceocertsec302-q2.htm EX-31.1 Document

Exhibit 31.1

CERTIFICATION

I, Kevin P. Hourican, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sysco Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 30, 2024

/s/ KEVIN P. HOURICAN
Kevin P. Hourican
President and Chief Executive Officer

EX-31.2 6 exhibit312cfocertsec302-q2.htm EX-31.2 Document

Exhibit 31.2

CERTIFICATION

I, Kenny K. Cheung, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sysco Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 30, 2024

/s/ KENNY K. CHEUNG
Kenny K. Cheung
Executive Vice President and Chief Financial Officer


EX-32.1 7 exhibit321ceocertsec906-q2.htm EX-32.1 Document

Exhibit 32.1




CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002



I, Kevin P. Hourican, President and Chief Executive Officer, of Sysco Corporation (the “company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 30, 2023 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2.All of the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: January 30, 2024

/s/ KEVIN P. HOURICAN
Kevin P. Hourican
President and Chief Executive Officer

EX-32.2 8 exhibit322cfocertsec906-q2.htm EX-32.2 Document

Exhibit 32.2




CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002



I, Kenny K. Cheung, Executive Vice President and Chief Financial Officer, of Sysco Corporation (the “company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 30, 2023 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2.All of the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: January 30, 2024

/s/ KENNY K. CHEUNG
Kenny K. Cheung
Executive Vice President and Chief Financial Officer