8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 11, 2020

Sysco Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-06544	74-1648137
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1390 Enclave Parkway, Houston, TX 77077-2099

(Address of principal executive offices) (zip code)

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

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $1.00 Par Value	SYY	New York Stock Exchange
1.25% Notes due June 2023	SYY23	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

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

SECTION 2 – FINANCIAL INFORMATION

Item 2.02 Results of Operations and Financial Condition.

On August 11, 2020, Sysco Corporation (“Sysco”) issued a press release announcing its results of operations and financial condition for its fourth quarter and fiscal year ended June 27, 2020. Sysco hereby incorporates by reference herein the information set forth in its press release dated August 11, 2020 (the “Press Release”), a copy of which is attached hereto as Exhibit 99.1.

Except for the historical information contained in this report, the statements made by Sysco are forward looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Sysco’s future financial performance could differ significantly from the expectations of management and from results expressed or implied in the Press Release. Forward-looking statements in the Press Release are subject to certain risks and uncertainties described in the Press Release. For further information on other risk factors, please refer to the “Risk Factors” contained in Sysco’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019 and in Sysco’s Quarterly Report on Form 10-Q for the period ended March 28, 2020.

The information in this Item 2.02 is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in Item 2.02 of this report, including the Press Release attached hereto as Exhibit 99.1, will not be incorporated by reference into any registration statement filed by Sysco under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

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SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d) Exhibits.

Exhibit Number	Description
99.1	Press Release dated August 11, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

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

	Sysco Corporation
Date: August 11, 2020	By:	/s/ Eve M. McFadden
		Eve M. McFadden
		Senior Vice President, Legal, General Counsel and Corporate Secretary

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EX-99.1

Exhibit 99.1

SYSCO REPORTS FOURTH QUARTER and FULL YEAR 2020 RESULTS

THE COMPANY IS MAKING SUBSTANTIAL PROGRESS ON A BOLD TRANSFORMATION THAT WILL ENABLE THE COMPANY TO IMPROVE HOW IT SERVES CUSTOMERS, DIFFERENTIATE FROM COMPETITORS, AND TRANSFORM THE INDUSTRY

HOUSTON, August 11, 2020 - Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week fourth fiscal quarter and its fiscal year ended June 27, 2020.

Fourth Quarter Fiscal 2020 Highlights

• Sales decreased 42.7% to $8.9 billion

• Gross profit decreased 47.4% to $1.6 billion; gross margin decreased 159 basis points

• Operating income (loss) decreased 173.8% to $(531.6) million; adjusted¹ operating income (loss) decreased 104.1% to $(33.9) million

• Earnings (loss) per share (“EPS”) decreased $2.25 to $(1.22); adjusted¹ EPS decreased $1.39 to $(0.29)

Fiscal 2020 Highlights

• Sales decreased 12.0% to $52.9 billion

• Gross profit decreased 13.2% to $9.9 billion; gross margin decreased 26 basis points

• Operating income decreased 67.8% to $749.5 million; adjusted¹ operating income decreased 37.4% to $1.7 billion

• EPS decreased $2.78 to $0.42; adjusted¹ EPS decreased $1.54 to $2.01

“I am immensely proud of the actions taken by the Sysco team to manage our business during this time of crisis, specifically led by our associates’ focus and agility when launching strategic transformational initiatives,” said Kevin Hourican, Sysco’s president and chief executive officer. “While our fourth quarter and fiscal 2020 results were significantly impacted by the COVID-19 pandemic, we quickly responded by strengthening our balance sheet, adding new and different types of customers, and strategically committing resources to plan for the eventual return of demand. Our quarterly results came in notably better than we anticipated. More importantly, we are confident that the transformational steps we are taking better position Sysco to meet the evolving needs of our customers and the marketplace as we emerge from this crisis.”

With concerted effort, we have continued to manage through the COVID-19 pandemic by leveraging our salesforce to drive incremental business and actively prepare for the return of food-away-from-home demand. As we move forward, our leadership is turning the page and deploying substantial business transformation initiatives that will improve how we serve our customers and run our business. We are also proud to continue our charitable programs by delivering 30 million meals to help fight hunger in the communities we serve.

¹ Earnings (Loss) Per Share (EPS) are shown on a diluted basis unless otherwise specified. Adjusted financial results exclude certain items, which primarily include excess bad debt expense, goodwill impairment charges, restructuring costs, transformational project costs and acquisition-related costs. Specific to EPS, this year’s Certain Items include the impact of an impairment on assets held for sale and last year’s Certain Items include the gain on the sale of Iowa Premium, LLC (“Iowa Premium”) and the impact of recognizing a foreign tax credit. Reconciliations of all non-GAAP measures are included at the end of this release.

Our customers continue to face uncertainty as COVID-19 outbreaks affect their businesses. In this challenging environment, we are utilizing our strong capabilities to help restaurant partners succeed now and into the future. With our efforts, restaurants are reshaping food-away-from-home models through our restaurant resources, which include the virtual restaurant readiness tool and the bundled restaurant operator toolkits. Our tools provide solutions associated with meal kits, safety and sanitation, contactless menus, and curbside/takeout. We are proud to highlight that we have successfully helped convert over 16,000 restaurants into food marketplaces, and we believe that restaurant operators who have partnered with Sysco are better equipped to improve their sales and profitability.

Fourth Quarter Fiscal 2020 Results

U.S. Foodservice Operations

Sales for the fourth quarter were $6.1 billion, a decrease of 42.8% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 38.7% for the fourth quarter, of which a decrease of 39.4% was organic, while total case volume within U.S. Broadline operations decreased 41.5%, of which a decrease of 41.9% was organic.

Gross profit decreased 45.7% to $1.2 billion, and gross margin decreased 102 basis points to 19.1%, compared to the same period last year. Food cost inflation was relatively flat in U.S. Broadline as measured by the estimated change in Sysco’s product costs, as a result of inflationary pressure primarily in the meat category, specifically beef, offset by deflation in the poultry and frozen categories.

Operating expenses decreased $196.3 million, or 14.9%, compared to the same period last year. Adjusted operating expenses decreased $323.6 million, or 24.4%, compared to the same period last year.

Operating income was $40.6 million, a decrease of $786.0 million, or 95.1%, compared to the same period last year. Adjusted operating income was $164.9 million, a decrease of $658.7 million, or 80.0%, compared to the same period last year.

International Foodservice Operations

Sales for the fourth quarter were $1.4 billion, a decrease of 53.4% compared to the same period last year. On a constant currency basis, sales for the fourth quarter were $1.4 billion, a decrease of 51.9% compared to the same period last year. Foreign exchange rates negatively affected International Foodservice Operations sales by 1.5% and total Sysco sales by 0.3% during the quarter.

Gross profit decreased 57.7% to $263.0 million, and gross margin decreased 193 basis points to 19.3%, in each case as compared to the same period last year. On a constant currency basis, gross profit decreased 56.4% to $270.9 million. Foreign exchange rates negatively affected International Foodservice Operations gross profit by 1.3% and total Sysco gross profit by 0.3% during the quarter.

Operating expenses increased $82.1 million, or 14.7%, compared to the same period last year. Adjusted operating expenses decreased $170.3 million, or 33.8%, compared to the same period last year. On a constant currency basis, adjusted operating expenses decreased $159.3 million, or 31.6%, compared to the same period last year. Foreign exchange rates positively affected International Foodservice Operations operating expense by 2.2% and total Sysco operating expense by 0.6% during the quarter.

The international segment delivered an operating loss of $377.3 million, a decrease of $440.7 million compared to the same period last year. Adjusted operating loss was $70.0 million, a decrease of $188.3 million compared to the same period last year. On a constant currency basis, adjusted operating loss was $73.1 million, a decrease of $191.4 million, or 161.8%, compared to the same period last year.

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Foreign exchange rates positively affected International Foodservice Operations operating income by 2.6% and total Sysco operating income by 0.4% during the quarter.

Fiscal 2020 Results

U.S. Foodservice Operations

Sales for fiscal 2020 were $36.8 billion, a decrease of 10.9% compared to the prior year. Local case volume within U.S. Broadline operations decreased 9.6% for fiscal 2020, of which a decrease of 10.6% was organic, while total case volume within U.S. Broadline operations decreased 11.2%, of which a decrease of 11.7% was organic.

Gross profit decreased 12.1% to $7.3 billion, and gross margin decreased 25 basis points to 19.7%, compared in each case to the prior year. Food cost inflation was 1.8% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the dairy and meat categories.

Operating expenses decreased $5.7 million, or 0.1%, compared to the prior year. Adjusted operating expenses decreased $246.5 million, or 4.7%, compared to the prior year.

Operating income was $2.0 billion, a decrease of $988.6 million, or 33.0%, compared to the prior year. Adjusted operating income was $2.2 billion, a decrease of $747.8 million, or 25.0%, compared to the prior year.

International Foodservice Operations

Sales for fiscal 2020 were $9.7 billion, a decrease of $1.8 billion, or 15.8%, compared to the prior year. On a constant currency basis, sales for fiscal 2020 were $9.9 billion, a decrease of 14.1% compared to the prior year. Foreign exchange rates negatively affected International Foodservice Operations sales by 1.7% and total Sysco sales by 0.5% during the year.

Gross profit decreased 18.3% to $2.0 billion, and gross margin decreased 60 basis points to 20.2%, in each case as compared to the prior year. On a constant currency basis, gross profit decreased 16.5% to $2.0 billion, as compared to the prior year.

Operating expenses increased $59.9 million, or 2.6%, compared to the prior year. Adjusted operating expenses decreased $190.2 million, or 9.3%, compared to the prior year. On a constant currency basis, adjusted operating expenses decreased $144.7 million, or 7.1%, compared to the prior year.

The international segment delivered an operating loss of $371.4 million, a decrease of $496.9 million compared to the prior year. Adjusted operating income was $108.0 million, a decrease of $246.8 million, or 69.6%, compared to the prior year. On a constant currency basis, adjusted operating income was $105.6 million, a decrease of $249.2 million, or 70.2%, compared to the prior year. Foreign exchange rates positively affected total Sysco operating income during fiscal 2020 by 0.1%.

Balance Sheet, Capital Spending and Cash Flow

Capital expenditures, net of proceeds from sales of plant and equipment, for fiscal 2020 were $20.3 million higher compared to the prior year.

Cash flow from operations was $1.6 billion for fiscal 2020, which was $792.5 million lower compared to the prior year. Free cash flow² for fiscal 2020 was $927.0 million, which was $812.8 million lower compared to the prior year.

² Free cash flow is a non-GAAP measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP measures are included at the end of this release.

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Conference Call & Webcast

Sysco will host a conference call to review the company’s fourth quarter fiscal 2020 financial results on Tuesday, August 11, 2020, at 10:00 a.m. Eastern. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

Key Highlights:

	13-Week Period Ended				52-Week Period Ended
	June 27, 2020		Change		June 27, 2020		Change
Financial Comparison:
Sales		$8.9 billion		-42.7%		$52.9 billion		-12.0%
Gross profit		$1.6 billion		-47.4%		$9.9 billion		-13.2%
Gross Margin		17.66%		-159 bps		18.72%		-26 bps
GAAP:
Operating expenses		$2.1 billion		-7.1%		$9.2 billion		0.8%
Certain Items		$(497.7) million		NM		$(962.5) million		138.8%
Operating (Loss) Income		$(531.6) million		-173.8%		$749.5 million		-67.8%
Operating Margin		(6.00)%		-1065 bps		1.42%		-246 bps
Certain Items in Other expense (income), net		$(47.0) million		-170.8%		$(47.0) million		-170.8%
Net (Loss) Earnings		$(618.4) million		-215.4%		$215.5 million		-87.1%
Diluted (Loss) Earnings Per Share		$(1.22)		-218.4%		$0.42		-86.9%
Non-GAAP (1):
Operating Expenses		$1.6 billion		-26.0%		$8.2 billion		-5.6%
Operating (Loss) Income		$(33.9) million		-104.1%		$1.7 billion		-37.4%
Operating Margin		(0.38)%		-567 bps		3.24%		-131 bps
Net (Loss) Earnings		$(147.8) million		-125.8%		$1.0 billion		-44.4%
Diluted (Loss) Earnings Per Share (2)		$(0.29)		-126.4%		$2.01		-43.4%
Case Growth:
U.S. Broadline		-41.5%				-11.2%
Local		-38.7%				-9.6%
Sysco Brand Sales as a % of Cases:
U.S. Broadline		38.46%		-2 bps		38.48%		39 bps
Local		45.19%		-239 bps		46.84%		-24 bps

Note:

⁽¹⁾ A reconciliation of non-GAAP measures is included at the end of this release.

⁽²⁾  Individual components in the table above may not sum to the totals due to the rounding.

Forward-Looking Statements

Statements made in this press release or in our earnings call for the fourth quarter of fiscal 2020 that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include: the effect, impact, potential duration or other implications of the recent outbreak of a novel strain of coronavirus (“COVID-19”) and any expectations we may have with respect thereto; our expectations regarding our ability to manage the current downturn and capitalize on our position as the industry leader as the global economy recovers; our expectations regarding future market share gains; our expectations regarding the effects of our business transformation initiatives, including on our ability to increase our share of customer spending and to increase sales in premium products, and on our ability to benefit from our efforts to centralize key customer support functions for large and/or national accounts; our belief that our transformation initiatives will drive future growth; our expectations regarding our efforts to regionalize our operations and the benefits to our company from regionalization; our expectations regarding our investment capability to build inventory and set up new customers; our plans to leverage technology improvements to enable reductions in our workforce without compromising service or quality; our expectations regarding our company, and our ability to attract and serve new customers, following the COVID-19 crisis; our plans to remove structural expense from our company’s operations; our expectations regarding savings starting in fiscal 2022 from additional cost improvement opportunities; the effects of our planned investments in digital technology; our expectations regarding the timing of improvements in the economy following the COVID-19 crisis; our expectations that our work to accelerate growth will return to pre-COVID levels as demand resurges; our expectations that our investments in technology and our business will allow for future growth and exceptional customer service; our belief that the steps undertaken as part of our management of the COVID-19 crisis to date will help us retain and win additional business from our

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independent restaurant customers beyond the pandemic; our expectations regarding the impact of our strategy on our future operations, including on the service we provide our customers and on our ability to differentiate Sysco from other companies in our industry; our expectations regarding our ability to increase profitability for SYGMA; our expectations regarding our ability to leverage operating expense growth to gross profit growth; our expectations regarding our investments across Europe, including, but not limited to, the integration of Brakes France and Davigel to Sysco France, including our ability to continue to succeed in the French marketplace; expectations regarding growth opportunities in Europe; expectations regarding growth opportunities in Latin America; our ability to deliver against our strategic priorities, which we believe will provide excellent customer service and improve our overall performance; statements regarding economic trends in the United States and abroad; our expectations regarding the amount of our capital expenditures in fiscal 2021; our expectations regarding the deployment of capital proceeds that Sysco currently holds; our expectations regarding the effects of our divestiture of our CAKE business; our plans regarding the suspension of our share buyback position throughout fiscal 2021; our expectations regarding gross margins during fiscal 2021; and our expectations regarding our overall effective tax rate in fiscal 2021.

The success of our plans and expectations regarding our operating performance are subject to the general risks associated with our business, including the risks of interruption of supplies due to lack of long-term contracts, severe weather, crop conditions, work stoppages, intense competition, technology disruptions, dependence on large, long-term regional and national customers, inflation risks, the impact of fuel prices, adverse publicity, labor issues, political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, any or all of which could delay our receipt of product or increase our input costs. Risks and uncertainties also include 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 credit ratings, our ability to maintain compliance with the covenants in our credit agreement, our ability to access capital markets, and the global economy and financial markets generally. Risks and uncertainties also include risks impacting the economy generally, including the risks that the current general economic conditions will deteriorate, or consumer confidence in the economy or consumer spending, particularly on food-away-from-home, may decline. Market conditions may not improve. Competition and the impact of GPOs may reduce our margins and make it difficult for us to maintain our market share, growth rate and profitability. 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. Our ability to meet our long-term strategic objectives depends on our ability to grow gross profit, leverage our supply chain costs and reduce administrative costs. This will depend largely on the success of our various business initiatives, including efforts related to revenue management, expense management, our digital e-commerce strategy and any efforts related to restructuring or the reduction of administrative costs. There are various risks related to these efforts, including the risk that if sales from our locally managed customers do not grow at the same rate as sales from regional and national customers, or if we are unable to continue to accelerate local case growth, 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; the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs may not be effective; the risk that our efforts to mitigate increases in warehouse 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; 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 our business, results of operations and liquidity 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 cost savings and other benefits at the levels that we anticipate. Our plans related to and the timing of any initiatives are subject to change at any time based on management’s subjective evaluation of our overall business needs. If we are unable to realize the anticipated benefits from our efforts, we could become cost disadvantaged in the marketplace, and our competitiveness and our profitability could decrease. Adverse publicity about us or lack of confidence in our products could negatively impact our reputation and reduce earnings. 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. Periods of significant or prolonged inflation or deflation, either overall or in certain product categories, can have a negative impact on us and our customers, as high food costs can reduce consumer spending in the food-away-from-home market, and may negatively impact our sales, gross profit, operating income and earnings, and periods of deflation can be difficult to manage effectively. Fluctuations in inflation and deflation, as well as fluctuations in the value of foreign currencies, are beyond our control and subject to broader market forces. Expanding into international markets presents unique challenges and risks, including compliance with local laws, regulations and customs and the impact of local political and economic conditions, including the impact of Brexit and the “yellow vest” protests in France against a fuel tax increase, pension reform and the French government, and such expansion efforts may not be successful. Any business that we acquire may not perform as expected, and we may not realize the anticipated benefits of our acquisitions. Expectations regarding the financial statement impact of any acquisitions may change based on management’s subjective evaluation. A divestiture of one or more of our businesses may not provide the anticipated effects on our operations. Meeting our dividend target objectives depends on our level of earnings, available cash and the success of our various strategic initiatives. Changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results. We rely on technology in our business and any cybersecurity incident, other technology disruption or delay in implementing new technology could negatively affect our business and our relationships with customers. For a discussion of additional factors impacting Sysco’s business, see our Annual Report on Form 10-K for the year ended June 29, 2019 and our Quarterly Report on Form 10-Q for the period ended March 28, 2020, each as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward-looking statements, except as required by applicable law.

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About Sysco

Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 57,000 associates, the company operates approximately 326 distribution facilities worldwide and serves more than 625,000 customer locations. For fiscal 2020 that ended June 27, 2020, the company generated sales of more than $52 billion. Information about our CSR program, including Sysco’s 2019 Corporate Social Responsibility Report, can be found at sysco.com/csr2019report.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoCorporation or Twitter at https://twitter.com/Sysco. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. Investors should also follow us at www.twitter.com/SyscoStock and download the Sysco IR App, available on the iTunes App Store and the Google Play Market. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.

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Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS

(In Thousands, Except for Share and Per Share Data)

	13-Week Period Ended						52-Week Period Ended
	Jun. 27, 2020			Jun. 29, 2019			Jun. 27, 2020		Jun. 29, 2019
Sales	$	8,866,564		$	15,474,862		$	52,893,310	$	60,113,922
Cost of sales		7,300,909			12,495,670			42,991,646		48,704,935
Gross profit		1,565,655			2,979,192			9,901,664		11,408,987
Operating expenses		2,097,235			2,258,662			9,152,159		9,078,837
Operating (loss) income		(531,580	)		720,530			749,505		2,330,150
Interest expense		164,269			89,780			408,220		360,423
Other expense (income), net		40,396			(51,558	)		47,901		(36,109	)
(Loss) earnings before income taxes		(736,245	)		682,308			293,384		2,005,836
Income taxes		(117,826	)		146,542			77,909		331,565
Net (loss) earnings	$	(618,419	)	$	535,766		$	215,475	$	1,674,271
Net (loss) earnings:
Basic (loss) earnings per share	$	(1.22	)	$	1.04		$	0.42	$	3.24
Diluted (loss) earnings per share		(1.22	)		1.03			0.42		3.20
Average shares outstanding		508,296,452			514,646,741			510,121,071		516,890,581
Diluted shares outstanding		508,296,452			520,060,241			514,025,974		523,381,124

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Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except for Share Data)

	June 27, 2020			June 29, 2019
ASSETS
Current assets
Cash and cash equivalents	$	6,059,427		$	513,460
Accounts and notes receivable, less allowances of $334,810 and $28,176		2,893,551			4,181,696
Inventories		3,095,085			3,216,034
Prepaid expenses and other current assets		192,163			210,582
Income tax receivable		108,006			19,733
Total current assets		12,348,232			8,141,505
Plant and equipment at cost, less accumulated depreciation		4,458,567			4,501,705
Other long-term assets
Goodwill		3,732,469			3,896,226
Intangibles, less amortization		780,172			857,301
Deferred income taxes		194,115			80,760
Operating lease right-of-use assets, net		603,616			—
Other assets		511,095			489,025
Total other long-term assets		5,821,467			5,323,312
Total assets	$	22,628,266		$	17,966,522
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable	$	2,266		$	3,957
Accounts payable		3,447,065			4,314,620
Accrued expenses		1,616,289			1,729,941
Accrued income taxes		2,938			17,343
Current operating lease liabilities		107,167			—
Current maturities of long-term debt		1,542,128			37,322
Total current liabilities		6,717,853			6,103,183
Long-term liabilities
Long-term debt		12,902,485			8,122,058
Deferred income taxes		86,601			172,232
Long-term operating lease liabilities		523,496			—
Other long-term liabilities		1,204,953			1,031,020
Total long-term liabilities		14,717,535			9,325,310
Commitments and contingencies
Noncontrolling interest		34,265			35,426
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none		—			—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares		765,175			765,175
Paid-in capital		1,506,901			1,457,419
Retained earnings		10,563,008			11,229,679
Accumulated other comprehensive loss		(1,710,881	)		(1,599,729	)
Treasury stock at cost, 256,915,825 and 252,297,926 shares		(9,965,590	)		(9,349,941	)
Total shareholders’ equity		1,158,613			2,502,603
Total liabilities and shareholders’ equity	$	22,628,266		$	17,966,522

8

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS

(In Thousands)

	52-Week Period Ended
	Jun. 27, 2020			Jun. 29, 2019
Cash flows from operating activities:
Net earnings	$	215,475		$	1,674,271
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense		42,234			104,904
Depreciation and amortization		805,765			763,935
Operating lease asset amortization		108,376			—
Amortization of debt issuance and other debt-related costs		22,663			21,382
Goodwill impairment		203,206			—
Impairment of assets held for sale		55,942			—
Gain on sale of business		—			(66,309	)
Deferred income taxes		(191,317	)		(126,719	)
Provision for losses on receivables		404,158			62,946
Other non-cash items		(525	)		(3,172	)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Decrease (increase) in receivables		915,717			(203,458	)
Decrease (increase) in inventories		114,563			(114,667	)
Decrease (increase) in prepaid expenses and other current assets		9,835			(18,535	)
(Decrease) increase in accounts payable		(834,118	)		246,420
(Decrease) increase in accrued expenses		(139,891	)		137,517
(Decrease) in operating lease liabilities		(124,040	)		—
(Decrease) increase in accrued income taxes		(102,678	)		4,929
Decrease (increase) in other assets		20,666			(21,346	)
Increase (decrease) in other long-term liabilities		92,649			(50,891	)
Net cash provided by operating activities		1,618,680			2,411,207
Cash flows from investing activities:
Additions to plant and equipment		(720,423	)		(692,391	)
Proceeds from sales of plant and equipment		28,717			20,941
Acquisition of businesses, net of cash acquired		(142,780	)		(106,616	)
Proceeds from sale of business		—			149,879
Purchase of marketable securities		(11,424	)		(116,440	)
Proceeds from sales of marketable securities		20,532			—
Other investing activities (1)		69,071			1,772
Net cash used for investing activities		(756,307	)		(742,855	)
Cash flows from financing activities:
Bank and commercial paper borrowings, net		616,657			132,100
Other debt borrowings		6,783,562			388,180
Other debt repayments		(1,119,232	)		(790,250	)
Proceeds from stock option exercises		227,602			253,135
Treasury stock purchases		(844,699	)		(1,022,033	)
Dividends paid		(856,312	)		(775,430	)
Other financing activities (2)		(87,778	)		(22,976	)
Net cash provided by (used for) for financing activities		4,719,800			(1,837,274	)
Effect of exchange rates on cash, cash equivalents and restricted cash		(18,848	)		(14,677	)
Net increase (decrease) in cash and cash equivalents (3)		5,563,325			(183,599	)
Cash, cash equivalents and restricted cash at beginning of period		532,245			715,844
Cash, cash equivalents and restricted cash at end of period (3)	$	6,095,570		$	532,245

9

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	325,308	$	346,670
Income taxes		376,609		531,103

⁽¹⁾ Change primarily includes proceeds from the settlement of net investment hedges and proceeds from the settlement of corporate-owned life insurance policies.

⁽²⁾ Change includes cash paid for shares withheld to cover taxes, debt issuance costs and other financing activities.

⁽³⁾ Change includes restricted cash included within other assets in the Consolidated Balance Sheet.

10

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items

Sysco’s results of operations for fiscal 2020 and fiscal 2019 were impacted by restructuring and transformational project costs consisting of: (1) expenses associated with our various transformation initiatives; (2) severance and facility closure charges; and (3) restructuring charges. All acquisition-related costs in fiscal 2020 and fiscal 2019 that have been designated as Certain Items relate to the Brakes Acquisition. These include acquisition-related intangible amortization expense. Fiscal 2020 results of operations were also negatively impacted by costs arising from the COVID-19 pandemic, the most significant including (1) excess bad debt expense, (2) goodwill impairment charges and (3) fixed asset impairment charges. Many of Sysco’s customers, including those in the restaurant, hospitality and education segments, are closed or operating at a substantially reduced volume due to governmental requirements for closures. Some of these customers have ceased paying their outstanding receivables, creating uncertainty as to their collectability. We have experienced an increase in past due receivables and have recognized additional bad debt charges. We have estimated uncollectible amounts by applying write-off percentages based on an aging of past due receivables. These write-off percentages are based in part on historical loss experience, including losses incurred during times of local and regional disasters. We have estimated the amount attributable to the impact of the COVID-19 pandemic on our customers by comparing our June allowance results to average results for periods ended prior to the onset of the COVID-19 pandemic, with excess amounts being a reasonable estimate of what the reserve for the allowance for doubtful accounts would have been for fiscal 2020, absent the impact of the COVID-19 pandemic. Because the COVID-19 pandemic is more widespread and longer in duration than historical disasters impacting our business, it is possible that actual uncollectible amounts will differ and additional charges may be required in fiscal 2021. Although Sysco traditionally incurs bad debt expense, the magnitude of such expenses that we have experienced is not indicative of our normal operations. Our adjusted results have not been normalized in a manner that would exclude the full impact of the COVID-19 pandemic on our business. As such, Sysco has not adjusted its results for lost sales, inventory write-offs or other costs associated with the COVID-19 pandemic not previously stated. Fiscal 2019 Certain Items include the gain on the sale of Iowa Premium and the impact of recognizing a foreign tax credit.

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

Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations, facilitating comparisons on a year-over-year basis and (2) removes those items that are difficult to predict and are often unanticipated and that, as a result, are difficult to include in analysts’ financial models and our investors’ expectations with any degree of specificity.

Although Sysco has a history of growth through acquisitions, the Brakes Group was significantly larger than the companies historically acquired by Sysco, with a proportionately greater impact on Sysco’s consolidated financial statements. Accordingly, Sysco is excluding from its non-GAAP financial measures for the relevant period solely those acquisition costs specific to the Brakes Acquisition. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2020 and fiscal 2019.

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

11

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items

(Dollars in Thousands, Except for Share and Per Share Data)

	13-Week Period Ended Jun. 27, 2020			13-Week Period Ended Jun. 29, 2019			Change in Dollars			% Change
Operating expenses (GAAP)	$	2,097,235		$	2,258,662		$	(161,427	)		-7.1	%
Impact of restructuring and transformational project costs (1)		(180,066	)		(77,753	)		(102,313	)		131.6
Impact of acquisition-related costs (2)		(13,251	)		(19,789	)		6,538			-33.0
Impact of excess bad debt expense		(169,903	)		—			(169,903	)		NM
Impact of goodwill impairment		(134,481	)		—			(134,481	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,599,534		$	2,161,120		$	(561,586	)		-26.0	%
Operating (loss) income (GAAP)	$	(531,580	)	$	720,530		$	(1,252,110	)		-173.8	%
Impact of restructuring and transformational project costs (1)		180,066			77,753			102,313			131.6
Impact of acquisition-related costs (2)		13,251			19,789			(6,538	)		-33.0
Impact of excess bad debt expense		169,903			—			169,903			NM
Impact of goodwill impairment		134,481			—			134,481			NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(33,879	)	$	818,072		$	(851,951	)		-104.1	%
Other (income) expense (GAAP)	$	40,396		$	(51,558	)	$	91,954			-178.4	%
Impact of impairment on assets held for sale		(46,968	)		—			(46,968	)		NM
Impact of gain on sale of Iowa Premium		—			66,309			(66,309	)		NM
Other (income) expense (Non-GAAP)	$	(6,572	)	$	14,751		$	(21,323	)		-144.6	%
Net (loss) earnings (GAAP)	$	(618,419	)	$	535,766		$	(1,154,185	)		-215.4	%
Impact of restructuring and transformational project costs (1)		180,066			77,753			102,313			131.6
Impact of acquisition-related costs (2)		13,251			19,789			(6,538	)		-33.0
Impact of excess bad debt expense		169,903			—			169,903			NM
Impact of goodwill impairment		134,481			—			134,481			NM
Impact of impairment on assets held for sale		46,968			—			46,968			NM
Impact of gain on sale of Iowa Premium		—			(66,309	)		66,309			NM
Tax impact of restructuring and transformational project costs (3)		(32,926	)		(16,891	)		(16,035	)		94.9
Tax impact of acquisition-related costs (3)		1,943			(4,352	)		6,295			-144.6
Tax impact of excess bad debt expense (3)		(30,454	)		—			(30,454	)		NM
Tax impact of impairment on assets held for sale (3)		(12,644	)		—			(12,644	)		NM
Tax impact of gain on sale of Iowa Premium (3)		—			18,119			(18,119	)		NM
Impact of France, U.K., and Sweden tax law changes		—			6,464			(6,464	)		NM
Impact of US transition tax		—			2,631			(2,631	)		NM
Net (loss) earnings adjusted for Certain Items (Non-GAAP)	$	(147,831	)	$	572,970		$	(720,801	)		-125.8	%
Diluted (loss) earnings per share (GAAP)	$	(1.22	)	$	1.03		$	(2.25	)		-218.4	%
Impact of restructuring and transformational project costs (1)		0.35			0.15			0.20			133.3
Impact of acquisition-related costs (2)		0.03			0.04			(0.01	)		-25.0
Impact of excess bad debt expense		0.33			—			0.33			NM
Impact of goodwill impairment		0.26			—			0.26			NM
Impact of impairment on assets held for sale		0.09			—			0.09			NM
Impact of gain on sale of Iowa Premium		—			(0.13	)		0.13			NM
Tax impact of restructuring and transformational project costs (3)		(0.06	)		(0.03	)		(0.03	)		100.0
Tax impact of acquisition-related costs (3)		—			(0.01	)		0.01			NM
Tax impact of excess bad debt expense (3)		(0.06	)		—			(0.06	)		NM
Tax impact of impairment on assets held for sale (3)		(0.02	)		—			(0.02	)		NM
Tax impact of gain on sale of Iowa Premium (3)		—			0.03			(0.03	)		NM
Impact of France, U.K. and Sweden tax law changes		—			0.01			(0.01	)		NM
Impact of US transition tax		—			0.01			(0.01	)		NM
Diluted EPS adjusted for Certain Items (Non-GAAP) (4)	$	(0.29	)	$	1.10		$	(1.39	)		-126.4	%
Diluted shares outstanding		508,296,452			520,060,241

12

⁽¹⁾  Fiscal 2020 includes $165 million related to restructuring, facility closure and severance charges, of which $75 million relates to severance charges, and $15 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2019 includes $41 million related to restructuring, facility closure and severance charges and $37 million related to various transformation initiative costs.

⁽²⁾  Fiscal 2020 and fiscal 2019 include $13 million and $19 million, respectively, related to intangible amortization expense from the Brakes Acquisition, which is included in the results of International Foodservice.

⁽³⁾  The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.

⁽⁴⁾  Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

NM represents that the percentage change is not meaningful.

13

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items

(Dollars in Thousands, Except for Share and Per Share Data)

	52-Week Period Ended Jun. 27, 2020			52-Week Period Ended Jun. 29, 2019			Change in Dollars			% Change
Operating expenses (GAAP)	$	9,152,159		$	9,078,837		$	73,322			0.8	%
Impact of restructuring and transformational project costs (1)		(371,088	)		(325,300	)		(45,788	)		14.1
Impact of acquisition-related costs (2)		(64,793	)		(77,832	)		13,039			-16.8
Impact of excess bad debt expense		(323,403	)		—			(323,403	)		NM
Impact of goodwill impairment		(203,206	)		—			(203,206	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	8,189,669		$	8,675,705		$	(486,036	)		-5.6	%
Operating income (GAAP)	$	749,505		$	2,330,150		$	(1,580,645	)		-67.8	%
Impact of restructuring and transformational project costs (1)		371,088			325,300			45,788			14.1
Impact of acquisition-related costs (2)		64,793			77,832			(13,039	)		-16.8
Impact of excess bad debt expense		323,403			—			323,403			NM
Impact of goodwill impairment		203,206			—			203,206			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	1,711,995		$	2,733,282		$	(1,021,287	)		-37.4	%
Other (income) expense (GAAP)	$	47,901		$	(36,109	)	$	84,010			-232.7	%
Impact of impairment on assets held for sale		(46,968	)		—			(46,968	)		NM
Impact of gain on sale of Iowa Premium		—			66,309			(66,309	)		NM
Other (income) expense (Non-GAAP)	$	933		$	30,200		$	(29,267	)		-96.9	%
Net earnings (GAAP)	$	215,475		$	1,674,271		$	(1,458,796	)		-87.1	%
Impact of restructuring and transformational project costs (1)		371,088			325,300			45,788			14.1
Impact of acquisition-related costs (2)		64,793			77,832			(13,039	)		-16.8
Impact of excess bad debt expense		323,403			—			323,403			NM
Impact of goodwill impairment		203,206			—			203,206			NM
Impact of impairment on assets held for sale		46,968			—			46,968			NM
Impact of gain on sale of Iowa Premium		—			(66,309	)		66,309			NM
Tax impact of restructuring and transformational project costs (3)		(90,683	)		(81,722	)		(8,961	)		11.0
Tax impact of acquisition-related costs (3)		(13,641	)		(19,553	)		5,912			-30.2
Tax impact of excess bad debt expense (3)		(76,864	)		—			(76,864	)		NM
Tax impact of impairment on assets held for sale (3)		(12,644	)		—			(12,644	)		NM
Tax impact of gain on sale of Iowa Premium (3)		—			18,119			(18,119	)		NM
Impact of French tax rate change		924			—			924			NM
Impact of foreign tax credit benefit		—			(95,067	)		95,067			NM
Impact of France, U.K., and Sweden tax law changes		—			6,464			(6,464	)		NM
Impact of US transition tax		—			17,516			(17,516	)		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	1,032,025		$	1,856,851		$	(824,826	)		-44.4	%
Diluted earnings per share (GAAP)	$	0.42		$	3.20		$	(2.78	)		-86.9	%
Impact of restructuring and transformational project costs (1)		0.72			0.62			0.10			16.1
Impact of acquisition-related costs (2)		0.13			0.15			(0.02	)		-13.3
Impact of excess bad debt expense		0.63			—			0.63			NM
Impact of goodwill impairment		0.40			—			0.40			NM
Impact of impairment on assets held for sale		0.09			—			0.09			NM
Impact of gain on sale of Iowa Premium		—			(0.13	)		0.13			NM
Tax impact of restructuring and transformational project costs (3)		(0.18	)		(0.16	)		(0.02	)		12.5
Tax impact of acquisition-related costs (3)		(0.03	)		(0.04	)		0.01			-25.0
Tax impact of excess bad debt expense (3)		(0.15	)		—			(0.15	)		NM
Tax impact of impairment on assets held for sale (3)		(0.02	)		—			(0.02	)		NM
Tax impact of gain on sale of Iowa Premium (3)		—			0.03			(0.03	)		NM

14

Impact of foreign tax credit benefit		—		(0.18	)		0.18		NM
Impact of France, U.K. and Sweden tax law changes		—		0.01			(0.01	)	NM
Impact of US transition tax		—		0.03			(0.03	)	NM
Diluted EPS adjusted for Certain Items (Non-GAAP) (4)	$	2.01	$	3.55		$	(1.54	)	-43.4	%
Diluted shares outstanding		514,025,974		523,381,124

⁽¹⁾  Fiscal 2020 includes $265 million related to restructuring, severance and facility closure charges, of which $99 million relates to severance charges. Fiscal 2020 also includes $106 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2019 includes $174 million related to severance, restructuring and facility closure charges in Europe and Canada and at Corporate, of which $61 million relates to our France restructuring (i.e. our integration of Brake France and Davigel into Sysco France), and $151 million related to various transformation initiatives costs, of which $18 million relates to accelerated depreciation with regard to software that was replaced.

⁽²⁾  Fiscal 2020 and fiscal 2019 include $65 million and $77 million, respectively, related to intangible amortization expense from the Brakes Acquisition, which is included in the results of International Foodservice and integration costs in fiscal 2019.

⁽³⁾  The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.

⁽⁴⁾  Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

NM represents that the percentage change is not meaningful.

15

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	13-Week Period Ended Jun. 27, 2020			13-Week Period Ended Jun. 29, 2019			Change in Dollars			%/bps Change
U.S. FOODSERVICE OPERATIONS
Sales	$	6,114,931		$	10,696,389		$	(4,581,458	)		-42.8	%
Gross Profit		1,165,551			2,147,852			(982,301	)		-45.7	%
Gross Margin		19.06	%		20.08	%					-102 bps
Operating expenses (GAAP)	$	1,124,986		$	1,321,306		$	(196,320	)		-14.9	%
Impact of restructuring and transformational project costs (1)		(938	)		2,927			(3,865	)		-132.0
Impact of excess bad debt expense		(123,424	)		—			(123,424	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,000,624		$	1,324,233		$	(323,609	)		-24.4	%
Operating income (GAAP)	$	40,565		$	826,546		$	(785,981	)		-95.1	%
Impact of restructuring and transformational project costs (1)		938			(2,927	)		3,865			-132.0
Impact of excess bad debt expense		123,424			—			123,424			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	164,927		$	823,619		$	(658,692	)		-80.0	%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	1,361,109		$	2,923,601		$	(1,562,492	)		-53.4	%
Impact of currency fluctuations (2)		44,508			—			44,508			-1.5
Comparable sales using a constant currency basis (Non-GAAP)	$	1,405,617		$	2,923,601		$	(1,517,984	)		-51.9	%
Gross Profit (GAAP)	$	263,037		$	621,636		$	(358,599	)		-57.7	%
Impact of currency fluctuations (2)		7,887			—			7,887			-1.3
Comparable gross profit using a constant currency basis (Non-GAAP)	$	270,924		$	621,636		$	(350,712	)		-56.4	%
Gross Margin (GAAP)		19.33	%		21.26	%					-193 bps
Impact of currency fluctuations (2)		(0.06	)		—						-6 bps
Comparable gross margin using a constant currency basis (Non-GAAP)		19.27	%		21.26	%					-199 bps
Operating expenses (GAAP)	$	640,339		$	558,193		$	82,146			14.7	%
Impact of restructuring and transformational project costs (3)		(117,597	)		(35,533	)		(82,064	)		231.0
Impact of acquisition-related costs (4)		(13,251	)		(19,305	)		6,054			-31.4
Impact of excess bad debt expense		(42,002	)		—			(42,002	)		NM
Impact of goodwill impairment		(134,481	)		—			(134,481	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	333,008		$	503,355		$	(170,347	)		-33.8	%
Impact of currency fluctuations (2)		11,058			—			11,058			-2.2
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	344,066		$	503,355		$	(159,289	)		-31.6	%
Operating (loss) income (GAAP)	$	(377,302	)	$	63,443		$	(440,745	)		NM
Impact of restructuring and transformational project costs (3)		117,597			35,533			82,064			231.0
Impact of acquisition-related costs (4)		13,251			19,305			(6,054	)		-31.4
Impact of excess bad debt expense		42,002			—			42,002			NM
Impact of goodwill impairment		134,481			—			134,481			NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(69,971	)	$	118,281		$	(188,252	)		-159.2	%
Impact of currency fluctuations (2)		(3,170	)		—			(3,170	)		2.6
Comparable operating (loss) income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	(73,141	)	$	118,281		$	(191,422	)		-161.8	%

16

SYGMA
Sales	$	1,288,928		$	1,548,952		$	(260,024	)	-16.8	%
Gross Profit		114,446			128,860			(14,414	)	-11.2	%
Gross Margin		8.88	%		8.32	%				56 bps
Operating expenses (GAAP)	$	105,298		$	118,293		$	(12,995	)	-11.0	%
Impact of restructuring and transformational project costs (5)		(2,131	)		(2,241	)		110		-4.9
Operating expenses adjusted for Certain Items (Non-GAAP)	$	103,167		$	116,052		$	(12,885	)	-11.1	%
Operating income (GAAP)	$	9,148		$	10,567		$	(1,419	)	-13.4	%
Impact of restructuring and transformational project costs (5)		2,131			2,241			(110	)	-4.9
Operating income adjusted for Certain Items (Non-GAAP)	$	11,279		$	12,808		$	(1,529	)	-11.9	%
OTHER
Sales	$	101,596		$	305,920		$	(204,324	)	-66.8	%
Gross Profit		24,636			73,783			(49,147	)	-66.6	%
Gross Margin		24.25	%		24.12	%				13 bps
Operating expenses (GAAP)	$	46,483		$	60,364		$	(13,881	)	-23.0	%
Impact of excess bad debt expense		(4,478	)		—			(4,478	)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	42,005		$	60,364			(18,359	)	-30.4	%
Operating (loss) income (GAAP)	$	(21,847	)	$	13,419		$	(35,266	)	-262.8	%
Impact of excess bad debt expense		4,478			—			4,478		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(17,369	)	$	13,419			(30,788	)	-229.4	%
CORPORATE
Gross Profit	$	(2,015	)	$	7,061		$	(9,076	)	-128.5	%
Operating expenses (GAAP)	$	180,129		$	200,506		$	(20,377	)	-10.2	%
Impact of restructuring and transformational project costs (6)		(59,400	)		(42,906	)		(16,494	)	38.4
Impact of acquisition-related costs (7)		—			(484	)		484		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	120,729		$	157,116		$	(36,387	)	-23.2	%
Operating loss (GAAP)	$	(182,144	)	$	(193,445	)	$	11,301		-5.8	%
Impact of restructuring and transformational project costs (6)		59,400			42,906			16,494		38.4
Impact of acquisition-related costs (7)		—			484			(484	)	NM
Operating loss adjusted for Certain Items (Non-GAAP)	$	(122,744	)	$	(150,055	)	$	27,311		-18.2	%
TOTAL SYSCO
Sales	$	8,866,564		$	15,474,862		$	(6,608,298	)	-42.7	%
Gross Profit		1,565,655			2,979,192			(1,413,537	)	-47.4	%
Gross Margin		17.66	%		19.25	%				-159 bps
Operating expenses (GAAP)	$	2,097,235		$	2,258,662		$	(161,427	)	-7.1	%
Impact of restructuring and transformational project costs (1) (3) (5) (6)		(180,066	)		(77,753	)		(102,313	)	131.6
Impact of acquisition-related costs (4) (7)		(13,251	)		(19,789	)		6,538		-33.0
Impact of excess bad debt expense		(169,903	)		—			(169,903	)	NM
Impact of goodwill impairment		(134,481	)		—			(134,481	)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,599,534		$	2,161,120		$	(561,586	)	-26.0	%
Operating (loss) income (GAAP)	$	(531,580	)	$	720,530		$	(1,252,110	)	-173.8	%
Impact of restructuring and transformational project costs (1) (3) (5) (6)		180,066			77,753			102,313		131.6
Impact of acquisition-related costs (4) (7)		13,251			19,789			(6,538	)	-33.0
Impact of excess bad debt expense		169,903			—			169,903		NM
Impact of goodwill impairment		134,481			—			134,481		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(33,879	)	$	818,072		$	(851,951	)	-104.1	%

17

⁽¹⁾  Includes charges related to restructuring and business transformation projects.

⁽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 and Canada.

⁽⁴⁾  Fiscal 2020 and fiscal 2019 include $13 million and $19 million, respectively, related to intangible amortization expense from the Brakes Acquisition.

⁽⁵⁾  Includes charges related to transformation initiatives and other restructuring charges.

⁽⁶⁾  Fiscal 2020 and fiscal 2019 include various transformation initiative costs, primarily consisting of changes to our business technology strategy and severance related to restructuring. Fiscal 2020 also includes severance charges incurred in response to the COVID-19 pandemic.

⁽⁷⁾  Fiscal 2019 includes integration costs from the Brakes Acquisition.

NM represents that the percentage change is not meaningful.

18

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	52-Week Period Ended Jun. 27, 2020			52-Week Period Ended Jun. 29, 2019			Change in Dollars			%/bps Change
U.S. FOODSERVICE OPERATIONS
Sales	$	36,774,146		$	41,288,188		$	(4,514,042	)		-10.9	%
Gross Profit		7,254,722			8,249,027			(994,305	)		-12.1	%
Gross Margin		19.73	%		19.98	%					-25 bps
Operating expenses (GAAP)	$	5,251,563		$	5,257,233		$	(5,670	)		-0.1	%
Impact of restructuring and transformational project costs (1)		(10,145	)		—			(10,145	)		NM
Impact of excess bad debt expense		(230,654	)		—			(230,654	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	5,010,764		$	5,257,233		$	(246,469	)		-4.7	%
Operating income (GAAP)	$	2,003,159		$	2,991,794		$	(988,635	)		-33.0	%
Impact of restructuring and transformational project costs (1)		10,145			—			10,145			NM
Impact of excess bad debt expense		230,654			—			230,654			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	2,243,958		$	2,991,794		$	(747,836	)		-25.0	%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	9,672,190		$	11,493,040		$	(1,820,850	)		-15.8	%
Impact of currency fluctuations (2)		198,422			—			198,422			-1.7
Comparable sales using a constant currency basis (Non-GAAP)	$	9,870,612		$	11,493,040		$	(1,622,428	)		-14.1	%
Gross Profit (GAAP)	$	1,955,190		$	2,392,179		$	(436,989	)		-18.3	%
Impact of currency fluctuations (2)		43,076			—			43,076			-1.8
Comparable gross profit using a constant currency basis (Non-GAAP)	$	1,998,266		$	2,392,179		$	(393,913	)		-16.5	%
Gross Margin (GAAP)		20.21	%		20.81	%					-60 bps
Impact of currency fluctuations (2)		(0.03	)		—						-3 bps
Comparable gross margin using a constant currency basis (Non-GAAP)		20.24	%		20.81	%					-57 bps
Operating expenses (GAAP)	$	2,326,597		$	2,266,736		$	59,861			2.6	%
Impact of restructuring and transformational project costs (3)		(191,900	)		(152,852	)		(39,048	)		25.5
Impact of acquisition-related costs (4)		(64,793	)		(76,530	)		11,737			-15.3
Impact of excess bad debt expense		(88,271	)		—			(88,271	)		NM
Impact of goodwill impairment		(134,481	)		—			(134,481	)		NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,847,152		$	2,037,354		$	(190,202	)		-9.3	%
Impact of currency fluctuations (2)		45,493			—			45,493			-2.2
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,892,645		$	2,037,354		$	(144,709	)		-7.1	%
Operating (loss) income (GAAP)	$	(371,407	)	$	125,443		$	(496,850	)		NM
Impact of restructuring and transformational project costs (3)		191,900			152,852			39,048			25.5
Impact of acquisition-related costs (4)		64,793			76,530			(11,737	)		-15.3
Impact of excess bad debt expense		88,271			—			88,271			NM
Impact of goodwill impairment		134,481			—			134,481			NM
Operating income adjusted for Certain Items (Non-GAAP)	$	108,038		$	354,825		$	(246,787	)		-69.6	%
Impact of currency fluctuations (2)		(2,417	)		—			(2,417	)		0.6
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	105,621		$	354,825		$	(249,204	)		-70.2	%

19

SYGMA
Sales	$	5,555,926		$	6,244,328		$	(688,402	)	-11.0	%
Gross Profit		483,494			505,638			(22,144	)	-4.4	%
Gross Margin		8.70	%		8.10	%				60 bps
Operating expenses (GAAP)	$	446,614		$	477,858		$	(31,244	)	-6.5	%
Impact of restructuring and transformational project costs (5)		(5,793	)		(2,609	)		(3,184	)	122.0
Operating expenses adjusted for Certain Items (Non-GAAP)	$	440,821		$	475,249		$	(34,428	)	-7.2	%
Operating income (GAAP)	$	36,880		$	27,780		$	9,100		32.8	%
Impact of restructuring and transformational project costs (5)		5,793			2,609			3,184		122.0
Operating income adjusted for Certain Items (Non-GAAP)	$	42,673		$	30,389		$	12,284		40.4	%
OTHER
Sales	$	891,048		$	1,088,366		$	(197,318	)	-18.1	%
Gross Profit		218,884			272,697			(53,813	)	-19.7	%
Gross Margin		24.56	%		25.06	%				-50 bps
Operating expenses (GAAP)	$	240,245		$	236,849		$	3,396		1.4	%
Impact of excess bad debt expense		(4,478	)		—			(4,478	)	NM
Impact of goodwill impairment		(11,660	)		—			(11,660	)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	224,107		$	236,849		$	(12,742	)	-5.4	%
Operating (loss) income (GAAP)	$	(21,361	)	$	35,848		$	(57,209	)	-159.6	%
Impact of excess bad debt expense		4,478			—			4,478		NM
Impact of goodwill impairment		11,660			—			11,660		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(5,223	)	$	35,848			(41,071	)	-114.6	%
CORPORATE
Gross Profit	$	(10,626	)	$	(10,554	)	$	(72	)	0.7	%
Operating expenses (GAAP)	$	887,140		$	840,161		$	46,979		5.6	%
Impact of restructuring and transformational project costs (6)		(163,249	)		(169,838	)		6,589		-3.9
Impact of acquisition-related costs (7)		—			(1,302	)		1,302		NM
Impact of goodwill impairment		(57,066	)		—			(57,066	)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	666,825		$	669,021		$	(2,196	)	-0.3	%
Operating loss (GAAP)	$	(897,766	)	$	(850,715	)	$	(47,051	)	5.5	%
Impact of restructuring and transformational project costs (6)		163,249			169,838			(6,589	)	-3.9
Impact of acquisition-related costs (7)		—			1,302			(1,302	)	NM
Impact of goodwill impairment		57,066			—			57,066		NM
Operating loss adjusted for Certain Items (Non-GAAP)	$	(677,451	)	$	(679,575	)	$	2,124		-0.3	%
TOTAL SYSCO
Sales	$	52,893,310		$	60,113,922		$	(7,220,612	)	-12.0	%
Gross Profit		9,901,664			11,408,987			(1,507,323	)	-13.2	%
Gross Margin		18.72	%		18.98	%				-26 bps
Operating expenses (GAAP)	$	9,152,159		$	9,078,837		$	73,322		0.8	%
Impact of restructuring and transformational project costs (1) (3) (5) (6)		(371,088	)		(325,300	)		(45,788	)	14.1
Impact of acquisition-related costs (4) (7)		(64,793	)		(77,832	)		13,039		-16.8
Impact of excess bad debt expense		(323,403	)		—			(323,403	)	NM
Impact of goodwill impairment		(203,206	)		—			(203,206	)	NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	8,189,669		$	8,675,705		$	(486,036	)	-5.6	%

20

Operating income (GAAP)	$	749,505	$	2,330,150	$	(1,580,645	)	-67.8	%
Impact of restructuring and transformational project costs (1) (3) (5) (6)		371,088		325,300		45,788		14.1
Impact of acquisition-related costs (4) (7)		64,793		77,832		(13,039	)	-16.8
Impact of excess bad debt expense		323,403		—		323,403		NM
Impact of goodwill impairment		203,206		—		203,206		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	1,711,995	$	2,733,282	$	(1,021,287	)	-37.4	%

⁽¹⁾  Includes charges related to restructuring and business transformation projects.

⁽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 in Europe and Canada.

⁽⁴⁾  Fiscal 2020 and fiscal 2019 include $65 million and $77 million, respectively, related to intangible amortization expense from the Brakes Acquisition.

⁽⁵⁾  Includes charges related to facility closures and other restructuring charges.

⁽⁶⁾  Fiscal 2020 and fiscal 2019 include various transformation initiative costs, primarily consisting of changes to our business technology strategy and severance related to restructuring. Fiscal 2019 includes $18 million of accelerated depreciation on software that was replaced and severance charges related to restructuring. Fiscal 2020 also includes severance charges incurred in response to the COVID-19 pandemic.

⁽⁷⁾  Fiscal 2019 includes integration costs from the Brakes Acquisition.

NM represents that the percentage change is not meaningful.

21

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Free Cash Flow

(In Thousands)

Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Sysco considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures, as it may be necessary that we use it to make mandatory debt service or other payments. Free cash flow should not be used as a substitute for the most comparable GAAP measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities.

	52-Week Period Ended Jun. 27, 2020			52-Week Period Ended Jun. 29, 2019			52-Week Period Change in Dollars
Net cash provided by operating activities (GAAP)	$	1,618,680		$	2,411,207		$	(792,527	)
Additions to plant and equipment		(720,423	)		(692,391	)		(28,032	)
Proceeds from sales of plant and equipment		28,717			20,941			7,776
Free Cash Flow (Non-GAAP)	$	926,974		$	1,739,757		$	(812,783	)

22

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

During the fourth quarter of fiscal 2020, Sysco revised the way performance is assessed for the U.S. Foodservice Operations segment. As a result of this change, charges incurred by the company’s corporate and shared services center to provide direct support functions to the U.S. Foodservice Operations reportable segment have been reclassified from Corporate expenses into the U.S. Foodservice reportable segment. The segment information disclosed for fiscal 2020 reflects this change in reporting structure and prior year amounts have been reclassified to conform with the current year presentation.

	As Reclassified												As Reclassified
	13-Week Period Ended												52-Week Period Ended
	Sep. 28, 2019			Dec. 28, 2019			Mar. 28, 2020			Jun. 27, 2020			Jun. 27, 2020
U.S. FOODSERVICE OPERATIONS
Sales (GAAP)	$	10,658,633		$	10,413,576		$	9,587,006		$	6,114,931		$	36,774,146
Gross Profit (GAAP)		2,144,886			2,048,905			1,895,380			1,165,551			7,254,722
Gross Margin (GAAP)		20.12	%		19.68	%		19.77	%		19.06	%		19.73	%
Operating expenses (GAAP)	$	1,351,269		$	1,344,103		$	1,431,205		$	1,124,986		$	5,251,563
Impact of restructuring and transformational project costs (1)		(4,126	)		(3,679	)		(1,402	)		(938	)		(10,145	)
Impact of excess bad debt expense		—			—			(107,230	)		(123,424	)		(230,654	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,347,143		$	1,340,424		$	1,322,573		$	1,000,624		$	5,010,764
Operating income (GAAP)	$	793,617		$	704,802		$	464,175		$	40,565		$	2,003,159
Impact of restructuring and transformational project costs (1)		4,126			3,679			1,402			938			10,145
Impact of excess bad debt expense		—			—			107,230			123,424			230,654
Operating income adjusted for Certain Items (Non-GAAP)	$	797,743		$	708,481		$	572,807		$	164,927		$	2,243,958
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	2,912,387		$	2,890,052		$	2,508,642		$	1,361,109		$	9,672,190
Gross Profit (GAAP)		605,185			586,039			500,929			263,037			1,955,190
Gross Margin (GAAP)		20.78	%		20.28	%		19.97	%		19.33	%		20.21	%
Operating expenses (GAAP)	$	550,385		$	551,158		$	584,715		$	640,339		$	2,326,597
Impact of restructuring and transformational project costs (2)		(27,273	)		(21,850	)		(25,180	)		(117,597	)		(191,900	)
Impact of acquisition-related costs (3)		(16,909	)		(17,312	)		(17,321	)		(13,251	)		(64,793	)
Impact of excess bad debt expense		—			—			(46,269	)		(42,002	)		(88,271	)
Impact of goodwill impairment		—			—			—			(134,481	)		(134,481	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	506,203		$	511,996		$	495,945		$	333,008		$	1,847,152
Operating income (loss) (GAAP)	$	54,800		$	34,881		$	(83,786	)	$	(377,302	)	$	(371,407	)
Impact of restructuring and transformational project costs (2)		27,273			21,850			25,180			117,597			191,900
Impact of acquisition-related costs (3)		16,909			17,312			17,321			13,251			64,793
Impact of excess bad debt expense		—			—			46,269			42,002			88,271
Impact of goodwill impairment		—			—			—			134,481			134,481
Operating income (loss) adjusted for Certain Items (Non-GAAP)	$	98,982		$	74,043		$	4,984		$	(69,971	)	$	108,038

23

SYGMA
Sales (GAAP)	$	1,446,994		$	1,455,893		$	1,364,111		$	1,288,928		$	5,555,926
Gross Profit (GAAP)		125,918			124,239			118,891			114,446			483,494
Gross Margin (GAAP)		8.70	%		8.53	%		8.72	%		8.88	%		8.70	%
Operating expenses (GAAP)	$	118,348		$	114,378		$	108,590		$	105,298		$	446,614
Impact of restructuring and transformational project costs (4)		(2,584	)		(956	)		(122	)		(2,131	)		(5,793	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	115,764		$	113,422		$	108,468		$	103,167		$	440,821
Operating income (GAAP)	$	7,570		$	9,861		$	10,301		$	9,148		$	36,880
Impact of restructuring and transformational project costs (4)		2,584			956			122			2,131			5,793
Operating income adjusted for Certain Items (Non-GAAP)	$	10,154		$	10,817		$	10,423		$	11,279		$	42,673
OTHER
Sales (GAAP)	$	284,990		$	265,521		$	238,941		$	101,596		$	891,048
Gross Profit (GAAP)		71,744			66,506			56,000			24,636			218,884
Gross Margin (GAAP)		25.17	%		25.05	%		23.44	%		24.25	%		24.56	%
Operating expenses (GAAP)	$	61,607		$	57,104		$	75,051		$	46,483		$	240,245
Impact of excess bad debt expense		—			—			—			(4,478	)		(4,478	)
Impact of goodwill impairment		—			—			(11,660	)		—			(11,660	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	61,607		$	57,104		$	63,391		$	42,005		$	224,107
Operating income (loss) (GAAP)	$	10,137		$	9,400		$	(19,051	)	$	(21,847	)	$	(21,361	)
Impact of excess bad debt expense		—			—			—			4,478			4,478
Impact of goodwill impairment		—			—			11,660			—			11,660
Operating income (loss) adjusted for Certain Items (Non-GAAP)	$	10,137		$	9,400		$	(7,391	)	$	(17,369	)	$	5,223
CORPORATE
Gross Profit (GAAP)	$	(4,363	)	$	2,710		$	(6,958	)	$	(2,015	)	$	(10,626	)
Operating expenses (GAAP)	$	193,444		$	209,162		$	304,405		$	180,129		$	887,140
Impact of restructuring and transformational project costs (5)		(22,739	)		(30,621	)		(50,489	)		(59,400	)		(163,249	)
Impact of goodwill impairment		—			—			(57,066	)		—			(57,066	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	170,705		$	178,541		$	196,850		$	120,729		$	666,825
Operating loss (GAAP)	$	(197,807	)	$	(206,452	)	$	(311,363	)	$	(182,144	)	$	(897,766	)
Impact of restructuring and transformational project costs (5)		22,739			30,621			50,489			59,400			163,249
Impact of goodwill impairment		—			—			57,066			—			57,066
Operating loss adjusted for Certain Items (Non-GAAP)	$	(175,068	)	$	(175,831	)	$	(203,808	)	$	(122,744	)	$	(677,451	)
TOTAL SYSCO
Sales (GAAP)	$	15,303,004		$	15,025,042		$	13,698,700		$	8,866,564		$	52,893,310
Gross Profit (GAAP)		2,943,369			2,828,398			2,564,242			1,565,655			9,901,664
Gross Margin (GAAP)		19.23	%		18.82	%		18.72	%		17.66	%		18.72	%
Operating expenses (GAAP)	$	2,275,053		$	2,275,906		$	2,503,966		$	2,097,235		$	9,152,160
Impact of restructuring and transformational project costs (1)(2)(4)(5)		(56,722	)		(57,106	)		(77,194	)		(180,066	)		(371,088	)
Impact of acquisition-related costs (3)		(16,909	)		(17,312	)		(17,321	)		(13,251	)		(64,793	)
Impact of excess bad debt expense		—			—			(153,500	)		(169,903	)		(323,403	)
Impact of goodwill impairment		—			—			(68,725	)		(134,481	)		(203,206	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	2,201,422		$	2,201,488		$	2,187,226		$	1,599,534		$	8,189,670

24

Operating income (loss) (GAAP)	$	668,317	$	552,492	$	60,276	$	(531,580	)	$	749,505
Impact of restructuring and transformational project costs (1)(2)(4)(5)	$	56,722	$	57,106	$	77,194	$	180,066		$	371,088
Impact of acquisition-related costs (3)		16,909		17,312		17,321		13,251			64,793
Impact of excess bad debt expense		—		—		153,500		169,903			323,403
Impact of goodwill impairment		—		—		68,725		134,481			203,206
Operating income (loss) adjusted for Certain Items (Non-GAAP)	$	741,948	$	626,910	$	377,016	$	(33,879	)	$	1,711,995

* Segment has no applicable Certain items

⁽¹⁾  Includes charges related to additional benefits provided to employees in response to the COVID-19 pandemic, restructuring and business transformation projects.

⁽²⁾  Includes restructuring, severance and facility closure costs in Europe and Canada.

⁽³⁾  Includes intangible amortization expense from the Brakes Acquisition.

⁽⁴⁾  Includes charges related to facility closures and other restructuring charges.

⁽⁵⁾  Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, severance related to restructuring and severance charges incurred in response to the COVID-19 pandemic.

25

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	As Reclassified												As Reclassified
	13-Week Period Ended												52-Week Period Ended
	Sep. 29, 2018			Dec. 29, 2018			Mar. 30, 2019			Jun. 29, 2019			Jun. 29, 2019
U.S. FOODSERVICE OPERATIONS
Sales (GAAP)	$	10,399,411		$	10,087,105		$	10,105,283		$	10,696,389		$	41,288,188
Gross Profit (GAAP)		2,090,227			2,001,819			2,009,129			2,147,852			8,249,027
Gross Margin (GAAP)		20.10	%		19.85	%		19.88	%		20.08	%		19.98	%
Operating expenses (GAAP)	$	1,325,111		$	1,317,517		$	1,293,299		$	1,321,306		$	5,257,233
Impact of restructuring and transformational project costs (1)		—			—			(2,927	)		2,927			—
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,325,111		$	1,317,517		$	1,290,372		$	1,324,233		$	5,257,233
Operating income (GAAP)	$	765,116		$	684,302		$	715,830		$	826,546		$	2,991,794
Impact of restructuring and transformational project costs (1)		—			—			2,927			(2,927	)		—
Operating income adjusted for Certain Items (Non-GAAP)	$	765,116		$	684,302		$	718,757		$	823,619		$	2,991,794
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	2,920,950		$	2,890,598		$	2,757,891		$	2,923,601		$	11,493,040
Gross Profit (GAAP)		615,505			589,922			565,116			621,636			2,392,179
Gross Margin (GAAP)		21.07	%		20.41	%		20.49	%		21.26	%		20.81	%
Operating expenses (GAAP)	$	548,733		$	604,839		$	554,971		$	558,193		$	2,266,736
Impact of restructuring and transformational project costs (2)		(6,727	)		(81,020	)		(29,572	)		(35,533	)		(152,852	)
Impact of acquisition-related costs (3)		(21,899	)		(16,947	)		(18,379	)		(19,305	)		(76,530	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	520,107		$	506,872		$	507,020		$	503,355		$	2,037,354
Operating income (loss) (GAAP)	$	66,772		$	(14,917	)	$	10,145		$	63,443		$	125,443
Impact of restructuring and transformational project costs (2)		6,727			81,020			29,572			35,533			152,852
Impact of acquisition-related costs (3)		21,899			16,947			18,379			19,305			76,530
Operating income adjusted for Certain Items (Non-GAAP)	$	95,398		$	83,050		$	58,096		$	118,281		$	354,825
SYGMA
Sales (GAAP)	$	1,621,457		$	1,536,607		$	1,537,312		$	1,548,952		$	6,244,328
Gross Profit (GAAP)		129,326			121,537			125,915			128,860			505,638
Gross Margin (GAAP)		7.98	%		7.91	%		8.19	%		8.32	%		8.10	%
Operating expenses (GAAP)	$	126,895		$	118,423		$	114,247		$	118,293		$	477,858
Impact of restructuring and transformational project costs (4)		—			—			(368	)		(2,241	)		(2,609	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	126,895		$	118,423		$	113,879		$	116,052		$	475,249
Operating income (GAAP)	$	2,431		$	3,114		$	11,668		$	10,567		$	27,780
Impact of restructuring and transformational project costs (4)		—			—			368			2,241			2,609
Operating income adjusted for Certain Items (Non-GAAP)	$	2,431		$	3,114		$	12,036		$	12,808		$	30,389

26

OTHER *
Sales (GAAP)	$	273,461		$	251,397		$	257,588		$	305,920		$	1,088,366
Gross Profit (GAAP)		71,535			63,501			63,878			73,783			272,697
Gross Margin (GAAP)		26.16	%		25.26	%		24.80	%		24.12	%		25.06	%
Operating expenses (GAAP)	$	61,200		$	57,783		$	57,502		$	60,364		$	236,849
Operating income (loss) (GAAP)		10,335			5,718			6,376			13,419			35,848
CORPORATE
Gross Profit (GAAP)	$	(2,808	)	$	(5,067	)	$	(9,740	)	$	7,061		$	(10,554	)
Operating expenses (GAAP)	$	213,706		$	221,255		$	204,694		$	200,506		$	840,161
Impact of restructuring and transformational project costs (5)		(34,177	)		(53,417	)		(39,338	)		(42,906	)		(169,838	)
Impact of acquisition-related costs (6)		(737	)		(61	)		(20	)		(484	)		(1,302	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	178,792		$	167,777		$	165,336		$	157,116		$	669,021
Operating loss (GAAP)	$	(216,514	)	$	(226,322	)	$	(214,434	)	$	(193,445	)	$	(850,715	)
Impact of restructuring and transformational project costs (5)		34,177			53,417			39,338			42,906			169,838
Impact of acquisition-related costs (6)		737			61			20			484			1,302
Operating loss adjusted for Certain Items (Non-GAAP)	$	(181,600	)	$	(172,844	)	$	(175,076	)	$	(150,055	)	$	(679,575	)
TOTAL SYSCO
Sales (GAAP)	$	15,215,279		$	14,765,707		$	14,658,074		$	15,474,862		$	60,113,922
Gross Profit (GAAP)		2,903,785			2,771,712			2,754,298			2,979,192			11,408,987
Gross Margin (GAAP)		19.08	%		18.77	%		18.79	%		19.25	%		18.98	%
Operating expenses (GAAP)	$	2,275,645		$	2,319,817		$	2,224,713		$	2,258,662		$	9,078,837
Impact of restructuring and transformational project costs (1)(2)(4)(5)		(40,904	)		(134,437	)		(72,206	)		(77,753	)		(325,300	)
Impact of acquisition-related costs (3)(6)		(22,636	)		(17,008	)		(18,399	)		(19,789	)		(77,832	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	2,212,105		$	2,168,372		$	2,134,108		$	2,161,120		$	8,675,705
Operating income (GAAP)	$	628,140		$	451,895		$	529,585		$	720,530		$	2,330,150
Impact of restructuring and transformational project costs (1)(2)(4)(5)	$	40,904		$	134,437		$	72,206		$	77,753		$	325,300
Impact of acquisition-related costs (3)(6)		22,636			17,008			18,399			19,789			77,832
Operating income adjusted for Certain Items (Non-GAAP)	$	691,680		$	603,340		$	620,190		$	818,072		$	2,733,282

* Segment has no applicable Certain items

⁽¹⁾  Includes charges related to business transformation projects.

⁽²⁾ Includes restructuring charges in France and other restructuring, severance and facility closure costs in Europe and Canada.

⁽³⁾ Includes intangible amortization expense from the Brakes Acquisition.

⁽⁴⁾  Includes charges related to facility closures and other restructuring charges.

⁽⁵⁾  Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, including accelerated depreciation on software that was being replaced, and severance charges related to restructuring.

⁽⁶⁾  Includes integration costs from the Brakes Acquisition.

27

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	As Reclassified												As Reclassified
	13-Week Period Ended												52-Week Period Ended
	Sep. 30, 2017			Dec. 30, 2017			Mar. 31, 2018			Jun. 30, 2018			Jun. 30, 2018
U.S. FOODSERVICE OPERATIONS
Sales (GAAP)	$	9,848,942		$	9,681,225		$	9,704,495		$	10,407,601		$	39,642,263
Gross Profit (GAAP)		1,986,283			1,915,466			1,911,704			2,086,823			7,900,276
Gross Margin (GAAP)		20.17	%		19.79	%		19.70	%		20.05	%		19.93	%
Operating expenses (GAAP)	$	1,256,265		$	1,251,004		$	1,264,674		$	1,268,521		$	5,040,464
Impact of MEPP charge		—			—			(1,700	)		—			(1,700	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,256,265		$	1,251,004		$	1,262,974		$	1,268,521		$	5,038,764
Operating income (GAAP)	$	730,018		$	664,462		$	647,030		$	818,302		$	2,859,812
Impact of MEPP charge		—			—			1,700			—			1,700
Operating income adjusted for Certain Items (Non-GAAP)	$	730,018		$	664,462		$	648,730		$	818,302		$	2,861,512
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	2,903,255		$	2,869,043		$	2,799,251		$	2,947,016		$	11,518,565
Gross Profit (GAAP)		615,103			599,647			583,226			638,992			2,436,968
Gross Margin (GAAP)		21.19	%		20.90	%		20.84	%		21.68	%		21.16	%
Operating expenses (GAAP)	$	538,299		$	547,053		$	563,750		$	594,002		$	2,243,104
Impact of restructuring costs (1)		(3,898	)		(5,602	)		(3,552	)		(23,615	)		(36,667	)
Impact of acquisition-related costs (2)		(14,514	)		(20,809	)		(21,679	)		(33,002	)		(90,004	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	519,887		$	520,642		$	538,519		$	537,385		$	2,116,433
Operating income (GAAP)	$	76,804		$	52,594		$	19,476		$	44,990		$	193,864
Impact of restructuring costs (1)		3,898			5,602			3,552			23,615			36,667
Impact of acquisition-related costs (2)		14,514			20,809			21,679			33,002			90,004
Operating income adjusted for Certain Items (Non-GAAP)	$	95,216		$	79,005		$	44,707		$	101,607		$	320,535
SYGMA *
Sales (GAAP)	$	1,640,671		$	1,633,145		$	1,605,753		$	1,677,464		$	6,557,033
Gross Profit (GAAP)		125,607			122,760			127,074			135,837			511,278
Gross Margin (GAAP)		7.66	%		7.52	%		7.91	%		8.10	%		7.80	%
Operating expenses (GAAP)	$	120,762		$	119,407		$	122,597		$	124,194		$	486,960
Operating income (GAAP)		4,845			3,353			4,477			11,643			24,318
OTHER *
Sales (GAAP)	$	257,556		$	228,077		$	240,005		$	283,825		$	1,009,463
Gross Profit (GAAP)		67,827			61,697			64,524			69,315			263,363
Gross Margin (GAAP)		26.33	%		27.05	%		26.88	%		24.42	%		26.09	%
Operating expenses (GAAP)	$	60,895		$	55,517		$	55,563		$	51,903		$	223,878
Operating income (loss) (GAAP)		6,932			6,180			8,961			17,412			39,485
CORPORATE
Gross Profit (GAAP)	$	1,152		$	(184	)	$	(10,900	)	$	(14,258	)	$	(26,494	)

28

Operating expenses (GAAP)	$	198,082		$	197,853		$	186,841		$	194,153		$	776,929
Impact of restructuring costs (3)		(15,154	)		(15,775	)		(19,229	)		(22,699	)		(72,857	)
Impact of acquisition-related costs (4)		(5,232	)		(4,990	)		(3,682	)		(4,228	)		(18,132	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	177,696		$	177,088		$	163,930		$	167,226		$	685,940
Operating loss (GAAP)	$	(199,234	)	$	(198,037	)	$	(197,741	)	$	(208,411	)	$	(803,423	)
Impact of restructuring costs (3)		15,154			15,775			19,229			22,699			72,857
Impact of acquisition-related costs (4)		5,232			4,990			3,682			4,228			18,132
Operating loss adjusted for Certain Items (Non-GAAP)	$	(178,848	)	$	(177,272	)	$	(174,830	)	$	(181,484	)	$	(712,434	)
TOTAL SYSCO
Sales (GAAP)	$	14,650,424		$	14,411,490		$	14,349,504		$	15,315,906		$	58,727,324
Gross Profit (GAAP)		2,793,668			2,699,386			2,675,628			2,916,709			11,085,391
Gross Margin (GAAP)		19.07	%		18.73	%		18.65	%		19.04	%		18.88	%
Operating expenses (GAAP)	$	2,174,303		$	2,170,834		$	2,193,425		$	2,232,773		$	8,771,335
Impact of MEPP charge		—			—			(1,700	)		—			(1,700	)
Impact of restructuring costs (1)(3)		(19,053	)		(21,377	)		(22,781	)		(46,313	)		(109,524	)
Impact of acquisition-related costs (2)(4)		(19,745	)		(25,799	)		(25,361	)		(37,231	)		(108,136	)
Operating expenses adjusted for Certain Items (Non-GAAP)	$	2,135,505		$	2,123,658		$	2,143,583		$	2,149,229		$	8,551,975
Operating income (GAAP)	$	619,365		$	528,552		$	482,203		$	683,936		$	2,314,056
Impact of MEPP charge		—			—			1,700			—			1,700
Impact of restructuring and transformational project costs (1)(3)		19,053			21,377			22,781			46,313			109,524
Impact of acquisition-related costs (2)(4)		19,745			25,799			25,361			37,231			108,136
Operating income adjusted for Certain Items (Non-GAAP)	$	658,163		$	575,728		$	532,045		$	767,480		$	2,533,416

* Segment has no applicable Certain items

⁽¹⁾  Includes Brakes Acquisition-related restructuring charges, facility closure charges and other severance charges related to restructuring.

⁽²⁾  Includes intangible amortization expense from the Brakes Acquisition, which is included in the results of Sysco Europe and integration costs, and a write-off for an intangible asset due to restructuring in France.

⁽³⁾  Fiscal 2018 includes business technology transformation initiative costs, professional fees on three-year financial objectives, severance charges related to restructuring, costs to convert to legacy systems in conjunction with our revised business technology strategy and facility closure charges.

⁽⁴⁾  Includes integration costs from the Brakes Acquisition.

29

XML

Document and Entity Information	Aug. 11, 2020
Document And Entity Information [Line Items]
Entity Registrant Name	SYSCO CORP
Amendment Flag	false
Entity Central Index Key	0000096021
Document Type	8-K
Document Period End Date	Aug. 11, 2020
Entity Incorporation State Country Code	DE
Entity File Number	1-06544
Entity Tax Identification Number	74-1648137
Entity Address, Address Line One	1390 Enclave Parkway
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77077-2099
City Area Code	(281)
Local Phone Number	584-1390
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document And Entity Information [Line Items]
Security 12b Title	Common stock, $1.00 Par Value
Trading Symbol	SYY
Security Exchange Name	NYSE
Deferrable Notes [Member]
Document And Entity Information [Line Items]
Security 12b Title	1.25% Notes due June 2023
Trading Symbol	SYY23
Security Exchange Name	NYSE