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Sysco

SyscoSYY财报

NYSE · 必需消费 · 食品经销商

Sysco is an American multinational corporation that sells, markets, and distributes food products to restaurants, healthcare and educational facilities, sports stadiums, and other venues that serve food. It also sells foodservice supplies and equipment. The company is headquartered in the Energy Corridor district of Houston, Texas.

What changed in Sysco's 10-K — 2021 vs 2022

Top changes in Sysco's 2022 10-K

387 paragraphs added · 506 removed · 294 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+3 added−19 removed43 unchanged
The agency also specifies the standards of identity for certain foods, prescribes the format and content of information required to appear on food product labels, regulates food contact packaging and materials, and maintains a Reportable Food Registry for the industry to report when there is a reasonable probability that an article of food will cause serious adverse health consequences.
The agency also specifies the standards of identity for certain foods, 5 prescribes the format and content of information required to appear on food product labels, regulates food contact packaging and materials, and maintains a Reportable Food Registry for the industry to report when there is a reasonable probability that an article of food will cause serious adverse health consequences.
For certain product lines, we are also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural Commodities Act, the Packers and Stockyard Act and regulations promulgated by the U.S. Department of Agriculture (USDA) to interpret and implement these statutory 6 provisions.
For certain product lines, we are also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural Commodities Act, the Packers and Stockyard Act and regulations promulgated by the U.S. Department of Agriculture (USDA) to interpret and implement these statutory provisions.
We are subject to privacy laws in the EU, including the General Data Protection Regulation (GDPR), which requires companies to meet certain 7 requirements regarding the handling of personal data. In addition, our business is subject to the U.K.
We are subject to privacy laws in the EU, including the General Data Protection Regulation (GDPR), which requires companies to meet certain requirements regarding the handling of personal data. In addition, our business is subject to the U.K.
A comparison of the sales mix in the principal product categories during the last three years is presented below: Principal product categories 2021 2020 2019 Fresh and frozen meats 19 % 19 % 19 % Canned and dry products 16 16 17 Frozen fruits, vegetables, bakery and other 15 15 15 Poultry 11 10 10 Dairy products 10 10 10 Paper and disposables 8 7 7 Fresh produce 8 9 8 Seafood 5 5 6 Beverage products 3 4 4 Other (1) 5 5 4 Totals 100 % 100 % 100 % (1) Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our previously-owned Cake business, and other janitorial products, medical supplies and smallwares.
A comparison of the sales mix in the principal product categories during the last three years is presented below: Principal product categories 2022 2021 2020 Fresh and frozen meats 19 % 19 % 19 % Canned and dry products 17 16 16 Frozen fruits, vegetables, bakery and other 14 15 15 Poultry 11 11 10 Dairy products 10 10 10 Fresh produce 8 8 9 Paper and disposables 7 8 7 Seafood 5 5 5 Beverage products 3 3 4 Other (1) 6 5 5 Totals 100 % 100 % 100 % (1) Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment and subscription sales for our previously owned Cake business, and other janitorial products, medical supplies and smallwares.
The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our operations that distribute to international customers.
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.
We also provide ancillary services relating to foodservice distribution, such as providing customers with product usage reports and other data, menu-planning advice, food safety training and assistance in inventory control, as well as access to various third-party services designed to add value to our customers’ businesses. 2 No single customer accounted for 10% or more of Sysco’s total sales for the fiscal year ended July 3, 2021.
We also provide ancillary services relating to foodservice distribution, such as providing customers with product usage reports and other data, menu-planning advice, food safety training and assistance in inventory control, as well as access to various third-party services designed to add value to our customers’ businesses. 2 No single customer accounted for 10% or more of Sysco’s total sales for the fiscal year ended July 2, 2022.
We estimate that our sales by type of customer during the past three fiscal years were as follows: Type of Customer 2021 2020 2019 Restaurants 66 % 62 % 62 % Healthcare 9 9 8 Education, government 6 8 9 Travel and leisure 5 7 9 Other (1) 14 14 12 Totals 100 % 100 % 100 % (1) Other includes cafeterias that are not stand-alone restaurants, bakeries, caterers, churches, civic and fraternal organizations, vending distributors, other distributors and international exports, as well as retail food sales and logistics services.
We estimate that our sales by type of customer during the past three fiscal years were as follows: Type of Customer 2022 2021 2020 Restaurants 63 % 66 % 62 % Healthcare 8 9 9 Education, government 8 6 8 Travel and leisure 7 5 7 Other (1) 14 14 14 Totals 100 % 100 % 100 % (1) Other includes cafeterias that are not stand-alone restaurants, bakeries, caterers, churches, civic and fraternal organizations, vending distributors, other distributors and international exports, as well as retail food sales and logistics services.
Reporting Segments 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.
Reporting Segments 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 combined certain operations into three reportable segments.
In many jurisdictions, compliance with these competition laws is of special importance to us, and our operations may come under special scrutiny by competition law authorities, due to our competitive position in those jurisdictions. Outside the U.S., our business is subject to numerous similar statutes and regulations, as well as other legal and regulatory requirements.
In many jurisdictions, compliance with these competition laws is of special importance to us, and our operations may come under special scrutiny by competition law authorities, due to our competitive position in those jurisdictions. 6 Outside the U.S., our business is subject to numerous similar statutes, regulations, and other regulatory requirements.
These sales are reflected within the respective customer types listed in the table above, depending on the type of customer the FSM operator serves. Sources of Supply We purchase from thousands of suppliers, both domestic and international, none of which individually accounts for more than 10% of our purchases.
These sales are reflected within the respective customer types listed in the table above, depending on the type of customer the FSM operator serves. Sources of Supply We purchase from thousands of suppliers, both domestic and international, none of which individually accounted for more than 10% of our purchases for fiscal 2022.
Capital Improvements During fiscal 2021, 2020 and 2019, $470.7 million, $720.4 million and $692.4 million, respectively, were invested in facilities, technology, equipment, delivery fleet and other capital asset enhancements. From time to time, we dispose of assets in the normal course of business; we consider proceeds from these asset sales to be an offset to capital expenditures.
Capital Improvements During fiscal 2022, 2021 and 2020, $632.8 million, $470.7 million and $720.4 million, respectively, were invested in facilities, technology, equipment, delivery fleet and other capital asset enhancements. From time to time, we dispose of assets in the normal course of business; we consider proceeds from these asset sales to be an offset to capital expenditures.
Diversity, Equity and Inclusion — Sysco’s Diversity, Equity and Inclusion (DEI) team develops global strategic initiatives that are implemented locally to ensure that the needs specific to each region are addressed. To accelerate our global efforts to create a more diverse workforce and an equitable and inclusive culture, Sysco hired its Vice President, Chief Diversity Officer in fiscal 2021.
Diversity, Equity and Inclusion — Our Diversity, Equity and Inclusion (DEI) team develops global strategic initiatives that are implemented to ensure that the needs specific to each region are addressed. To accelerate our global efforts to create a more diverse workforce and an equitable and inclusive culture, we hired a Vice President, Chief Diversity Officer in fiscal 2021.
In addition, Sysco is a member of the Business Coalition for Equality Act, a group of U.S. employers that support legislation providing the same protections for LGBTQ+ associates as other protected groups under federal law.
In addition, we are a member of the Business Coalition for Equality Act, a group of U.S. employers that support legislation providing the same protections for LGBTQ+ associates as other protected groups under federal law.
We are not engaged in material research and development activities relating to the development of new products or the improvement of existing products. Our sales do not generally fluctuate significantly on a seasonal basis; therefore, our business is not deemed to be seasonal. As of July 3, 2021, we operated 343 distribution facilities throughout North America and Europe.
We are not engaged in material research and development activities relating to the development of new products or the improvement of existing products. Our sales do not generally fluctuate significantly on a seasonal basis; therefore, our business is not deemed to be seasonal. As of July 2, 2022, we operated 333 distribution facilities throughout North America and Europe.
We estimate that sales to our customers in the food service management (FSM) sector, which include large customers that service cafeterias in institutions such as universities, hospitals, and sporting venues, accounted for just over 5% of sales in fiscal 2021.
We estimate that sales to our customers in the food service management (FSM) sector, which include large customers that service cafeterias in institutions such as universities, hospitals, and sporting venues, accounted for 6% of sales in fiscal 2022 as compared to 5% of sales in fiscal 2021.
Our customers may also choose to purchase products directly from wholesale or retail outlets, including club, cash and carry and grocery stores, online retailers, or negotiate prices directly with our suppliers. While we compete primarily with local and regional distributors, some organizations compete with us on a multi-region basis.
Our customers may choose to purchase products directly from wholesale or retail outlets, including club, cash and carry and grocery stores, online retailers, or negotiate prices directly with our suppliers. We compete with local and regional distributors and some organizations that operate on a multi-region basis.
Our purpose is “Connecting the World to Share Food and Care for One Another.” We provided products and related services to over 650,000 customer locations, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers during fiscal 2021.
Our purpose is “Connecting the World to Share Food and Care for One Another.” We provided products and related services to approximately 700,000 customer locations, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers during fiscal 2022.
Founded in 1969, Sysco commenced operations as a public company in March 1970 when the stockholders of nine companies exchanged their stock for Sysco common stock. Since our formation, we have grown from $115 million to as high as $60.1 billion in annual sales in fiscal 2019, both through internal expansion of existing operations and through acquisitions.
Founded in 1969, Sysco commenced operations as a public company in March 1970 when the stockholders of nine companies exchanged their stock for Sysco common stock. Since our formation, we have grown from $115 million to our all-time high of $68.6 billion in annual sales in fiscal 2022, both through internal expansion of existing operations and through acquisitions.
During fiscal 2021, 2020 and 2019, capital expenditures, net of proceeds from sales of assets, were $411.5 million, $691.7 million and $671.5 million, respectively. Capital expenditures, net of proceeds from sales of assets, as a percentage of sales during fiscal 2021, 2020 and 2019 were 0.8%, 1.3% and 1.1%, respectively.
During fiscal 2022, 2021 and 2020, capital expenditures, net of proceeds from sales of assets, were $608.7 million, $411.5 million and $691.7 million, respectively. Capital expenditures, net of proceeds from sales of assets, as a percentage of sales during fiscal 2022, 2021 and 2020 were 0.9%, 0.8% and 1.3%, respectively.
The level of inventory on hand will vary by product depending on shelf-life, supplier order fulfillment lead times and customer demand. We also make purchases of additional volumes of certain products based on supply or pricing opportunities.
The level of inventory on hand will vary by product depending on shelf-life, supplier order fulfillment lead times and customer demand. We also make purchases of additional volumes of certain products based on supply or pricing opportunities. We take advantage of suppliers’ cash discounts where appropriate.
The corporate office also makes available supply chain expertise, such as in warehousing and distribution services, which provide assistance in operational best practices, including space utilization, energy conservation, fleet management and work flow.
The GSC also makes available supply chain expertise, such as in warehousing, distribution, and omni-channel strategic services, which provide assistance in operational best practices, including space utilization, energy conservation, fleet management and work flow.
Also, in fiscal 2021, we launched our Global DEI Advisory Council, which has been tasked with creating our three-year DEI Roadmap and our Real Talk Dialogues, which provide leaders and their associates safe forums to have open, honest, two-way and completely voluntary conversations.
We use our Global DEI Advisory Council, which has been tasked with creating our three-year DEI Roadmap and Real Talk Dialogues, to provide leaders and associates safe forums to have open, honest, two-way and completely voluntary conversations.
We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness. We monitor each customer’s account and will suspend shipments if necessary. A majority of our sales orders are filled within 24 hours of when customer orders are placed. We generally maintain inventory on hand to be able to meet customer demand.
We monitor each customer’s account and will suspend shipments if necessary. A majority of our sales orders are filled within 24 hours of when customer orders are placed. We generally maintain inventory on hand to be able to meet customer demand.
We are also subject to regulation by numerous federal, state and local regulatory agencies, including, but not limited to, the U.S. Department of Labor, which sets employment practice standards for workers, and the U.S.
These customer relationships subject us to additional regulations applicable to government contractors. We are also subject to regulation by numerous federal, state and local regulatory agencies, including, but not limited to, the U.S. Department of Labor, which sets employment practice standards for workers, and the U.S.
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. Sysco sold its interests in Cake Corporation in the first quarter of fiscal 2021.
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.
As of July 3, 2021, approximately 99% of our U.S.-based associates are classified as full-time associates, defined as employees who work 30 or more hours per week. Collective Bargaining Agreements — As of July 3, 2021, approximately 19% of our employees were represented by unions, primarily the International Brotherhood of Teamsters and unions in France and Sweden.
Also, approximately 98% of our U.S.-based associates are classified as full-time associates, defined as employees who work 30 or more hours per week and approximately 17% of our employees were represented by unions, primarily the International Brotherhood of Teamsters and unions in France and Sweden.
We sold our interests in Cake Corporation in the first quarter of fiscal 2021. Our distribution centers, which we refer to as operating sites, distribute branded merchandise, as well as products packaged under our private brands. Products packaged under our private brands have been manufactured for Sysco according to specifications that have been developed by our quality assurance team.
Our distribution centers, which we refer to as operating sites, distribute branded merchandise, as well as products packaged under our private brands. Products packaged under our private brands have been manufactured for Sysco according to specifications that have been developed by our quality assurance team.
In order to preserve our liquidity in response to the COVID-19 pandemic, we reduced our expected capital expenditures by eliminating capital projects that were not critical for our business.
In order to preserve our liquidity in response to the COVID-19 pandemic, we reduced our capital expenditures by eliminating capital projects that were not critical for our business in fiscal 2021, and in fiscal 2022, our capital expenditures returned to more normal levels.
We expect to finance our fiscal 2022 capital expenditures from internally generated funds. Human Capital Resources Sysco believes engaged and empowered associates drive business success and that attracting, developing and retaining the best talent globally to drive our business success is a key driver of the company’s long-term value.
Human Capital Resources We believe engaged and empowered associates drive business success and that attracting, developing and retaining the best talent globally to drive our business success is a key driver of the company’s long-term value.
Along with equitable pay, total rewards for Sysco’s full-time associates include paid vacation and sick time benefits, short-term and long-term incentives, retirement plans, training and development, access to career opportunities, paid pregnancy and adoption leave benefits, health and welfare, and recognition, as well as other programs like dependent scholarships and employee discounts.
Also, our full-time associates receive paid vacation and sick time benefits, short-term and long-term incentives, retirement plans, training and development, access to career opportunities, paid pregnancy and adoption leave benefits, short-term and long-term 4 disability benefits, health and welfare benefits, and recognition, as well as other programs like dependent scholarships and employee discounts.
Five of our private brands have had annual sales in excess of $1 billion. These trademarks and the private brands on which they are used are widely recognized within the foodservice industry.
In fiscal 2022, six of our private brands had sales at or near $1 billion. These trademarks and the private brands on which they are used are widely recognized within the foodservice industry.
Sysco’s chief executive officer signed the CEO Pledge, as part of the CEO Action for Racial Equity, a group that includes business leaders from across the Fortune 100 companies.
Our chief executive officer signed the CEO Pledge, as part of the CEO Action for Racial Equity, a group that includes business leaders from across the Fortune 100 companies that is committed to advancing diversity and inclusion in the workplace.
We will have a 52-week year ending July 2, 2022 for fiscal 2022. Sysco Corporation is organized under the laws of Delaware. The address and telephone number of our executive offices are 1390 Enclave Parkway, Houston, Texas 77077-2099, (281) 584-1390.
Sysco Corporation is organized under the laws of Delaware. The address and telephone number of our executive offices are 1390 Enclave Parkway, Houston, Texas 77077-2099, (281) 584-1390.
We take advantage of suppliers’ cash discounts where appropriate, otherwise we pay out suppliers according to our payment terms. 3 Corporate Headquarters Our corporate staff makes available a number of services to our operating sites and our shared services staff performs support activities for employees, suppliers and customers.
Otherwise, we pay our suppliers according to our payment terms. 3 Global Support Center Our Global Support Center (GSC) staff makes available a number of centralized services to our operating sites and our shared services staff performs support activities for employees, suppliers and customers.
The FCPA also requires us to keep accurate books and records and to maintain internal accounting controls to detect and prevent bribery and to ensure that transactions are properly authorized and recorded.
Foreign Corrupt Practices Act (FCPA) prohibits bribery of public officials to obtain or retain business in foreign jurisdictions. The FCPA also requires us to keep accurate books and records and to maintain internal accounting controls to detect and prevent bribery and to ensure that transactions are properly authorized and recorded.
Sysco’s annual sales in fiscal 2021 were $51.3 billion. Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 53-week year ended July 3, 2021 for fiscal 2021, a 52-week year ended June 27, 2020 for fiscal 2020 and a 52-week year ended June 29, 2019 for fiscal 2019.
Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ended July 2, 2022 for fiscal 2022, a 53-week year ended July 3, 2021 for fiscal 2021 and a 52-week year ended June 27, 2020 for fiscal 2020. We will have a 52-week year ending July 1, 2023 for fiscal 2023.
We also focus on increasing profitability by lowering operating costs and by lowering aggregate inventory levels, which reduces future facility expansion needs at our operating sites, while providing greater value to our suppliers and customers.
We also focus on increasing profitability by lowering operating costs and by lowering aggregate inventory levels, which reduces future facility expansion needs at our operating sites, while providing greater value to our suppliers and customers. Working Capital Practices Our growth is funded through a combination of cash on hand, cash flow from operations, commercial paper issuances and long-term borrowings.
Selected financial data for each of our reportable segments, as well as financial information concerning geographic areas, can be found in Note 21, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 8. 1 Customers and Products Sysco’s customers in the foodservice industry include restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, industrial caterers and other similar venues where foodservice products are served.
Selected financial data for each of our reportable segments, as well as financial 1 information concerning geographic areas, can be found in Note 21, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 8.
At the end of fiscal 2021, women held 24% of U.S. management roles (defined as managers of people) and 24% of officer roles (defined as the executives and senior level positions within the corporate office and field organizations).
As of July 2, 2022, in the U.S, women held 24% of management roles (defined as managers of people) and 28% of officer roles (defined as executives and senior level employees within the global support center and field organizations).
Technomic projects the market size to increase to approximately $285 billion by the end of calendar 2021. We also serve certain international geographies that vary in size and amount of market share. We believe, based upon industry trade data, that our sales to the U.S. and Canada food-away-from-home industry were the highest of any foodservice distributor during fiscal 2021.
We believe, based upon industry trade data, that our sales to the U.S. and Canada food-away-from-home industry were the highest of any foodservice distributor during fiscal 2022.
We also regularly review our compensation practices to promote fair and equitable pay. In fiscal 2021, Sysco’s hourly associates received an average hourly wage of $28.46, and 100% of associates in our U.S. distribution facilities received pay above state minimum wage thresholds.
In fiscal 2022, our hourly associates received an average hourly wage of $23.49, and 100% of associates in our U.S. distribution facilities received pay above state minimum wage thresholds.
Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, specialty produce, specialty imports and a wide variety of non-food products; • International Foodservice Operations – includes operations in the Americas (primarily outside of the United States (U.S.)) and Europe, which distribute a full line of food products and a wide variety of non-food products.
“Other” financial information is attributable to our other operations that do not meet the quantitative disclosure thresholds. • U.S. Foodservice Operations – primarily includes (a) the company’s 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.
In addition, we are subject to the U.S. False Claims Act, and similar state statutes, which prohibit the submission of claims for payment to the government that are false and the knowing retention of overpayments. The U.S. Foreign Corrupt Practices Act (FCPA) prohibits bribery of public officials to obtain or retain business in foreign jurisdictions.
In addition, we are subject to the Federal False Claims Act, and similar state statutes, which prohibit knowingly presenting or causing to be presented a false or fraudulent claim for payment to the government and the knowing and improper retention of overpayments. The U.S.
Total Rewards — We are committed to equal pay for equal work, regardless of gender, race, ethnicity or other personal characteristics. To deliver on that commitment, we benchmark and set pay ranges based on market data and consider various factors, such as an employee’s role and experience, job location and performance.
To deliver on that commitment, we benchmark and set pay ranges based on market data and consider various factors, such as an employee’s role and experience, job location and individual performance. We also regularly review our compensation practices to promote fair and equitable pay.
Our leadership and teams are responsible for attracting and retaining top talent by facilitating an environment where employees feel supported and encouraged in their professional and personal development.
Our leadership is responsible for attracting and retaining top talent by facilitating an environment where employees feel supported and encouraged in their professional and personal development. Specifically, we promote employee development by cultivating a high-impact learning culture for our associates through a variety of enterprise development programs and learning resources, including goal-setting and career development processes.
Our diverse associates and inclusive culture create an environment where associates can develop their skills and contribute to our success by driving strong financial performance.
Our diverse associates and inclusive culture create an environment where associates can develop their skills and contribute to our success by driving strong financial performance. As of July 2, 2022, we employed approximately 71,000 employees, including 49,000 U.S. employees and 22,000 employees outside the United States, as compared to approximately 58,000 employees as of July 3, 2021.
Additionally, we understand the importance of providing competitive compensation and benefits, as well as appropriate training that cultivates growth, developmental opportunities and multiple career paths within the company. A key focus of Sysco’s Talent Acquisition in fiscal 2021 has been achieving hiring targets for our transportation associates. Throughout our industry, drivers are in short supply and hiring is a challenge.
We commit to investing in our employees through on the job training and coaching. A key focus of our Talent Acquisition has been achieving hiring targets for our transportation associates. Throughout our industry, drivers are in short supply and hiring is a challenge.
We estimate our capital expenditures, net of proceeds from sales of assets, in fiscal 2022 will be approximately 1.3% of fiscal 2022 sales, as we continue to invest in our business for the long-term. During the three years ended July 3, 2021, capital expenditures were financed primarily by internally generated funds, our commercial paper program and bank and other borrowings.
During the three years ended July 2, 2022, capital expenditures were financed primarily by internally generated funds and bank and other borrowings. We expect to finance our fiscal 2023 capital expenditures from cash flows from operations and bank and other borrowings.
Our customers include several departments of the federal government, including the Department of Defense and Department of Veterans Affairs facilities, as well as certain state and local entities. These customer relationships subject us to additional regulations applicable to government contractors.
In addition, we must comply with Federal Trade Commission standards with respect to any claims made about our food products in advertising and marketing materials. Our customers include several departments of the federal government, including the Department of Defense and Department of Veterans Affairs facilities, as well as certain state and local entities.
For our U.S. leadership, Hispanic or Latinx, Black or African American, and Asian employees held 12%, 8% and 4% of management roles (defined as managers of people), respectively, at the end of fiscal 2021. 5 Our Associate Resource Groups (ARGs) are voluntary, associate-led groups organized to foster a diverse, inclusive workplace at Sysco, and are a critical element of our engagement and DEI efforts at both our headquarters and at operating sites by interested associates.
Our Associate Resource Groups (ARGs) are voluntary, associate-led groups organized to foster a diverse, inclusive workplace at Sysco, and are a critical element of our engagement and DEI efforts at both our headquarters and at operating sites by interested associates. Competition A large number of companies are engaged in the distribution of food and non-food products to the foodservice industry.
Existing foodservice competitors can extend their shipping distances and add truck routes and warehouses relatively quickly to serve new markets or customers. We estimate that we serve about 17% of the approximately $230 billion annual foodservice market in the U.S., as estimated by Technomic, Inc., for calendar year 2020.
We estimate that we serve about 17% of the approximately $300 billion annual foodservice market in the U.S., as estimated by Technomic, Inc., for calendar year 2021. Technomic projects the market size to increase to approximately $345 billion by the end of calendar 2022. We also serve certain international geographies that vary in size and amount of market share.
Working Capital Practices Our growth is funded through a combination of significant cash on hand, incremental cash flow from operations, commercial paper issuances and long-term borrowings. See the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” regarding our liquidity, financial position and sources and uses of funds.
See the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” regarding our liquidity, financial position and sources and uses of funds. We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness.
For more information on our COVID-19 workplace and community response, see our COVID-19 disclosures in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Talent Acquisition and Talent Management — Maintaining a pipeline of talent is critical to Sysco’s ongoing success and is essential to our succession planning efforts and to growing leaders throughout the organization.
Approximately 9.0% of our union employees are covered by collective bargaining agreements that are subject to renegotiation in fiscal 2023. Talent Acquisition and Talent Management — Maintaining a pipeline of talent is critical to our ongoing success and is essential to our succession planning efforts and to growing leaders throughout the organization.
If successful, we may expand the program nationally within the U.S. Furthermore, through a program entitled Sysco Speaks, we conduct annual, confidential engagement surveys of our global workforce that are administered and analyzed by an independent third party. All Sysco associates across our global operations are invited to participate, and 86% of associates completed the survey in fiscal 2021.
Additionally, through a program titled Sysco Speaks, we conduct annual, confidential engagement surveys of our global workforce that are administered and analyzed by an independent third party. Total Rewards — We are committed to equal pay for equal work, regardless of gender, race, ethnicity or other personal characteristics.
For example, this program will give our warehouse associate population an opportunity to become drivers. Trainees will be paid to attend the academy, and Sysco will pay the licensing and certification fees. In return, associates will sign a contract to work for Sysco for an agreed upon period of time.
In fiscal 2022, Sysco invested in its first Sysco Driver Academy, enabling us to develop and train our own drivers, which we refer to as Delivery Partners. This program gives our warehouse associate population an opportunity to Delivery Partners. Trainees are paid to attend the academy, and we pay for their licensing and certification fees.
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“Other” financial information is attributable to our other operating segments that do not meet the quantitative disclosure thresholds. • U.S. Foodservice Operations – primarily includes U.S.
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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 the operations of Sysco; • International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute a full line of food products and a wide variety of non-food products.
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Sysco’s Board of Directors, through its Compensation and Leadership Development Committee, together with Sysco’s chief executive officer and chief human resources officer, are tasked with providing oversight of our human capital strategy, which consists of (1) talent acquisition, (2) talent management, (3) total rewards, (4) diversity, equity and inclusion and (5) health, well-being and safety.
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Customers and Products Sysco’s customers in the foodservice industry include restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, industrial caterers and other similar venues where foodservice products are served.
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As of July 3, 2021, we had approximately 58,000 employees, including approximately 40,000 U.S. employees and approximately 18,000 employees outside the United States, as compared to approximately 57,000 employees as of June 27, 2020.
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In the U.S., Hispanic or Latinx, Black or African American, and Asian employees held 13%, 9% and 4% of management roles and 4%, 9%, and 7% of officer roles, respectively.
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Contract negotiations are handled by each individual operating site with support from our Labor Relations team. Approximately 1.2% of our union employees are covered by collective bargaining agreements that are subject to renegotiation in fiscal 2022. Since July 3, 2021, there have been two contract renegotiations. We consider our labor relations to be satisfactory.
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COVID-19 Response — We have been actively responding to the COVID-19 pandemic and its impact globally. Our highest priorities continue to be the safety of our employees and working with our employees and network of suppliers and customers to help maintain the global food supply chain.
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We have defined and implemented procedures to protect the health and safety of our employees, while also ensuring business continuity and our ability to service our customers. We have allowed employees to work remotely whenever possible and have installed protocols for daily temperature checks and health screenings for our employees not working remotely.
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We have also provided guidelines for performing deep cleaning and proper social distancing in our offices and warehouses and have implemented requirements for employees to wear face coverings when not working remotely.
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Given the unprecedented challenges brought on by COVID-19, in April 2020 we launched a global mental health and well-being campaign that continues to be a primary focus for Sysco. In response to the COVID-19 pandemic in fiscal 2020, we made a reduction to our staffing levels through both temporary workforce furloughs and permanent reductions in force.
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As business conditions improved in the second half of fiscal 2021, we hired over 6,000 additional sales consultants, new business developers, culinary experts and operations associates in preparation for the incremental volume associated with the expected business recovery.
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Sysco is monitoring the spread of variants of COVID-19, and while the future impact of the disease on our business is uncertain, we will respond appropriately to 4 maintain the health and safety of our associates.
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Specifically, we promote employee development by cultivating a high-impact learning culture for Sysco associates through a variety of enterprise development programs and learning resources, growing associates through goal-setting and career development processes, and reviewing strategic positions regularly and identifying potential internal candidates to fill those roles.
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We commit to investing in our employees through on the job experiences and coaching, as well as tuition reimbursement for a majority of our employees in the U.S. to promote continued professional growth.
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Sysco has developed partnerships with driving school organizations, on a national and local level, to support hiring across our U.S. sites. We encourage our business locations to partner with high schools to recruit non-college bound future graduates to consider a career path that will take them from a warehouse selector to a driver position and beyond.
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Our current national partner helps to identify a diverse slate of unemployed or underemployed individuals who aspire to be commercially qualified drivers and present them to Sysco as candidates for tuition sponsorship and subsequent hire; and our partner provides training to existing Sysco associates who choose to pursue a driving career.
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Sysco also has an in-house network of Supply Chain Instructors who ensure that we successfully onboard and train new drivers and support them as they learn how to deliver product to our customers safely and efficiently. In fiscal 2022, Sysco is investing in its first Sysco Driver Academy that will enable us to train our own drivers.
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Aggregate survey results are reviewed by executive officers and the Board of Directors. By acting on results, both at an aggregate enterprise level and a department/business/work group level, and by analyzing our scores compared to both global and internal benchmarks, we have been able to enhance our culture and improve our overall engagement levels.
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These groups are effective vehicles for diverse associates to strengthen their skills, build relationships and foster mutually supportive interactions with their Sysco colleagues. By the end of fiscal 2021, twelve ARGs had been formed, representing gender, race, ethnicity, sexual orientation and gender identification, veterans and generations, among other groups.
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Health, Well-being and Safety — Our occupational health services and total rewards/benefits teams offer a wide range of programs that address the needs of our workforce. We offer our associates and their families programs that support their lives, and we offer programs for U.S. associates that support health, mind, security and community.
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In fiscal 2020, our environmental compliance, occupational health and safety teams were combined under one central Environmental Health and Safety (EHS) team comprising functional experts across many geographies to address EHS at every point in our business process. Competition A large number of companies are engaged in the distribution of food and non-food products to the foodservice industry.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Certain of these laws and regulations in the EU may impose liability for costs of investigation or remediation of contamination (which could be material), regardless of fault or the legality of the original disposal, and even if such contamination was present prior to the commencement of our operations at the site and was not caused by our activities.
Certain of these laws and regulations in the EU may impose liability for costs of investigation or remediation of contamination (which could be material), regardless of fault or the legality of the original disposal, even if such contamination was present prior to the commencement of our operations at the site and was not caused by our activities.
We are subject to regulation by various federal, state, provincial, regional and local governments in the countries in which we operate with respect to many aspects of our business, such as food safety and sanitation, ethical business practices, transportation, minimum wage, overtime, wage payment, wage and hour and employment discrimination, immigration, human 15 health and safety, and due to the services we provide in connection with governmentally funded entitlement programs.
We are subject to regulation by various federal, state, provincial, regional and local governments in the countries in which we operate with respect to many aspects of our business, such as food safety and sanitation, ethical business practices, transportation, minimum wage, overtime, wage payment, wage and hour and employment discrimination, immigration, human health and safety, and due to the services we provide in connection with governmentally funded entitlement programs.
To the extent the COVID-19 pandemic continues to adversely affect our business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described in this Annual Report on Form 10-K and 9 subsequent filings with the SEC, such as those risks relating to our level of indebtedness, and may have an adverse effect on the price of our common stock.
To the extent the COVID-19 pandemic continues to adversely affect our business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described in this Annual Report on Form 10-K and subsequent filings with the SEC, such as those risks relating to our level of indebtedness, and may have an adverse effect on the price of our common stock.
Additionally, increased competition from non-traditional sources (such as club stores and commercial wholesale outlets with lower cost structures), online direct food wholesalers and cash and carry 11 operations have served to further increase pressure on the industry’s profit margins, and continued margin pressure within the industry may have a material adverse effect on our results of operations.
Additionally, increased competition from non-traditional sources (such as club stores and commercial wholesale outlets with lower cost structures), online direct food wholesalers and cash and carry operations have served to further increase pressure on the industry’s profit margins, and continued margin pressure within the industry may have a material adverse effect on our results of operations.
To date, these have not had a material impact on our financial condition, results of operations or liquidity; however, there can be no assurance that there will not be a material adverse effect in the future, especially if the amount of insurance coverage we maintain is not sufficient to cover claims or liabilities relating to an incident.
To date, these have not had a material impact on our financial condition, results of operations or liquidity; however, there is no assurance that there will not be a material adverse effect in the future, especially if the amount of insurance coverage we maintain is not sufficient to cover claims or liabilities relating to an incident.
In that event, if we were unable to achieve additional cost savings to offset these price reductions and/or cost increases, our results of operations could be materially adversely affected. We may be unable to change our cost structure and pricing practices rapidly enough to successfully compete in such an environment.
In that event, if we were unable to achieve additional cost savings to offset these price reductions and/or cost increases, our results of operations could be 11 materially adversely affected. We may be unable to change our cost structure and pricing practices rapidly enough to successfully compete in such an environment.
If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we may experience higher costs and/or supply shortages associated with our efforts to accommodate those changes as our suppliers adapt to the new eating preferences.
If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we may experience higher costs and/or supply shortages associated with our efforts to accommodate those changes as our suppliers adapt to new eating preferences.
If fuel costs increase in the future, we may experience difficulties in passing all or a portion of these costs along to our customers, which may adversely affect our results of operations. We routinely enter into fuel hedging arrangements, including fuel derivatives, to hedge our exposure to volatile fuel prices.
If fuel costs continue to increase in the future, we may experience difficulties in passing all or a portion of these costs along to our customers, which may adversely affect our results of operations. We routinely enter into fuel hedging arrangements, including fuel derivatives, to hedge our exposure to volatile fuel prices.
Integration of an acquired business may be more difficult when we acquire a business in a market in which we have limited expertise, or with a culture different from Sysco’s. 16 A significant expansion of our business and operations, in terms of geography or magnitude, could strain our administrative and operational resources.
Integration of an acquired business may be more difficult when we acquire a business in a market in which we have limited expertise, or with a culture different from Sysco’s. A significant expansion of our business and operations, in terms of geography or magnitude, could strain our administrative and operational resources.
Our increased level of indebtedness and the ultimate cost of such indebtedness could have a negative impact on our liquidity, cost of future debt financing and financial results, and our credit ratings may be adversely affected as a result of the incurrence of additional indebtedness.
Our level of indebtedness and the ultimate cost of such indebtedness could have a negative impact on our liquidity, cost of future debt financing and financial results, and our credit ratings may be adversely affected as a result of the incurrence of additional indebtedness.
These factors could cause our future results to differ from our expectations expressed in the forward-looking statements identified within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and from historical trends.
These factors could cause our future results to differ from our expectations expressed in the forward-looking statements identified within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and from other historical trends.
We are also subject to non-income-based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the U.S. and various foreign jurisdictions.
We are also subject to non-income- 12 based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the U.S. and various foreign jurisdictions.
Further, our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ and suppliers’ personal information, private information about employees and financial and strategic information about the company and our business partners.
Further, our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ and suppliers’ personal information, private information about employees and financial and strategic information about the 14 company and our business partners.
Our indebtedness may further increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures, potential acquisitions, joint ventures and/or share repurchase programs.
Our indebtedness may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures, potential acquisitions, joint ventures and/or share repurchase programs.
Additionally, we procure products from suppliers outside of the U.S., and we are subject to the risks associated with political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, including health and safety restrictions related to epidemics and pandemics (such as the COVID-19 pandemic), any or all of which could delay our receipt of products or increase our input costs.
Additionally, we procure products from suppliers outside of the U.S., and we are subject to the risks associated with political or financial instability, military conflict, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, including health and safety restrictions related to epidemics and pandemics (such as the COVID-19 pandemic), any or all of which could delay our receipt of products or increase our input costs.
The amount of any increase or decrease in our required contributions to these multiemployer plans will depend upon many factors, including the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations, changes in the funded status of these plans and the potential payment of a withdrawal liability if we, for any reason, cease to have an ongoing obligation to contribute to a given plan.
The amount of any increase or decrease in our required contributions to these multiemployer plans will depend upon many factors, including collective bargaining negotiations, actions taken by trustees who manage the plans, government regulations, changes in the funded status of these plans and the potential payment of a withdrawal liability if we, for any reason, cease to have an ongoing obligation to contribute to a given plan.
These conditions include shortages of qualified labor for our suppliers, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, short-term weather conditions or more prolonged climate change, crop and other agricultural conditions, water shortages, transportation interruptions (such as shortages of ocean cargo containers), unavailability of fuel or increases in fuel costs, product recalls, competitive demands, civil insurrection or social unrest, terrorist attacks or international hostilities and natural disasters, epidemics, pandemics (such as the COVID-19 pandemic) or other human or animal disease outbreaks or other catastrophic events (including, but not limited to, foodborne illnesses).
These conditions include shortages of qualified labor for our suppliers, work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, short-term weather conditions or more prolonged climate change, crop and other agricultural conditions, water shortages, transportation interruptions (such as shortages of ocean cargo containers), unavailability of fuel or increases in fuel costs, product recalls, competitive demands, civil insurrection or social unrest, terrorist attacks or international hostilities (such as the invasion of Ukraine by Russia) and natural disasters, epidemics, pandemics (such as the COVID-19 pandemic) or other human or animal disease outbreaks or other catastrophic events (including, but not limited to, foodborne illnesses).
In addition, we could incur investigation, remediation or other costs related to environmental conditions at our currently or formerly owned or operated properties.
In addition, we could incur substantial investigation, remediation or other costs related to environmental conditions at our currently or formerly owned or operated properties.
Our ability to successfully operate in international markets may be adversely affected by political, economic and social conditions beyond our control, public health crises, epidemics and pandemics (such as the COVID-19 pandemic), local laws and customs, and legal and regulatory constraints, including compliance with applicable anti-corruption and currency laws and regulations, of the countries or regions in which we currently operate or intend to operate in the future.
Our ability to successfully operate in these new markets may be adversely affected by political, economic and social conditions beyond our control, public health crises, epidemics and pandemics (such as the COVID-19 pandemic), local laws and customs, and legal and regulatory constraints, including compliance with applicable anti-corruption and currency laws and regulations, of the countries or regions in which we currently operate or intend to operate in the future.
We and our third-party providers experience cyber-incidents of varying degrees from time-to-time, including ransomware and phishing attacks, as well as distributed denial of service attacks and the theft of data.
We and our third-party providers experience cybersecurity incidents of varying degrees from time-to-time, including ransomware and phishing attacks, as well as distributed denial of service attacks and the theft of data.
As a result, our results of operations may be adversely affected during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. A shortage of qualified labor could negatively affect our business and materially reduce earnings .
As a result, our results of operations may be adversely affected during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. A shortage of qualified labor and increases in labor costs could negatively affect our business and materially reduce earnings .
In addition, in response to the COVID-19 pandemic and the related economic downturn, many consumers have preferred to eat at home rather than consume food away from home. If these preferences continue and consumers continue to avoid gathering in public places in large groups, the demand for our products and services could be adversely affected.
In addition, in response to the COVID-19 pandemic and the related economic downturn, many consumers preferred to eat at home rather than consume food away from home. If these preferences return and consumers choose to avoid gathering in public places in large groups, the demand for our products and services could be adversely affected.
Many of these conditions outside of our control could also impair our ability to provide our products and services to our customers or increase the cost of doing so. Our current operating environment is constantly shifting in response to COVID-19, placing significant pressure on the food-away-from-home supply chain. Customer demand is currently outpacing available supply in certain categories.
Many of these conditions outside of our control could also impair our ability to provide our products and services to our customers or increase the cost of doing so. Our current operating environment continues to adjust in response to COVID-19, placing significant pressure on the food-away-from-home supply chain. Customer demand is currently outpacing available supply in certain 10 categories.
The future success of our operations, including the achievement of our strategic objectives, depends on our ability, and the ability of third parties on which we rely to supply and to deliver our products, to identify, recruit, develop and retain qualified and talented individuals. As a result, any shortage of qualified labor could significantly adversely affect our business.
The future success of our operations, including the achievement of our strategic objectives, depends on our ability, and the ability of certain third parties on which we rely, to identify, recruit, develop and retain qualified and talented individuals. As a result, any shortage of qualified labor could significantly adversely affect our business.
Our industry is characterized by low margins, and periods of significant or prolonged inflation or deflation affect our product costs and may negatively impact our profitability. The foodservice distribution industry is characterized by relatively high inventory turnover with relatively low profit margins. Volatile food costs have a direct impact on our industry.
Industry and General Economic Risks Our industry is characterized by low margins, and periods of significant or prolonged inflation or deflation affect our product costs and may negatively impact our profitability. 7 The foodservice distribution industry is characterized by relatively high inventory turnover with relatively low profit margins. Volatile food costs have a direct impact on our industry.
In the current operating environment, we are experiencing a shortage of qualified labor in certain geographies, particularly with warehouse workers and drivers, resulting in increased costs from certain temporary wage actions, such as hiring and referral and retention bonus programs.
In the current operating environment, we are experiencing a shortage of qualified labor in certain geographies, particularly with regard to recruiting and retaining warehouse workers and drivers, resulting in increased costs from certain temporary wage actions, such as hiring and referral and retention bonus programs.
Based on the latest information available from plan administrators, we estimate our share of the aggregate withdrawal liability on the multiemployer plans in which we participate could have been as much as $170.2 million as of August 9, 2021. A significant increase to funding requirements could adversely affect the company’s financial condition, results of operations or cash flows.
Based on the latest information available from plan administrators, we estimate our share of the aggregate withdrawal liability on the multiemployer plans in which we participate could have been as much as $156.2 million as of August 13, 2022. A significant increase to funding requirements could adversely affect the company’s financial condition, results of operations or cash flows.
If the products distributed by us are alleged to have caused injury or illness, or to have failed to comply with governmental regulations, we may need to recall our products and may experience product liability claims.
If our products are alleged to have caused injury or illness, or to have failed to comply with governmental regulations, we may need to recall our products and may experience product liability claims.
Periods of significant product cost inflation may adversely affect our results of operations if we are unable to pass on all or a portion of such product cost increases to our customers in a timely manner.
In periods of significant product cost inflation, if we are unable to pass on all or a portion of such product cost increases to our customers in a timely manner, our results of operations would be adversely affected.
Conversely, our business may be adversely affected by periods of product cost deflation, because we make a significant portion of our sales at prices that are based on the cost of products we sell plus a percentage margin.
Conversely, our business may be adversely affected by periods of product cost deflation, because we make a significant portion of our sales at prices that are based on the cost of products we sell plus a percentage margin, mark-up or fee per case.
Risks inherent in our existing and future international operations also include, among others, the costs and difficulties of managing international operations, difficulties in identifying and gaining access to local suppliers, suffering possible adverse tax consequences from changes in tax laws or the unfavorable resolution of tax assessments or audits, maintaining product quality and greater difficulty in enforcing intellectual property rights.
Risks inherent in such expansion also include, among others, the costs and difficulties of identifying and gaining access to local suppliers, suffering possible adverse tax consequences from changes in tax laws or the unfavorable resolution of tax assessments or audits, maintaining product quality and greater difficulty in enforcing intellectual property rights.
In addition, cyber criminals are increasing their attacks on individual employees, utilizing interest in pandemic-related information to increase business email compromise scams designed to trick victims into transferring sensitive data or funds, or steal credentials that compromise information systems.
In addition, cyber criminals are increasing their attacks on individual employees with business email compromise scams designed to trick victims into transferring sensitive data or funds, or steal credentials that compromise information systems.
We may also choose to voluntarily recall or withdraw products that we determine do not satisfy our quality standards, whether for taste, appearance or otherwise, in order to protect our brand and reputation.
We may also choose to voluntarily recall or withdraw products that we determine do not satisfy our quality standards, in order to protect our brand and reputation.
For example, we encountered operational challenges in fiscal 2019 related to our efforts to integrate two businesses in France acquired in connection with the Brakes Group acquisition, which integration efforts have adversely affected our ability to drive growth in sales.
For example, we encountered operational challenges in fiscal 2019 related to our efforts to integrate two businesses in France acquired in connection with the Brakes Group acquisition, which integration efforts have adversely affected our ability to drive growth in sales and will continue to be managed into fiscal 2023.
Alternatively, if a court were to find this provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments None. 20
Alternatively, if a court were to find this provision in our amended and restated bylaws to be inapplicable or unenforceable in any action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition and results of operations.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Adverse publicity about regulatory or legal action against us could damage our reputation and image, undermine our customers’ confidence in us and reduce short-term or long-term demand for our products and services, even if the regulatory or legal action is unfounded or not material to our operations.
In addition, adverse publicity about regulatory or legal action against us could damage our reputation and image, undermine our customers’ confidence in us and reduce short-term or long-term demand for our products and services, even if the regulatory or legal action is unfounded or not material to our operations. Our relationships with long-term customers may be materially diminished or terminated.
Some of our customer agreements are terminable upon written notice by either us or the customer, which provides some customers with the opportunity to renegotiate their contracts with us on less favorable terms or to award more business to our competitors.
We have long-standing relationships and agreements with a number of our customers. Some of our customer agreements are terminable upon written notice by either us or the customer, which provides some customers with the opportunity to renegotiate their contracts with us on less favorable terms or to award more business to our competitors.
From time to time, both federal and state governmental agencies have conducted audits of our billing practices as part of investigations of providers of services under governmental contracts, or otherwise. We also receive requests for information from governmental agencies in connection with these audits.
From time to time, both federal and state governmental agencies conduct audits of various aspects of our operations, as part of investigations of providers of services under governmental contracts, or otherwise. We also receive requests for information from governmental agencies in connection with these audits.
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 experienced by the consumer can lead to reductions in the frequency of dining out and the amount spent by consumers for food-away-from-home purchases, which could negatively impact our business by reducing demand for our products. • Heightened uncertainty in the financial markets negatively affects consumer confidence and discretionary spending, which can cause disruptions with our customers and suppliers. • Liquidity issues and an inability to consistently access credit markets would impair our ability to market and distribute food products, support our operations and meet our customers’ needs. • Liquidity issues and the inability of our customers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to conduct day-to-day transactions involving the collection of funds from such customers. • Liquidity issues and the inability of our suppliers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to obtain the foodservice products and supplies that we need in the quantities and at the prices that we request.
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.
In addition, our future use of fuel derivatives would expose us to the risk that any of our counterparties fails to perform its obligations, whether due to its insolvency or otherwise, which could result in financial losses.
In addition, our future use of fuel derivatives would expose us to the risk that any of our counterparties fails to perform its obligations, whether due to its insolvency or otherwise, which could result in financial losses. Economic and political instability could adversely affect our results of operations and financial condition.
Industry and General Economic Risks Global health developments and economic uncertainty resulting from the COVID-19 pandemic have adversely affected, and are expected to continue to adversely affect, our business, financial condition and results of operations.
Global health developments and economic uncertainty resulting from the COVID-19 pandemic continue to adversely affect, our business, financial condition and results of operations.
In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and any alternative financing measures available may not be successful and may not permit us to meet our scheduled debt service obligations.
In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and any alternative financing measures available may not be successful and may not permit us to meet our scheduled debt service obligations. We may be required to pay material amounts under multiemployer defined benefit pension plans .
Our anticipated change to the mix of locally managed customers versus multi-unit customers could reduce our gross and operating margins. 13 Gross margin from our multi-unit customers is generally lower than that of our locally managed customers because we typically sell higher volumes of products to these customers and provide a relatively lower level of value-added services than we do to locally managed customers.
Gross margin from our multi-unit customers is generally lower than that of our locally managed customers because we typically sell higher volumes of products to multi-unit customers and provide a relatively lower level of value-added services than we do to locally managed customers.
The price and supply of fuel can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, regional production patterns, weather conditions and environmental concerns.
The price and supply of fuel can fluctuate significantly based on international, political and economic circumstances (such as Russia’s invasion of Ukraine), as well as other factors outside our control, such as actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, regional production patterns, weather conditions and environmental concerns, and the resurgence of demand, as travel restrictions associated with the COVID-19 pandemic are scaled back.
The cost of fuel affects the price paid by us for products, as well as the costs we incur to deliver products to our customers.
The cost of fuel affects the prices we pay for products, as well as the costs we incur to deliver products to our customers.
As of July 3, 2021, we had approximately 58,000 employees, approximately 19% of whom were represented by unions, primarily the International Brotherhood of Teamsters and unions in France and Sweden. Contract negotiations are handled by each individual operating site. Approximately 1.2% of our union employees are covered by collective bargaining agreements that are subject to renegotiation in fiscal 2022.
As of July 2, 2022, we had approximately 71,000 employees, approximately 17% of whom were represented by unions, primarily the International Brotherhood of Teamsters and unions in France and Sweden. Approximately 9% of our union employees are covered by collective bargaining agreements that are subject to renegotiation in fiscal 2023.
As these variants spread, some governmental authorities have reintroduced certain restrictions and others may decide to do so in the future, which could adversely affect the timing of business reopenings and demand in the foodservice industry.
Mutations of the virus have arisen, and are continuing to arise, some of which have proven to be particularly aggressive variants. As these variants spread, some governmental authorities have reintroduced certain restrictions and others may decide to do so in the future, which could adversely affect demand in the foodservice industry.
Unfavorable macroeconomic conditions in North America and Europe, as well as unfavorable conditions in particular local markets, may adversely affect our results of operations and financial condition. The foodservice industry is characterized by relatively low profit margins, consequently, our results of operations are susceptible to regional, national and international economic trends and uncertainties.
Unfavorable macroeconomic conditions, as well as unfavorable conditions in particular local markets, may adversely affect our results of operations and financial condition. 8 Our results of operations are susceptible to regional, national and international economic trends and uncertainties.
Moreover, once all governmental restrictions are lifted, it is unclear how quickly customers will return to their prior eating habits, which may be a function of continued concerns over safety or depressed consumer sentiment due to adverse economic conditions, including job losses.
Moreover, if governmental restrictions were to resume, it is unclear how quickly customers will return to their prior eating habits, which may be a function of continued concerns over safety or depressed consumer sentiment due to adverse economic conditions, including job losses. Expanding into new markets and complementary lines of business presents unique challenges and may not be successful .
Although our purchasing volume can provide benefits when dealing with suppliers, suppliers may not be able to provide the foodservice products and supplies that we need in the quantities and at the prices that we request due to conditions outside of their control.
Although our purchasing volume can provide benefits when dealing with suppliers, suppliers may not be able to provide the foodservice products and supplies that we need due to conditions outside of their control. We are also subject to delays caused by interruptions in production and increases in product costs based on conditions outside of our control.
Although our operating sites have not experienced any significant labor disputes or work stoppages to date, and we believe they have satisfactory relationships with their unions, a work stoppage due to failure of multiple operating subsidiaries to renegotiate union contracts could have a material adverse effect on us.
Failure to effectively renegotiate these contracts could result in work stoppages. We believe our operating sites have good relationships with their unions, but a work stoppage due to failure of multiple operating subsidiaries to renegotiate union contracts could have a material adverse effect on us.
Reports, whether true or not, of foodborne illnesses (such as e-coli, avian flu, bovine spongiform encephalopathy, hepatitis A, trichinosis, salmonella, listeria or swine flu) or injuries caused by food tampering could also severely injure our reputation or reduce public confidence in our products.
Reports, whether true or not, of foodborne illnesses or injuries caused by food tampering could also severely injure our reputation or reduce public confidence in our products.
We may not be able to retain or renew existing agreements, maintain relationships with any of our customers on acceptable terms, or at all, or collect amounts that insolvent customers might owe us.
Market competition, customer requirements, customer financial condition and customer consolidation through mergers or acquisitions also could adversely affect our ability to continue or expand these relationships. We may not be able to retain or renew existing agreements, maintain relationships with any of our customers on acceptable terms, or at all, or collect amounts that insolvent customers might owe us.
Fear of such events may further alter consumer confidence, behavior and spending patterns, and could adversely affect the economies and financial markets of many countries (or globally), resulting in an economic downturn that could affect customers’ demand for our products. 8 In response to the outbreak of COVID-19 and its development into a pandemic, governmental authorities in many countries in which we operate, and in which our customers are present and suppliers operate, have imposed mandatory closures, sought voluntary closures and imposed restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions.
In response to the outbreak of COVID-19 and its development into a pandemic, governmental authorities in many countries in which we operate, and in which our customers are present and suppliers operate, have, imposed mandatory closures, sought voluntary closures and imposed restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions.
See the discussion under “Human Capital Resources” in Item 1, “Business” for additional information regarding our talent acquisition and talent management efforts in the context of these labor shortages. A continuation of such shortages for a prolonged period of time could have a material adverse effect on the company’s financial condition and results of operations.
See the discussion under “Human Capital Resources” in Item 1, “Business” for additional information regarding our talent acquisition and talent management efforts in the context of these labor shortages.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine, except for any action (A) as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than such court, or (C) for which such court does not have subject matter jurisdiction.
We require significant quantities of fuel for our delivery vehicles and are exposed to the risk associated with fluctuations in the market price for fuel.
We may not be able to fully compensate for increases in fuel costs, and fuel hedging arrangements intended to contain fuel costs could result in above market fuel costs . We require significant quantities of fuel for our delivery vehicles and are exposed to the risk associated with fluctuations in the market price for fuel.
Consumer eating habits could be affected by a number of factors, including changes in attitudes regarding diet and health or new information regarding the health effects of consuming certain foods.
Consumer eating habits could be affected by a number of factors, including changes in attitudes regarding diet and health (including shifting preferences for sustainable, organic and locally grown products, as well as alternative proteins) or new information regarding the health effects of consuming certain foods. Changing consumer eating habits also occur due to generational shifts.
The loss of one or more of our major customers could adversely affect our business, financial condition, and results of operations.
The loss of one or more of our major customers could adversely affect our business, financial condition, and results of operations. Our anticipated change to the mix of locally managed customers versus multi-unit customers could reduce our gross and operating margins.
A prolonged or deeper economic downturn that adversely affects our business, financial condition or results of operations could affect our ability to access the credit markets for additional liquidity. A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.
A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.
Historically, North America and Europe have experienced, from time to time, including during the COVID-19 pandemic, deteriorating economic conditions and heightened uncertainty in their financial markets, which have adversely 10 impacted business and consumer confidence and spending and depressed capital investment and economic activity in the affected regions.
The countries in which we operate, have experienced, 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. As reported in July 2022 by the U.S.
Retirement Plan will be impacted by the fluctuations of interest rates on high quality bonds in the public markets as these are inputs in 19 determining our minimum funding requirements. Specifically, decreases in these interest rates have had and may continue to have an adverse effect on our funding obligations.
Retirement Plan will be impacted by the fluctuations of interest rates on high quality bonds in the public markets as these are inputs in determining our minimum funding requirements. Failure to successfully renegotiate union contracts could result in work stoppages .
Anything that damages our reputation or public confidence in our products, whether or not justified, including negative publicity about the quality, safety, sustainability or integrity of our products or relating to illegal or unethical activities by our employees, suppliers or agents, could tarnish our reputation and diminish the value of our brand, which could adversely affect our results of operations.
Anything that damages our reputation or public confidence in our products, whether or not justified, could tarnish our reputation and diminish the value of our brand, which could adversely affect our results of operations, and require additional resources to rebuild our reputation and restore the value of our brand.
Our ability to successfully operate in these complementary business markets may be adversely affected by legal and regulatory constraints, including compliance with regulatory programs to which we become subject.
Our business strategy also includes the possibility of expansion into businesses that are closely related or complementary to, but not currently part of, our core foodservice distribution business. Our ability to successfully operate in these complementary business markets may be adversely affected by legal and regulatory constraints, including compliance with regulatory programs to which we become subject.
The cost of compliance or the consequences of non-compliance, including debarments, could have an adverse effect on our results of operations. In addition, governmental units may make changes in the regulatory frameworks within which we operate that may require us to incur substantial increases in costs in order to comply with such laws and regulations.
In addition, governmental units may make changes in the regulatory frameworks within which we operate that may require us to incur substantial increases in costs in order to comply with such laws and regulations. 13 We may incur significant costs to comply with environmental laws and regulations, and we may be subject to substantial fines, penalties or third-party claims for non-compliance.
Additionally, information technology systems continue to evolve and, in order to remain competitive, we must implement new technologies in a timely and efficient manner.
Additionally, information technology systems continue to evolve and, in order to remain competitive, we must implement new technologies in a timely and efficient manner. Our failure to implement timely new technologies may adversely affect our competitiveness and, consequently, our results of operations. Our failure to comply with data privacy regulations could adversely affect our business.
While these actions will serve to limit future growth in our pension liabilities, we had a sizable pension obligation of $4.5 billion, as compared to assets totaling $4.7 billion, as of July 3, 2021, both of which have sensitivity to financial market factors that could impact our funding requirements.
Our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines . We had a sizable pension obligation of $3.5 billion, as compared to assets totaling $3.6 billion, as of July 2, 2022, both of which have sensitivity to financial market factors that could impact our funding requirements.
See Note 14, “Company-Sponsored Employee Benefit Plans” in the Notes to Consolidated Financial Statements in Item 8 for a discussion of the funded status of the U.S. Retirement Plan. The amount of our annual contribution to the U.S. Retirement Plan is dependent upon, among other things, the returns on the U.S.
See Note 14, “Company-Sponsored Employee Benefit Plans” in the Notes to Consolidated Financial Statements in Item 8 for a discussion of the funded status of the U.S. Retirement Plan. At the end of fiscal 2012, we decided to freeze future benefit accruals under the company-sponsored qualified pension plan (U.S.
We experienced an elevated inflation rate of 9.6% combined for the U.S. and Canada during the fourth quarter of fiscal 2021, primarily in the paper and disposables, poultry and meat categories. The rate accelerated towards the end of the quarter and has continued into the first quarter of fiscal 2022.
We experienced an elevated inflation rate of approximately 15.0% in our U.S. Broadline operations during fiscal 2022, primarily in the paper and disposables, poultry and meat categories.
Certain suppliers are struggling to meet demand for our orders. Future supply shortages could have an adverse effect on the company’s financial condition and results of operations. Further, increased frequency or duration of extreme weather conditions, whether due to global climate change or otherwise, could also impair production capabilities, disrupt our supply chain or adversely affect demand for our products.
Certain suppliers are struggling to meet demand for our orders, which impairs our ability to deliver products and services to our customers. Prolonged future supply shortages could have an adverse effect on the company’s financial condition and results of operations.
Expanding into international markets and complementary lines of business presents unique challenges, and our expansion efforts with respect to international operations and complementary lines of business may not be successful . An element of our strategy includes further expansion of operations into international markets and the establishment of international procurement organizations.
An element of our strategy includes further expansion of operations into new markets and the establishment of new procurement organizations.
Economic and political instability and potential unfavorable changes in laws and regulations in international markets could adversely affect our results of operations and financial condition. Our international operations subject us to certain risks, including economic and political instability and potential unfavorable changes in laws and regulations in international markets in which we operate.
Our international operations subject us to certain risks, including economic and political instability and potential unfavorable changes in laws and regulations in international markets in which we operate. For example, the U.K. exited the EU on January 31, 2020, with a transition period that ended on December 31, 2020.
In fiscal 2021, our total contributions to these plans were approximately $42.9 million. The costs of providing benefits through such plans have increased in recent years.
We contribute to several multiemployer defined benefit pension plans based on obligations arising under collective bargaining agreements covering union-represented employees. In fiscal 2022, our total contributions to these plans were approximately $45.5 million. The costs of providing benefits through such plans have increased in recent years.
Our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position . As described in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8, as of July 3, 2021, we had approximately $11.1 billion of total indebtedness.
As described in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8, as of July 2, 2022, we had approximately $10.6 billion of total indebtedness. This amount included senior notes, and we have the ability to borrow under our revolving credit facility, which supports our U.S. commercial paper program.
At 12 any time, input costs could increase for a prolonged period for a large portion of the products that we sell.
Further, increased frequency or duration of extreme weather conditions, which may be from climate change, could also impair production capabilities, disrupt our supply chain or adversely affect demand for our products. At any time, input costs could increase for a prolonged period for a large portion of the products that we sell.
Such a shortage would also likely lead to higher wages for employees (or higher costs to purchase the services of such third parties) and a corresponding reduction in our results of operations.
Unsuccessful recruiting and retention efforts as a result of such continuing shortages for a prolonged period of time could have a material adverse effect on the company’s financial condition and results of operations. Labor shortages will also likely lead to higher wages for employees and higher costs to purchase the services of third parties.
Our failure to successfully implement or comply with appropriate processes to adhere to the requirements of GDPR and other laws and regulations in this area could result in substantial fines or penalties and legal liability and could tarnish our reputation.
Failure to comply with data privacy laws can result in substantial fines or penalties, legal liability and / or reputational damage.
Employee recruitment, development and retention efforts that we or such third parties undertake may not be successful, which could result in a shortage of qualified individuals in future periods. Any such shortage could decrease our ability to effectively serve our customers and achieve our strategic objectives.
Any such shortage could decrease our ability to effectively serve our customers and achieve our strategic objectives.
Effective January 1, 2013, these employees were eligible for additional contributions under an enhanced, defined contribution plan.
Retirement Plan) as of December 31, 2012 for all U.S.-based salaried and non-union hourly employees. Effective January 1, 2013, these employees were eligible for additional contributions under an enhanced, defined contribution plan. 16 The amount of our annual contribution to the U.S. Retirement Plan is dependent upon, among other things, the returns on the U.S.

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Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties The table below shows the number of distribution facilities occupied by Sysco in each country and the aggregate square footage devoted to cold and dry storage as of July 3, 2021.
Item 2. Properties The table below shows the number of distribution facilities occupied by Sysco in each country and the aggregate square footage devoted to cold and dry storage as of July 2, 2022.
We own approximately 86% of these vehicles and lease the remainder.
We own approximately 94% of these vehicles and lease the remainder.
Within our Latin American operations, we operate 16 cash and carry facilities and 4 warehouse and storage facilities in Costa Rica and 3 cash and carry facilities in Panama. We own our approximately 634,000 square foot headquarters office complex in Houston, Texas.
Within our Latin American operations, we operate 17 cash and carry facilities and 5 warehouse and storage facilities in Costa Rica and 4 cash and carry facilities and 1 warehouse and storage facility in Panama. We own our approximately 634,000 square foot headquarters office complex in Houston, Texas.
The various operating sites, in the aggregate, accounted for 3% of fiscal 2021 sales. As of July 3, 2021, our fleet of approximately 14,000 delivery vehicles consisted of tractor and trailer combinations, vans and panel trucks, most of which are either wholly or partially refrigerated for the transportation of frozen or perishable foods.
The various operating sites under construction, in the aggregate, contributed 12% of fiscal 2022 sales. As of July 2, 2022, our fleet of approximately 15,000 delivery vehicles consisted of tractor and trailer combinations, vans and panel trucks, most of which are either wholly or partially refrigerated for the transportation of frozen or perishable foods.
We own approximately 40,600,000 square feet of our distribution facilities (or 78.1% of the total square feet), and the remainder is occupied under leases expiring at various dates from fiscal 2022 to fiscal 2063, exclusive of renewal options.
We own approximately 40,700,000 square feet of our distribution facilities (or 75.5% of the total square feet), and the remainder is occupied under leases expiring at various dates from fiscal 2023 to fiscal 3012, exclusive of renewal options.
Location Number of Facilities Square Feet (in thousands) Segment Served (1) Bahamas 2 220 I Belgium 1 200 I Canada 32 4,181 I, O Costa Rica 1 188 I France 65 3,005 I Ireland and Northern Ireland 6 657 I Mexico 7 299 I Panama 1 44 I Sweden 7 948 I United Kingdom 49 2,610 I United States and its territories (2) 172 39,623 U, I, S, O Totals 343 51,975 (1) Segments served include U.S.
Location Number of Facilities Square Feet (in thousands) Segment Served (1) Bahamas 1 192 I Belgium 1 200 I Canada 30 4,150 I, O Costa Rica 1 188 I France 40 2,931 I Ireland and Northern Ireland 6 656 I Mexico 6 280 I Panama 1 44 I Sweden 7 948 I United Kingdom 50 2,644 I United States and its territories (2) 190 41,718 U, I, S, O Totals (3) 333 53,951 (1) Segments served include U.S.
Foodservice (U), International Foodservice (I), SYGMA (S), and Other (O). (2) California, Florida, and Texas account for 20, 16, and 14, respectively, of the facilities located in the U.S.
Foodservice (U), International Foodservice (I), SYGMA (S), and Other (O). (2) California, Florida, Texas, and Illinois account for 21, 16, 14, and 11 respectively, of the facilities located in the U.S. (3) Using a comparable definition based on facility size, fiscal 2021 included 319 facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. 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.
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 either (i) involve the potential for monetary sanctions that Sysco’s management reasonably believes will exceed a specified threshold or (ii) are material to its business or financial condition.
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 4. Mine Safety Disclosures Not applicable. 21 PART II – FINANCIAL INFORMATION
Item 3. Legal Proceedings 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.
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 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.
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 environmental matters to disclose for this period, nor does the company expect a material adverse effect on its business or financial condition. 18

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The graph assumes that the value of the investment in our Common Stock, the S&P 500 Index, and the S&P 500 Food/Staple Retail Index was $100 on the last trading day of fiscal 2016, and that all dividends were reinvested.
The graph assumes that the value of the investment in our Common Stock, the S&P 500 Index, and the S&P 500 Food/Staple Retail Index was $100 on the last trading day of fiscal 2017, and that all dividends were reinvested.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market for Sysco’s common stock (SYY) is the New York Stock Exchange. The number of record owners of Sysco’s common stock as of August 10, 2021 was 8,016.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market for Sysco’s common stock (SYY) is the New York Stock Exchange. The number of record owners of Sysco’s common stock as of August 9, 2022 was 7,669.
In May 2021, our Board of Directors approved a separate 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.
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 6,698,991 shares for $499.8 million during fiscal 2022.
Performance data for Sysco, the S&P 500 Index and the S&P 500 Food/Staple Retail Index is provided as of the last trading day of each of our last five fiscal years. 22 7/2/2016 7/1/2017 6/30/2018 6/29/2019 6/27/2020 7/3/2021 Sysco Corporation $100 $101 $141 $149 $113 $171 S&P 500 100 118 135 149 155 228 S&P 500 Food/Staple Retail Index 100 97 105 125 132 170 Item 6. [Reserved]
Performance data for Sysco, the S&P 500 Index and the S&P 500 Food/Staple Retail Index is provided as of the last trading day of each of our last five fiscal years. 20 7/1/2017 6/30/2018 6/29/2019 6/27/2020 7/3/2021 7/2/2022 Sysco Corporation $100 $139 $147 $112 $169 $195 S&P 500 100 114 126 132 194 173 S&P 500 Food/Staple Retail Index 100 108 128 136 175 185 Item 6. [Reserved]
See the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Debt Activity and Borrowing Availability” for additional information regarding the credit agreement amendment.
(2) See the discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Equity Transactions” for additional information regarding Sysco’s share repurchase program.
Removed
During March 2020, we discontinued share repurchases under the August 2019 program due to business conditions and certain restrictions imposed by the amendment to our credit agreement providing for Sysco’s $2 billion long-term revolving credit facility, and we made no further repurchases during fiscal 2021.
Added
We made the following share repurchases during the fourth quarter of fiscal 2022: ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Shares Purchased (1) (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs Month #1 April 3 - April 30 — $ — — — Month #2 May 1 - May 28 79,248 78.70 6,236,990 — Month #3 May 29 - July 2 943,215 82.71 78,014,103 — Totals 1,022,463 $ 82.40 84,251,093 — (1) The total number of shares repurchased includes 0, 2,770 and 0 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.
Added
As of July 2, 2022, we had a remaining authorization of approximately $4.5 billion. We purchased 3,099,268 additional shares under our authorization through August 9, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Additionally, Sysco Corporation has provided intercompany loans to certain of its international subsidiaries, and when interest and principal payments are made, some of this cash will move to the U.S. 44 Our wholly owned captive insurance subsidiary (the Captive) must maintain a sufficient level of liquidity to fund future reserve payments.
Additionally, Sysco Corporation has provided intercompany loans to certain of its international subsidiaries, and when interest and principal payments are made, some of this cash will move to the U.S. Our wholly owned captive insurance subsidiary (the Captive) must maintain a sufficient level of liquidity to fund future reserve payments.
Sysco’s management considers growth in this metric to be a measure of overall financial performance that provides useful information to management and investors about the profitability of the business, as it facilitates comparison of performance on a consistent basis from period to period by providing a 26 measurement of recurring factors and trends affecting our business.
Sysco’s management considers growth in this metric to be a measure of overall financial performance that provides useful information to management and investors about the profitability of the business, as it facilitates comparison of performance on a consistent basis from period to period by providing a measurement of recurring factors and trends affecting our business.
Sysco offers an assortment of Sysco-branded products that can be differentiated from privately branded products, which enables us to achieve higher gross margin by administering and leveraging a consolidated product procurement program for quality food and non-food products. Due to cost efficiencies, Sysco-branded products generate a higher gross margin than sales from other privately branded products.
Sysco offers an assortment of Sysco-branded products that can be differentiated from privately branded products, which enables us to achieve higher gross margin by administering and leveraging a consolidated product procurement program for quality food and non- 24 food products. Due to cost efficiencies, Sysco-branded products generate a higher gross margin than sales from other privately branded products.
We continue to be in a strong financial position based on our balance sheet and operating cash flows; however, our liquidity and capital resources can be influenced by economic trends and conditions that impact our results of operations.
We continue to be in a strong financial position based on our balance sheet and operating cash flows; however, our liquidity and capital resources can be influenced by macro-economic trends and conditions that impact our results of operations.
We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business.
We believe it is useful to provide investors with 23 the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business.
Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows and the discount rate selected to measure the risks inherent in the future cash flows.
Some of the more significant estimates and assumptions inherent 48 in the income method or other methods include the amount and timing of projected future cash flows and the discount rate selected to measure the risks inherent in the future cash flows.
We believe that the judgments and estimates discussed herein are reasonable; however, actual results could differ, and we may be exposed to losses or gains that could be material.
We believe that the judgments 49 and estimates discussed herein are reasonable; however, actual results could differ, and we may be exposed to losses or gains that could be material.
The fiscal 2021 and fiscal 2020 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.
The fiscal 2022 and fiscal 2021 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.
The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our operations that distribute to international customers.
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.
Such amounts are based on estimates. Purchase obligations also include amounts committed with various third-party service providers to provide information technology services for periods up to fiscal 2026. See discussion under Note 20, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements in Item 8.
Such amounts are based on estimates. Purchase obligations also include amounts committed with various third-party service providers to provide information technology services for periods up to fiscal 2027. See discussion under Note 20, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements in Item 8.
Along with sales, operating income is the most relevant measure for evaluating segment performance and allocating resources, as operating income includes cost of goods sold, as well as the costs to warehouse and deliver goods, which are significant and relevant costs when evaluating a distribution business. Results of U.S. Foodservice Operations In fiscal 2021, the U.S.
Along with sales, operating income is the most relevant measure for evaluating segment performance and allocating resources, as operating income includes cost of goods sold, as well as the costs to warehouse and deliver goods, which are significant and relevant costs when evaluating a distribution business. Results of U.S. Foodservice Operations In fiscal 2022, the U.S.
NM represents that the percentage change is not meaningful. 42 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.
NM represents that the percentage change is not meaningful. 40 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.
Management believes that adjusting its operating expenses, operating income, interest expense, other (income) expense, net, 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.
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.
Purchase obligations exclude full requirements electricity contracts where no stated minimum purchase volume is required. • Other Liabilities – These include other long-term liabilities reflected in our Consolidated Balance Sheets as of July 3, 2021, including obligations associated with certain employee benefit programs, unrecognized tax benefits and various long-term liabilities, which have some inherent uncertainty in the timing of these payments. • Contingent Consideration – Certain acquisitions involve contingent consideration, typically payable only if certain operating results are attained or certain outstanding contingencies are resolved.
Purchase obligations exclude full requirements electricity contracts where no stated minimum purchase volume is required. • Other Liabilities – These include other long-term liabilities reflected in our Consolidated Balance Sheets as of July 2, 2022, including obligations associated with certain employee benefit programs, unrecognized tax benefits and various long-term liabilities, which have some inherent uncertainty in the timing of these payments. • Contingent Consideration – Certain acquisitions involve contingent consideration, typically payable only if certain operating results are attained or certain outstanding contingencies are resolved.
All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company’s $2.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries, as discussed in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8.
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 discussed in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8.
Overview 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.
Overview 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 combined certain operations into three reportable segments.
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 and those within Part I, Item 1A of this document: • 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, including, but not limited to, our growth, product costs, supply chain, labor availability, logistical capabilities, customer demand for our products and industry demand generally, consumer spending, our liquidity, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally; • 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; • the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit; • periods of significant or prolonged inflation or deflation and their impact on our product costs and profitability generally; • 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 North America and Europe and the impact on our results of operations and financial condition; • the risks related to our efforts to implement our transformation initiatives and meet our other long-term strategic objectives, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove costlier than expected; the risk that the actual costs of any initiatives may be greater or less than currently expected; and the risk of adverse effects to us if past and future undertakings and the associated changes to our business do not prove to be cost effective or do not result in the level of cost savings and other benefits that we anticipated; • the impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs; • the risk that the actual costs of any business initiatives may be greater or less than currently expected; • the risk that competition in our industry and the impact of 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; 55 • 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; • 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; 56 • 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.
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 and those within Part I, Item 1A of this document: • 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; 52 • 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; 53 • 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; • 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.
Our strategic initiatives to increase delivery frequency and enable omnichannel inventory fulfillment remain on track. • Customer Teams – Our greatest strength is our people, people who are passionate about food and food service. Our diverse team delivers expertise and differentiated services designed to help our customers grow their business.
Our strategic initiatives to increase delivery frequency and enable omni-channel inventory fulfillment remain on track. • Customer Teams – Our greatest strength is our people, people who are passionate about food and food service. Our diverse team delivers expertise and differentiated services designed to help our customers grow their business.
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; • our expectations regarding the use of remaining cash generated from operations; • 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; • our expectations regarding 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 2022; • 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 redemption of $450 million of debt maturing in the next 12 months; 54 • 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.
Retirement Plan; • the sufficiency of our available liquidity to sustain our operations for multiple years; 51 • 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 redemption of $517.8 million of debt maturing 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.
Basis of Preparation of the Summarized Financial Information The following tables include summarized financial information of Sysco Corporation (issuer), and certain wholly owned U.S. Broadline subsidiaries (guarantors) (together, the obligor group). The summarized financial information of the obligor group is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated.
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.
To calculate an allowance for credit losses, the company estimates uncollectible amounts based on historical loss experience, including those experienced during times of local and regional disasters, current conditions and collection rates, and expectations regarding future losses.
To calculate an allowance for credit losses, the company estimates uncollectible amounts based on historical loss experience, including those experienced during times of local and regional disasters, the COVID-19 pandemic, current conditions and collection rates, and expectations regarding future losses.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of Sysco’s financial condition, results of operations and liquidity and capital resources for the fiscal years ended July 3, 2021 and June 27, 2020 should be read as a supplement to our Consolidated Financial Statements and the accompanying notes contained in Item 8 of this report, and in conjunction with the “Forward-looking Statements” section set forth in Part II and the “Risk Factors” section set forth in Item 1A of Part I.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of Sysco’s financial condition, results of operations and liquidity and capital resources for the fiscal years ended July 2, 2022 and July 3, 2021 should be read as a supplement to our Consolidated Financial Statements and the accompanying notes contained in Item 8 of this report, and in conjunction with the “Forward-looking Statements” section set forth in Part II and the “Risk Factors” section set forth in Item 1A of Part I.
Debt Activity and Borrowing Availability Our debt activity, including issuances and repayments, and our borrowing availability is described in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8. Our outstanding borrowings at July 3, 2021, and repayment activity since the end of fiscal 2021 are disclosed within those notes.
Debt Activity and Borrowing Availability Our debt activity, including issuances and repayments, and our borrowing availability is described in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8. Our outstanding borrowings at July 2, 2022, and repayment activity since the end of fiscal 2022 are disclosed within those notes.
The fair value conclusions as of July 3, 2021 for the reporting units are highly sensitive to changes in the assumptions used in the income approach, which include forecasted revenues, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management.
The fair value conclusions as of July 2, 2022 for the reporting units are highly sensitive to changes in the assumptions used in the income approach, which include forecasted revenues, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management.
In November 2000, we filed with the SEC a shelf registration statement covering 30,000,000 shares of common stock to be offered from time to time in connection with acquisitions. As of August 10, 2021, 29,477,835 shares remained available for issuance under this registration statement.
In November 2000, we filed with the SEC a shelf registration statement covering 30,000,000 shares of common stock to be offered from time to time in connection with acquisitions. As of August 9, 2022, 29,477,835 shares remained available for issuance under this registration statement.
Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 53-week year ended July 3, 2021 for fiscal 2021, a 52-week year ended June 27, 2020 for fiscal 2020 and a 52-week year ended June 29, 2019 for fiscal 2019. We will have a 52-week year ending July 2, 2022 for fiscal 2022.
Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ended July 2, 2022 for fiscal 2022, a 53-week year ended July 3, 2021 for fiscal 2021 and a 52-week year ended June 27, 2020 for fiscal 2020. We will have a 52-week year ending July 1, 2023 for fiscal 2023.
Cash generated from operations is generally allocated to: • working capital requirements; • capital investments in facilities, systems, fleet, other equipment and technology; • cash dividends; • acquisitions consistent with our growth strategy; • debt repayments; • share repurchases; and • contributions to our various retirement plans. Any remaining cash generated from operations may be invested in high-quality, short-term instruments.
Cash generated from operations is generally allocated to: • working capital-investments; • capital investments in facilities, systems, fleet, other equipment and technology; • acquisitions consistent with our growth strategy; • debt repayments; • cash dividends; and • share repurchases. Any remaining cash generated from operations may be invested in high-quality, short-term instruments.
The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of July 3, 2021 was a charge, net of tax, of $1.1 billion, driven by an increase in the discount rates and a decline in expected return on assets.
The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of July 2, 2022 was a charge, net of tax, of $1.0 billion, driven by an increase in the discount rates and a decline in expected return on assets.
The impact of the COVID-19 pandemic may change our mix of earnings by jurisdiction and has increased the risk that operating losses may occur within certain of our jurisdictions that could lead to the recognition of valuation allowances against certain deferred tax assets in the future, if these losses are prolonged beyond our current expectations.
The impact of the recovery from the COVID-19 pandemic may change our mix of earnings by jurisdiction and has increased the risk that carryforward attributes, such as operating losses, may occur within certain of our jurisdictions that could lead to the recognition of valuation allowances against certain deferred tax assets in the future, if these losses are prolonged beyond our current expectations.
As of July 3, 2021, Sysco had a total of $10.6 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.
As of July 2, 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.
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 52 change in our funded status.
None of these plans have a significant sensitivity to changes in discount rates s pecific to our results of operations, but such changes could impact our balance sheet due to a change in our funded status.
See Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements in Item 8 for aggregate contingent consideration amounts outstanding as of July 3, 2021.
See Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements in Item 8 for aggregate contingent consideration amounts outstanding as of July 2, 2022.
We estimate that we serve about 17% of an approximately $230 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc as of the end of calendar 2020. Technomic projects the market size to increase to approximately $285 billion by the end of calendar 2021.
We estimate that we serve about 17% of an approximately $300 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc. as of the end of calendar 2021. Technomic projects the market size to increase to approximately $345 billion by the end of calendar 2022.
The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of June 27, 2020 was a charge, net of tax, of $1.3 billion.
The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of July 3, 2021 was a charge, net of tax, of $1.1 billion.
All discussion of changes in our results of operations from fiscal 2019 to fiscal 2020 has been omitted from this Form 10-K, but may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended June 27, 2020, filed with the Securities and Exchange Commission on August 25, 2020.
All discussion of changes in our results of operations from fiscal 2020 to fiscal 2021 has been omitted from this Form 10-K, but may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended July 3, 2021, filed with the Securities and Exchange Commission on August 30, 2021.
In fiscal 2021, we recorded a net credit to the provision for losses on receivables totaling $152.7 million, which reflects a benefit on the reduction of our allowance for pre-pandemic receivable balances, as we have made excellent progress on obtaining timely payments from our customers.
In fiscal 2022, we recorded a net credit to the provision for losses on receivables totaling $15.5 million, which reflects a benefit on the reduction of our allowance for pre-pandemic receivable balances, as we have made excellent progress on obtaining payments from our customers.
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. The expected long-term rate of return on plan assets of the U.S. Retirement Plan is 4.75% for fiscal 2021, consistent with fiscal 2020.
Due to the low level of active employees in our retirement plans, our assumption for the rate of increase in future compensation is n ot a critical assumption. The expected long-term rate of return on plan assets of the U.S. Retirement Plan is 4.50% for fiscal 2022, consistent with fiscal 2021.
A 25 basis point increase (decrease) in the assumed rate of return in the Plan for fiscal 2022 would decrease (increase) Sysco’s net company-sponsored pension costs for fiscal 2022 by approximately $11 million.
A 25 basis point increase (decrease) in the assumed rate of return in the Plan for fiscal 2023 would decrease (increase) Sysco’s net company-sponsored pension costs for fiscal 2023 by approximately $9.0 million.
We intend to improve the effectiveness of our sales organization by leveraging data to increase the yield of the sales process. • Future Horizons – We are committed to responsible growth. We will cultivate new channels, new segments, and new capabilities while being stewards of our company and our planet.
We intend to improve the effectiveness of our sales organization by leveraging data to increase the yield of the sales process. • Future Horizons – We are committed to responsible growth. We will cultivate new channels, new segments, and new capabilities while being stewards of our company and our planet. We will fund our journey through cost-out and efficiency improvements.
These key assumptions are inherently uncertain and require a high degree of estimation and judgment and are subject to change based on future changes, industry and global economic and geo-political conditions, and the timing and success of the implementation of current strategic initiatives.
These key assumptions are inherently uncertain and require a high degree of estimation and judgment and are subject to change based on future changes, industry and global economic and geo-political conditions, uncertainty around the ongoing impact of the COVID-19 pandemic, and the timing and success of the implementation of current strategic initiatives.
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 the crisis; • expectations regarding our business and the economic recovery generally as the COVID-19 pandemic subsides, including beliefs regarding future customer activity; • our expectations regarding the improvement in the performance of non-restaurant business sectors; • our expectations of an improving market over the course of fiscal 2022; • 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; • 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 the Sysco Driver Academy; • our expectations regarding our fiscal 2022 sales and our rate of sales growth in fiscal 2022 and the three years of our long-range plan; 53 • our expectations regarding the impact of inflation on sales, gross margin rates and gross profit dollars; • our expectations regarding gross margins in fiscal 2022; • our plans regarding cost savings, including our target for cost savings through fiscal 2024 and the impact of costs savings on the company; • our expectations that divestitures in fiscal 2021 will facilitate our efforts to prioritize our focus and investments on our core business; • 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 investment of remaining cash generated from operations; • the expected long-term rate of return on plan assets of the U.S.
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.
Foodservice Operations operating results represented approximately 69.6% of Sysco’s overall sales and 107.9% of the aggregated operating income of Sysco’s reporting segments. Several factors contributed to these higher operating results as compared to the other operating segments. We have invested substantial amounts in assets, operating methods, technology and management expertise in this segment.
Foodservice Operations operating results represented approximately 70.7% of Sysco’s overall sales and 96.5% of the aggregated operating income of Sysco’s reporting segments. Several factors contributed to these higher operating results as compared to the other operating segments. We have invested substantial amounts in assets, operating methods, technology and management expertise in this segment.
Updated amounts at August 10, 2021, include: • No outstanding borrowings from the credit facility supporting our U.S. commercial paper program; and • No outstanding borrowings under our U.S. commercial paper program. Our aggregate commercial paper issuances and short-term bank borrowings had weighted average interest rates of 0.97% for fiscal 2021 and 1.99% for fiscal 2020.
Updated amounts at August 9, 2022, include: • No outstanding borrowings from the credit facility supporting our U.S. commercial paper program; and • $259.0 million outstanding borrowings under our U.S. commercial paper program. Our aggregate commercial paper issuances and short-term bank borrowings had weighted average interest rates of 1.35% for fiscal 2022 and 0.97% for fiscal 2021.
All other reporting units were concluded to have a fair value that exceeded book value by at least 30%. 50 The company estimated the fair value of these reporting units using a combination of discounted cash flow and earnings or revenue multiple models.
In the annual fiscal 2022 assessment, all reporting units were concluded to have a fair value that exceeded book value by at least 30%. The company estimated the fair value of these reporting units using a combination of discounted cash flow and earnings or revenue multiple models.
Due to our strong financial position, we believe that we will continue to be able to effectively access the commercial paper market and long-term capital markets, if necessary. 45 Cash Flows Operating Activities We generated $1.9 billion and $1.6 billion in cash flows from operations in fiscal 2021 and fiscal 2020, respectively.
Due to our strong financial position, we believe that we will continue to be able to effectively access the commercial paper market and long-term capital markets, if necessary. 44 Cash Flows Operating Activities We generated $1.8 billion in cash flows from operations in fiscal 2022, compared to cash flows from operations of $1.9 billion in fiscal 2021.
Net Earnings Net earnings increased 143.3% in fiscal 2021 as compared to the prior year, due primarily to the items noted above for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 11, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8.
Net Earnings Net earnings increased 159.2% in fiscal 2022, as compared to fiscal 2021, due primarily to the items noted above for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 19, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8.
(2) Fiscal 2021 includes $72 million related to restructuring charges, facility closure and severance charges and $56 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(2) Fiscal 2022 includes $61 million related to restructuring charges, severance and facility closure charges and $49 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
As of July 3, 2021, we had $3.0 billion in cash and cash equivalents, approximately 19% of which was held by our international subsidiaries generated from our earnings of international operations. If these earnings were transferred among countries or repatriated to the U.S., such amounts may be subject to withholding and additional foreign tax obligations.
As of July 2, 2022, we had $867.1 million in cash and cash equivalents, approximately 49% of which was held by our international subsidiaries and generated from our earnings of international operations. If these earnings were transferred among countries or repatriated to the U.S., such amounts may be subject to withholding and additional foreign tax obligations.
We purchased $53.1 million in marketable securities in fiscal 2021 and received $36.0 million in proceeds from the sale of marketable securities in that period. Cash Requirements The Company’s cash requirements within the next twelve months include accounts payable and accrued liabilities, current maturities of long-term debt, other current liabilities, and purchase commitments and other obligations.
We purchased $19.3 million in marketable securities in fiscal 2022 and received $16.6 million in proceeds from the sale of marketable securities in that period. Cash Requirements The Company’s cash requirements within the next twelve months include accounts payable and accrued liabilities, current maturities of long-term debt, other current liabilities, and purchase commitments and other obligations.
An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective income tax rate in the period of resolution.
An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective income tax rate in the period of resolution.
(4) In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $15 million and $12 million or non-cash stock compensation expense of $96 million and $42 million for fiscal 2021 and fiscal 2020, respectively.
(5) In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $7 million and $15 million or non-cash stock compensation expense of $122 million and $96 million for fiscal 2022 and fiscal 2021, respectively.
Foodservice Operations and International Foodservice Operations represented approximately 69.6% and 16.3%, respectively, of Sysco’s overall sales, compared to 69.5% and 18.3%, respectively, in fiscal 2020. In fiscal 2021 and fiscal 2020, U.S. Foodservice Operations represented approximately 107.9% and 121.6%, respectively, of the total segment operating income.
Foodservice Operations and International Foodservice Operations represented approximately 70.7% and 17.2%, respectively, of Sysco’s overall sales, compared to 69.6% and 16.3%, respectively, in fiscal 2021. In fiscal 2022 and fiscal 2021, U.S. Foodservice Operations represented approximately 96.5% and 107.9%, respectively, of the total segment operating income.
We believe these mechanisms will continue to prevent a significant unfavorable impact on our cash flows from operations. We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness. We monitor each customer’s account and will suspend shipments if necessary.
We believe these mechanisms will continue to mitigate any unfavorable impact on our cash flows from operations arising from macro-economic trends and conditions. We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness. We monitor each customer’s account and will suspend shipments if necessary.
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. Sysco sold its interests in Cake Corporation in the first quarter of fiscal 2021.
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.
Strategy Our purpose is “Connecting the World to Share Food and Care for One Another,” which we believe will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our “Recipe for Growth” transformation.
Foodservice Segment. 26 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.
We are developing a more nimble, accessible and productive supply chain that is better positioned to support customers in their business recovery, we and have eliminated order minimums for our customers.
We are developing a more nimble, accessible and productive supply chain that is better positioned to support customers in their business recovery, we remain the only national broadliner with no order minimums for our customers.
Adjusted diluted earnings per share, excluding Certain Items (which is a non-GAAP financial measure for which a reconciliation is provided in “Non-GAAP Reconciliations” below), in fiscal 2021 were $1.44, a 28.4% decrease from the comparable prior year period amount of $2.01 per share.
Adjusted diluted earnings per share, excluding Certain Items (which is a non-GAAP financial measure for which a reconciliation is provided in “Non-GAAP Reconciliations” below), in fiscal 2022 were $3.25, a 125.7% increase from the comparable prior year period amount of $1.44 per share.
In August 2018, we filed a universal shelf registration statement with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of various types of debt and equity securities.
In August 2021, we filed a universal shelf registration statement with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of various types of debt and equity securities. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.
As of July 3, 2021, Sysco was in compliance with all of its debt covenants, and the company expects to remain in compliance through the next twelve months. Guarantor Summarized Financial Information On January 19, 2011, the wholly owned U.S.
The new revolving credit facility expires on April 29, 2027. As of July 2, 2022, Sysco was in compliance with all of its debt covenants, and the company expects to remain in compliance through the next twelve months. Guarantor Summarized Financial Information On January 19, 2011, the wholly owned U.S.
The rate of return assumption is reviewed annually and revised as deemed appropriate. The expected return on plan assets impacts the recorded amount of net pension costs. The expected long-term rate of return on plan assets of the U.S. Retirement Plan decreased by 25 basis points to 4.50% for fiscal 2022, due to expected lower long-term rate of return.
The rate of return assumption is reviewed annually and revised as deemed appropriate. The expected return on plan assets impacts the recorded amount of net pension costs. The expected long-term rate of return on plan assets of the U.S. Retirement Plan is 4.50% for fiscal 2023, as our long-term rate of return remains the same as fiscal 2022.
Foodservice Operations International Foodservice Operations SYGMA Other Corporate Consolidated Totals (In thousands) Sales $ 35,724,843 $ 8,350,638 $ 6,498,601 $ 723,761 $ — $ 51,297,843 Sales increase (decrease) (2.9) % (13.7) % 17.0 % (18.8) % (3.0) % Percentage of total 69.6 % 16.3 % 12.7 % 1.4 % 100.0 % Operating income (loss) $ 2,456,564 $ (232,403) $ 52,654 $ (396) $ (839,177) $ 1,437,242 Operating income (loss) increase (decrease) 22.6 % (37.4) % 42.8 % (98.1) % 91.8 % Percentage of total segments 107.9 % (10.2) % 2.3 % — % 100.0 % Operating income as a percentage of sales 6.9 % (2.8) % 0.8 % (0.1) % 2.8 % 52-Week Period Ended Jun. 27, 2020 U.S.
Foodservice Operations International Foodservice Operations SYGMA Other Global Support Center Consolidated Totals (In thousands) Sales $ 35,724,843 $ 8,350,638 $ 6,498,601 $ 723,761 $ — $ 51,297,843 Percentage of total 69.6 % 16.3 % 12.7 % 1.4 % 100.0 % Operating income (loss) $ 2,456,564 $ (232,403) $ 52,654 $ (396) $ (839,177) $ 1,437,242 Percentage of total segments 107.9 % (10.2) % 2.3 % — % 100.0 % Operating income (loss) as a percentage of sales 6.9 % (2.8) % 0.8 % (0.1) % 2.8 % In fiscal 2022, U.S.
According to industry sources, the foodservice, or food-away-from-home, market represents approximately 45% of the total dollars spent on food purchases made at the consumer level in the U.S. as of the end of calendar year 2020.
According to industry sources, the foodservice, or food-away-from-home, market represents approximately 53% of the total dollars spent on food purchases made at the consumer level in the U.S. as of the end of calendar year 2021, which is consistent with pre-pandemic levels as of the end of calendar year 2019.
This is calculated by taking one-fourteenth of the total metric for the fourth quarter of fiscal 2021. The company uses these non-GAAP measures when evaluating its financial results, as well as for internal planning and forecasting purposes. These financial measures should not be used as a substitute for GAAP measures in assessing the company’s results of operations for periods presented.
The company uses these non-GAAP measures when evaluating its financial results, as well as for internal planning and forecasting purposes. These financial measures should not be used as a substitute for GAAP measures in assessing the company’s results of operations for periods presented.
Sales and Gross Profit Trends Our sales and gross profit performance can be influenced by multiple factors, including price, volume, customer mix, product mix and the impact of the COVID-19 pandemic. The biggest factor affecting performance in fiscal 2021 was the COVID-19 pandemic due to reduced volume.
Sales and Gross Profit Trends Our sales and gross profit performance can be influenced by multiple factors, including price, volume, customer mix, product mix and the impact of the COVID-19 pandemic.
Increase (Decrease) 2021 (In millions) Cause of change Percentage Dollars Inflation 3.6 % $ 351.7 Foreign currency 4.6 444.4 Extra week in fiscal 2021 1.8 178.3 Other (1) (23.7) (2,296.0) Total change in sales (13.7) % $ (1,321.6) (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.
Increase (Decrease) 2022 (In millions) Cause of change Percentage Dollars Inflation 9.6 % $ 798.5 Foreign currency (2.2) (180.1) Other (1) 33.8 2,818.4 Total change in sales 41.2 % $ 3,436.8 (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.
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. 40 Set forth below is a reconciliation by segment of actual operating expenses and operating income to adjusted results for these measures for the periods presented (dollars in thousands): U.S.
NM represents that the percentage change is not meaningful. 38 Set forth below is a reconciliation by segment of actual operating expenses and operating income to adjusted results for these measures for the periods presented (dollars in thousands): 2022 2021 Change in Dollars % Change U.S.
Income Tax Trends Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions.
Income Taxes The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions.
As of July 3, 2021, the Captive held $129.7 million of fixed income marketable securities and $30.0 million of restricted cash and restricted cash equivalents in a restricted investment portfolio in order to meet solvency requirements.
As of July 2, 2022, the Captive held $119.9 million of fixed income marketable securities and $64.3 43 million of restricted cash and restricted cash equivalents in a restricted investment portfolio in order to meet solvency requirements.
(6) The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(5) Represents a gain on sale from disposition of a business, Iowa Premium. (6) 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.
Free Cash Flow Our free cash flow for fiscal 2021 increased by $565.3 million, to $1.5 billion, as compared to fiscal 2020, principally as a result of an increase in cash flows from operations and year-over-year decreased capital expenditures.
Free Cash Flow Our free cash flow for fiscal 2022 decreased by $309.7 million, to $1.2 billion, as compared to fiscal 2021, principally as a result of a decrease in cash flows from operations due to investments in working capital and a year-over-year increase in capital expenditures.
Diluted earnings per share in fiscal 2021 were $1.02, a 142.9% increase from the comparable prior year period amount of $0.42 per share.
Diluted earnings per share in fiscal 2022 were $2.64, a 158.8% increase from the comparable prior year period amount of $1.02 per share.
Increase (Decrease) 2021 (In millions) Cause of change Percentage Dollars Case volume (8.6) % $ (3,144.5) Inflation (1) 4.1 1,522.8 Acquisitions 0.1 50.5 Extra week in fiscal 2021 2.2 822.8 Other (2) (0.7) (300.9) Total change in sales (2.9) % $ (1,049.3) (1) Includes product cost inflation of 4.3% for U.S. Broadline operations.
Increase (Decrease) 2022 (In millions) Cause of change Percentage Dollars Case volume (1), (4) 17.6 % $ 6,300.4 Inflation (2) 14.2 5,072.9 Acquisitions (3) 3.7 1,334.7 Other (4) 0.3 87.7 Total change in sales 35.8 % $ 12,795.7 (1) Includes case volume of 15.4% for U.S. Broadline operations. (2) Includes product cost inflation of 15.0% for U.S. Broadline operations.
Liquidity and Capital Resources Highlights Below are comparisons of the cash flows from fiscal 2021 to fiscal 2020: • Cash flows from operations were $1.9 billion in fiscal 2021, compared to $1.6 billion in fiscal 2020; • Net capital expenditures totaled $411.5 million in fiscal 2021, compared to $691.7 million in fiscal 2020; • Free cash flow was $1.5 billion in fiscal 2021, compared to $927.0 million in fiscal 2020 (see “Cash Flows – Free Cash Flow – Non-GAAP Reconciliation” below for an explanation of this non-GAAP financial measure); • There were no acquisitions in fiscal 2021; cash used for acquisition of businesses was $142.8 million in fiscal 2020; • There were $826.2 million of bank and commercial paper repayments, net, in fiscal 2021, compared to $616.7 million of bank and commercial paper borrowings, net in fiscal 2020; • Dividends paid were $917.6 million in fiscal 2021, compared to $856.3 million in fiscal 2020; and • There were no stock repurchases in fiscal 2021; cash paid for treasury stock repurchases was $844.7 million in fiscal 2020. 43 We repaid senior notes in the amount of $1.3 billion, purchased senior notes and debentures in the amount of $712.4 million pursuant to a tender offer in fiscal 2021 and repaid $700 million of borrowings under our long-term revolving credit facility, utilizing cash flow from operations.
Liquidity and Capital Resources Highlights Below are comparisons of the cash flows from fiscal 2022 to fiscal 2021: • Cash flows from operations were $1.8 billion in fiscal 2022, compared to $1.9 billion in fiscal 2021; • Net capital expenditures totaled $608.7 million in fiscal 2022, compared to $411.5 million in fiscal 2021; • Free cash flow was $1.2 billion in fiscal 2022, compared to $1.5 billion in fiscal 2021 (see “Cash Flows – Free Cash Flow – Non-GAAP Reconciliation” below for an explanation of this non-GAAP financial measure); • Cash used for acquisition of businesses was $1.3 billion in fiscal 2022; • There was no significant bank or commercial paper activity in fiscal 2022, compared to $826.2 million of bank and commercial paper repayments, net in fiscal 2021; • Dividends paid were $958.9 million in fiscal 2022, compared to $917.6 million in fiscal 2021; and • Cash paid for treasury stock repurchases was $499.8 million in fiscal 2022, compared to none in fiscal 2021. 42 We repaid senior notes in the amount of $1.7 billion and issued an aggregate of $1.3 billion in new senior notes in fiscal 2022.
Individual components of diluted earnings per share may not add up to the total presented due to rounding.
(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.
Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic. (2) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. (3) Includes restructuring, severance and facility closure costs primarily in Europe. (4) Represents intangible amortization expense from the Brakes Acquisition.
(2) Fiscal 2022 and fiscal 2021 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. (3) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. (4) Includes restructuring, severance and facility closure costs primarily in Europe. (5) Represents intangible amortization expense.
We will fund our journey through cost-out and efficiency improvements. 30 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: 2021 2020 Sales 100.0 % 100.0 % Cost of sales 81.8 81.3 Gross profit 18.2 18.7 Operating expenses 15.4 17.3 Operating income 2.8 1.4 Interest expense 1.7 0.8 Other (income) expense, net — 0.1 Earnings before income taxes 1.1 0.5 Income taxes 0.1 0.1 Net earnings 1.0 % 0.4 % 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: 2021 Sales (3.0) % Cost of sales (2.4) Gross profit (5.5) Operating expenses (13.5) Operating income 91.8 Interest expense 115.6 Other (income) expense, net (1) (157.7) Earnings before income taxes 99.3 Income taxes (22.3) Net earnings 143.3 % Basic earnings per share 145.2 % Diluted earnings per share 142.9 Average shares outstanding 0.1 Diluted shares outstanding (0.1) (1) Other (income) expense, net was income of $27.6 million in fiscal 2021 and expense of $47.9 million in fiscal 2020. 31 Segment Results The following represents our results by reportable segments: 53-Week Period Ended Jul. 3, 2021 U.S.
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: 2022 2021 Sales 100.0 % 100.0 % Cost of sales 82.0 81.8 Gross profit 18.0 18.2 Operating expenses 14.6 15.4 Operating income 3.4 2.8 Interest expense 0.9 1.7 Other (income) expense, net — — Earnings before income taxes 2.5 1.1 Income taxes 0.5 0.1 Net earnings 2.0 % 1.0 % 27 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: 2022 Sales 33.8 % Cost of sales 34.3 Gross profit 31.7 Operating expenses 26.0 Operating income 62.7 Interest expense (29.1) Other (income) expense, net (1) 13.6 Earnings before income taxes 198.7 Income taxes 541.1 Net earnings 159.2 % Basic earnings per share 158.3 % Diluted earnings per share 158.8 Average shares outstanding — Diluted shares outstanding 0.1 (1) Other (income) expense, net was income of $31.4 million in fiscal 2022 and income of $27.6 million in fiscal 2021.
That rate of growth is expected to accelerate across the three years of our long range plan, and we intend to deliver 1.5 times the market growth in fiscal 2024.
That rate of growth is expected to accelerate across the three years of our long-range plan, and we intend to deliver 1.5 times the market growth by the end of our fiscal 2024. Product cost inflation has also been a driver of our sales and gross profit performance. We experienced inflation in our U.S.
In fiscal 2021, we continued to reduce our debt levels, and have paid down $3.4 billion of debt. As of July 3, 2021, there were no borrowings outstanding under our long-term revolving credit facility. As of August 10, 2021, the company has approximately $4.7 billion in cash and available liquidity.
As of July 2, 2022, there were no borrowings outstanding under our long-term revolving credit facility. As of August 9, 2022, the company has approximately $3.2 billion in cash and available liquidity.
(4) Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.
(4) Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
Furthermore, the ability of Sysco Corporation to service its indebtedness and other obligations is dependent upon the earnings and cash flow of its subsidiaries and the distribution or other payment to it of such earnings or cash flow.
Furthermore, the ability of Sysco Corporation to service its indebtedness and other obligations is dependent upon the earnings and cash flow of its subsidiaries and the distribution or other payment to it of such earnings or cash flow. If any of Sysco Corporation’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on its assets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Changes in the value of these items resulting from fluctuations in the underlying exchange rates to U.S. Dollar exchange rates are recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). 58 Fuel Price Risk Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices.
Changes in the value of these items resulting from fluctuations in the underlying exchange rates to U.S. Dollar exchange rates are recorded as foreign currency translation adjustments within Accumulated other comprehensive income (loss). Fuel Price Risk Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices.
Third, increased fuel costs impact the costs we incur to deliver product to our customers. Fuel costs related to outbound deliveries represented approximately 0.5% of sales during fiscal 2021, fiscal 2020 and fiscal 2019.
Third, increased fuel costs impact the costs we incur to deliver product to our customers. Fuel costs related to outbound deliveries represented approximately 0.5% of sales during fiscal 2022, fiscal 2021 and fiscal 2020.
A 10% unfavorable change in the fiscal 2021 weighted year-to-date exchange rate and the resulting impact on our financial statements would have negatively affected fiscal 2021 sales by 1.3% and would not have materially affected our operating income, net earnings and earnings per share. We do not routinely enter into material agreements to hedge foreign currency exchange rate risks.
A 10% unfavorable change in the fiscal 2022 weighted year-to-date exchange rate and the resulting impact on our financial statements would have negatively affected fiscal 2022 sales by 1.9% and would not have materially affected our operating income, net earnings and earnings per share. We do not routinely enter into material agreements to hedge foreign currency exchange rate risks.
The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties in such transactions. At July 3, 2021, there were no commercial paper issuances outstanding under our U.S. commercial paper program.
The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties in such transactions. At July 2, 2022, there were no commercial paper issuances outstanding under our U.S. commercial paper program.
Using current, published quarterly market price projections for diesel and estimates of fuel consumption, a 10% unfavorable change in diesel prices from the market price would result in a potential increase of approximately $7.1 million in our fuel costs on our non-contracted volumes. Investment Risk Our U.S.
Using current, published quarterly market price projections for diesel and estimates of fuel consumption, a 10% unfavorable change in diesel prices from the market price would result in a potential increase of approximately $8.0 million in our fuel costs on our non-contracted volumes. Investment Risk Our U.S.
The following tables present our interest rate position as of July 3, 2021. All amounts are stated in U.S. dollar equivalents. Interest Rate Position as of July 3, 2021 Principal Amount by Expected Maturity Average Interest Rate 2022 2023 2024 2025 2026 Thereafter Total Fair Value (Dollars in thousands) U.S.
The following tables present our interest rate position as of July 2, 2022. All amounts are stated in U.S. dollar equivalents. Interest Rate Position as of July 2, 2022 Principal Amount by Expected Maturity Average Interest Rate 2023 2024 2025 2026 2027 Thereafter Total Fair Value (Dollars in thousands) U.S.
Our largest currency exposures are with Canadian dollars, British pound sterling and Euro currencies. Our income statement trends may be impacted by the translation of the income statements of our foreign subsidiaries into U.S. dollars. The exchange rates used to translate our foreign sales into U.S. dollars positively affected sales by 0.9% in fiscal 2021 when compared to fiscal 2020.
Our largest currency exposures are with Canadian dollars, British pound sterling and Euro currencies. Our income statement trends may be impacted by the translation of the income statements of our foreign subsidiaries into U.S. dollars. The exchange rates used to translate our foreign sales into U.S. dollars negatively affected sales by 0.3% in fiscal 2022 when compared to fiscal 2021.
The exchange rate used to translate our foreign sales into U.S. dollars negatively affected sales by 0.3% in fiscal 2020 when compared to fiscal 2019. The impact to our operating income, net earnings and earnings per share was not material in fiscal 2021 or fiscal 2020.
The exchange rate used to translate our foreign sales into U.S. dollars positively affected sales by 0.9% in fiscal 2021 when compared to fiscal 2020. The impact to our operating income, net earnings and earnings per share was not material in fiscal 2022 or fiscal 2021.
We use diesel fuel swap contracts to fix the price of a portion of our projected monthly diesel fuel requirements. As of July 3, 2021, we had diesel fuel swaps with a total notional amount of approximately 32 million gallons through June 2022.
We use diesel fuel swap contracts to fix the price of a portion of our projected monthly diesel fuel requirements. As of July 2, 2022, we had diesel fuel swaps with a total notional amount of approximately 52 million gallons through June 2024.
A 10% unfavorable change in the value of the investments held by our company-sponsored retirement plans at the plans’ fiscal year end (December 31, 2020) would not have a material impact on our anticipated future contributions for fiscal 2022; however, such an unfavorable change would increase our pension expense for fiscal 2022 by $35.8 million and would reduce our shareholders’ equity on our balance sheet as of July 3, 2021 by $465.5 million. 59
A 10% unfavorable change in the value of the investments held by our company-sponsored retirement plans at the plans’ fiscal year end (December 31, 2021) would not have a material impact on our anticipated future contributions for fiscal 2023; however, such an unfavorable change would increase our pension expense for fiscal 2023 by $30.1 million and would reduce our shareholders’ equity on our balance sheet as of July 2, 2022 by $363.3 million. 56
These swaps are expected to lock in the price of approximately 50% of our projected fuel purchase needs for fiscal 2022. Our remaining fuel purchase needs will occur at market rates unless contracted for a fixed price or hedged at a later date.
These swaps are expected to lock in the price of approximately 80% of our bulk fuel purchases for fiscal 2023, or 60% of our total projected fuel purchase needs for fiscal 2023. Our remaining fuel purchase needs will occur at market rates unless contracted for a fixed price or hedged at a later date.
Details of our outstanding swap agreements as of July 3, 2021 are below: Maturity Date of Swap Notional Value Fixed Coupon Rate on Hedged Debt Floating Interest Rate on Swap Floating Rate Reset Terms Location of Fair Value on Balance Sheet Fair Value of Asset (Liability) (in thousands) June 23, 2023 € 500,000,000 1.25 Three-month EURIBOR Every three months in advance Other long-term assets $ 6,532 March 15, 2025 $ 500,000,000 3.55 Three-month LIBOR Every three months in advance Other long-term assets $ 36,685 57 We receive or pay amounts on these interest rate swap agreements on a semi-annual basis.
Details of our outstanding swap agreements as of July 2, 2022 are below: Maturity Date of Swap Notional Value Fixed Coupon Rate on Hedged Debt Floating Interest Rate on Swap Floating Rate Reset Terms Location of Fair Value on Balance Sheet Fair Value of Asset (Liability) (in thousands) June 23, 2023 € 500,000,000 1.25 Three-month EURIBOR Every three months in advance Current maturities of long-term debt $ (2,820) We receive or pay amounts on these interest rate swap agreements on a semi-annual basis.
Interest Rate Position as of July 3, 2021 Notional Amount by Expected Maturity Average Interest Swap Rate 2022 2023 2024 2025 2026 Thereafter Total Fair Value (Dollars in thousands) Interest Rate Swaps Related To Debt: Pay Variable/Receive Fixed $ — $ 593,303 $ — $ 500,000 $ — $ — $ 1,093,303 $ 43,217 Average Variable Rate Paid: Rate A Plus — % 1.10 % — % 0.75 % — % — % 0.94 % Fixed Rate Received — % 1.25 % — % 3.55 % — % — % 2.30 % Rate A – three-month LIBOR Foreign Currency Exchange Rate Risk The majority of our foreign subsidiaries use their local currency as their functional currency.
Interest Rate Position as of July 2, 2022 Notional Amount by Expected Maturity Average Interest Swap Rate 2023 2024 2025 2026 2027 Thereafter Total Fair Value (Dollars in thousands) Interest Rate Swaps Related To Debt: Pay Variable/Receive Fixed $ 521,398 $ — $ — $ — $ — $ — $ 521,398 $ (2,820) Average Variable Rate Paid: Rate A Plus 1.10 % — % — % — % — % — % 1.10 % Fixed Rate Received 1.25 % — % — % — % — % — % 1.25 % Rate A – three-month EURIBOR 55 Foreign Currency Exchange Rate Risk The majority of our foreign subsidiaries use their local currency as their functional currency.
Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that we may need to refinance maturing debt with new debt at higher rates.
Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that we may need to refinance maturing debt with new debt at higher rates. 54 We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that position.
Total debt as of July 3, 2021 was $11.1 billion, of which approximately 90% was at fixed rates of interest, including the impact of our interest rate swap agreements. At June 27, 2020, there were no commercial paper issuances outstanding under our U.S. commercial paper program and we had £600.0 million outstanding under our U.K. commercial paper program.
Total debt as of July 2, 2022 was $10.6 billion, of which approximately 95% was at fixed rates of interest, including the impact of our interest rate swap agreements. At July 3, 2021, there were no commercial paper issuances outstanding under our U.S. commercial paper program.
Total debt as of June 27, 2020 was $14.4 billion, of which approximately 79% was at fixed rates of interest, including the impact of our interest rate swap agreements.
Total debt as of July 3, 2021 was $11.1 billion, of which approximately 90% was at fixed rates of interest, including the impact of our interest rate swap agreements.
Dollar Denominated: Fixed Rate Debt $ 450,000 $ — $ — $ 750,000 $ 750,000 $ 7,582,055 $ 9,532,055 $ 9,454,290 Average Interest Rate 2.60 % — % — % 5.65 % 3.75 % 4.80 % 4.68 % Floating Rate Debt (1) $ — $ — $ — $ 500,000 $ — $ — $ 500,000 $ 533,681 Average Interest Rate — % — % — % 3.55 % — % — % 3.55 % Euro Denominated: Floating Rate Debt (1) $ — $ 593,303 $ — $ — $ — $ — $ 593,303 $ 598,253 Average Interest Rate — % 1.25 % — % — % — % — % 1.25 % Canadian Dollar Denominated: Fixed Rate Debt $ — $ — $ — $ 404,138 $ — $ — $ 404,138 $ 402,589 Average Interest Rate — % — % — % 3.65 % — % — % 3.65 % (1) Includes fixed rate debt that has been converted to floating rate debt through an interest rate swap agreement.
Dollar Denominated: Fixed Rate Debt $ — $ — $ — $ 750,000 $ 1,043,176 $ 7,788,879 $ 9,582,055 $ 9,300,127 Average Interest Rate — % — % — % 3.75 % 3.46 % 4.67 % 4.47 % Euro Denominated: Floating Rate Debt (1) $ 521,398 $ — $ — $ — $ — $ — $ 521,398 $ 517,263 Average Interest Rate 1.25 % — % — % — % — % — % 1.25 % Canadian Dollar Denominated: Fixed Rate Debt $ — $ — $ 386,877 $ — $ — $ — $ 386,877 $ 378,091 Average Interest Rate — % — % 3.65 % — % — % — % 3.65 % (1) Includes fixed rate debt that has been converted to floating rate debt through an interest rate swap agreement.
Removed
We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that position.

Other SYY 10-K year-over-year comparisons