Equibles

10-Q

SYSCO CORP (SYY)

10-Q 2023-02-01 For: 2022-12-31
View Original
Added on April 08, 2026

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 31, 2022

OR

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

Commission File Number: 1-6544

________________

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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 classTrading SymbolName of each exchange on which registeredCommon stock, $1.00 Par ValueSYYNew York Stock Exchange1.25% Notes due June 2023SYY 23New York Stock Exchange

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

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

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

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

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

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

507,604,019 shares of common stock were outstanding as of January 13, 2023.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION Page No.
Item 1. Financial Statements 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
Item 3. Quantitative and Qualitative Disclosures about Market Risk 57
Item 4. Controls and Procedures 57
PART II – OTHER INFORMATION
Item 1. Legal Proceedings 58
Item 1A. Risk Factors 58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 58
Item 3. Defaults Upon Senior Securities 59
Item 4. Mine Safety Disclosures 59
Item 5. Other Information 59
Item 6. Exhibits 59
Signatures 61

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)

Dec. 31, 2022 Jul. 2, 2022
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 500,340 $ 867,086
Accounts receivable, less allowances of $84,646 and $70,790 4,907,836 4,838,912
Inventories 4,661,516 4,437,498
Prepaid expenses and other current assets 300,513 303,789
Income tax receivable 25,801 35,934
Total current assets 10,396,006 10,483,219
Plant and equipment at cost, less accumulated depreciation 4,562,435 4,456,420
Other long-term assets
Goodwill 4,576,898 4,542,315
Intangibles, less amortization 911,196 952,683
Deferred income taxes 435,183 377,604
Operating lease right-of-use assets, net 708,535 723,297
Other assets 496,978 550,150
Total other long-term assets 7,128,790 7,146,049
Total assets $ 22,087,231 $ 22,085,688
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 5,420,422 $ 5,752,958
Accrued expenses 2,128,945 2,270,753
Accrued income taxes 33,017 40,042
Current operating lease liabilities 104,070 105,690
Current maturities of long-term debt 702,067 580,611
Total current liabilities 8,388,521 8,750,054
Long-term liabilities
Long-term debt 10,349,913 10,066,931
Deferred income taxes 232,444 250,171
Long-term operating lease liabilities 633,824 636,417
Other long-term liabilities 1,012,634 967,907
Total long-term liabilities 12,228,815 11,921,426
Noncontrolling interest 33,306 31,948
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 1,774,141 1,766,305
Retained earnings 10,649,338 10,539,722
Accumulated other comprehensive loss (1,324,788) (1,482,054)
Treasury stock at cost, 257,846,972 and 256,531,543 shares (10,427,277) (10,206,888)
Total shareholders’ equity 1,436,589 1,382,260
Total liabilities and shareholders’ equity $ 22,087,231 $ 22,085,688

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

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

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

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
Sales $ 18,593,953 $ 16,320,203 $ 37,720,783 $ 32,776,749
Cost of sales 15,244,337 13,429,053 30,882,312 26,913,891
Gross profit 3,349,616 2,891,150 6,838,471 5,862,858
Operating expenses 2,708,974 2,446,241 5,463,496 4,786,267
Operating income 640,642 444,909 1,374,975 1,076,591
Interest expense 132,042 242,899 256,192 371,113
Other expense (income), net (1) 330,124 (10,676) 345,405 (13,928)
Earnings before income taxes 178,476 212,686 773,378 719,406
Income taxes 37,260 45,245 166,594 173,952
Net earnings $ 141,216 $ 167,441 $ 606,784 $ 545,454
Net earnings:
Basic earnings per share $ 0.28 $ 0.33 $ 1.20 $ 1.07
Diluted earnings per share 0.28 0.33 1.19 1.06
Average shares outstanding 507,609,696 511,044,400 507,594,137 511,780,234
Diluted shares outstanding 510,145,794 514,574,889 510,264,473 515,178,910
(1) Sysco’s second quarter of fiscal 2023 included a charge for $315.4 million in other expense related to pension settlement charges. See Note 9, “Company-Sponsored Employee Benefit Plans.”
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See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
Net earnings $ 141,216 $ 167,441 $ 606,784 $ 545,454
Other comprehensive income (loss):
Foreign currency translation adjustment 241,814 (26,870) 9,632 (114,064)
Items presented net of tax:
Amortization of cash flow hedges 2,170 2,155 4,325 4,310
Change in net investment hedges (33,749) 8,362 (10,240) 18,527
Change in cash flow hedges 203 (6,101) (26,187) (6,530)
Reclassification adjustment for loss included in net income 22 — 22 —
Amortization of prior service cost 74 74 148 148
Amortization of actuarial loss 5,628 5,488 12,519 11,855
Pension settlement charge 236,591 — 236,591 —
Net actuarial loss arising in current year (67,388) — (67,388) —
Change in marketable securities 1,172 (1,429) (2,156) (1,740)
Total other comprehensive income (loss) 386,537 (18,321) 157,266 (87,494)
Comprehensive income $ 527,753 $ 149,120 $ 764,050 $ 457,960

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In thousands, except for share data)

Quarter to Date

Accumulated<br>Other Comprehensive<br>Loss
Paid-in<br>Capital Retained<br>Earnings Treasury Stock
Amount Shares Amounts Totals
Balance as of October 1, 2022 $ 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 (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 $ 765,175 $ 1,774,141 $ 10,649,338 $ (1,324,788) 257,846,972 $ (10,427,277) $ 1,436,589
Accumulated<br>Other Comprehensive<br>Loss
Paid-in<br>Capital Retained<br>Earnings Treasury Stock
Amount Shares Amounts Totals
Balance as of October 2, 2021 $ 765,175 $ 1,655,110 $ 10,288,291 $ (1,217,937) 252,825,080 $ (9,817,347) $ 1,673,292
Net earnings 167,441 167,441
Foreign currency translation adjustment (26,870) (26,870)
Amortization of cash flow hedges, net of tax 2,155 2,155
Change in cash flow hedges, net of tax (6,101) (6,101)
Change in net investment hedges, net of tax 8,362 8,362
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 5,562 5,562
Change in marketable securities, net of tax (1,429) (1,429)
Dividends declared (0.47 per common share) (239,107) (239,107)
Treasury stock purchases 5,679,298 (415,824) (415,824)
Increase in ownership interest in subsidiaries (304) (304)
Share-based compensation awards 35,681 (470,522) 18,214 53,895
Balance as of January 1, 2022 $ 765,175 $ 1,690,487 $ 10,216,625 $ (1,236,258) 258,033,856 $ (10,214,957) $ 1,221,072

All values are in US Dollars.

Year to Date

Accumulated<br>Other Comprehensive<br>Loss
Paid-in<br>Capital Retained<br>Earnings Treasury Stock
Amount Shares Amounts Totals
Balance as of July 2, 2022 $ 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 (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 $ 765,175 $ 1,774,141 $ 10,649,338 $ (1,324,788) 257,846,972 $ (10,427,277) $ 1,436,589
Accumulated<br>Other Comprehensive<br>Loss
Paid-in<br>Capital Retained<br>Earnings Treasury Stock
Amount Shares Amounts Totals
Balance as of July 3, 2021 $ 765,175 $ 1,619,995 $ 10,151,706 $ (1,148,764) 253,342,595 $ (9,835,216) $ 1,552,896
Net earnings 545,454 545,454
Foreign currency translation adjustment (114,064) (114,064)
Amortization of cash flow hedges, net of tax 4,310 4,310
Change in cash flow hedges, net of tax (6,530) (6,530)
Change in net investment hedges, net of tax 18,527 18,527
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax 12,003 12,003
Change in marketable securities, net of tax (1,740) (1,740)
Dividends declared (0.94 per common share) (480,535) (480,535)
Treasury stock purchases 5,679,298 (415,824) (415,824)
Increase in ownership interest in subsidiaries (304) (304)
Share-based compensation awards 70,796 (988,037) 36,083 106,879
Balance as of January 1, 2022 $ 765,175 $ 1,690,487 $ 10,216,625 $ (1,236,258) 258,033,856 $ (10,214,957) $ 1,221,072

All values are in US Dollars.

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)

26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022
Cash flows from operating activities:
Net earnings $ 606,784 $ 545,454
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge 315,354 —
Share-based compensation expense 52,679 60,254
Depreciation and amortization 378,949 377,763
Operating lease asset amortization 55,884 54,856
Amortization of debt issuance and other debt-related costs 10,315 11,014
Deferred income taxes (123,187) (72,892)
Provision for losses on receivables 9,732 1,508
Loss on extinguishment of debt — 115,603
Other non-cash items 11,525 1,103
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables (87,190) (385,179)
Increase in inventories (222,650) (357,908)
Increase in prepaid expenses and other current assets (8,915) (12,560)
(Decrease) increase in accounts payable (390,124) 83,214
(Decrease) increase in accrued expenses (62,779) 95,388
Decrease in operating lease liabilities (57,234) (65,123)
Increase (decrease) in accrued income taxes 3,108 (111,227)
Decrease (increase) in other assets 22,156 (4,255)
(Decrease) increase in other long-term liabilities (10,941) 40,034
Net cash provided by operating activities 503,466 377,047
Cash flows from investing activities:
Additions to plant and equipment (309,664) (181,374)
Proceeds from sales of plant and equipment 25,493 5,450
Acquisition of businesses, net of cash acquired (37,699) (769,658)
Purchase of marketable securities (14,019) (18,539)
Proceeds from sales of marketable securities 11,641 16,648
Other investing activities 4,840 6,651
Net cash used for investing activities (319,408) (940,822)
Cash flows from financing activities:
Bank and commercial paper borrowings, net 155,000 —
Other debt borrowings including senior notes 140,024 1,249,995
Other debt repayments including senior notes (57,270) (23,050)
Redemption premiums and repayments for senior notes — (1,395,668)
Debt issuance costs — (15,547)
Cash received from termination of interest rate swap agreements — 23,127
Proceeds from stock option exercises 47,339 36,083
Stock repurchases (267,727) (415,824)
Dividends paid (498,323) (481,386)
Other financing activities (46,517) (5,297)
Net cash used for financing activities (527,474) (1,027,567)
Effect of exchange rates on cash, cash equivalents and restricted cash (2,314) (10,868)
Net decrease in cash, cash equivalents and restricted cash (345,730) (1,602,210)
Cash, cash equivalents and restricted cash at beginning of period 931,376 3,037,100
Cash, cash equivalents and restricted cash at end of period $ 585,646 $ 1,434,890
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 244,530 $ 258,436
Income taxes, net of refunds 289,413 342,628

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1.  BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, 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 2, 2022. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

Supplemental Cash Flow Information

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statement of cash flows:

Dec. 31, 2022 Jan. 1, 2022
(In thousands)
Cash and cash equivalents $ 500,340 $ 1,374,276
Restricted cash (1) 85,306 60,614
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows $ 585,646 $ 1,434,890 (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.
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2. NEW ACCOUNTING STANDARDS

Liabilities – Supplier Financing Programs

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

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

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

3. REVENUE

The company recognizes revenues when its performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, was $4.6 billion as of both December 31, 2022 and July 2, 2022.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in other assets and amortized over the life of the contract or the expected life of the relationship with the customer. As of December 31, 2022, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:

13-Week Period Ended 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.
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13-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- --- --- --- ---
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Fresh and frozen meats $ 2,403,763 $ 396,232 $ 513,138 $ — $ 3,313,133
Canned and dry products 2,087,808 560,623 155,615 30 2,804,076
Frozen fruits, vegetables, bakery and other 1,508,462 518,271 292,185 — 2,318,918
Poultry 1,351,188 240,755 223,348 — 1,815,291
Dairy products 1,114,145 289,380 139,735 — 1,543,260
Fresh produce 1,037,683 214,823 64,048 — 1,316,554
Paper and disposables 894,553 114,634 193,010 12,792 1,214,989
Seafood 585,713 110,337 33,980 — 730,030
Beverage products 246,365 107,156 131,517 18,827 503,865
Other (1) 268,475 254,061 24,747 212,804 760,087
Total Sales $ 11,498,155 $ 2,806,272 $ 1,771,323 $ 244,453 $ 16,320,203 (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.
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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.
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26-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- --- --- --- ---
US Foodservice Operations International Foodservice Operations SYGMA Other Total
(In thousands)
Principal Product Categories
Fresh and frozen meats $ 4,848,224 $ 813,403 $ 987,794 $ — $ 6,649,421
Canned and dry products 4,164,582 1,142,518 293,212 30 5,600,342
Frozen fruits, vegetables, bakery and other 3,009,755 1,036,526 565,332 — 4,611,613
Poultry 2,702,388 481,956 452,706 — 3,637,050
Dairy products 2,215,569 594,492 279,959 — 3,090,020
Fresh produce 2,024,685 433,786 130,611 — 2,589,082
Paper and disposables 1,805,903 234,374 381,253 28,291 2,449,821
Seafood 1,278,726 231,802 67,204 — 1,577,732
Beverage products 502,750 224,377 269,032 40,916 1,037,075
Other (1) 548,536 508,285 48,253 429,519 1,534,593
Total Sales $ 23,101,118 $ 5,701,519 $ 3,475,356 $ 498,756 $ 32,776,749 (1) Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.
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4.  ACQUISITIONS

During the first 26 weeks of fiscal 2023, the company paid cash of $37.7 million for several acquisitions. Certain acquisitions involve contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are achieved. As of December 31, 2022, aggregate contingent consideration outstanding was $62.7 million, of which $59.2 million was recorded as earnout liabilities. Earnout liabilities are all measured using unobservable inputs that are considered a Level 3 fair value measurement.

Greco and Sons

On August 12, 2021, Sysco consummated its acquisition of Greco and Sons (Greco), a leading independent Italian specialty distributor in the United States, operating out of 10 distribution centers. Greco imports and distributes a full line of food and non-food products and manufactures specialty meat products. The acquisition also includes Bellissimo Foods Company, which distributes a broad selection of Italian and Mediterranean ingredients, including a proprietary branded line of products that are sold exclusively through the Bellissimo Foods Company distribution network, serving independent pizza and Italian restaurants. The purpose of the acquisition was to strengthen Sysco’s business within the Italian foodservice sector.

During the first quarter of fiscal 2023, the company completed the determination of fair value of the assets acquired and liabilities assumed for the Greco acquisition. The company recorded certain measurement period adjustments during each quarter of fiscal 2022 and the first quarter of fiscal 2023, none of which were individually or in aggregate material to the company’s financial statements.

5.  FAIR VALUE MEASUREMENTS

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

The following tables present the company’s assets measured at fair value on a recurring basis as of December 31, 2022 and July 2, 2022:

Assets Measured at Fair Value as of Dec. 31, 2022
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents $ 204,815 $ 5,011 $ — $ 209,826
Other assets (1) 85,306 — — 85,306
Total assets at fair value $ 290,121 $ 5,011 $ — $ 295,132 (1) Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
--- ---
Assets Measured at Fair Value as of Jul. 2, 2022
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents $ 625,281 $ 10,007 $ — $ 635,288
Other assets (1) 64,290 — — 64,290
Total assets at fair value $ 689,571 $ 10,007 $ — $ 699,578 (1) Represents restricted cash balance recorded within other assets in the consolidated balance sheet.
--- ---

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt, and is considered a Level 2 measurement. The fair value of total debt was approximately $10.4 billion as of December 31, 2022 and $10.5 billion as of July 2, 2022, while the carrying value was $11.1 billion as of December 31, 2022 and $10.6 billion as of July 2, 2022.

6. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. The company includes fixed income securities maturing in less than 12 months within prepaid expenses and other current assets and includes fixed income securities maturing in more than 12 months within other assets in the accompanying consolidated balance sheets. The company records the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.

Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in accumulated other comprehensive loss. There were no significant credit losses recognized in the first 26 weeks of fiscal 2023. The following table presents the company’s available-for-sale marketable securities as of December 31, 2022 and July 2, 2022:

December 31, 2022
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 $ 97,844 $ 106 $ (7,363) $ 90,587 $ — $ 90,587
Government bonds 29,925 — (1,732) 28,193 — 28,193
Total marketable securities $ 127,769 $ 106 $ (9,095) $ 118,780 $ — $ 118,780
Jul. 2, 2022
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 $ 96,167 $ 8 $ (5,995) $ 90,180 $ 5,983 $ 84,197
Government bonds 30,070 — (302) 29,768 — 29,768
Total marketable securities $ 126,237 $ 8 $ (6,297) $ 119,948 $ 5,983 $ 113,965

As of December 31, 2022, the balance of available-for-sale securities by contractual maturity is shown in the following table. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

December 31, 2022
(In thousands)
Due after one year through five years $ 70,553
Due after five years through ten years 48,227
Total $ 118,780

There were no significant realized gains or losses in marketable securities in the first 26 weeks of fiscal 2023.

7. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, the company does not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate risk, foreign currency risk and fuel price risk.

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates.

Hedging of foreign currency risk

The company uses euro-bond denominated debt to hedge the foreign currency exposure of our net investment in certain foreign operations. Additionally, Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, British pound sterling, Polish zloty and Danish krone. These inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. The company enters into foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

Hedging of fuel price risk

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

None of the company’s hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of December 31, 2022 are presented below:

Maturity Date of the Hedging Instrument Currency / Unit of Measure Notional Value
(In millions)
Hedging of interest rate risk
June 2023 Euro 500
Hedging of foreign currency risk
Various (January 2023 to April 2023) Swedish Krona 266
Various (January 2023 to March 2023) British Pound Sterling 9
June 2023 Euro 500
Hedging of fuel risk
Various (January 2023 to March 2025) Gallons 74

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 31, 2022 and July 2, 2022 are as follows:

Derivative Fair Value
Balance Sheet location Dec. 31, 2022 Jul. 2, 2022
(In thousands)
Fair Value Hedges:
Interest rate swaps Other current liabilities $ 6,391 $ 2,820
Cash Flow Hedges:
Fuel swaps Other current assets $ 13,490 $ 47,170
Foreign currency forwards Other current assets 1,014 633
Fuel swaps Other assets 1,331 —
Fuel swaps Other current liabilities 1,303 —
Foreign currency forwards Other current liabilities 1 —
Fuel swaps Other long-term liabilities 1,638 209

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

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 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 $ 132,042 $ 242,899 $ 256,192 $ 371,113
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items $ (2,685) $ 29,787 $ (309) $ 27,355
Derivatives designated as hedging instruments 742 (39,473) (5,501) (47,862)

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. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
(In thousands)
Interest expense $ (1,940) $ (5,367) $ (3,879) $ (11,892)
Decrease in fair value of debt 745 (35,154) (3,570) (39,247)
Hedged items $ (2,685) $ 29,787 $ (309) $ 27,355

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 13-week periods ended December 31, 2022 and January 1, 2022, presented on a pretax basis, are as follows:

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 $ —
13-Week Period Ended Jan. 1, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ (7,588) Operating expense $ 9,608
Foreign currency contracts (356) Cost of sales / Other income —
Total $ (7,944) $ 9,608
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 11,149 N/A $ —

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the 26-week periods ended December 31, 2022 and January 1, 2022, presented on a pretax basis, are as follows:

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 $ —
26-Week Period Ended Jan. 1, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In thousands) (In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps $ (8,073) Operating expense $ 17,580
Foreign currency contracts (434) Cost of sales / Other income —
Total $ (8,507) $ 17,580
Derivatives in net investment hedging relationships:
Foreign denominated debt $ 24,702 N/A $ —

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 31, 2022 are as follows:

Dec. 31, 2022
Carrying Amount of Hedged Assets (Liabilities) Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In thousands)
Balance sheet location:
Current maturities of long-term debt $ (568,932) $ 6,391

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

Jul. 2, 2022
Carrying Amount of Hedged Assets (Liabilities) Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In thousands)
Balance sheet location:
Current maturities of long-term debt $ (568,601) $ 2,820

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 31, 2022, there were no borrowings outstanding under this facility.

Sysco has a U.S commercial paper program allowing the company to issue short-term unsecured notes. On September 2, 2022, Sysco entered into an amended and restated commercial paper dealer agreement increasing the issuance allowance from an aggregate amount not to exceed $2.0 billion to an aggregate amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of December 31, 2022, there were $155.0 million in 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

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

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

As a result of the transaction, the company recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023 primarily related to the accelerated recognition of actuarial losses included within accumulated other comprehensive loss in the statement of changes in consolidated shareholders’ equity. The transaction also required the company to remeasure the benefit obligations and plan assets of the U.S. Retirement Plan. The remeasurement

reflects the use of an updated discount rate and an expected rate of return on plan assets as of October 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

Funded Status

The following table presents the changes in benefit obligations and plan assets of the U.S. Retirement Plan affected by the interim remeasurements described above for the 26-week period ended December 31, 2022:

U.S. Retirement Plan
(In thousands)
Change in benefit obligation:
Benefit obligation at July 2, 2022 $ 3,538,232
Service cost 4,357
Interest cost 80,604
Actuarial gain, net (440,311)
Benefit payments (71,839)
Settlements (694,998)
Benefit obligation at December 31, 2022 2,416,045
Change in plan assets:
Fair value of plan assets at July 2, 2022 3,633,167
Actual return on plan assets (456,202)
Benefit payments (71,839)
Settlements (694,998)
Fair value of plan assets at December 31, 2022 2,410,128
Funded status at December 31, 2022 $ (5,917)

Components of Net Benefit Costs

The components of net company-sponsored benefit cost for the U.S. Retirement Plan for the second quarter and first 26 weeks of fiscal 2023 and fiscal 2022 are as follows:

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
(In thousands) (In thousands)
Service cost $ 2,034 $ 3,382 $ 4,357 $ 6,764
Interest cost 38,103 34,792 80,604 69,584
Expected return on plan assets (36,957) (51,580) (76,977) (103,160)
Amortization of prior service cost 98 99 197 198
Amortization of actuarial loss 7,661 7,304 16,609 14,608
Settlement loss recognized 315,354 — 315,354 —
Net pension (benefits) costs $ 326,293 $ (6,003) $ 340,144 $ (12,006)

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.

Assumptions

The remeasurement of the benefit obligations and plan assets of the U.S. Retirement Plan that took place on October 31, 2022 reflects an updated discount rate and an updated expected rate of return on plan assets. The discount rate used to determine benefit obligations as of the remeasurement date was 6.07%, as compared to the discount rate of 4.91% that was used to determine benefit obligations as of July 2, 2022. The expected rate of return used to determine net company-sponsored benefit costs for the remainder of fiscal 2023 was updated to 6.00% as of the remeasurement date, as compared to the expected rate of return of 4.50% that was calculated as of July 2, 2022 to determine net company-sponsored benefit costs for fiscal 2023.

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. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
(In thousands, except for share<br>and per share data) (In thousands, except for share<br>and per share data)
Numerator:
Net earnings $ 141,216 $ 167,441 $ 606,784 $ 545,454
Denominator:
Weighted-average basic shares outstanding 507,609,696 511,044,400 507,594,137 511,780,234
Dilutive effect of share-based awards 2,536,098 3,530,489 2,670,336 3,398,676
Weighted-average diluted shares outstanding 510,145,794 514,574,889 510,264,473 515,178,910
Basic earnings per share $ 0.28 $ 0.33 $ 1.20 $ 1.07
Diluted earnings per share $ 0.28 $ 0.33 $ 1.19 $ 1.06

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 1,848,000 and 2,124,000 for the second quarter of fiscal 2023 and fiscal 2022, respectively. The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 1,620,000 and 2,044,000 for the first 26 weeks of fiscal 2023 and fiscal 2022, respectively.

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 $527.8 million and $149.1 million for the second quarter of fiscal 2023 and fiscal 2022, respectively. Comprehensive income was $764.1 million and $458.0 million for the first 26 weeks of fiscal 2023 and fiscal 2022, respectively.

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

13-Week Period Ended Dec. 31, 2022
Location of <br>Expense (Income) Recognized in <br>Net Earnings Before Tax<br>Amount Tax Net of Tax<br>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 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:
Other comprehensive income before reclassification adjustments:
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 hedge Operating expenses (2) 1,189 986 203
Change in net investment hedge N/A (44,999) (11,250) (33,749)
Total other comprehensive income (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.
13-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- ---
Location of <br>Expense (Income) Recognized in <br>Net Earnings Before Tax<br>Amount Tax Net of Tax<br>Amount
(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost Other expense, net $ 99 $ 25 $ 74
Amortization of actuarial loss, net Other expense, net 7,401 1,913 5,488
Total reclassification adjustments 7,500 1,938 5,562
Foreign currency translation:
Foreign currency translation adjustment N/A (26,870) — (26,870)
Marketable securities:
Change in marketable securities (1) N/A (1,808) (379) (1,429)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges Operating expenses (2) (7,944) (1,843) (6,101)
Change in net investment hedges N/A 11,149 2,787 8,362
Total other comprehensive income before reclassification adjustments 3,205 944 2,261
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 2,874 719 2,155
Total other comprehensive income (loss) $ (15,099) $ 3,222 $ (18,321) (1) Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2022.
--- ---
(2) Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
26-Week Period Ended Dec. 31, 2022
--- --- --- --- --- --- --- ---
Location of <br>Expense (Income) Recognized in <br>Net Earnings Before Tax<br>Amount Tax Net of Tax<br>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 income (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 income (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.
26-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- ---
Location of <br>Expense (Income) Recognized in <br>Net Earnings Before Tax<br>Amount Tax Net of Tax<br>Amount
(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost Other expense, net $ 198 $ 50 $ 148
Amortization of actuarial loss, net Other expense, net 15,887 4,032 11,855
Total reclassification adjustments 16,085 4,082 12,003
Foreign currency translation:
Foreign currency translation adjustment N/A (114,064) — (114,064)
Marketable securities:
Change in marketable securities (1) N/A (2,201) (461) (1,740)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges Operating expenses (2) (8,507) (1,977) (6,530)
Change in net investment hedges N/A 24,702 6,175 18,527
Total other comprehensive income before reclassification adjustments 16,195 4,198 11,997
Reclassification adjustments:
Amortization of cash flow hedges Interest expense 5,748 1,438 4,310
Total other comprehensive income (loss) $ (78,237) $ 9,257 $ (87,494) (1) Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first 26 weeks of fiscal 2022.
--- ---
(2) Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

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

26-Week Period Ended Dec. 31, 2022
Pension and Other Postretirement Benefit Plans,<br>net of tax Foreign Currency Translation Hedging,<br>net of tax Marketable Securities, <br>net of tax 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 hedge — — (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)
26-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- --- --- --- ---
Pension and Other Postretirement Benefit Plans,<br>net of tax Foreign Currency Translation Hedging,<br>net of tax Marketable Securities Total
(In thousands)
Balance as of Jul. 3, 2021 $ (1,061,991) $ (40,092) $ (51,096) $ 4,415 $ (1,148,764)
Equity adjustment from foreign currency translation — (114,064) — — (114,064)
Amortization of cash flow hedges — — 4,310 — 4,310
Change in net investment hedges — — 18,527 — 18,527
Change in cash flow hedge — — (6,530) — (6,530)
Amortization of unrecognized prior service cost 148 — — — 148
Amortization of unrecognized net actuarial losses 11,855 — — — 11,855
Change in marketable securities — — — (1,740) (1,740)
Balance as of Jan. 1, 2022 $ (1,049,988) $ (154,156) $ (34,789) $ 2,675 $ (1,236,258)

12.  SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees under several share-based payment arrangements, including various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In the first 26 weeks of fiscal 2023, options to purchase 916,673 shares were granted to employees. The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value per option granted during the first 26 weeks of fiscal 2023 was $24.58.

In the first 26 weeks of fiscal 2023, employees were granted 438,644 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 2023 was $85.31. The PSUs will convert into shares of Sysco common stock at the end of the three-year performance period based on actual performance targets achieved, as well as the market-based return of Sysco’s common stock relative to that of each company within the S&P 500 index.

In the first 26 weeks of fiscal 2023, employees were granted 244,068 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 26 weeks of fiscal 2023 was $84.12.

Employee Stock Purchase Plan

Plan participants purchased 538,505 shares of common stock under the ESPP during the first 26 weeks of fiscal 2023. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $10.95 during the first 26 weeks of fiscal 2023. The fair value of each stock purchase right is estimated as the difference between the stock price at the date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $52.7 million and $60.3 million for the first 26 weeks of fiscal 2023 and fiscal 2022, respectively.

As of December 31, 2022, there was $136.3 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 2.01 years.

13.  INCOME TAXES

Effective Tax Rate

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.

The effective tax rates for the second quarter and first 26 weeks of fiscal 2022 were 21.27% and 24.18%, respectively. The effective tax rate for the second quarter and first 26 weeks of fiscal 2022 was impacted by the increase in our reserve for uncertain tax positions of $12.0 million in the first quarter, partially offset by (1) the favorable impact of excess tax benefits of equity-based compensation that totaled $1.4 million and $2.9 million, respectively, and (2) the impact of corporate-owned life insurance policies that totaled an unfavorable $1.0 million in the second quarter and a favorable $1.0 million in the first 26 weeks of fiscal 2022.

Uncertain Tax Positions

As of December 31, 2022, the gross amount of unrecognized tax benefit and related accrued interest was $32.4 million and $7.0 million, respectively. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next 12 months. At this time, an estimate of the range of the reasonably possible change cannot be made.

Other

The Inflation Reduction Act of 2022 (Inflation Reduction Act) was enacted on August 16, 2022. The Inflation Reduction Act imposes a new 15% corporate alternative minimum tax (CAMT) on “applicable corporations” for taxable years beginning after December 31, 2022. The CAMT is imposed to the extent the alternative minimum tax exceeds a corporation’s regular tax liability. A corporation that pays alternative minimum tax is eligible for a credit against income tax in future years. Subject to future regulatory guidance, the company does not currently believe the CAMT will have a material impact on its 2023 tax liability.

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

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, 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 (U.K.), France, Ireland and Sweden;

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

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

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

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

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
Sales: (In thousands) (In thousands)
U.S. Foodservice Operations $ 13,077,054 $ 11,498,155 $ 26,679,536 $ 23,101,118
International Foodservice Operations 3,282,411 2,806,272 6,566,146 5,701,519
SYGMA 1,933,536 1,771,323 3,866,993 3,475,356
Other 300,952 244,453 608,108 498,756
Total $ 18,593,953 $ 16,320,203 $ 37,720,783 $ 32,776,749
13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
Operating income (loss): (In thousands) (In thousands)
U.S. Foodservice Operations $ 780,961 $ 676,822 $ 1,684,789 $ 1,474,345
International Foodservice Operations 57,385 10,745 144,593 47,421
SYGMA 6,805 (6,729) 12,276 (9,176)
Other 9,881 183 21,419 6,639
Total segments 855,032 681,021 1,863,077 1,519,229
Global Support Center (214,390) (236,112) (488,102) (442,638)
Total operating income 640,642 444,909 1,374,975 1,076,591
Interest expense 132,042 242,899 256,192 371,113
Other expense (income), net 330,124 (10,676) 345,405 (13,928)
Earnings before income taxes $ 178,476 $ 212,686 $ 773,378 $ 719,406

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

Highlights

Our second quarter of fiscal 2023 results were primarily attributable to sales growth that surpassed second quarter of fiscal 2022 levels by 13.9%. This double-digit sales growth resulted in operating income growth compared to the same period last year, driven by higher volumes, effective management of inflation and market share gains. Our gross profit growth this quarter outpaced operating expense, as we continued to make progress in improving our supply chain productivity. We continued to advance our Recipe For Growth strategy, with advancement in our digital tools, supply chain investments, and sales and merchandising initiatives, both domestically and internationally. Our second quarter net earnings also includes a pension liability transfer, which resulted in a non-cash charge of $315.4 million recorded within Other expense (income), net. See below for a comparison of our fiscal 2023 results to our fiscal 2022 results, both including and excluding Certain Items (as defined below).

Comparisons of results from the second quarter of fiscal 2023 to the second quarter of fiscal 2022 are presented below:

•Sales:

◦increased 13.9%, or $2.3 billion, to $18.6 billion;

•Operating income:

◦increased 44.0%, or $195.7 million, to $640.6 million;

◦adjusted operating income increased 37.6%, or $186.4 million, to $682.1 million;

•Net earnings:

◦decreased 15.7%, or $26.2 million, to $141.2 million;

◦adjusted net earnings increased 39.7%, or $116.0 million, to $407.9 million;

•Basic earnings per share:

◦decreased 15.2%, or $0.05, to $0.28 per share;

•Diluted earnings per share:

◦decreased 15.2%, or $0.05, to $0.28 per share;

◦adjusted diluted earnings per share increased 40.4%, or $0.23, to $0.80 in fiscal 2023;

•EBITDA:

◦decreased 22.6%, or $146.3 million, to $500.5 million; and

◦adjusted EBITDA increased 23.9%, or $160.6 million, to $831.3 million.

Comparisons of results from the first 26 weeks of fiscal 2023 to the first 26 weeks of fiscal 2022 are presented below:

•Sales:

◦increased 15.1%, or $4.9 billion, to $37.7 billion;

•Operating income:

◦increased 27.7%, or $298.4 million, to $1.4 billion;

◦adjusted operating income increased 23.0%, or $271.6 million, to $1.5 billion;

•Net earnings:

◦increased 11.2%, or $61.3 million, to $606.8 million;

◦adjusted net earnings increased 24.8%, or $178.7 million, to $900.5 million;

•Basic earnings per share:

◦increased 12.1%, or $0.13, to $1.20 per share;

•Diluted earnings per share:

◦increased 12.3%, or $0.13, to $1.19 per share; and

◦adjusted diluted earnings per share increased 25.7%, or $0.36, to $1.76 in fiscal 2023;

•EBITDA:

◦decreased 4.1%, or $59.8 million, to $1.4 billion; and

◦adjusted EBITDA increased 14.7%, or $224.7 million, to $1.7 billion.

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, as we believe these metrics provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of restructuring and transformational project costs consisting of: (1) restructuring charges, (2) expenses associated with our various transformation initiatives and (3) facility closure and severance charges; acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions; and the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory and a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Our results for fiscal 2022 were also impacted by debt extinguishment costs and an increase in reserves for uncertain tax positions.

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

Trends

Economic and Industry Trends

The food-away-from-home sector experienced growth in the second quarter of fiscal 2023. Restaurants continued to be resilient; however, industry sources had projected higher industry growth and such growth has been lower than projected. Even with slower growth, the food-away-from-home sector is positioned well to manage through a softer macro-economic environment and to experience future growth. We experienced a strong start to the year in national sales, which has driven market share gains overall, as we grew 1.35 times the market during the first half of the year.

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 of fiscal 2023 was volume growth, as we experienced a 5.2% improvement in total case volume and a 3.2% improvement in local case volume within our U.S. Foodservice segment, in each instance as compared to the second quarter of fiscal 2022. This volume reflects our broadline and specialty businesses except for our specialty meats business which measures its volume in pounds. This growth enabled us to gain market share during the second quarter of fiscal 2023 and we expect to continue seeing momentum on our rate of sales growth for the full year.

Product cost inflation has also been a driver of our sales and gross profit performance. We experienced inflation at a rate of 8.3% and 9.0% in the second quarter and first 26 weeks of fiscal 2023, respectively, at the total enterprise level, primarily driven by inflation in the dairy, fresh produce and frozen food categories. We continue to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin increased 29 and 24 basis points in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the same prior year periods, primarily driven by higher volumes, the effective management of inflation and progress with our partnership growth management initiatives.

Operating Expense Trends

Total operating expenses increased 10.7% and 14.1% during the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, driven by increased volumes, cost inflation, continued operational cost pressures from the operating environment and our planned investments to drive our transformation initiatives under our Recipe For Growth strategy. This quarter included: transformation investments of $55 million; new-colleague related productivity costs of $22 million; and expenditures related to the labor dispute we resolved in the second quarter of fiscal 2023. We continued to invest in associate retention and best-in-class training, primarily for transportation and warehouse colleagues. Our Sysco Driver Academy is contributing to improved retention and productivity, and we expect to see this trend improve as the percentage of drivers trained from within Sysco continues to grow. We believe the advancements we are making in our physical capabilities, and the investments we are making in improved training, will provide improved service levels to our customers and strengthen Sysco’s ability to profitably win market share.

Pension Settlement Charge

The Sysco Corporation Retirement Plan (the Plan) executed a commitment agreement to purchase a nonparticipating single premium group annuity contract that transferred $695.0 million of the Plan’s defined benefit pension obligations related to certain pension benefits. As a result of the transaction, we recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023. This charge has been treated as a Certain Item. The amount of on-going expense for the Plan has been remeasured for the remainder of the fiscal year. Pension expense is elevated over fiscal 2022 due to increased interest rates and lower asset returns; the majority of the increase is included within Other expense, income net in the consolidated results of operations. We expect pension expense within this line item to increase by approximately $35 million for the last 26 weeks of fiscal 2023, as compared to the same time period in fiscal 2022.

Mergers and Acquisitions

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

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

Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another.” Purpose driven companies are believed to perform better, and 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 towards increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will continue to accelerate. We are committed to profitably growing 1.5 times the market by the end of fiscal 2024, the third year of our three-year strategic plan.

Results of Operations

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

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 82.0 82.3 81.9 82.1
Gross profit 18.0 17.7 18.1 17.9
Operating expenses 14.6 15.0 14.5 14.6
Operating income 3.4 2.7 3.6 3.3
Interest expense 0.7 1.5 0.7 1.1
Other expense (income), net 1.7 (0.1) 0.8 —
Earnings before income taxes 1.0 1.3 2.1 2.2
Income taxes 0.2 0.3 0.5 0.5
Net earnings 0.8 % 1.0 % 1.6 % 1.7 %

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

13-Week Period Ended 26-Week Period Ended
Dec. 31, 2022 Dec. 31, 2022
Sales 13.9 % 15.1 %
Cost of sales 13.5 14.7
Gross profit 15.9 16.6
Operating expenses 10.7 14.1
Operating income 44.0 27.7
Interest expense (45.6) (31.0)
Other expense (income), net (1) (2) (3,192.2) (2,579.9)
Earnings before income taxes (16.1) 7.5
Income taxes (17.6) (4.2)
Net earnings (15.7) % 11.2 %
Basic earnings per share (15.2) % 12.1 %
Diluted earnings per share (15.2) 12.3
Average shares outstanding (0.7) (0.8)
Diluted shares outstanding (0.9) (1.0) (1) Other expense (income), net was expense of $330.1 million and income of $10.7 million in the second quarter of fiscal 2023 and fiscal 2022, respectively.
--- ---
(2) Other expense (income), net was expense of $345.4 million and income of $13.9 million in the first 26 weeks of fiscal 2023 and fiscal 2022, respectively.

The following tables represent our results by reportable segments:

13-Week Period Ended Dec. 31, 2022
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated<br>Totals
(In thousands)
Sales $ 13,077,054 $ 3,282,411 $ 1,933,536 $ 300,952 $ — $ 18,593,953
Sales increase 13.7 % 17.0 % 9.2 % 23.1 % 13.9 %
Percentage of total 70.3 % 17.7 % 10.4 % 1.6 % 100.0 %
Operating income (loss) $ 780,961 $ 57,385 $ 6,805 $ 9,881 $ (214,390) $ 640,642
Operating income (loss) increase (decrease) 15.4 % NM NM NM (9.2) % 44.0 %
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 %
13-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated<br>Totals
(In thousands)
Sales $ 11,498,155 $ 2,806,272 $ 1,771,323 $ 244,453 $ — $ 16,320,203
Percentage of total 70.5 % 17.2 % 10.9 % 1.4 % 100.0 %
Operating income (loss) $ 676,822 $ 10,745 $ (6,729) $ 183 $ (236,112) $ 444,909
Percentage of total segments 99.4 % 1.6 % (1.0) % — % 100.0 %
Operating income (loss) as a percentage of sales 5.9 % 0.4 % (0.4) % 0.1 % 2.7 %
26-Week Period Ended Dec. 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated<br>Totals
(In thousands)
Sales $ 26,679,536 $ 6,566,146 $ 3,866,993 $ 608,108 $ — $ 37,720,783
Sales increase 15.5 % 15.2 % 11.3 % 21.9 % 15.1 %
Percentage of total 70.7 % 17.4 % 10.3 % 1.6 % 100.0 %
Operating income (loss) $ 1,684,789 $ 144,593 $ 12,276 $ 21,419 $ (488,102) $ 1,374,975
Operating income increase 14.3 % 204.9 % NM 222.6 % 27.7 %
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 % 3.6 % 26-Week Period Ended Jan. 1, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
U.S. Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated<br>Totals
(In thousands)
Sales $ 23,101,118 $ 5,701,519 $ 3,475,356 $ 498,695 $ 61 $ 32,776,749
Percentage of total 70.5 % 17.4 % 10.6 % 1.5 % 100.0 %
Operating income (loss) $ 1,474,345 $ 47,421 $ (9,176) $ 6,639 $ (442,638) $ 1,076,591
Percentage of total segments 97.0 % 3.1 % (0.6) % 0.5 % 100.0 %
Operating income as a percentage of sales 6.4 % 0.8 % (0.3) % 1.3 % 3.3 %

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 2023, U.S. Foodservice Operations and International Foodservice Operations collectively represented approximately 88.0% and 88.1% of Sysco’s overall sales and 98.0% and 98.2% of total segment operating income, respectively. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.

Results of U.S. Foodservice Operations

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

13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
(Dollars in thousands)
Sales $ 13,077,054 $ 11,498,155 $ 1,578,899 13.7 %
Gross profit 2,493,089 2,139,278 353,811 16.5
Operating expenses 1,712,128 1,462,456 249,672 17.1
Operating income $ 780,961 $ 676,822 $ 104,139 15.4 %
Gross profit $ 2,493,089 $ 2,139,278 $ 353,811 16.5 %
Adjusted operating expenses (Non-GAAP) 1,702,180 1,454,558 247,622 17.0
Adjusted operating income (Non-GAAP) $ 790,909 $ 684,720 $ 106,189 15.5 %
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
(Dollars in thousands)
Sales $ 26,679,536 $ 23,101,118 $ 3,578,418 15.5 %
Gross profit 5,105,432 4,324,432 781,000 18.1
Operating expenses 3,420,643 2,850,087 570,556 20.0
Operating income $ 1,684,789 $ 1,474,345 $ 210,444 14.3 %
Gross profit $ 5,105,432 $ 4,324,432 $ 781,000 18.1 %
Adjusted operating expenses (Non-GAAP) 3,400,749 2,843,952 556,797 19.6
Adjusted operating income (Non-GAAP) $ 1,704,683 $ 1,480,480 $ 224,203 15.1 %

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) 4.4 % $ 504.1 5.1 % $ 1,165.9
Inflation 8.7 1,004.0 9.3 2,145.8
Other (2) 0.6 70.8 1.1 266.7
Total change in sales 13.7 % $ 1,578.9 15.5 % $ 3,578.4 (1) Case volumes increased 5.2% and 6.3% compared to the second quarter and first 26 weeks of fiscal 2022, respectively. This volume increase resulted in a 4.4% and 5.1% increase in the dollar value of sales compared to the second quarter and first 26 weeks of fiscal 2022, respectively.
--- ---
(2) Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds. Any impact in volumes from these specialty meats operations is included within “Other.”

The primary drivers of the sales increase in the second quarter and first 26 weeks of fiscal 2023 were inflation, along with an improvement in case volume in our U.S. Foodservice Operations, which was largely the result of the impact of our Recipe for Growth initiatives. Case volumes from our U.S. Foodservice Operations increased 5.2% and 6.3% in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022. This included a 3.2% increase in local customer case volume in the second quarter of fiscal 2023.

Operating Income

The increase in operating income for the second quarter and first 26 weeks of fiscal 2023, as compared to the second quarter and first 26 weeks of fiscal 2022, was driven by gross profit dollar growth and partially offset by an increase in operating expenses.

Gross profit dollar growth in the second quarter and first 26 weeks of fiscal 2023, as compared to the second quarter and first 26 weeks of fiscal 2022, was driven primarily by the improvement in local cases stemming from: (1) the impact of our Recipe for Growth initiatives, (2) management of higher inflation and (3) partnership growth management initiatives. The estimated change in product costs, an internal measure of inflation or deflation, increased in both the second quarter and first 26 weeks of fiscal 2023. For the second quarter and first 26 weeks of fiscal 2023, this change in product costs was primarily driven by inflation in the dairy, fresh produce and frozen foods categories. Gross margin, which is gross profit as a percentage of sales, was 19.1% in each of the second quarter and first 26 weeks of fiscal 2023 for our U.S. Foodservice Operations, which was an increase of 45 basis points compared to gross margin of 18.6% in the second quarter of fiscal 2022, and an increase of 42 basis points compared to gross margin of 18.7% in the first 26 weeks of fiscal 2022.

The increase in operating expenses for the second quarter and first 26 weeks of fiscal 2023, as compared to the second quarter and first 26 weeks of fiscal 2022, was primarily driven by increased volumes, cost inflation, operational pressures from the operating environment and our planned investments to drive our transformation initiatives.

Results of International Foodservice Operations

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

13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
(Dollars in thousands)
Sales $ 3,282,411 $ 2,806,272 $ 476,139 17.0 %
Gross profit 624,460 565,931 58,529 10.3
Operating expenses 567,075 555,186 11,889 2.1
Operating income $ 57,385 $ 10,745 $ 46,640 434.1 %
Gross profit $ 624,460 $ 565,931 $ 58,529 10.3 %
Adjusted operating expenses (Non-GAAP) 545,817 526,281 19,536 3.7
Adjusted operating income (Non-GAAP) $ 78,643 $ 39,650 $ 38,993 98.3 %
Sales on a constant currency basis (Non-GAAP) $ 3,608,465 $ 2,806,272 $ 802,193 28.6 %
Gross profit on a constant currency basis (Non-GAAP) 690,309 565,931 124,378 22.0
Adjusted operating expenses on a constant currency basis (Non-GAAP) 607,045 526,281 80,764 15.3
Adjusted operating income (Non-GAAP) $ 83,264 $ 39,650 $ 43,614 110.0 %
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
(Dollars in thousands)
Sales $ 6,566,146 $ 5,701,519 $ 864,627 15.2 %
Gross profit 1,273,725 1,155,065 118,660 10.3
Operating expenses 1,129,132 1,107,644 21,488 1.9
Operating income $ 144,593 $ 47,421 $ 97,172 204.9 %
Gross profit $ 1,273,725 $ 1,155,065 $ 118,660 10.3 %
Adjusted operating expenses (Non-GAAP) 1,087,953 1,051,297 36,656 3.5
Adjusted operating income (Non-GAAP) $ 185,772 $ 103,768 $ 82,004 79.0 %
Sales on a constant currency basis (Non-GAAP) $ 7,207,651 $ 5,701,519 $ 1,506,132 26.4 %
Gross profit on a constant currency basis (Non-GAAP) 1,411,334 1,155,065 256,269 22.2
Adjusted operating expenses on a constant currency basis (Non-GAAP) 1,213,887 1,051,297 162,590 15.5
Adjusted operating income on a constant currency basis (Non-GAAP) $ 197,447 $ 103,768 $ 93,679 90.3 %

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 17.0 % $ 476.6 15.3 % $ 871.7
Foreign currency (11.6) (326.1) (11.3) (641.5)
Other (1) 11.6 325.6 11.2 634.4
Total change in sales 17.0 % $ 476.1 15.2 % $ 864.6 (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.
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Sales for the second quarter and first 26 weeks of fiscal 2023 were higher, as compared to the second quarter and first 26 weeks of fiscal 2022, primarily due to inflation along with an improvement in volume, some of which was attributable to our Recipe for Growth initiatives. Partially offsetting these increases was the negative impact of foreign currency translation.

Operating Income

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

The increase in gross profit dollars in the second quarter and first 26 weeks of fiscal 2023, as compared to the second quarter and first 26 weeks of fiscal 2022, 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 2023, as compared to the second quarter and first 26 weeks of fiscal 2022, was primarily due to increased volume.

Results of SYGMA and Other Segment

For SYGMA, sales were 9.2% and 11.3% higher in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, primarily from an increase in case volumes driven by the success of national and regional quick service restaurants and inflation. Operating income increased by $13.5 million and $21.5 million in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, primarily due to the increase in case volumes and fee increases to customers.

For the operations that are grouped within Other, operating income increased $9.7 million and $14.8 million in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, primarily due to the recovery of our hospitality business, Guest Worldwide. Volume for this business has improved as hospitality occupancy rates have grown from prior year levels.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the second quarter of fiscal 2023 decreased $11.6 million, or 5.0%, as compared to the second quarter of fiscal 2022, primarily due to lower employee-related costs. These expenses in the first 26 weeks of fiscal 2023 increased $47.9 million, or 10.9%, as compared to the first 26 weeks of fiscal 2022, primarily due to increases in self-insurance reserves, fuel hedging program expenses and expenses associated with business technology transformation initiatives.

Included in Global Support Center expenses are Certain Items that totaled $10.2 million and $16.3 million in the second quarter and first 26 weeks of fiscal 2023, as compared to $14.0 million and $41.7 million in the second quarter and first 26 weeks of fiscal 2022, respectively. Certain Items impacting the second quarter and first 26 weeks of fiscal 2023 were

primarily expenses associated with our business technology transformation initiatives. Certain Items impacting the second quarter and first 26 weeks of fiscal 2022 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions.

Interest Expense

Interest expense decreased $110.9 million and $114.9 million for the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, primarily from a $115.6 million charge taken for debt extinguished in fiscal 2022.

Other income and expense

Other expense increased $340.8 million and $359.3 million for the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022. The expense in the second quarter and first 26 weeks of fiscal 2023 was primarily attributable to a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer, as well as higher on-going pension expense.

Net Earnings

Net earnings decreased 15.7% and increased 11.2% in the second quarter and first 26 weeks of fiscal 2023, respectively, as compared to the second quarter and first 26 weeks of fiscal 2022, due primarily to the items noted above for 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 39.7% and 24.8% in the second quarter and first 26 weeks of fiscal 2023, primarily due to an increase in sales volume.

Earnings Per Share

Basic earnings per share in the second quarter of fiscal 2023 were $0.28, a 15.2% decrease from the comparable prior year amount of $0.33 per share. Diluted earnings per share in the second quarter of fiscal 2023 were $0.28, a 15.2% decrease from the comparable prior year period amount of $0.33 per share. Adjusted diluted earnings per share, excluding Certain Items, in the second quarter of fiscal 2023 were $0.80, a 40.4% increase from the comparable prior year amount of $0.57 per share.

Basic earnings per share in the first 26 weeks of fiscal 2023 were $1.20, a 12.1% increase from the comparable prior year amount of $1.07 per share. Diluted earnings per share in the first 26 weeks of fiscal 2023 were $1.19, a 12.3% increase from the comparable prior year period amount of $1.06 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first 26 weeks of fiscal 2023 were $1.76, a 25.7% increase from the comparable prior year amount of $1.40 per share.

Non-GAAP Reconciliations

Our discussion of our results includes certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of: (1) restructuring and transformational project costs consisting of: (a) restructuring charges, (b) expenses associated with our various transformation initiatives and (c) facility closure and severance charges; (2) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions; and (3) the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance related to COVID-related personal protection equipment inventory and a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Our results for fiscal 2022 were also impacted by debt extinguishment costs and an increase in reserves for uncertain tax positions.
The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.
Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year-over-year basis.
Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2023 and fiscal 2022.
Set forth below is a reconciliation of sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add up to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- --- --- ---
Sales (GAAP) $ 18,593,953 $ 16,320,203 $ 2,273,750 13.9 %
Impact of currency fluctuations (1) 332,426 — 332,426 2.1
Comparable sales using a constant currency basis (Non-GAAP) $ 18,926,379 $ 16,320,203 $ 2,606,176 16.0 %
Cost of sales (GAAP) $ 15,244,337 $ 13,429,053 $ 1,815,284 13.5 %
Gross profit (GAAP) $ 3,349,616 $ 2,891,150 $ 458,466 15.9 %
Impact of currency fluctuations (1) 67,898 — 67,898 2.3
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 3,417,514 $ 2,891,150 $ 526,364 18.2 %
Gross margin (GAAP) 18.01 % 17.72 % 29 bps
Impact of currency fluctuations (1) 0.05 — 5 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.06 % 17.72 % 34 bps
Operating expenses (GAAP) $ 2,708,974 $ 2,446,241 $ 262,733 10.7 %
Impact of restructuring and transformational project costs (2) (14,388) (23,469) 9,081 38.7
Impact of acquisition-related costs (3) (28,960) (33,732) 4,772 14.1
Impact of bad debt reserve adjustments (4) 1,923 6,438 (4,515) (70.1)
Operating expenses adjusted for Certain Items (Non-GAAP) 2,667,549 2,395,478 272,071 11.4
Impact of currency fluctuations (1) 66,976 — 66,976 2.8
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 2,734,525 $ 2,395,478 $ 339,047 14.2 %
Operating expense as a percentage of sales (GAAP) 14.57 % 14.99 % -42 bps
Impact of certain item adjustments (0.22) % (0.31) % 9 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.35 % 14.68 % -33 bps
Operating income (GAAP) $ 640,642 $ 444,909 $ 195,733 44.0 %
Impact of restructuring and transformational project costs (2) 14,388 23,469 (9,081) (38.7)
Impact of acquisition-related costs (3) 28,960 33,732 (4,772) (14.1)
Impact of bad debt reserve adjustments (4) (1,923) (6,438) 4,515 70.1
Operating income adjusted for Certain Items (Non-GAAP) 682,067 495,672 186,395 37.6
Impact of currency fluctuations (1) 922 — 922 0.2
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 682,989 $ 495,672 $ 187,317 37.8 %
Operating margin (GAAP) 3.45 % 2.73 % 72 bps
Operating margin adjusted for Certain Items (Non-GAAP) 3.67 % 3.04 % 63 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 3.61 % 3.04 % 57 bps
Interest expense (GAAP) $ 132,042 $ 242,899 $ (110,857) (45.6) %
Impact of loss on extinguishment of debt — (115,603) 115,603 NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 132,042 $ 127,296 $ 4,746 3.7 %
Other expense (income) (GAAP) $ 330,124 $ (10,676) $ 340,800 NM
13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- ---
Impact of other non-routine gains and losses (5) (314,878) — (314,878) NM
Other expense (income) adjusted for Certain Items (Non-GAAP) $ 15,246 $ (10,676) $ 25,922 NM
Net earnings (GAAP) $ 141,216 $ 167,441 $ (26,225) (15.7) %
Impact of restructuring and transformational project costs (2) 14,388 23,469 (9,081) (38.7)
Impact of acquisition-related costs (3) 28,960 33,732 (4,772) (14.1)
Impact of bad debt reserve adjustments (4) (1,923) (6,438) 4,515 70.1
Impact of loss on extinguishment of debt — 115,603 (115,603) NM
Impact of other non-routine gains and losses (5) 314,878 — 314,878 NM
Tax impact of restructuring and transformational project costs (6) (3,618) (5,897) 2,279 38.6
Tax impact of acquisition-related costs (6) (7,283) (8,475) 1,192 14.1
Tax impact of bad debt reserves adjustments (6) 484 1,617 (1,133) (70.1)
Tax impact of loss on extinguishment of debt (6) — (29,111) 29,111 NM
Tax impact of other non-routine gains and losses (6) (79,185) — (79,185) NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 407,917 $ 291,941 $ 115,976 39.7 %
Diluted earnings per share (GAAP) $ 0.28 $ 0.33 $ (0.05) (15.2) %
Impact of restructuring and transformational project costs (2) 0.03 0.05 (0.02) (40.0)
Impact of acquisition-related costs (3) 0.06 0.07 (0.01) (14.3)
Impact of bad debt reserve adjustments (4) — (0.01) 0.01 NM
Impact of loss on extinguishment of debt — 0.22 (0.22) NM
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) (0.01) (0.02) 0.01 50.0
Tax impact of loss on extinguishment of debt (6) — (0.06) 0.06 NM
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) $ 0.80 $ 0.57 $ 0.23 40.4 %
(1) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
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(2) Fiscal 2023 includes $5 million related to restructuring, severance, and facility closure charges and $9 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $12 million related to restructuring, severance, and facility closure charges and $12 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy
(3) Fiscal 2023 includes $26 million of intangible amortization expense and $3 million in acquisition and due diligence costs. Fiscal 2022 includes $27 million of intangible amortization expense and $7 million in acquisition and due diligence costs.
(4) Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5) Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6) The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(7) Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
NM represents that the percentage change is not meaningful.
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- --- --- ---
Sales (GAAP) $ 37,720,783 $ 32,776,749 $ 4,944,034 15.1 %
Impact of currency fluctuations (1) 651,588 — 651,588 2.0
Comparable sales using a constant currency basis (Non-GAAP) $ 38,372,371 $ 32,776,749 $ 5,595,622 17.1 %
Cost of sales (GAAP) $ 30,882,312 $ 26,913,891 $ 3,968,421 14.7 %
Impact of inventory valuation adjustment (2) 2,571 — 2,571 0.1
Cost of sales adjusted for Certain Items (Non-GAAP) $ 30,884,883 $ 26,913,891 $ 3,970,992 14.8 %
Gross profit (GAAP) $ 6,838,471 $ 5,862,858 $ 975,613 16.6 %
Impact of inventory valuation adjustment (2) (2,571) — (2,571) —
Comparable gross profit adjusted for Certain Items (Non-GAAP) 6,835,900 5,862,858 973,042 16.6
Impact of currency fluctuations (1) 140,932 — 140,932 2.4
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 6,976,832 $ 5,862,858 $ 1,113,974 19.0 %
Gross margin (GAAP) 18.13 % 17.89 % 24 bps
Impact of inventory valuation adjustment (2) (0.01) — -1 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP) 18.12 % 17.89 % 23 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP) 18.12 % 17.89 % 23 bps
Impact of currency fluctuations (1) 0.06 — 6 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.18 % 17.89 % 29 bps
Operating expenses (GAAP) $ 5,463,496 $ 4,786,267 $ 677,229 14.1 %
Impact of restructuring and transformational project costs (3) (26,034) (47,980) 21,946 45.7
Impact of acquisition-related costs (4) (58,415) (69,658) 11,243 16.1
Impact of bad debt reserve adjustments (5) 4,515 13,499 (8,984) (66.6)
Operating expenses adjusted for Certain Items (Non-GAAP) 5,383,562 4,682,128 701,434 15.0
Impact of currency fluctuations (1) 137,670 — 137,670 2.9
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 5,521,232 $ 4,682,128 $ 839,104 17.9 %
Operating expense as a percentage of sales (GAAP) 14.48 % 14.60 % -12 bps
Impact of certain item adjustments (0.21) (0.32) 11 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.27 % 14.28 % -1 bps
Operating income (GAAP) $ 1,374,975 $ 1,076,591 $ 298,384 27.7 %
Impact of inventory valuation adjustment (2) (2,571) — (2,571) NM
Impact of restructuring and transformational project costs (3) 26,034 47,980 (21,946) (45.7)
Impact of acquisition-related costs (4) 58,415 69,658 (11,243) (16.1)
Impact of bad debt reserve adjustments (5) (4,515) (13,499) 8,984 66.6
Operating income adjusted for Certain Items (Non-GAAP) 1,452,338 1,180,730 271,608 23.0
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- ---
Impact of currency fluctuations (1) 3,262 — 3,262 0.3
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,455,600 $ 1,180,730 $ 274,870 23.3 %
Interest expense (GAAP) $ 256,192 $ 371,113 $ (114,921) (31.0) %
Impact of loss on extinguishment of debt — (115,603) 115,603 NM
Interest expense adjusted for Certain Items (Non-GAAP) $ 256,192 $ 255,510 $ 682 0.3 %
Other expense (income) (GAAP) $ 345,405 $ (13,928) $ 359,333 NM
Impact of other non-routine gains and losses (6) (314,878) — (314,878) NM
Other expense (income) adjusted for Certain Items (Non-GAAP) $ 30,527 $ (13,928) $ 44,455 NM
Net earnings (GAAP) $ 606,784 $ 545,454 $ 61,330 11.2 %
Impact of inventory valuation adjustment (2) (2,571) — (2,571) NM
Impact of restructuring and transformational project costs (3) 26,034 47,980 (21,946) (45.7)
Impact of acquisition-related costs (4) 58,415 69,658 (11,243) (16.1)
Impact of bad debt reserve adjustments (5) (4,515) (13,499) 8,984 66.6
Impact of loss on extinguishment of debt — 115,603 (115,603) 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) (6,538) (12,082) 5,544 45.9
Tax impact of acquisition-related costs (7) (14,670) (17,541) 2,871 16.4
Tax impact of bad debt reserves adjustments (7) 1,134 3,399 (2,265) (66.6)
Tax impact of loss on extinguishment of debt (7) — (29,111) 29,111 NM
Tax impact of other non-routine gains and losses (7) (79,075) — (79,075) NM
Impact of adjustments to uncertain tax positions — 12,000 (12,000) NM
Net earnings adjusted for Certain Items (Non-GAAP) $ 900,522 $ 721,861 $ 178,661 24.8 %
Diluted earnings per share (GAAP) $ 1.19 $ 1.06 $ 0.13 12.3 %
Impact of inventory valuation adjustment (2) (0.01) — (0.01) NM
Impact of restructuring and transformational project costs (3) 0.05 0.09 (0.04) (44.4)
Impact of acquisition-related costs (4) 0.11 0.14 (0.03) (21.4)
Impact of bad debt reserve adjustments (5) (0.01) (0.03) 0.02 66.7
Impact of loss on extinguishment of debt — 0.22 (0.22) NM
Impact of other non-routine gains and losses (6) 0.62 — 0.62 NM
Tax impact of restructuring and transformational project costs (7) (0.01) (0.02) 0.01 50.0
Tax impact of acquisition-related costs (7) (0.03) (0.03) — —
Tax impact of bad debt reserves adjustments (7) — 0.01 (0.01) NM
Tax impact of loss on extinguishment of debt (7) — (0.06) 0.06 NM
Tax impact of other non-routine gains and losses (7) (0.15) — (0.15) NM
Impact of adjustments to uncertain tax positions — 0.02 (0.02) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8) $ 1.76 $ 1.40 $ 0.36 25.7 %
(1) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
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(2) Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(3) Fiscal 2023 includes $10 million related to restructuring, severance, and facility closure charges and $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $28 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $20 million related to restructuring charges, severance and facility closure charges.
(4) Fiscal 2023 includes $52 million of intangible amortization expense and $6 million in acquisition and due diligence costs. Fiscal 2022 includes $48 million of intangible amortization expense and $21 million in acquisition and due diligence costs.
(5) Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6) Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7) The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(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.
13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars %/bps Change
--- --- --- --- --- --- --- --- --- --- ---
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 1,712,128 $ 1,462,456 $ 249,672 17.1 %
Impact of restructuring and transformational project costs (92) (16) (76) NM
Impact of acquisition-related costs (1) (11,514) (13,131) 1,617 12.3
Impact of bad debt reserve adjustments (2) 1,658 5,249 (3,591) (68.4)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 1,702,180 $ 1,454,558 $ 247,622 17.0 %
Operating income (GAAP) $ 780,961 $ 676,822 $ 104,139 15.4 %
Impact of restructuring and transformational project costs 92 16 76 NM
Impact of acquisition-related costs (1) 11,514 13,131 (1,617) (12.3)
Impact of bad debt reserve adjustments (2) (1,658) (5,249) 3,591 68.4
Operating income adjusted for Certain Items (Non-GAAP) $ 790,909 $ 684,720 $ 106,189 15.5 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 3,282,411 $ 2,806,272 $ 476,139 17.0 %
Impact of currency fluctuations (3) 326,054 — 326,054 11.6
Comparable sales using a constant currency basis (Non-GAAP) $ 3,608,465 $ 2,806,272 $ 802,193 28.6 %
Gross profit (GAAP) $ 624,460 $ 565,931 $ 58,529 10.3 %
Impact of currency fluctuations (3) 65,849 — 65,849 11.7
Comparable gross profit using a constant currency basis (Non-GAAP) $ 690,309 $ 565,931 $ 124,378 22.0 %
Gross margin (GAAP) 19.02 % 20.17 % -115 bps
Impact of currency fluctuations (3) 0.11 — 11 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.13 % 20.17 % -104 bps
Operating expenses (GAAP) $ 567,075 $ 555,186 $ 11,889 2.1 %
Impact of restructuring and transformational project costs (4) (5,588) (11,621) 6,033 51.9
Impact of acquisition-related costs (5) (15,935) (18,475) 2,540 13.7
Impact of bad debt reserve adjustments (2) 265 1,191 (926) (77.7)
Operating expenses adjusted for Certain Items (Non-GAAP) 545,817 526,281 19,536 3.7
Impact of currency fluctuations (3) 61,228 — 61,228 11.6
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 607,045 $ 526,281 $ 80,764 15.3 %
Operating income (GAAP) $ 57,385 $ 10,745 $ 46,640 NM
Impact of restructuring and transformational project costs (4) 5,588 11,621 (6,033) (51.9)
Impact of acquisition-related costs (5) 15,935 18,475 (2,540) (13.7)
Impact of bad debt reserve adjustments (2) (265) (1,191) 926 77.7
Operating income adjusted for Certain Items (Non-GAAP) 78,643 39,650 38,993 98.3
Impact of currency fluctuations (3) 4,622 — 4,622 NM
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 83,265 $ 39,650 $ 43,615 NM
SYGMA
Operating expenses (GAAP) $ 143,656 $ 143,681 $ (25) — %
Operating income (loss) (GAAP) 6,805 (6,729) 13,534 NM
OTHER
Operating expenses (GAAP) $ 67,430 $ 54,626 $ 12,804 23.4 %
13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars %/bps Change
--- --- --- --- --- --- --- --- ---
Impact of bad debt reserve adjustments (2) — (2) 2 NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 67,430 $ 54,624 $ 12,806 23.4 %
Operating income (GAAP) $ 9,881 $ 183 $ 9,698 NM
Impact of bad debt reserve adjustments (2) — 2 (2) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 9,881 $ 185 $ 9,696 NM
GLOBAL SUPPORT CENTER
Gross profit (loss) (GAAP) $ 4,295 $ (5,820) $ 10,115 NM
Operating expenses (GAAP) $ 218,685 $ 230,292 $ (11,607) (5.0) %
Impact of restructuring and transformational project costs (6) (8,708) (11,832) 3,124 26.4
Impact of acquisition-related costs (7) (1,511) (2,126) 615 28.9
Operating expenses adjusted for Certain Items (Non-GAAP) $ 208,466 $ 216,334 $ (7,868) (3.6) %
Operating loss (GAAP) $ (214,390) $ (236,112) $ 21,722 9.2 %
Impact of restructuring and transformational project costs (6) 8,708 11,832 (3,124) (26.4)
Impact of acquisition-related costs (7) 1,511 2,126 (615) (28.9)
Operating loss adjusted for Certain Items (Non-GAAP) $ (204,171) $ (222,154) $ 17,983 8.1 %
(1) Fiscal 2023 and fiscal 2022 include intangible amortization expense and acquisition costs.
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(2) Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4) Includes restructuring and facility closure costs primarily in Europe.
(5) Represents intangible amortization expense.
(6) 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.
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- --- --- ---
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP) $ 3,420,643 $ 2,850,087 $ 570,556 20.0 %
Impact of restructuring and transformational project costs (44) (19) (25) NM
Impact of acquisition-related costs (1) (24,100) (17,785) (6,315) (35.5)
Impact of bad debt reserve adjustments (2) 4,250 11,669 (7,419) (63.6)
Operating expenses adjusted for Certain Items (Non-GAAP) $ 3,400,749 $ 2,843,952 $ 556,797 19.6 %
Operating income (GAAP) $ 1,684,789 $ 1,474,345 $ 210,444 14.3 %
Impact of restructuring and transformational project costs 44 19 25 NM
Impact of acquisition-related costs (1) 24,100 17,785 6,315 35.5
Impact of bad debt reserve adjustments (2) (4,250) (11,669) 7,419 63.6
Operating income adjusted for Certain Items (Non-GAAP) $ 1,704,683 $ 1,480,480 $ 224,203 15.1 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP) $ 6,566,146 $ 5,701,519 $ 864,627 15.2 %
Impact of currency fluctuations (3) 641,505 — 641,505 11.2
Comparable sales using a constant currency basis (Non-GAAP) $ 7,207,651 $ 5,701,519 $ 1,506,132 26.4 %
Gross profit (GAAP) $ 1,273,725 $ 1,155,065 $ 118,660 10.3 %
Impact of currency fluctuations (3) 137,609 — 137,609 11.9
Comparable gross profit using a constant currency basis (Non-GAAP) $ 1,411,334 $ 1,155,065 $ 256,269 22.2 %
Gross margin (GAAP) 19.40 % 20.26 % -86 bps
Impact of currency fluctuations (3) 0.18 — 18 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.58 % 20.26 % -68 bps
Operating expenses (GAAP) $ 1,129,132 $ 1,107,644 $ 21,488 1.9 %
Impact of restructuring and transformational project costs (4) (9,495) (21,047) 11,552 54.9
Impact of acquisition-related costs (5) (31,949) (37,131) 5,182 14.0
Impact of bad debt reserve adjustments (2) 265 1,831 (1,566) (85.5)
Operating expenses adjusted for Certain Items (Non-GAAP) 1,087,953 1,051,297 36,656 3.5
Impact of currency fluctuations (3) 125,934 — 125,934 12.0
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 1,213,887 $ 1,051,297 $ 162,590 15.5 %
Operating income (GAAP) $ 144,593 $ 47,421 $ 97,172 NM
Impact of restructuring and transformational project costs (4) 9,495 21,047 (11,552) (54.9)
Impact of acquisition-related costs (5) 31,949 37,131 (5,182) (14.0)
Impact of bad debt reserve adjustments (2) (265) (1,831) 1,566 85.5
Operating income adjusted for Certain Items (Non-GAAP) 185,772 103,768 82,004 79.0
Impact of currency fluctuations (3) 11,675 — 11,675 11.3
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $ 197,447 $ 103,768 $ 93,679 90.3 %
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- --- --- ---
SYGMA
Sales (GAAP) $ 3,866,993 $ 3,475,356 $ 391,637 11.3 %
Gross profit (GAAP) 304,354 275,109 29,245 10.6
Gross margin (GAAP) 7.87 % 7.92 % -5 bps
Operating expenses (GAAP) $ 292,078 $ 284,285 $ 7,793 2.7 %
Operating income (loss) (GAAP) 12,276 (9,176) 21,452 NM
OTHER
Operating expenses (GAAP) $ 136,730 $ 107,191 $ 29,539 27.6 %
Impact of bad debt reserve adjustments (2) — (1) 1 NM
Operating expenses adjusted for Certain Items (Non-GAAP) $ 136,730 $ 107,190 $ 29,540 27.6 %
Operating income (GAAP) $ 21,419 $ 6,639 $ 14,780 NM
Impact of bad debt reserve adjustments (2) — 1 (1) NM
Operating income adjusted for Certain Items (Non-GAAP) $ 21,419 $ 6,640 $ 14,779 NM
GLOBAL SUPPORT CENTER
Gross loss (GAAP) $ (3,189) $ (5,578) $ 2,389 42.8 %
Impact of inventory valuation adjustment (6) (2,571) — (2,571) NM
Comparable gross loss adjusted for Certain Items (Non-GAAP) $ (5,760) $ (5,578) $ (182) (3.3) %
Operating expenses (GAAP) $ 484,913 $ 437,060 $ 47,853 10.9 %
Impact of restructuring and transformational project costs (7) (16,495) (26,914) 10,419 38.7
Impact of acquisition-related costs (8) (2,365) (14,742) 12,377 84.0
Operating expenses adjusted for Certain Items (Non-GAAP) $ 466,053 $ 395,404 $ 70,649 17.9 %
Operating loss (GAAP) $ (488,102) $ (442,638) $ (45,464) (10.3) %
Impact of inventory valuation adjustment (6) (2,571) — (2,571) NM
Impact of restructuring and transformational project costs (7) 16,495 26,914 (10,419) (38.7)
Impact of acquisition-related costs (8) 2,365 14,742 (12,377) (84.0) %
Operating loss adjusted for Certain Items (Non-GAAP) $ (471,813) $ (400,982) $ (70,831) (17.7) %
(1) Fiscal 2023 and fiscal 2022 include intangible amortization expense and acquisition costs.
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(2) Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4) Includes restructuring, severance and facility closure costs primarily in Europe.
(5) Represents intangible amortization expense.
(6) Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(7) Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(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 2022 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):

13-Week Period Ended Dec. 31, 2022 13-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
Net earnings (GAAP) $ 141,216 $ 167,441 $ (26,225) (15.7) %
Interest (GAAP) 132,042 242,899 (110,857) (45.6)
Income taxes (GAAP) 37,260 45,245 (7,985) (17.6)
Depreciation and amortization (GAAP) 190,025 191,297 (1,272) (0.7)
EBITDA (Non-GAAP) $ 500,543 $ 646,882 $ (146,339) (22.6) %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1) 14,793 23,193 (8,400) (36.2)
Impact of acquisition-related costs (2) 3,049 7,085 (4,036) (57.0)
Impact of bad debt reserve adjustments (3) (1,923) (6,438) 4,515 70.1
Impact of other non-routine gains and losses (4) 314,878 — 314,878 NM
EBITDA adjusted for Certain Items (Non-GAAP) (5) $ 831,340 $ 670,722 $ 160,618 23.9 % (1) Fiscal 2023 and fiscal 2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
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(2) Fiscal 2023 and fiscal 2022 include acquisition and due diligence costs.
(3) Fiscal 2023 and fiscal 2022 represent 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 $5 million and $1 million or non-cash stock compensation expense of $24 million and $31 million in fiscal 2023 and fiscal 2022, respectively.
NM represents that the percentage change is not meaningful.
26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022 Change in Dollars % Change
--- --- --- --- --- --- --- --- ---
Net earnings (GAAP) $ 606,784 $ 545,454 $ 61,330 11.2 %
Interest (GAAP) 256,192 371,113 (114,921) (31.0)
Income taxes (GAAP) 166,594 173,952 (7,358) (4.2)
Depreciation and amortization (GAAP) 378,949 377,763 1,186 0.3
EBITDA (Non-GAAP) $ 1,408,519 $ 1,468,282 $ (59,763) (4.1) %
Certain Item adjustments:
Impact of inventory valuation adjustment (1) $ (2,571) $ — $ (2,571) NM
Impact of restructuring and transformational project costs (2) 25,302 47,440 (22,138) (46.7)
Impact of acquisition-related costs (3) 6,595 21,306 (14,711) (69.0)
Impact of bad debt reserve adjustments (4) (4,515) (13,499) 8,984 66.6
Impact of other non-routine gains and losses (5) 314,878 — 314,878 NM
EBITDA adjusted for Certain Items (Non-GAAP) (6) $ 1,748,208 $ 1,523,529 $ 224,679 14.7 % (1) Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
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(2) Fiscal 2023 and fiscal 2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(3) Fiscal 2023 and fiscal 2022 include acquisition and due diligence costs.
(4) Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5) Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6) In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $8 million and $3 million or non-cash stock compensation expense of $52 million and $60 million for fiscal 2023 and fiscal 2022, respectively.
NM represents that the percentage change is not meaningful.

Liquidity and Capital Resources

Highlights

As of December 31, 2022, we had $500.3 million in cash and cash equivalents. We produced positive free cash flow in a period of higher working capital investments, capital expenditures and investments towards our Recipe for Growth strategy. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of the significant cash flows from the first 26 weeks of fiscal 2023 to the first 26 weeks of fiscal 2022 are provided.

On September 2, 2022, we upsized our commercial paper program to $3.0 billion. The commercial paper program allows the company to issue short-term, senior unsecured notes. The notes are pari passu with the company’s other senior unsecured debt, including its senior notes and revolving credit facility. We intend to use any proceeds from the commercial paper program for general corporate purposes.

26-Week Period Ended Dec. 31, 2022 26-Week Period Ended Jan. 1, 2022
Source of cash (use of cash) (In thousands)
Net cash provided by operating activities (GAAP) $ 503,466 $ 377,047
Additions to plant and equipment (309,664) (181,374)
Proceeds from sales of plant and equipment 25,493 5,450
Free Cash Flow (Non-GAAP) (1) $ 219,295 $ 201,123
Acquisition of businesses, net of cash acquired $ (37,699) $ (769,658)
Debt borrowings (repayments), net 237,754 1,226,945
Redemption premiums and repayments for senior notes — (1,395,668)
Stock repurchases (267,727) (415,824)
Dividends paid (498,323) (481,386) (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 2022 Form 10-K for discussions regarding this non-GAAP performance metric.
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Sources and Uses of Cash

Sysco generates cash in the U.S and internationally. As of December 31, 2022, we had $500.3 million in cash and cash equivalents, approximately 98% 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 and, due to our strong financial position, we believe that we will continue to be able to effectively access capital markets, as needed. Cash is generally allocated to working capital requirements, investments compatible with our overall growth strategy (organic and inorganic), debt management, and shareholder return. Remaining cash balances are invested in high-quality, short-term instruments.

We believe our cash flow from operations, the availability of liquidity under our commercial paper program and our revolving credit facility, and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements for more than the next 12 months, while maintaining sufficient liquidity for normal operating purposes.

Cash Flows

Operating Activities

We generated $503.5 million in cash flows from operations in the first 26 weeks of fiscal 2023, compared to cash flows from operations of $377.0 million in the first 26 weeks of fiscal 2022. In the first 26 weeks of fiscal 2023, these amounts included year-over-year unfavorable comparisons on working capital of $40.1 million due to a decrease in accounts payable, offset by a favorable comparison on accounts receivables and inventory. Accrued expenses also had negative comparisons, primarily from accrued incentives and accrued payroll in the first 26 weeks of fiscal 2023 in comparison to the first 26 weeks of fiscal 2022. Income taxes positively impacted cash flows from operations, as estimated payments made in the first 26 weeks of fiscal 2023 were lower than in fiscal 2022 due to overpayments in the prior year.

Investing Activities

Our capital expenditures in the first 26 weeks of fiscal 2023 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 2023 were $128.3 million higher than in the first 26 weeks of fiscal 2022, as we made investments to advance our Recipe for Growth strategy.

During the first 26 weeks of fiscal 2023, we paid $37.7 million, net of cash acquired, for acquisitions compared to $769.7 million in acquisitions made in the first 26 weeks of fiscal 2022.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $47.3 million in the first 26 weeks of fiscal 2023, as compared to $36.1 million in the first 26 weeks of fiscal 2022. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized. We commenced our share repurchase program during the second quarter of fiscal 2022. We repurchased 3.1 million shares for $267.7 million during the first 26 weeks of fiscal 2023. As of December 31, 2022, we had a remaining authorization of approximately $4.2 billion.

Dividends paid in the first 26 weeks of fiscal 2023 were $498.3 million, or $0.98 per share, as compared to $481.4 million, or $0.94 per share, in the first 26 weeks of fiscal 2022. In November 2022, we declared our regular quarterly dividend for the second quarter of fiscal 2023 of $0.49 per share, which was paid in January 2023.

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 at December 31, 2022 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, at that time entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company’s now $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of December 31, 2022, Sysco had a total of $10.0 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal 2022 Form 10-K for additional information regarding the terms of the guarantees.

Basis of Preparation of the Summarized Financial Information

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

Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet Dec. 31, 2022 Jul. 2, 2022
(In thousands)
ASSETS
Receivables due from non-obligor subsidiaries $ 161,094 $ 264,378
Current assets 5,263,848 5,658,972
Total current assets $ 5,424,942 $ 5,923,350
Notes receivable from non-obligor subsidiaries $ 91,204 $ 91,067
Other noncurrent assets 3,972,333 3,910,951
Total noncurrent assets $ 4,063,537 $ 4,002,018
LIABILITIES
Payables due to non-obligor subsidiaries $ 88,307 $ 62,441
Other current liabilities 2,383,167 2,765,756
Total current liabilities $ 2,471,474 $ 2,828,197
Notes payable to non-obligor subsidiaries $ 222,611 $ 315,753
Long-term debt 9,804,557 9,501,842
Other noncurrent liabilities 1,231,795 1,190,177
Total noncurrent liabilities $ 11,258,963 $ 11,007,772
Combined Parent and Guarantor Subsidiaries Summarized Results of Operations 26-Week Period Ended Dec. 31, 2022
--- --- --- ---
(In thousands)
Sales $ 23,774,313
Gross profit 4,298,963
Operating income 2,420,612
Interest expense from non-obligor subsidiaries 9,952
Net earnings 1,464,216

Critical Accounting Policies and Estimates

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

Company-Sponsored Pension Plans

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

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

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

Pension accounting standards require the recognition of the funded status of our defined benefit plans in the statement of financial position, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of December 31, 2022 was a charge, net of tax, of $829.5 million, as compared to a charge, net of tax, of $1.0 billion as of July 2, 2022. The decrease in the amount reflected in accumulated other comprehensive loss is due to a portion of it being recognized in earnings as a result of the settlement that took place in the second quarter of fiscal 2023.

Forward-Looking Statements

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

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

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

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

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

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

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

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

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

•our expectations regarding gross margins in fiscal 2023;

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

•our 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 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 2023;

•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;

•the expected maturity of $528.2 million of debt in the next 12 months;

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

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

•the impact and effects of public health crises, pandemics and epidemics, such as the recent outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations;

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

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

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

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

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

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

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

•the potential impact of product liability claims;

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

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

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

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

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

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

•the risk that Brexit may adversely impact our operations in the U.K., including those of the Brakes Group, as well as our operations throughout the European Union (EU);

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

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

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

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

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

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

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

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

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

•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 2022 Form 10-K and in Item 1A of Part II of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4.  Controls and Procedures

Sysco’s management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Sysco’s disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of December 31, 2022, our chief executive officer and chief financial officer concluded that, as of such date, Sysco’s disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 1.  Legal Proceedings

Environmental Matters

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

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

Item 1A.  Risk Factors

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

Unfavorable macroeconomic conditions, as well as unfavorable conditions in particular local markets, may adversely affect our results of operations and financial condition.

Our results of operations are susceptible to regional, national and international economic trends and uncertainties. Economic conditions can affect us in the following ways:

•Unfavorable conditions can depress sales and/or gross margins in a given market.

•Food cost and fuel cost inflation can lead to reductions in the frequency of dining out and the amount spent by consumers for food-away-from-home purchases, reducing demand for our products.

•Heightened uncertainty in the financial markets negatively affects consumer confidence and discretionary spending.

•The inability to consistently access credit markets could impair our ability to market and distribute food products, support our operations and meet our customers’ needs.

•Liquidity and the inability of our customers and suppliers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to collect funds from our customers and obtain the products and supplies that we need in the quantities and at the prices that we request.

•Foreign exchange rate fluctuations can adversely impact our competitiveness and/or financial results.

The countries in which we operate, have experienced, and are experiencing, from time to time, deteriorating economic conditions and heightened uncertainty in financial markets, which have adversely impacted business and consumer confidence and spending and depressed capital investment and economic activity in the affected regions. Such conditions and high levels of uncertainty make it difficult to predict when, or if, a recession may occur. In fact, some commentators have suggested that the U.S. is already in a recession. A prolonged economic downturn or recession in the U.S. or global economies, and the impact on gross domestic product growth, corporate earnings, consumer confidence, employment rates, income levels and/or personal wealth, could have a material adverse effect on our results of operations and financial condition.

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

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Mine Safety Disclosures

Not applicable

Item 5.  Other Information

None

Item 6.  Exhibits

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

EXHIBIT INDEX

3.1 — Restated Certificate of Incorporation, incorporated by reference to Exhibit 3(a) to Form 10-K for the year ended June 28, 1997 (File No. 1-6544).
3.2 — Certificate of Amendment to Restated Certificate of Incorporation increasing authorized shares, incorporated by reference to Exhibit 3(e) to Form 10-Q for the quarter ended December 27, 2003 (File No. 1-6544).
3.3 — Form of Amended Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(c) to Form 10-K for the year ended June 29, 1996 (File No. 1-6544).
3.4 — Amended and Restated Bylaws of Sysco Corporation dated August 27, 2021, incorporated by reference to Exhibit 3.4 to the Form 10-K for the year ended July 3, 2021 filed on August 30, 2021 (File No. 1-6544).
10.1# — Commitment Agreement dated October 18, 2022, by and among Sysco Corporation, Massachusetts Mutual Life Insurance Company and State Street Global Advisors Trust Company.
10.2†# — Form of Severance Letter Agreement for Senior Vice Presidents.
10.3†# — Form of Restricted Stock Award Agreement for Directors (2022) pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan.
10.4†# — Form of Restricted Stock Award Agreement for Directors (2022) pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan (for directors who elected to defer receipt of shares under the 2009 Board of Directors Stock Deferral Plan).
10.5†# — Description of Compensation Arrangements with Non-Employee Directors.
22.1 — Subsidiary Guarantors and Issuers of Guaranteed Securities, incorporated by reference to Exhibit 22.1 to the Form 10-K for the year ended July 2, 2022 filed on August 26, 2022 (File No. 1-6544).
31.1# — CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2# — CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1# — CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2# — CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH# — Inline XBRL Taxonomy Extension Schema Document
101.CAL# — Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF# — Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB# — Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE# — Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 — Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________

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

Filed herewith

SIGNATURES

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

Sysco Corporation
(Registrant)
Date: January 31, 2023 By: /s/ KEVIN P. HOURICAN
Kevin P. Hourican
President and Chief Executive Officer
Date: January 31, 2023 By: /s/ NEIL A. RUSSELL
Neil A. Russell
Senior Vice President,
Corporate Affairs and Chief
Communications Officer and
Interim Chief Financial Officer
Date: January 31, 2023 By: /s/ SCOTT B. STONE
Scott B. Stone
Vice President of Financial Reporting
and Interim Chief Accounting Officer

Document

Exhibit 10.1

[***] Indicates information that has been excluded from this Exhibit 10.1 because such

information is both (i) not material, and (ii) would be competitively harmful if publicly disclosed.

Commitment Agreement

10/18/2022 (the “Commitment Agreement Date”)

Massachusetts Mutual Life Insurance Company (“Insurer”), Sysco Corporation (“Company”), acting solely in its capacity as the sponsor of the Plan (defined below), and State Street Global Advisors Trust Company (“Independent Fiduciary”), acting solely in its capacity as the independent fiduciary of the Plan, hereby agree that Insurer shall provide a nonparticipating single premium group annuity contract (the “Contract”) supported by its general account in connection with the settlement of liabilities associated with certain benefits arising under the Sysco Corporation Retirement Plan (the “Plan”), subject to the terms and conditions of this Commitment Agreement (this “Commitment Agreement”). Capitalized terms not defined in paragraphs 1-11 of, or a Schedule to, this Commitment Agreement are defined in paragraph 12. By signing this Commitment Agreement, Insurer, Company, and Independent Fiduciary agree as follows:

1.Closing. The delivery of the Closing Date Transfers described in paragraph 3 to Insurer (the “Closing”) will take place on October 25, 2022, if on such date all of the conditions set forth in paragraph 10 have been satisfied or waived (the “Closing Date”).

2.Contract Issuance.

a.Timing. After the Commitment Agreement Date, Insurer, Company and Independent Fiduciary shall each use commercially reasonable efforts to revise the Specimen Contract attached hereto as Schedule 1 (the “Specimen Contract”) to reflect such revisions that were mutually agreed to by the parties prior to the Commitment Agreement Date but not yet included in the terms set forth in the Specimen Contract, if any, and will use commercially reasonable efforts to negotiate any additional revisions to the Contract and any revisions to the related forms of annuity certificates in accordance with paragraph

2.c. below. Insurer shall submit the Specimen Contract and related forms of annuity certificates for approval by the applicable state’s insurance commission no later than fourteen (14) calendar days after the Insurer, Company and Independent Fiduciary have agreed to the final terms of the Contract and certificates, respectively. In the event that any such approval, to the extent required by applicable law, is not granted, or if the Contract or a form of certificate is disapproved by the applicable state’s insurance commission, Insurer, Independent Fiduciary and Company will cooperate in good faith to mutually agree on modifications to the Contract or form of certificate, as applicable, to address the requests of the applicable state’s insurance commission, if any, and, to the extent possible, to preserve the provisions included in the Contract as revised in accordance with this paragraph 2.

b.Within five (5) Business Days after approval by the applicable state insurance commission, the Insurer and Company each shall execute the Contract. The annuity exhibit attached to the Contract will be consistent with the final data and premium adjustments described in paragraph 3.i.. Subject to Insurer’s receipt of the Premium Amount in accordance with paragraph 3, Insurer irrevocably commits to make payments to Payees commencing on the Insurer Financial Payment Date in accordance with the Specifications (as defined in paragraph 2.c.), Insurer’s final proposal dated October 18, 2022 (the “Proposal”) and, once issued, the Contract. Insurer will make such payments even if the Contract has not been issued by Insurer as of the Insurer Financial Payment Date.

c.Terms. The terms of the Contract and related forms of annuity certificates shall be consistent with the Annuity Placement Specifications No.1662 dated August 19, 2022, (including the “Data,” as defined therein), (together, the “Specifications”), the terms set forth in the Specimen Contract with such modifications agreed on in accordance with paragraph 2.a., above, and the Proposal. For the avoidance of doubt, if there is a conflict between the Proposal and the Specifications, the Proposal will control.

3.Closing Premium.

a.Premium Payment: So long as the conditions to Closing set forth in paragraph 10 have been satisfied, the Independent Fiduciary will direct the Plan Trustee to pay Insurer

$[***] (the “Premium Amount”) on the Closing Date by:

i.assigning, transferring, and delivering through re-registration to Insurer, by the Cut-Off Time, all rights, title and interests in and to each Eligible Asset, and

ii.paying to Insurer an amount in Cash, per instructions in Schedule 7, equal to the excess, if any, of the Premium Amount over the Transferred Asset Valuation.

In addition, so long as the conditions to Closing set forth in paragraph 10 have been satisfied, on the Closing Date, Independent Fiduciary will direct the Plan Trustee to pay to Insurer the Interim Asset Cash Flows (such payment, together with the payment of the Premium Amount, the “Closing Date Transfers”). Insurer will deposit the Closing Date Transfers into its general account that supports the Contract. If on or following the Closing Date, the Plan Trust, the Plan, or Company receives any payments with respect to any Transferred Asset, then to the extent any such payment (i) was not reflected in the Transferred Asset Valuation used to determine the Premium Amount or (ii) in the case of accrued interest on such Transferred Asset, was not made with respect to an accrual period that occurred after the Commitment Agreement Date such payments will be retained by the Plan Trust or, if the Plan Trust is no longer in existence at the time of such payment, Company; otherwise, Independent Fiduciary will direct the Plan Trustee to promptly pay to Insurer an amount in Cash equal to such payment. In all cases, Company, Independent Fiduciary and Insurer will work in good faith to cause any misdirected payments to be made to the correct party.

b.Schedule 2 Updates. On the second Business Day after the Commitment Agreement Date, Insurer will deliver to Company an updated Schedule 2 that reflects the Transferred Asset Market Value of each Schedule 2 Asset. If Company, Insurer and Independent Fiduciary, despite using good faith efforts, cannot resolve any dispute with respect to any such information on or prior to the Closing Date, then Insurer’s determination will control for purposes of the Closing Date Transfers, but Company or Independent Fiduciary may immediately commence an arbitration dispute pursuant to Schedule 8 with respect to any such information, and Insurer’s determination shall be subject to retroactive adjustment based on the determination of such arbitration. On the Closing Date, Insurer will, if needed, update Schedule 2 to reflect the removal of any asset that is not received by Insurer prior to the Cut-Off Time. Insurer will, if needed, further update Schedule 2 to reflect the removal of any asset that is determined to be an Ineligible Asset pursuant to paragraph 3.c. and is returned to the Plan Trust in accordance therewith.

c.Asset Portfolio Activity. On and as of the Business Day prior to the Closing Date, Insurer will provide to Company asset portfolio activity information in the form of Schedule 4 with respect to each Schedule 2 Asset and reflecting all Interim Asset Cash Flows. Prior to the Closing Date, Company will confirm to Insurer in writing that such information is accurate and complete or will provide any additions, deletions, or corrections to such information. If Company and Insurer have a dispute with respect to any such information and, despite using commercially good faith efforts, cannot resolve such dispute on or prior to the Business Day prior to the Closing Date, then Insurer’s asset portfolio activity information will control for purposes of the Closing Date Transfers, but Company or Independent Fiduciary may immediately commence an arbitration dispute pursuant to Schedule 8 with respect to any such information, and Insurer’s asset portfolio activity shall be subject to retroactive adjustment based on the determination of such arbitration.

d.Ineligible Assets. By written notice to the other party on or before the fifth Business Day following the Closing Date, Company or Insurer may identify as an Ineligible Asset any asset that was transferred to Insurer as part of the Closing Date Transfers, and the parties will work in good faith for seven (7) Business Days following the receipt of such notice to agree on which, if any, assets constituting part of the Closing Date Transfers are Ineligible Assets. If the parties agree that an asset is an Ineligible Asset within such seven (7) Business Days following the receipt of such notice, then, on or before the date that is three (3) Business Days following such agreement, Independent Fiduciary will direct the Plan Trustee to promptly pay to Insurer an amount, in Cash, per instructions in Schedule 7, equal to the Transferred Asset Market Value of each such asset, and, simultaneously with receipt of such payment, Insurer will return each such asset to the Plan Trust together with any Interim Asset Cash Flows associated with such asset.

e.Interest Payments. Any payment made pursuant to paragraph 3.d. or 3.i. will also include an amount, in Cash, equal to the interest on such payment calculated at an annual rate equal to [***], from the Closing Date through but excluding the date of such payment.

f.Additional Actions with Respect to Eligible Assets. Independent Fiduciary will direct the Plan Trustee to promptly give or cause to be given all notices that are required, under applicable law and the terms of each Eligible Asset, in connection with the sale, assignment, transfer, and delivery of the Eligible Assets on the Closing Date. Independent Fiduciary will direct the Plan Trustee to and Insurer will promptly execute, deliver, record, file, or cause to be executed, delivered, recorded, or filed any and all releases, affidavits, waivers, notices, or other documents that Company or Insurer may reasonably request in order to implement the transfer of the Eligible Assets to Insurer.

g.Risk of Loss on Transferred Assets; Gains on Transferred Assets. Insurer acknowledges and agrees that, if the Closing Date Transfers occur, then, from and after the

Commitment Agreement Date, Insurer bears any and all risks associated with each Transferred Asset.

h.Available Assets. Company will cause the Plan Trust to have sufficient Cash or other assets (whether by means of a Cash contribution or otherwise) to enable the Plan Trustee to pay all amounts that it is directed to pay to Insurer by Independent Fiduciary pursuant to this Commitment Agreement.

i.Premium Adjustments. Company and Insurer may mutually agree to timing with respect to any date and/or deliverable that differs from that set forth in this paragraph 3.i. After the Commitment Agreement Date and prior to March 1, 2023 the Insurer will conduct a data integrity review of all data elements in accordance with verification practices and procedures reasonable for the transactions contemplated by this Commitment Agreement, and Company and the Insurer will cooperate in good faith to identify any data errors (“Data Changes”), including new lives, deaths prior to the Closing Date, deleted lives not related to death and changes in or adjustments to existing Payee data including, but not limited to the following: date of birth, monthly benefit amount, gender, form of annuity, description of annuity, state of residence and qualified domestic relations orders (including the type of qualified domestic relations order). To the extent that the Data Changes occurring prior to March 1, 2023 fall within a [***]% pricing corridor (meaning that the resulting adjustment to the premium, whether positive or negative, does not exceed an amount equal to [***]% of the Premium Amount), Insurer will calculate the adjustment to the premium for each Data Change on a life-by-life basis, consistent with pricing assumptions and methodologies that are the same as the pricing assumptions and methodologies used by Insurer to calculate the Premium Amount (the “Original Pricing Assumptions”). Any adjustment in excess of such [***]% corridor will be priced by updating the Original Pricing Assumptions based on then-current changes in capital market conditions and other relevant factors. All premium adjustments will be paid as follows:

i.If the premium adjustment is a positive number, then Independent Fiduciary will direct the Plan Trustee to (or, if the Plan is not in existence as of such date, Company will) pay to Insurer an amount, in Cash, equal to such premium adjustment, plus interest calculated in accordance with paragraph 3.e. from the

ii.Closing Date through the date of payment, and Insurer will deposit the Cash into its general account that supports the Contract; or

iii.If the premium adjustment is a negative number, then Insurer will pay to the Plan Trust (or if the Plan Trust is not in existence as of such date, Company) an amount, in Cash, equal to the absolute value of such premium adjustment plus interest calculated in accordance with paragraph 3.e. from the Closing Date through the date of payment.

Insurer will provide the premium adjustment on a life-by-life basis for Company and Independent Fiduciary’s review by April 5, 2023. Company will respond to Insurer with any questions on the premium adjustment calculation by April 12,2023. Insurer and Company will cooperate in good faith to resolve any discrepancies on or prior to April 17, 2023 and Insurer will reflect in the annuity exhibit to the Contract any changes that have been agreed to on or prior to such date.

4.Public Announcements and Other Communications.

a.Press Releases. The Insurer shall have no right to issue a transaction announcement or press release or to otherwise make any public disclosure regarding the annuity purchase and the transactions contemplated by this Commitment Agreement; provided, however, that nothing contained in this paragraph 4.a. will prevent Insurer from communicating with Payees as otherwise permitted under this Commitment Agreement.

b.SEC Filings. If the Company concludes that disclosure of this Commitment Agreement and/or the Contract is required by the rules of the Securities and Exchange Commission (“SEC”), (1) the Company will, in good faith, consider whether to make an application with the SEC for confidential treatment of information that the Company concludes is competitively sensitive from the perspective of Company or otherwise merits confidential treatment, (2) the Company will provide the Insurer with a copy of any material correspondence (written or oral) with the SEC regarding any such application for confidential treatment, and the Company and Insurer will otherwise reasonably cooperate in connection with any such application.

c.No Insurer Communications. From the Commitment Agreement Date until the issuance of an annuity certificate by Insurer to an annuitant, other than as provided for in this Commitment Agreement, without Company’s prior written consent, (1) Insurer will cause its employees not to initiate any contact or communication with any participant or beneficiary of the Plan in connection with any transactions other than those transactions contemplated by this Commitment Agreement, and (2) Insurer will not, and will cause all of its affiliates not to, provide any of their respective insurance agents, wholesalers, retailers, or other representatives with any contact information of such participants and beneficiaries of the Plan obtained from Company or any of its representatives in connection with the transactions contemplated by this Commitment Agreement, except for those representatives of Insurer or any of their respective affiliates who need to know such information for purposes of the transactions contemplated by this Commitment Agreement and agree to comply with the requirements of this Commitment Agreement. However, this paragraph 4.c. will not restrict employees of Insurer from contacting any participant or beneficiary of the Plan in connection with, or to facilitate, Insurer’s performance of its obligations under the Contract, the annuity certificates or this Commitment Agreement. Until the issuance of an annuity certificate by Insurer to an annuitant, other than as provided for in this Commitment Agreement, if any participant or beneficiary of the Plan contacts an employee of Insurer, Insurer and Company will cooperate to coordinate on a response to such participant or beneficiary.

d.Sale or Promotion of Insurer’s Other Products. Until the issuance of an annuity certificate by Insurer to a Payee, Insurer agrees that neither it nor its affiliates, respective insurance agents, wholesalers, employees, broker, retailers or other representatives will use Confidential Information with respect to Payees to contact Payees to sell or promote its other products.

5.Welcome Kit and Annuity Certificates.

a.Cooperation. Insurer, Company and Independent Fiduciary will cooperate in good faith to agree on communications to be provided to annuitants, including the Welcome Kit and the annuity certificates, subject to paragraphs 5.b. and 5.c.

b.Welcome Kit. On or before December 22, 2022(or such other date agreed to by the parties) (the “Welcome Kit Mailing Date”), Insurer will mail a welcome kit to each annuitant under the Contract (the “Welcome Kit”). Insurer will send a preliminary draft of the Welcome Kit to Company and Independent Fiduciary as soon as practicable, and Insurer will consider in good faith any comments made by Company or Independent Fiduciary on or before ten (10) business days after they receive the preliminary draft of the Welcome Kit from Insurer.

c.Annuity Certificates. Insurer will use best efforts to obtain all regulatory approvals that are necessary for the issuance of any annuity certificate. Insurer will mail an annuity certificate to each applicable Payee no later than the later of (i) thirty (30) calendar days following the Contract execution date and (ii) thirty (30) calendar days after all required regulatory approvals of the annuity certificates have been obtained, or such later date as mutually agreed to by the parties. Insurer will send a preliminary draft of the annuity certificate to the Company and the Independent Fiduciary as soon as practicable and Insurer will consider in good faith any comments made by the Company and the

Independent Fiduciary on the annuity certificate on or before the fifth Business Day after receipt of the preliminary draft of the annuity certificate from Insurer. Each annuity certificate will include a statement informing Payee of (A) his or her right to obtain a copy of the Contract, (B) how to obtain such copy of the Contract (redacted to exclude information concerning other annuitants), and (C) his or her right to enforce all provisions of the Contract, including, without limitation, provisions with respect to such Payee’s annuity payments under the Contract, solely against Insurer and against no other person including the Plan, Company, or any affiliate thereof. The rights of a Payee are not conditioned on the issuance of the annuity certificates, and any delay in issuing a certificate will not have any effect on the date as of which the Payee has enforceable rights against Insurer.

6.Administration and Transfer.

a.Administrative Transition. Company and Insurer will use commercially reasonable efforts to take or cause to be taken all actions and do or cause to be done all things necessary to coordinate the takeover by Insurer of all responsibilities necessary to effectively make the payments required under the Contract and perform all related administration commencing on the Insurer Financial Payment Date. Insurer shall perform all of its obligations contemplated under this Commitment Agreement and the Contract, including the transfer of personal data and Confidential Information, in compliance with all applicable laws.

b.Call Center and Company Contact. From the Welcome Kit Mailing Date, Insurer will maintain, at its cost and expense, a toll-free phone number and website (the “Call Center”) which will be available for Payees to contact Insurer with questions related to the Contract and the annuity certificates, including administration questions and data updates. Representatives of Insurer at its customer service center will, from the Closing Date until Insurer’s Call Center becomes available, respond to inquiries from Payees (or any other caller) by providing a general description of the transfer of benefits and referring or transferring the caller to the current Plan administration customer line. Company will maintain for a period of one year following the Closing Date, at its cost and expense, a point of contact (the “Company Contact”) to which Insurer may refer Payees who pose questions related to their previous Plan benefits. In the event that a Payee contacts Company with questions related to the Contract or an annuity certificate, Company may refer the caller to the Call Center. In the event that a Payee contacts Insurer with questions related to the Payee’s Plan benefits that are not within the responsibilities of Insurer, Insurer may refer the caller to the Company Contact.

7.Insurer Representations and Warranties. Insurer hereby represents and warrants to Company and Independent Fiduciary as of the Commitment Agreement Date and as of the Closing Date that:

a.Due Organization, Good Standing and Corporate Power. Insurer is a life insurance company, duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. Insurer is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement, the transactions contemplated hereunder and the Contract makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. Insurer has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and the Contract and to consummate the transactions contemplated to be undertaken by Insurer in this Commitment Agreement and the Contract.

b.Compliance with Laws. The business of insurance conducted by Insurer has been and is being conducted in material compliance with applicable laws, and none of the licenses, permits or governmental approvals required for the continued conduct of the business of Insurer as such business is currently being conducted will lapse, terminate, expire or

otherwise be impaired as a result of the consummation of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement, except as, in either case, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Insurer to perform its obligations under this Commitment Agreement.

c.Relationship to the Plan. Insurer is not (1) a trustee of the Plan (other than a non- discretionary trustee who does not render investment advice with respect to any assets of the Plan), (2) a plan administrator (within the meaning of ERISA § 3(16)(A) and Code

§ 414(g)) or (3) an employer any of whose employees are covered by the Plan. Neither Insurer nor any of Insurer’s affiliates is a fiduciary of the Plan who either (1) has or exercises any discretionary authority or control with respect to the investment of Plan Assets that are or will be involved in the transactions contemplated by the Commitment Agreement or the Contract or (2) renders investment advice (within the meaning of ERISA§ 3(21)(A)(ii) or Code § 4975(e)(3)(B)) with respect to such assets. Schedule 5 sets forth a true and complete list of (I) Insurer and Insurer’s affiliates that are investment managers within the meaning of ERISA § 3(38)(B) and (II) without duplication of clause (I), Insurer and Insurer’s affiliates that are registered as investment advisers under the Investment Advisers Act of 1940; provided, however, that solely with respect to the representation and warranty as to Schedule 5 to be made by Insurer on and as of the Closing Date, Insurer may update Schedule 5 through the Closing Date by providing a written update to Company so that the information included therein is current on and as of the Closing Date.

d.No Post-Closing Liability. Following the Closing, the Plan, Company and Independent Fiduciary and their respective affiliates and representatives will not have any liability to pay any annuity payment under the Contract.

e.RBC Ratio. As of the Commitment Agreement Date, Insurer’s most recent Projected RBC Ratio is at least [***]% and to Insurer’s knowledge no event (including a change to financial market metrics) has occurred between the date of Insurer’s most recent Projected RBC Ratio and the Commitment Agreement Date that would be expected to cause Insurer’s most recent Projected RBC Ratio to fall below [***]%.

f.No Commissions. No commissions are or will be owed by Insurer to any individual (except for payments which may be owed to employees of Insurer) or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract. No fees or payments are or will be owed by Insurer to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which any other party, or its respective affiliates or representatives, could be liable.

g.Enforceability; No Conflict. Insurer has received all necessary corporate approvals and no other action on the part of Insurer is necessary to authorize the execution, delivery and performance of this Commitment Agreement and the Contract, and the consummation of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement and the Contract. This Commitment Agreement has been duly executed and delivered by Insurer, and is a valid and binding obligation of Insurer and enforceable against Insurer in accordance with its terms, subject to the applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (“Enforceability Exceptions”). The execution, delivery, and performance of this Commitment Agreement and the Contract by Insurer, and the consummation by Insurer of the transactions contemplated to be undertaken by Insurer in this Commitment Agreement, do not

(1) violate or conflict with any provision of its certificates or articles of incorporation, bylaws, code of regulations, or comparable governing documents, (2) except for the filings and approvals of state insurance governmental authorities in the states listed on Schedule 6, violate or conflict with any law or order of any governmental authority applicable to Insurer, (3) require any governmental or governmental agency approval

other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 6 or (4) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which Insurer is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on Insurer’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement. No filing or approval is required to issue the annuity certificates in accordance with the Contract, other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 6.

h.The Contract. The Contract, when executed, will be duly executed and delivered by Insurer and will be a valid and binding irrevocable obligation of Insurer and enforceable against Insurer by the contract-holder, and each Payee in accordance with its terms, subject to the Enforceability Exceptions. No governmental approval is required for Insurer to issue the Contract, other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the states listed on Schedule 6. At all times, the right to a benefit and all other provisions under the Contract, in accordance with the Contract’s terms, will be enforceable by the sole choice of the Payee to whom the benefit is owed under the Contract, subject to the Enforceability Exceptions. Even if Company, as the contract-holder, ceases to exist, notifies Insurer that it will cease to perform its obligations under the Contract, or no longer has obligations under the Contract, the Contract will remain a valid and binding obligation of Insurer, irrevocable and in full force and effect, and enforceable against Insurer by each Payee in accordance with its terms, subject to the Enforceability Exceptions.

i.Accuracy of Information. To Insurer’s knowledge (i) all information provided by Insurer to Company or Independent Fiduciary (other than any component incorporated into the calculation of the Premium Amount or the premium adjustment under paragraph 3.i. not calculated, determined or provided by Insurer, including the Data as defined in the Specifications, and any information provided by Insurer based on any such component) in connection with the transactions contemplated by this Commitment Agreement was, as of the date indicated on such information, true and correct in all material respects and

(ii) no change has occurred since the date indicated on such information that Insurer has not publicly disclosed or disclosed to the recipient of such information that would cause such information, taken as a whole, to be false or misleading.

j.Litigation. There is no action pending or, to Insurer’s knowledge, threatened against Insurer that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict Insurer’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

k.Sophisticated Investor. Insurer is a sophisticated investor with experience in the purchase of the assets of the type to be included in the Transferred Assets. Insurer has had access to such information as it deems necessary in order to make its decision to acquire the Transferred Assets from the Plan. Insurer acknowledges and agrees that neither Company, Independent Fiduciary, nor the Plan have given any investment advice or rendered any opinion to Insurer as to whether the acquisition of the Transferred Assets is prudent.

8.Company Representations and Warranties. Company hereby represents and warrants to Insurer and Independent Fiduciary as of the Commitment Agreement Date and as of the Closing Date that:

a.Due Organization, Good Standing and Corporate Power. Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas. Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the Contract makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. Company has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and the Contract and to consummate the transactions contemplated to be undertaken by Company in this Commitment Agreement and the Contract.

b.Accuracy of Information. To Company’s knowledge, (1) the mortality experience data file labeled “Sysco - Attachment VI - MED - 9-2-2022” provided on September 9, 2022 by or on behalf of Company to Insurer did not contain any misstatements or omissions that were, in the aggregate, material, and (2) the data in respect of benefit amounts, forms of annuities, and census data for date of birth, date of death, state of residence, or gender, in each case, with respect to the Payees that is furnished on behalf of Company to Insurer was not generated using any materially incorrect systematic assumptions and did not contain any material omissions.

c.Compliance with ERISA. The Plan and Plan Trust are maintained under and are subject to ERISA and, to Company’s knowledge, are in compliance with ERISA in all material respects. To Company’s knowledge, no event has occurred that is reasonably likely to result in the Plan losing their status as qualified by the Code for preferential tax treatment under Code

§§ 401(a) and 501(a). All amendments to the Plan necessary to effect the transactions contemplated by this Commitment Agreement and the Contract have been duly executed and, to the extent that they require authorization by Company, have been or will be by the Closing Date, duly authorized and made by Company.

d.Plan Investments. Neither Insurer nor any of Insurer’s affiliates is a fiduciary of the Plan who either (A) has or exercises any discretionary authority or control with respect to the investment of Plan Assets that are or will be involved in the transactions contemplated by the Commitment Agreement or the Contract or (B) renders investment advice (within the meaning of ERISA § 3(21)(A)(ii) or Code § 4975(e)(3)(B)) with respect to such assets. There are no commingled investment vehicles that hold Plan Assets, the units of which are or will be Plan Assets involved in the transactions contemplated by this Commitment Agreement or the Contract. No assets of the Plan that are or will be involved in the transactions contemplated by this Commitment Agreement or the Contract are or will be managed by any investment manager listed on Schedule 5, and no investment advisor listed on Schedule 5 renders or will render investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to those assets.

e.Independent Fiduciary. Independent Fiduciary has been duly appointed as independent fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to be the designated fiduciary responsible for (1) selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (2) determining whether the transactions contemplated by this Commitment Agreement and the Contract satisfy the ERISA Requirements, (3) representing the interests of the Plan and all their participants and beneficiaries in connection with the negotiation of a commitment agreement and, to the extent set forth in the engagement letter dated August 18, 2022 by and between Independent Fiduciary and the fiduciary of the Plan with authority to hire Independent Fiduciary (the “IF Engagement Letter”), the terms of any agreements with Insurer, including the Contract and the annuity certificates, (4) directing the Plan Trustee on behalf of the Plan

to transfer the Closing Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and any amounts required pursuant to paragraph 3 and (5) taking all other actions on behalf of the Plan necessary to effectuate the foregoing to the extent set forth in the IF Engagement Letter.

f.Plan Trustee is Directed Trustee. The Plan Trustee has been duly appointed as the directed trustee of the trust formed under the Plan and is obligated to follow Independent Fiduciary’s directions to effectuate and consummate the transactions contemplated by this Commitment Agreement and the IF Engagement Letter.

j.No Commissions. No commissions are or will be owed by the Company to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract. No fees or payments are or will be owed by the Company to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which Insurer, or its respective affiliates or representatives, could be liable.

k.Enforceability; No Conflict. Company has received all necessary corporate approvals and no other action on the part of Company is necessary to authorize the execution, delivery and performance of this Commitment Agreement and the Contract, and the consummation of the transactions contemplated to be undertaken by Company in this Commitment Agreement and the Contract. This Commitment Agreement and the Contract have been or will be duly executed and delivered by Company, and is (or when executed will be) a valid and binding obligation of Company and enforceable against Company in accordance with its terms, subject to the Enforceability Exceptions. The execution, delivery and performance of this Commitment Agreement and the Contract by Company, and the consummation by Company of the transactions contemplated to be undertaken by Company in this Commitment Agreement do not (1) violate or conflict with any provision of the Plan and any documents and instruments governing the Plan as contemplated under ERISA § 404(a)(1)(D) (the “Plan Governing Documents”), the certificates or articles of incorporation, bylaws, code of regulations, or the comparable governing documents of Company, (2) violate or conflict with any law or order of any governmental authority applicable to Company or the Plan Governing Documents, (3) require any governmental or governmental agency approval or (4) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which Company is a party,except where the occurrence of any of the foregoing would not have a material adverse effect on Company’s ability to consummate the transactions or perform its obligations contemplated by this Commitment Agreement or the Contract.

l.Litigation. There is no action pending or, to Company’s knowledge, threatened against Company or the Plan that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such party’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

9.Independent Fiduciary Representations and Warranties. Independent Fiduciary hereby represents and warrants to the Insurer and Company as of the Commitment Agreement Date and as of the Closing Date that:

a.Due Organization, Good Standing, and Corporate Power. Independent Fiduciary is a trust company duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. Independent Fiduciary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in the Commitment Agreement and the transactions contemplated hereunder makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. Independent Fiduciary has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and to consummate the transactions contemplated to be undertaken by Independent Fiduciary in this Commitment Agreement.

b.Independent Fiduciary Compliance with ERISA.

i.Independent Fiduciary meets the requirements of, and in the transactions contemplated by this Commitment Agreement is acting as, an “investment manager” under ERISA § 3(38), and further constitutes a “qualified professional asset manager” under the U.S. Department of Labor Prohibited Transaction Class Exemption 84-14 solely with respect to the transfer of assets to Insurer in connection with the transactions contemplated by this Commitment Agreement and the Contract (but not the selection of such assets or the management of such assets prior to the transfer).

ii.The Independent Fiduciary has accepted, and has not rescinded or terminated, appointment as independent fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to be the designated fiduciary responsible for (1) selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (2) determining whether the transactions contemplated by this Commitment Agreement and the Contract satisfy the ERISA Requirements, (3) representing the interests of the Plan and all of its participants, beneficiaries and alternate payees in connection with the negotiation of a commitment agreement and the terms of any agreements with Insurer, including the Contract and the annuity certificates, (4) directing the Plan Trustee on behalf of the Plan to transfer the Closing Date Transfers in connection with the consummation of the transactions contemplated by this Commitment Agreement and the Contract and any amounts required pursuant to paragraph 3.i. (each of (1) through (4) above, solely to the extent set forth in the IF Engagement Letter).

iii.The Independent Fiduciary is experienced in independent fiduciary work, fully qualified and has the requisite expertise together with its reliance on its consultant, Aon Consulting, Inc., and its counsel, K&L Gates LLP, to serve as an independent fiduciary in connection with the transactions contemplated by this Commitment Agreement.

iv.Independent Fiduciary understands and acknowledges that Insurer did not undertake, and is not undertaking, to provide impartial investment advice, or give advice in a fiduciary capacity, in connection with the transactions contemplated by this Commitment Agreement.

c.ERISA Determinations.

i.Independent Fiduciary has selected Insurer to issue the Contract as set forth in this Commitment Agreement (including the purchase of the Contract). If an Independent Fiduciary MAC has not occurred between the Commitment

Agreement Date and the Closing Date or, if an Independent Fiduciary MAC has occurred but is not continuing on the Closing Date, such selection, the transactions contemplated by this Commitment Agreement, the Plan’s use of assets for the purchase of the Contract as contemplated by this Commitment Agreement, and the Contract (including its terms) all satisfy the ERISA Requirements. Independent Fiduciary has delivered a certification confirming the foregoing, executed by a duly authorized officer of Independent Fiduciary, to the Committee.

ii.The transactions contemplated by this Commitment Agreement and the purchase of the Contract do not result in a Non-Exempt Prohibited Transaction, provided that the representations in paragraph 7.c. and 8.d. are true and correct in all material respects as of the Closing Date.

iii.The Plan Trust (1) will receive no less than “adequate consideration” for the Transferred Assets and (2) will pay no more than “adequate consideration” for the Contract, in each case within the meaning of “adequate consideration” under ERISA § 408(b)(17)(B) and Code § 4975(f)(10).

iv.The Independent Fiduciary is responsible for exercising independent judgment in evaluating the transactions contemplated by this Commitment Agreement (including purchase of the Contract). The Independent Fiduciary is not an affiliate of Insurer and does not have a financial interest, ownership interest or other relationship, agreement or understanding with Insurer that would limit or might otherwise affects its ability to exercise its best judgment as a fiduciary.

d.No Commissions. No commissions are or will be owed by Independent Fiduciary to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract. No fees or payments are or will be owed by Independent Fiduciary to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contract for which Insurer, or its respective affiliates or representatives, could be liable.

e.Enforceability; No Conflict. This Commitment Agreement is duly executed and delivered by Independent Fiduciary, and is a valid and binding obligation of Independent Fiduciary and enforceable against Independent Fiduciary in accordance with its terms, subject to the Enforceability Exceptions. The execution, delivery, and performance of this Commitment Agreement by Independent Fiduciary, and the consummation by Independent Fiduciary of the transactions contemplated to be undertaken by Independent Fiduciary in this Commitment Agreement, do not (1) violate or conflict with the certificates or articles of incorporation, bylaws, code of regulations, or comparable governing documents of Independent Fiduciary, (2) violate or conflict with any law or order of any governmental authority applicable to Independent Fiduciary, (3) require any governmental approval, (4) violate or conflict with any law or order of any governmental authority applicable to any provision of the Plan Governing Documents or (5) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Independent Fiduciary is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Independent Fiduciary’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.

f.Litigation. There is no action pending or, to Independent Fiduciary’s knowledge, threatened against Independent Fiduciary that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or

restrict Independent Fiduciary’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

10.Conditions to Closing. The parties’ obligations to consummate the transactions contemplated by this Commitment Agreement in connection with the Closing, including Independent Fiduciary’s obligation to direct the Plan Trustee to consummate the transactions contemplated by this Commitment Agreement, are subject to the conditions that:

a.Independent Fiduciary will have confirmed that the transactions contemplated by this Commitment Agreement continue to satisfy the ERISA Requirements because an Independent Fiduciary MAC has not occurred or, if an Independent Fiduciary MAC has occurred, it is not continuing on the Closing Date.

b.No court or government agency has taken any action after the Commitment Agreement Date that would cause the consummation of the transactions contemplated by this Commitment Agreement to violate the law or cause the Plan to fail to remain qualified under Code § 401(a).

c.Each of the representations and warranties of the counterparties set forth in paragraphs 7, 8 and 9 shall be materially true and correct as of the Commitment Agreement Date and as of the Closing Date.

To the extent not satisfied as of the Closing Date, all conditions set forth in this paragraph 10 shall be deemed to have been waived following the delivery of the Closing Date Transfers; provided, however, the requirements of paragraph 10.a. shall never be waived. Notwithstanding the foregoing, (1) each of the representations and warranties set forth in paragraphs 7, 8 and 9 shall survive the Closing and remain in effect until the expiration of the applicable statute of limitations and (ii) each of the covenants or other agreements in this Commitment Agreement that by their terms (x) do not contemplate performance after the Closing, shall not survive the Closing (except for pre-Closing breach thereof) and (y) contemplate performance after the Closing shall survive the Closing consistent with the terms of the relevant covenant or agreement.

No party may rely on the failure of any condition to its obligation to consummate the transactions contemplated hereby set forth in this paragraph 10 to be satisfied if such failure was caused by such party’s breach of its covenants hereunder.

11.Miscellaneous.

a.This Commitment Agreement, together with the Schedules to this Commitment Agreement, which are incorporated by reference and made a part of this Commitment Agreement as if fully set forth herein, and the NDA together, constitutes the sole and entire agreement of the parties to this Commitment Agreement with respect to the subject matter contained herein and therein. The parties each hereby acknowledge that they jointly and equally participated in the drafting of this Commitment Agreement and all other agreements it contemplates, and no presumption will be made that any provision of this Commitment Agreement will be

construed against any party by reason of such role in the drafting of this Commitment Agreement or any other agreement contemplated hereby. No amendment of any of the provisions hereof shall be effective unless set forth in writing and signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Commitment Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. Except to the extent expressly provided in this Commitment Agreement, nothing in this Commitment

Agreement shall confer any rights or remedies upon any person other than the parties hereto. To the extent there is a direct and express conflict between the terms of the Contract and this Commitment Agreement, the terms of the Contract will control.

b.This Commitment Agreement will be governed by, construed and interpreted in accordance with the laws of the State of New York, excluding those provisions relating to conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of the State of New York in respect of all matters arising out of or in connection with this Commitment Agreement. The parties agree that irreparable damage may occur if any of the provisions of this Commitment Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each party will be entitled to seek an injunction or injunctions to prevent breaches of this Commitment Agreement by the breaching party and to enforce specifically the terms and provisions of this Commitment Agreement, in addition to any other remedy to which such party is entitled by law or in equity. To the fullest extent permitted by law, none of the parties will be liable to any other party for any punitive or exemplary damages of any nature in respect of matters arising out of this Commitment Agreement.

c.The Mutual Non-Disclosure Agreement, dated as of August 15, 2022, between Company and Insurer (the “NDA”) shall continue in full force and effect.

d.Insurer will comply, and will ensure that all of its affiliates, agents and subcontractors comply, with all applicable laws and regulations governing the Confidential Information of all Payees, including those laws relating to privacy, data security and protection and the safeguarding of such information, and its maintenance, disclosure and use. Insurer will maintain administrative, technical and physical safeguards to protect the privacy and security of the Confidential Information related to Payees. Insurer will comply in all material respects with any internal written policies relating to the Confidential Information of any Payee as in effect from time to time. Insurer acknowledges that it is solely responsible from and after the Commitment Agreement Date for any Data Breach. For purposes of this paragraph 11.d., “Data Breach” means any act or omission by Insurer or its agents, subcontractors or service providers (“Authorized Persons”) that compromises either the security, confidentiality or integrity of any data related to Payees in its custody or under its control or the physical, technical, administrative or organizational safeguards put in place by Insurer (or any Authorized Persons) that relate to the protection of the security, confidentiality or integrity of any personally identifying information of any Payee that is in its custody or under its control.

e.[***]

f.No party hereto will assign or transfer this Commitment Agreement or any of its rights or obligations hereunder without the prior written consent of the other parties. Any assignment or transfer in violation of this paragraph 11.f. will be null and void from the outset, without any effect whatsoever.

g.This Commitment Agreement may be executed in any number of counterparts, including through DocuSign or other electronic means, each of which will be deemed an original but all of which together will constitute one and the same instrument.

12.Definitions. For purposes of this Commitment Agreement, the following defined terms will have the following meanings:

a.“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in New York, New York are authorized or required by law to close.

b.“Cash” means a wire transfer, through the Federal Reserve System, of currency of the United States of America.

c.“Code” means the Internal Revenue Code of 1986 and the applicable Treasury Regulations and other official guidance issued thereunder.

d.“Committee” means the Sysco Corporation Investment Committee.

e.“Confidential Information” has the meaning ascribed to such term in the NDA.

f.“Cut-Off Time” means 4:00 p.m. eastern time on the Closing Date.

g.“Eligible Asset” means a Schedule 2 Asset that meets the Asset Eligibility Criteria as laid out in Schedule 3 as of the Commitment Agreement Date and to which Company or Plan Trust has valid title, free and clear of all Liens, other than Permitted Liens on the Closing Date at the time of transfer.

h.“ERISA” means Employee Retirement Income Security Act of 1974, as amended, and any federal agency regulations and other official guidance promulgated thereunder that are currently in effect and applicable.

i.“ERISA Requirements” mean all of the applicable requirements of ERISA and applicable guidance promulgated thereunder, including Interpretive Bulletin 95-1.

j.“Fair Market Value” means the fair market value as of the applicable date for a Schedule 2 Asset as in an amount equal to the fair market value as of such date for such Schedule 2 Asset as indicated (1) by the primary pricing source set forth in the table below Pricing Sources that corresponds to the applicable asset class of such Schedule 2 Asset, (2) if such primary pricing source is not available or no fair market value is indicated by such primary pricing source for such Schedule 2 Asset, by the secondary pricing source set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset, or (3) if neither such primary nor secondary pricing source is available or no fair market value is indicated by either such source for such Schedule 2 Asset, Company, Independent Fiduciary, and Insurer will discuss the appropriate pricing source for such Schedule 2 Asset. For any applicable pricing source, the Mid Price will be used.

PRICING SOURCES

To determine the fair market value of the securities, the primary pricing source for the valuations will be [***] mid- price.

If [***] pricing is not available for any security, then the secondary pricing source will be [***] mid-price.

If neither the primary nor secondary pricing source is available for any particular security, the IC and Company will negotiate in good faith to determine an alternative fair market value of such security.

The fair market value will include accrued interest for each security. Accrued interest means the aggregate amount of interest that has been earned, but not paid, as of the close of business on the valuation date.

k.“Ineligible Asset” means a Schedule 2 Asset that does not meet the Asset Eligibility Criteria set forth on Schedule 3.

l.“Independent Fiduciary MAC” means (i) the occurrence of a material adverse change, as determined in Independent Fiduciary’s sole discretion, in or directly affecting Insurer after the Commitment Agreement Date that would cause the selection of Insurer and the purchase of the Contract to fail to satisfy the ERISA Requirements, or (ii) the occurrence of a change in ERISA Requirements after the Commitment Agreement Date that would cause the selection of Insurer and the Plan’s purchase of the Contract to fail to satisfy ERISA Requirements.

m.“Insurer Financial Payment Date” means January 1, 2023.

n.“Interim Asset Cash Flows” means, with respect to the Transferred Assets, the aggregate amount paid by the issuer of each asset to the record owner as of any day during the period from and including the Commitment Agreement Date and to but excluding the date that the Closing Date Transfers occur, (i) with respect to any coupon, plus (ii) with respect to cash flows received on such assets, including but not limited to principal payments, principal redemptions and tender offers but not including coupons described in clause (i). Interim Asset Cash Flows will not include any payments made with respect to any Transferred Asset that were due prior to the Commitment Agreement Date and any other cash flows not principal- or interest-related (such as class action payment receipt and litigation payment) relevant to events occurring prior to the Commitment Agreement Date. For purposes of paragraph 3.c., which relates to “Schedule 2 Assets” instead of “Transferred Assets,” the reference in this definition to “Transferred Assets” shall instead refer to “Schedule 2 Assets.” For purposes of paragraph 3.d, which relates to “Ineligible Assets” instead of “Transferred Assets,” the reference in this definition to “Transferred Assets” shall instead refer to “Ineligible Assets.”

o.“Mid Price” means, for any applicable pricing source set forth in the definition of Fair Market Value, the mid price as provided by the pricing source.

p.“Non-Exempt Prohibited Transaction” means a transaction prohibited by ERISA § 406 or Code § 4975, for which no statutory exemption or U.S. Department of Labor class exemption is available.

q.“Payee” means any payee under the Contract, including annuitants, contingent annuitants, alternate payees and beneficiaries, as applicable.

r.“Permitted Liens” means:

i.any Liens created by operation of law in respect of restrictions on transfer of securities (other than restrictions relating to the transfer of a Transferred Asset on the Closing Date in violation of applicable law); or

ii.with respect to any Transferred Asset, any transfer restrictions or other limitations on assignment, transfer or the alienability of rights under any indenture, debenture or other similar governing agreement to which such assets are subject (other than restrictions relating to the transfer of such an asset on the Closing Date in violation of any such restriction).

s.“Plan Asset” means an asset of the Plan(s) within the meaning of ERISA.

t.“Plan Trust” means the Sysco Corporation Retirement Plan Trust.

u.“Plan Trustee” means The Northern Trust Company.

v.“Projected RBC Ratio” means, as of the day of determination, the projection of the RBC Ratio as of December 31, 2022.

w.“RBC Ratio” means the company action level risk-based capital ratio of Insurer, which will be calculated in the manner set forth in Schedule 9.

x.“Schedule 2 Asset” means each asset listed from time to time on Schedule 2 that is not an Ineligible Asset.

y.    “Transferred Asset” means each Eligible Asset transferred to and received by Insurer by the Cut-Off Time on the Closing Date. Until valid title to an Eligible Asset has transferred to Insurer, such asset is not a Transferred Asset.

z.“Transferred Asset Market Value” means (i) the close-of-market Fair Market Value of a Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date, plus (ii) accrued interest on such Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date. For purposes of paragraph 3.d., which relates to “Ineligible Assets” instead of “Transferred

Assets,” the reference in this definition to “Transferred Asset” will instead refer to “Ineligible Asset.”

aa.“Transferred Asset Valuation” means the sum of the Transferred Asset Market Value for each Transferred Asset.

[signature page follows]

IN WITNESS WHEREOF, Company, Insurer, and Independent Fiduciary have executed this Commitment Agreement as of the date first written above.

SYSCO CORPORATION    MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By: /s/ Ron Phillips    By: /s/ Ian Cahill

Print Name:

Ron Phillips

Print Name: Ian Cahill

Title:

Executive Vice President, Chief Human Resources Officer

Title: Head of Pension Risk Transfer

STATE STREET GLOBAL ADVISORS TRUST

COMPANY, acting solely in its capacity as Independent Fiduciary of the Plan

By: /s/ Denise Sisk

Print Name:    Denise Sisk

Title:    Managing Director

Schedule 1

to Commitment Agreement

SPECIMEN CONTRACT

See Attached - Sysco - MassMutual GAC_USE_Active01_313510622_3 MassMutual 10-11-2022

Schedule 2

to Commitment Agreement

Security Data and Listing Table

See Attached - MASSMUTUAL DRY RUN RESPONSE as of COB 10-7-22 Sysco Asset In-Kind Portfolio Listing - Final

Schedule 3

to Commitment Agreement

ASSET ELIGIBILITY CRITERIA

In order for a Schedule 2 Asset to be eligible for transfer to Insurer as a Transferred Asset, each such asset must meet all of the following criteria (“Asset Eligibility Criteria”):

1.The asset is not a security issued by the Company or an affiliate thereof; and the asset is not a security issued by the Insurer or an affiliate thereof.

2.The Insurer has not notified the Company that the Insurer is prohibited by law from holding or beneficially owning the asset. The Insurer will be deemed to have notified the Company that the Insurer is prohibited by law from holding or beneficially owning any security issued by any entity that is listed from time to time on the:

a.California Department of Insurance’s “List of Companies Doing Business with the Iranian Petroleum/Natural Gas, Nuclear, and Military Sectors”,

b.California Department of General Services’ “Entities Prohibited from Contracting with Public Entities in California per the Iranian Contracting Act, 2010”,

c.New York State Department of Financial Services’ “Entities determined to be non-responsive bidders/offerors pursuant to The New York State Iran Divestment Act of 2012”, or

d.Treasury Department’s Office of Foreign Asset Control list of sanctioned countries.

3.A Fair Market Value for the asset is available on the Business Day prior to the Commitment Agreement Date.

4.The asset is not in default and is performing with respect to principal and interest payments on and as of the Commitment Agreement Date.

5.The asset is denominated in U.S. dollars.

6.The asset is in round lots of minimum trade size or greater, based on the applicable standards for such asset as applied by any applicable clearing service.

7.The asset is not a Sukuk security.

8.

Schedule 4

to Commitment Agreement

INTERIM ASSET CASH FLOWS

CUSIP<br><br>(9 Digit) Description Position Amount Coupon (Rate) Coupons Received<br><br>Amount    Date Principal Redemption Received<br><br>Amount    Date

Schedule 5

to

Commitment Agreement

INVESTMENT MANAGERS AND INVESTMENT ADVISERS

[***]

Schedule 6

to

Commitment Agreement

STATE INSURANCE GOVERNMENTAL AUTHORITIES

Insurer will secure the approval of the GAC and annuity certificates from the Texas of Insurance, if approval is needed.

Insurer will secure the approval of the annuity certificates from the applicable insurance regulatory authorities in the following jurisdictions, if approval is needed:

[***]

Schedule 7

to

Commitment Agreement

INSURER WIRE INSTRUCTIONS

Payment of Premium Amount by the Closing Date:

[***]

Schedule 8

to

Commitment Agreement

ARBITRATION DISPUTE RESOLUTION

1.Rules and Procedures. Any dispute between the parties referenced herein shall be resolved by arbitration conducted by one arbitrator, in accordance with Commercial Arbitration Rules and Expedited Procedures for Large, Complex Commercial Disputes of the American Arbitration Association (“AAA”), as such rules and procedures are in effect at the time of the arbitration, except as they may be modified herein or by mutual agreement of the Company and Insurer.

2.Location. The seat of the arbitration shall be New York City, New York, at a mutually agreed upon location, or in the absence of agreement at the New York City offices of the AAA.

3.Arbitrator. The Company and Insurer shall jointly engage a mutually agreed upon arbitrator (such firm, the “Approved Arbitrator”), within five Business Days after a dispute notice is delivered by either party to the other party to resolve any arbitration dispute. If the Company and Insurer are unable to engage an Approved Arbitrator within such time period on such terms, then the AAA shall appoint an arbitrator within three Business Days thereafter.

4.Damages. As applicable, the arbitrator shall resolve any arbitration dispute within the range of difference between (a) any amounts or values as calculated or determined by Insurer and (b) any amounts or values as calculated or determined by the Company. The arbitrator will have no authority to award any other damages other than as provided for herein.

5.Judgment. Any arbitration award shall be final and binding on the Company and Insurer. The Company and Insurer shall undertake to carry out any award without delay. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the Company or Insurer, as applicable, or their respective assets.

6.Costs. The Company and Insurer shall share the fees and disbursements of the arbitrator equally (i.e., on a 50%/50% basis). The Company and Insurer shall each bear their own costs and expenses incurred in connection with prosecuting and/or defending any arbitration dispute.

7.Amended Schedules. If applicable, the Company and Insurer will promptly amend the schedules hereto to reflect any arbitration decision.

Schedule 9

to

Commitment Agreement

RBC RATIO CALCULATION

[***]

Document

Exhibit 10.2

[Sysco Letterhead]

PERSONAL AND CONFIDENTIAL

[Date]

[Name]

[Title]

[Email Address]

Re:    Benefits Upon Termination Under Certain Circumstances

Dear [Name],

You are a key employee of Sysco Corporation (“Sysco” or the “Company”), and I know that you will make significant contributions to the profitability, growth, and financial strength of Sysco as we move forward. In recognition of your key role and to encourage your continued focus on driving Sysco’s strategic priorities, the Compensation and Leadership Development Committee of Sysco’s Board of Directors has approved certain benefits to be paid to you in the event that your employment were to end under specific circumstances.

The purpose of this letter agreement (this “Agreement”) is to memorialize the severance payments and benefits to which you will be entitled if your employment with Sysco ceases under particular circumstances. It further sets forth your obligations and commitments in exchange for continued employment with Sysco, the compensation and benefits you receive during such employment, and the promise and/or receipt of exit benefits if your employment terminates under certain circumstances.

1.Circumstances Covered by this Agreement: You will be entitled to the benefits described in this Agreement if your employment ceases for one of the following Eligible Termination Reasons:

a.Involuntary Termination Without Cause: “Cause” means your (1) conviction of, or plea of nolo contendere to, a felony under federal law or the law of the state in which such action occurred; (2) dishonesty in the course of fulfilling your employment or service duties; (3) willful and deliberate failure to perform your reasonable employment or service duties in any material respect; (4) your violation of any material company policy, including the Sysco Global Code of Conduct; or (5) your violation of any non-competition, non-solicitation, confidentiality or other restrictive covenants agreement or code of conduct applicable to you. Sysco shall have the sole discretion to determine whether Cause for termination exists.

b.Voluntary Termination with Good Reason: “Good Reason” means the occurrence of one or more of the following, without your consent: (1) a material diminution in your authority, duties or responsibilities; (2) a material change in the geographic location at which you must perform services for the Company or its subsidiaries; or (3) a material diminution in your annual base salary; provided, however, that to the extent equivalent salary reductions have been made for similarly situated executives, such salary reduction shall not constitute Good Reason. You must provide written notice of your intent to terminate for Good Reason to Sysco within thirty (30) days after the event constituting Good Reason. Sysco shall have a period of thirty (30) days in which it may correct the act or failure to act that constitutes the grounds for Good Reason as set forth in your

notice of termination. If Sysco does not correct the act or failure to act, you must terminate your employment for Good Reason within thirty (30) days after the end of the cure period, in order for the termination to be considered a Good Reason termination.

c.Termination as a Result of a Change in Control: A “Change in Control Termination” means a termination of your employment by Sysco without Cause or your resignation of employment with Sysco for Good Reason, occurring during the period beginning on the date that a Change in Control (as defined in the Sysco Corporation 2018 Omnibus Incentive Plan) occurs and ending on the second anniversary thereof.

2.Benefits Upon Termination for an Eligible Termination Reason. If your employment terminates for an Eligible Termination Reason, you will be entitled to the following benefits, subject to the terms and conditions described in this Agreement:

a.Severance Payment:

i.Severance Payment in the Event of an Involuntary Termination Without Cause or Voluntary Termination for Good Reason: An amount equal to one and one-half (1.5) times the sum of your then-current annual base salary, less applicable withholdings (the “Non-CIC Severance Payment”). The Non-CIC Severance Payment will not be considered compensation under any compensation or benefit plan sponsored or maintained by Sysco and will be in lieu of any separation of employment-related payment to which you otherwise would have been entitled under any plan, practice or program maintained by, or any agreement with, Sysco or any related or affiliated entity, all of which shall be superseded by this Agreement. You will not be eligible for any other severance payment, except as described herein, and there will be no duplication of benefits. Subject to Section 11(a) of this Agreement, the Non-CIC Severance Payment will be made in equal monthly installments for a period of 24 months, commencing as soon as practicable, but no later than thirty (30) days following the effective date of an executed General Release (as defined below).

ii.Severance Payment in the Event of a Change In Control Termination: An amount equal to one and one-half (1.5) times the sum of (A) your then-current annual base salary and (B) your then-current target short term incentive, less applicable withholdings (the “CIC Severance Payment”). The CIC Severance Payment will not be considered compensation under any compensation or benefit plan sponsored or maintained by Sysco and will be in lieu of any separation of employment-related payment to which you otherwise would have been entitled under any plan, practice or program maintained by, or any agreement with, Sysco or any related or affiliated entity, all

of which shall be superseded by this Agreement. You will not be eligible for any other severance payment, except as described herein, and there will be no duplication of benefits. Subject to Section 11(a) of this Agreement, the CIC Severance Payment will be made in a lump sum payment occurring as soon as practicable, but no later than thirty (30) days following the effective date of an executed General Release (as defined below).

b.Group Health Plan Benefits Reimbursement: Provided that you or your eligible dependents, if any, are participating in Sysco’s group health, dental and vision plans at the time of your separation of employment and elect on a timely basis to continue that participation in some or all of the offered plans through the federal law commonly known as “COBRA,” you will be eligible to receive, on a monthly basis, reimbursement in an amount equal to the difference between (i) the amounts of any premiums or other fees paid by you pursuant to COBRA to maintain your health benefits under the Company’s group health, dental and vision plans and (ii) the applicable active employee rates for such health, dental and vision benefits (the “Group Health Plan Benefits Reimbursement”). You shall continue to be eligible for the Group Health Plan Benefits Reimbursement until the earlier to occur of (1) the date eighteen (18) months after your active employee coverage ends; or (2) the date you are eligible to enroll in the health, dental and/or vision plans of another employer. Your continued receipt of the Group Health Plan Benefits Reimbursement is dependent on you and your dependents continuing to be eligible to participate in Sysco’s offered plans through COBRA. You agree to notify Sysco promptly if you are eligible to enroll in the plans of another employer or if you or any of your dependents cease to be eligible to continue participation in Company plans through COBRA. Group Health Benefits Plan Reimbursement will immediately cease if you violate the terms of this Agreement.

c.Outplacement: You will be immediately eligible for outplacement services at the expense of Sysco. Such services will be provided for up to twelve (12) months of coverage, or until new employment is obtained, whichever occurs first. Outplacement benefits described in this subsection will immediately cease if you violate the terms of this Agreement.

d.Annual Incentive in the Event of Involuntary Termination Not for Cause or Resignation for Good Reason: If your employment with Sysco ends involuntarily not for Cause or you resign with Good Reason, you will remain eligible for a pro-rata portion of your annual or short-term incentive for the fiscal year during which your employment is terminated. Your incentive payment will be calculated based on the number of full calendar months you were employed by Sysco during the applicable performance period and will be subject to the attainment of applicable Sysco performance goals for such performance period. Any annual or short-term incentive paid to you under this subsection will be subject to applicable withholding taxes and will be calculated on the same basis and made payable at the same time as all other annual or short-term incentives for the same performance period.

e.Annual Incentive in the Event of a Change in Control Termination: If your employment with Sysco ends as a result of a Change in Control Termination, you will remain eligible for a pro-rata portion of your annual or short-term incentive

for the fiscal year during which your employment is terminated. Your incentive payment will be calculated based on the number of full calendar months you were employed by Sysco during the applicable performance period and be paid at 100% of the target performance under the applicable Sysco performance goals for such performance period. Any annual or short-term incentive paid to you under this subsection will be subject to applicable withholding taxes and will be payable at the same time as all other annual or short-term incentives for the same performance period.

3.Circumstances Upon Which There Will Be No Entitlement to Benefits. This Agreement does not provide termination benefits for any separation of employment relating to:

a.Termination with Cause;

b.Voluntary Termination Without Good Reason; or

c.Death or Disability. “Disability” means (i) in the United States, that you have been determined by the Social Security Administration to be totally disabled and (ii) in all other jurisdictions, disability, as determined pursuant to the Company’s long-term disability policy.

4.Employment-at-Will. This Agreement does not constitute a contract of employment, and you acknowledge that your employment with Sysco is terminable “at-will” by either party with or without Cause and with or without notice.

5.Benefits Conditioned Upon Execution of Full Release of Claims. You must execute and not revoke a legally enforceable general release of claims (“General Release”) in a form acceptable to Sysco prior to the receipt of any payments or benefits set forth in this Agreement.

6.Effective Date; Term; Renewal. This Agreement is effective as of July 15, 2020 (the “Effective Date”) for one year. This Agreement shall be automatically renewed annually thereafter for a renewal period of one year, unless written notice of non-renewal is given by you or by Sysco at least thirty (30) days prior to the expiration of the term, including any renewal periods.

7.Benefits Conditioned Upon Execution of Protective Covenants Agreement. You must execute the attached Protective Covenants Agreement concurrently with your execution of this Agreement in order to be eligible for the payments and benefits set forth in this Agreement.

8.Intellectual Property Rights. You acknowledge that your development, work or research on any and all inventions or expressions of ideas, that may or may not be eligible for patent, copyright, trademark or trade secret protection, hereafter made or conceived solely or jointly within the scope of employment at Sysco, provided such invention or expression of an idea relates to the business of Sysco or relates to actual or demonstrably anticipated research or development of Sysco or results from any work performed by you for or on behalf of Sysco, are hereby assigned to Sysco, including your entire rights, title and interest. You will promptly disclose such invention or expression of an idea to your leader and will, upon request, promptly execute a specific written assignment of title to Sysco. If you currently hold any inventions or expressions of an idea, regardless of whether they were published or filed with the U.S. Patent and Trademark Office or the U.S. Copyright Office, or are under contract to not so

assign, you will provide a list of such inventions or idea to the Company’s General Counsel within two days of the execution of this Agreement.

9.Cooperation in Litigation. You agree, without receiving additional compensation, to fully and completely cooperate with Sysco, both during and after the period of employment with Sysco, with respect to matters that relate to your employment, in all investigations, potential litigation or litigation in which Sysco is involved or may become involved, other than any such investigations, potential litigation or litigation between you and Sysco. Sysco will reimburse you for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation.

10.Non-Disparagement. You will not take any actions that would reasonably be expected to be detrimental to the interests of Sysco or any Sysco affiliate, nor make derogatory statements, either written or oral to any third party, or otherwise publicly disparage Sysco or any Sysco affiliate, its products, services, or present or former employees, officers, directors, or customers. This provision does not and is not intended to preclude you from providing truthful testimony in response to legal process or governmental inquiry.

11.Tax Matters.

a.Section 409A Compliance. This Agreement is intended to be exempt from Section 409A of the Internal Revenue Code and valid regulations thereunder (“Section 409A”) as a short term deferral, or to comply with the requirements of Section 409A and, specifically, with the provisions of Treasury Regulation Section 1.409A-3(i)(1)(i) stating that a plan may provide that a payment upon the lapse of a substantial risk of forfeiture is to be made in accordance with a fixed schedule that is objectively determinable based on the date the substantial risk of forfeiture lapses. The substantial risk of forfeiture lapses on the date the Executive’s employment ceases for an Eligible Termination Reason that is a “separation from service” under Section 409A. This Agreement shall be administered and interpreted in accordance with Section 409A. For purposes of Section 409A, the right to a series of payments under this Agreement shall be treated as a right to a series of separate payments. Payments shall commence not later than 90 days after the date of separation from service for an Eligible Termination Reason. In no event may the Executive, directly or indirectly, designate the calendar year of a payment. Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of the Executive’s execution of the Release, directly or indirectly, result in the Executive designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, based on timing of the execution of the Release, payment shall be made in the later taxable year, if required by Section 409A. With respect to amounts paid under this Agreement that are reimbursements or in-kind benefits under Treasury Regulation Section 1.409A-3(i)(1)(iv), no such reimbursement or in-kind benefit shall be subject to liquidation or exchange for another benefit; the amount available for reimbursement or in-kind benefits provided during any calendar year shall not affect the amount available for reimbursement or in-kind benefits to be provided in a subsequent calendar year; and any reimbursement to which you are entitled shall be made promptly, but no later than the last day of the calendar year immediately following the calendar year in which such expenses were incurred. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A.

b.Treatment of Payments or Benefits Under Section 280G. In the event that any payment or benefit received (or to be received) by you would fail to be deductible under Section 280G of the Internal Revenue Code (“Section 280G”) or otherwise would be subject (in whole or part) to the excise tax imposed by Section

4999 of the Internal Revenue Code (the “Excise Tax”) then, the payment or benefits to be received by you that are subject to Section 280G shall be reduced to the extent necessary so that no portion of the total payment or benefits is subject to the Excise Tax, but only if the net amount of such payment or benefits, as so reduced, is greater than or equal to the net amount of such total payment or benefits without such reduction.

  1. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and, during the term of this Agreement, supersedes the provisions of all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto with respect to the subject matter hereof.

13.Governing Law, Jurisdiction, and Venue. This Agreement shall be governed by the laws of the United States and the laws of the State of Texas, both as to interpretation and performance. Any action or other legal proceeding not subject to arbitration under this Agreement or any action or legal proceeding regarding the enforceability of this Agreement shall be brought exclusively in an appropriate court of competent jurisdiction located in Harris County, Texas (if the action is brought in state court) or in the Southern District of Texas (if such action is brought in federal court). Any action brought within such courts shall not be transferred or removed by you to any other state or federal court.

14.Severability; Validity. If any provision(s) of this Agreement shall be found invalid, illegal, or unenforceable, in whole or in part, then such provision(s) shall be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision(s) had been originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may be.

15.Successors and Assigns. This Agreement may be transferred, in whole or in part, by the Company to its successors and assigns, and the rights and obligations of this Agreement shall be binding upon and inure to the benefit of any successors or assigns of the Company, and you will remain bound to fulfill your obligations under this Agreement. You may not, however, transfer or assign your rights or obligations under this Agreement.

16.Survival. The obligations contained in Sections 8, 9, 10 and 13 of this Agreement shall remain in full force and effect after the termination of your employment with the Company. You and the Company acknowledge and understand that your obligations under this Agreement shall not be affected by the reasons for, circumstances of, or identity of the party who initiates the termination of your employment with Sysco.

17.Inurement. This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee, or, if there is no such devisee, legatee or designee, to your estate.

18.No Waiver. The Company’s waiver or failure to enforce the terms of this Agreement in one instance shall not constitute a waiver of its rights under this Agreement to enforce, in other instances, that term or any other term of this Agreement.

19.Read and Understood. By signing below, you agree that you have read this Agreement, carefully and understand each of its terms and conditions and been provided the opportunity to seek independent legal counsel of your choice to the extent you deemed such advice necessary in connection with the review and execution of this Agreement.

I appreciate your contribution to the success of Sysco and value the role you will play in our success in the future. Please sign below indicating your receipt of and agreement to these terms.

Sincerely,

Kevin Hourican

President & CEO

Attachment

Agreed:

__________________

Name

__________________

Date

Document

EXHIBIT 10.3

SYSCO CORPORATION

2018 OMNIBUS INCENTIVE PLAN

2022 RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (“Agreement”) was made and entered into as of November 18, 2022 (“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.

  1. 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:

Document

EXHIBIT 10.4

SYSCO CORPORATION

2018 OMNIBUS INCENTIVE PLAN

2022 RESTRICTED STOCK AWARD AGREEMENT

SHARE UNITS

This Restricted Stock Award Agreement (“Agreement”) was made and entered into as of November 18, 2022 (“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 2022. 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.

  1. 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:

Appendix A

2022 RESTRICTED STOCK AWARD AGREEMENT

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Award granted to the Director under the Plan if the Director resides and/or works in one of the countries listed below. If the Director is a citizen or resident of a country other than the one in which the Director is currently residing and/or working, is considered a resident of another country for local law purposes or if the Director transfers employment and/or residency between countries after the Date of Grant, the Company will, in its discretion, determine the extent to which the terms and conditions herein will be applicable to the Director.

Certain capitalized terms used but not defined in this Appendix have the same meanings set forth in the Plan and/or the Agreement, as applicable.

EUROPEAN UNION (“EU”) / EUROPEAN ECONOMIC AREA (“EEA”) / UNITED KINGDOM (“UK”)

Terms and Conditions

Data Privacy

If the Director resides and/or is employed in the EU/EEA/UK, Section 10 of the Agreement shall be replaced with the following:

The Company, being the applicable data controller, is located at 1390 Enclave Parkway, Houston, Texas 77077, USA and issues Awards under the Plan in its sole discretion. The Director should review the following information about the Company’s data processing practices.

(a)Data Collection and Usage. Pursuant to applicable data protection laws, the Director is hereby notified that the Company collects, processes and uses certain personally-identifiable information about the Director for the legitimate interest of implementing, administering and managing the Plan and generally

administering equity awards; specifically, including the Director’s name, home address, email address and telephone number, date of birth, social insurance number or other identification number, salary, citizenship, job title, any shares of Stock or directorships held in the Company, and details of all Awards or any entitlement to shares of Stock awarded, canceled, exercised, vested, or outstanding in the Director’s favor, which the Company receives from the Director or the Employer. In granting the Awards under the Plan, the Company will collect the Director’s personal data for purposes of allocating shares of Stock and implementing, administering and managing the Plan. The Company’s legal basis for the collection, processing and use of the Director’s personal data is that it is necessary for the performance of the Company’s contractual obligations under the Plan and performance of the Agreement. The Director’s refusal to provide personal data would make it impossible for the Company to perform its contractual obligations and may affect the Director’s ability to participate in the Plan. As such, by participating in the Plan, the Director voluntarily acknowledges the collection, use, processing and transfer of the Director’s personal data as described herein. The Company shall implement appropriate technical and organizational security measures to protect the Director’s personal data.

(b)Stock Plan Administration Service Provider. The Company transfers participant data to Fidelity Stock Plan Services LLC an independent service provider based in the United States, which assists the Company with the implementation, administration and management of the Plan. The Company shall ensure that this, and any subsequent, administrator contractually agree to comply with legally required data protection obligations to protect the Director’s personal data. In the future, the Company may select a different service provider and share the Director’s data with another company that serves in a similar manner. The Company’s service provider will open an account for the Director to receive and trade shares of Stock. The Director will be asked to agree on separate terms and data processing practices with the service provider, which is a condition to the Director’s ability to participate in the Plan.

(c)International Data Transfers. The Company and its service providers are based in the United States. The Company can only meet its contractual obligations to the Director if the Director’s personal data is transferred to the United States. The Company’s legal basis for the transfer of the Director’s personal data to the United States is the performance of contractual obligations to the Director and it shall use the standard data protection clauses adopted by the EU Commission.

(d)Data Retention. The Company will use the Director’s personal data only as long as is necessary to implement, administer and manage the Director’s participation in the Plan or as required to comply with legal or regulatory obligations, including under tax and securities laws. When the Company no longer needs the Director’s personal data, the Company will remove it from its systems. If the Company keeps the Director’s data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis would be for compliance with relevant laws or regulations.

(e)Data Subject Rights. The Director may have a number of rights under data privacy laws in the Director’s country of residence. For example, the Director’s rights may include the right to (i) request access or copies of personal data the Company processes, (ii) request rectification of incorrect data, (iii) request deletion of data, (iv) place restrictions on processing, (v) lodge complaints with competent authorities in the Director’s country, and/or (vi) request a list with the names and addresses of all recipients of the Director’s personal data. To receive clarification regarding the Director’s rights or to exercise the Director’s rights, the Director should contact his or her local human resources department.

Document

EXHIBIT 10.5

Summary of Non-Employee

Director Compensation Program for CY2023

•Each non-employee director will receive an annual base retainer of $100,000. 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:                        $25,000

oCompensation & Leadership Development Committee Chair:    $20,000

oCorporate Governance & Nominating Committee Chair:        $20,000

oSustainability Committee Chair:                    $15,000

oTechnology Committee Chair:                    $15,000

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

•The Board will issue annual restricted stock awards (currently, each non-employee director receives stock with a value of $185,000). 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 $100,000 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 are entitled to receive pursuant to the 2009 Non-Employee Directors Stock Deferral Plan.

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 31, 2023

/s/ KEVIN P. HOURICAN

Kevin P. Hourican

President and Chief Executive Officer

Document

Exhibit 31.2

CERTIFICATION

I, Neil A. Russell, 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 31, 2023

/s/ NEIL A. RUSSELL

Neil A. Russell

Senior Vice President, Corporate Affairs and Chief Communications Officer and Interim Chief Financial Officer

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 31, 2022 (“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 31, 2023

/s/ KEVIN P. HOURICAN

Kevin P. Hourican

President and Chief Executive Officer

Document

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, Neil A. Russell, Senior Vice President, Corporate Affairs and Chief Communications Officer and Interim 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 31, 2022 (“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 31, 2023

/s/ NEIL A. RUSSELL

Neil A. Russell

Senior Vice President, Corporate Affairs and Chief Communications Officer and Interim Chief Financial Officer

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