Quarterly Report (10-q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

(Mark One)

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

For the quarterly period ended September 26, 2015

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

Commission File Number 1-6544

________________

Sysco Corporation

(Exact name of registrant as specified in its charter)



Delaware	74-1648137
(State or other jurisdiction of	(IRS employer
incorporation or organization)	identification number)
1390 Enclave Parkway	77077-2099
Houston, Texas	(Zip Code)
(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code:

(281) 584-1390

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑ No ☐

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



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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

564,515,133 shares of common stock were outstanding as of October 24, 2015.

TABLE OF CONTENTS



		Page No.
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35

Signatures		36

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)



	Sep. 26, 2015			Jun. 27, 2015			Sep. 27, 2014
	(unaudited)						(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	388,256		$	5,130,044		$	384,898
Accounts and notes receivable, less allowances of $46,470, $41,720, and $60,879	3,531,105			3,353,381			3,646,817
Inventories	2,841,361			2,691,823			2,845,641
Deferred income taxes	85,416			135,254			140,554
Prepaid expenses and other current assets	93,015			93,039			90,493
Prepaid income taxes	88,807			90,763			—
Total current assets	7,027,960			11,494,304			7,108,403
Plant and equipment at cost, less depreciation	3,961,299			3,982,143			3,968,713
Other assets
Goodwill	1,981,390			1,959,817			1,980,524
Intangibles, less amortization	168,541			154,809			180,325
Restricted cash	—			168,274			165,437
Other assets	232,361			229,934			190,631
Total other assets	2,382,292			2,512,834			2,516,917
Total assets	$	13,371,551		$	17,989,281		$	13,594,033

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable	$	51,806		$	70,751		$	78,635
Accounts payable	2,887,863			2,881,953			2,924,417
Accrued expenses	999,337			1,467,610			1,132,069
Accrued income taxes	—			—			94,437
Current maturities of long-term debt	31,810			4,979,301			306,931
Total current liabilities	3,970,816			9,399,615			4,536,489
Other liabilities
Long-term debt	3,004,618			2,271,825			2,626,610
Deferred income taxes	160,688			81,591			115,500
Other long-term liabilities	885,501			934,722			959,920
Total other liabilities	4,050,807			3,288,138			3,702,030
Commitments and contingencies
Noncontrolling interest	44,243			41,304			34,098
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			765,175
Paid-in capital	1,231,506			1,213,999			1,155,838
Retained earnings	8,816,245			8,751,985			8,878,693
Accumulated other comprehensive loss	(1,007,539		)	(923,197		)	(743,172		)
Treasury stock at cost, 169,052,528, 170,857,231 and 177,897,055 shares	(4,499,702		)	(4,547,738		)	(4,735,118		)
Total shareholders' equity	5,305,685			5,260,224			5,321,416
Total liabilities and shareholders' equity	$	13,371,551		$	17,989,281		$	13,594,033

Note: The June 27, 2015 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

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



	13-Week Period Ended
	Sep. 26, 2015			Sep. 27, 2014
Sales	$	12,562,611		$	12,445,081
Cost of sales	10,324,616			10,256,364
Gross profit	2,237,995			2,188,717
Operating expenses	1,744,521			1,723,104
Operating income	493,474			465,613
Interest expense	126,907			30,934
Other expense (income), net	(15,240		)	(2,188		)
Earnings before income taxes	381,807			436,867
Income taxes	137,387			158,054
Net earnings	$	244,420		$	278,813

Net earnings:
Basic earnings per share	$	0.41		$	0.47
Diluted earnings per share	0.41			0.47

Average shares outstanding	596,698,935			588,277,056
Diluted shares outstanding	600,789,913			593,309,750

Dividends declared per common share	$	0.30		$	0.29

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)



	13-Week Period Ended
	Sep. 26, 2015			Sep. 27, 2014
Net earnings	$	244,420		$	278,813
Other comprehensive (loss) income:
Foreign currency translation adjustment	(87,229		)	(71,254		)
Items presented net of tax:
Amortization of cash flow hedges	1,676			126
Change in fair value of cash flow hedges	(3,778		)	(34,111		)
Amortization of prior service cost	1,715			1,737
Amortization of actuarial loss (gain), net	3,275			2,993
Total other comprehensive (loss) income	(84,341		)	(100,509		)
Comprehensive income	$	160,079		$	178,304

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)



	13-Week Period Ended
	Sep. 26, 2015			Sep. 27, 2014
Cash flows from operating activities:
Net earnings	$	244,420		$	278,813
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	11,636			12,161
Depreciation and amortization	135,961			133,996
Amortization of debt issuance and other debt-related costs	6,161			3,803
Loss on extinguishment of debt	86,460			—
Deferred income taxes	124,631			9,940
Provision for losses on receivables	1,546			6,058
Other non-cash items	(4,511		)	(1,280		)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) in receivables	(211,035		)	(267,602		)
(Increase) in inventories	(162,867		)	(251,998		)
Decrease (increase) in prepaid expenses and other current assets	165			(7,019		)
Increase in accounts payable	23,580			99,744
Decrease in accrued expenses	(470,409		)	(28,725		)
Increase in accrued income taxes	5,833			137,506
Decrease (increase) in other assets	(10,354		)	2,327
Decrease in other long-term liabilities	(38,419		)	(64,417		)
Excess tax benefits from share-based compensation arrangements	(4,280		)	(689		)
Net cash (used in) provided by operating activities	(261,482		)	62,618
Cash flows from investing activities:
Additions to plant and equipment	(121,243		)	(118,821		)
Proceeds from sales of plant and equipment	1,506			1,126
Acquisition of businesses, net of cash acquired	(83,598		)	(32,074		)
Decrease (increase) in restricted cash	168,274			(20,025		)
Net cash used for investing activities	(35,061		)	(169,794		)
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments), net	717,600			268,598
Other debt borrowings	4,148			13,901
Other debt repayments	(3,659		)	(4,207		)
Redemption of senior notes	(5,050,000		)	—
Debt issuance costs	—			(642		)
Cash paid for settlement of cash flow hedge	—			(58,935		)
Cash received from termination of interest rate swap agreements	14,496			—
Proceeds from stock option exercises	54,768			35,179
Dividends paid	(179,037		)	(170,049		)
Excess tax benefits from share-based compensation arrangements	4,280			689
Net cash (used for) provided by financing activities	(4,437,404		)	84,534
Effect of exchange rates on cash and cash equivalents	(7,841		)	(5,506		)
Net (decrease) in cash and cash equivalents	(4,741,788		)	(28,148		)
Cash and cash equivalents at beginning of period	5,130,044			413,046
Cash and cash equivalents at end of period	$	388,256		$	384,898
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	93,976		$	49,921
Income taxes	13,298			15,827

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1. BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without audit, with the exception of the June 27, 2015 consolidated balance sheet, which was derived from the audited consolidated financial statements included in the company's fiscal 2015 Annual Report on Form 10-K. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income and cash flows for all periods presented have been made.

Prior year amounts within the consolidated balance sheets have been reclassified to conform to the current year presentation as it relates to the presentation of debt issuance costs due to a change in accounting standards. See Note 2, "Changes in Accounting" for additional information on these changes.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the company's fiscal 2015 Annual Report on Form 10-K. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

The interim financial information herein has been reviewed by Ernst & Young LLP, independent registered public accounting firm, in accordance with established professional standards and procedures for such a review. A Review Report of Independent Registered Public Accounting Firm has been issued by Ernst & Young LLP and is included as Exhibit 15.1 to this Form 10-Q.

2. CHANGES IN ACCOUNTING

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This guidance requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, rather than an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. Upon adoption, this guidance requires retrospective application. The company early adopted this standard for the fiscal year ended June 27, 2015. Although the new guidance had no impact on the company’s results of operations, the debt issuance costs presented as assets within the company’s consolidated balance sheet as of September 27, 2014 of $23.9 million has been reclassified as a reduction of the related debt liability.

3. NEW ACCOUNTING STANDARDS

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for interim and annual periods beginning after December 15, 2017, which is fiscal 2019 for Sysco, and could be early adopted in fiscal 2018. The standard may be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The company has not selected a transition method and is currently evaluating the impact of the pending adoption of this ASU on its ongoing financial reporting.

4. ACQUISITIONS

During the first 13 weeks of fiscal 2016, the company paid cash of $83.6 million for an acquisition. The acquisition did not have a material effect on the company's operating results, cash flows or financial position. Certain acquisitions involve

contingent consideration that may include earnout agreements that are typically payable over periods of up to three years in the event that certain operating results are attained. As of September 26, 2015, aggregate contingent consideration outstanding was $38.3 million, of which $28.7 million was recorded as earnout liabilities as of September 26, 2015.

5. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:


•	Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;


•	Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and


•	Level 3 – Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

Sysco’s policy is to invest in only high-quality investments. Cash equivalents primarily include time deposits, certificates of deposit, commercial paper, high-quality money market funds and all highly liquid instruments with original maturities of three months or less. Restricted cash consists of investments in high-quality money market funds.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value:


•	Time deposits and commercial paper included in cash equivalents are valued at amortized cost, which approximates fair value. These are included within cash equivalents as a Level 2 measurement in the tables below.


•	Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. These are included within cash equivalents and restricted cash as Level 1 measurements in the tables below.

•

The interest rate swap agreements, discussed further in Note 6, "Derivative Financial Instruments" are valued using a swap valuation model that utilizes an income approach using observable market inputs including interest rates, LIBOR swap rates and credit default swap rates. These are included within prepaid expenses and other current assets, other assets, accrued expenses and other long-term liabilities as Level 2 measurements in the tables below.

The following tables present the company’s assets and liabilities measured at fair value on a recurring basis as of September 26, 2015, June 27, 2015 and September 27, 2014:



	Assets and Liabilities Measured at Fair Value as of Sep. 26, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	102,508	$	62,131	$	—	$	164,639
Other assets
Interest rate swap agreement	—		8,219		—		8,219
Total assets at fair value	$	102,508	$	70,350	$	—	$	172,858
Liabilities:
Long-term debt	$	—	$	506,713	$	—	$	506,713
Total liabilities at fair value	$	—	$	506,713	$	—	$	506,713



	Assets and Liabilities Measured at Fair Value as of Jun. 27, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	4,677,735	$	63,689	$	—	$	4,741,424
Restricted cash	168,274		—		—		168,274
Other assets
Interest rate swap agreement	—		12,597		—		12,597
Total assets at fair value	$	4,846,009	$	76,286	$	—	$	4,922,295
Liabilities:
Accrued expenses
Current portion of long-term debt	$	—	$	1,257,127	$	—	$	1,257,127
Long-term debt	—		503,379		—		503,379
Total liabilities at fair value	$	—	$	1,760,506	$	—	$	1,760,506



	Assets and Liabilities Measured at Fair Value as of Sep. 27, 2014
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents
Cash equivalents	$	—	$	143,416	$	—	$	143,416
Restricted cash	165,437		—		—		165,437
Other assets
Interest rate swap agreement	—		264		—		264
Total assets at fair value	$	165,437	$	143,680	$	—	$	309,117

Liabilities:
Other long-term liabilities
Interest rate swap agreement	$	—	$	3,496	$	—	$	3,496
Long-term debt	—		499,110		—		—
Total Liabilities at fair value	$	—	$	502,606	$	—	$	3,496

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to the short‑term maturities of these instruments. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issue or on the current rates offered to the company for debt of the same remaining maturities and is considered a Level 2 measurement. The table above reflects the fair value for any long-term debt that has been hedged and is recorded at fair value. Non-hedged debt is recorded at book value. The fair value of total non-hedged debt approximated $2.6 billion, $5.6 billion and $2.8 billion as of September 26, 2015, June 27, 2015 and September 27, 2014, respectively. The carrying value of total non-hedged debt was $2.4 billion, $5.4 billion and $2.5 billion as of September 26, 2015, June 27, 2015 and September 27, 2014, respectively.

6. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco manages its debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps from time to time to achieve this position. The company does not use derivative financial instruments for trading or speculative purposes.

In August 2015, the company entered into forward starting swap agreements with a notional amount totaling $500 million. The company designated these derivatives as cash flow hedges to reduce interest rate exposure on forecasted 10-year debt due to changes in the benchmark interest rates for debt the company expected to issue in fiscal 2016. Sysco priced this debt offering in September 2015 and terminated these hedges, resulting in a liability of $6.1 million at September 26, 2015. The loss was recorded in Accumulated other comprehensive income (loss) and will be amortized to interest expense over the term of the issued debt. See Note 16, "Subsequent Events" for additional information on these hedges.

In October 2014, Sysco obtained long-term financing for its proposed merger with US Foods by completing a six-part senior notes offering totaling $5 billion. At the same time of these note issuances, the company entered into interest rate swap agreements that effectively converted $500 million of senior notes maturing in fiscal 2018 and $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These are collectively referred to as the 2015 swaps. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates. In the first quarter of 2016, we terminated the 2015 swaps for proceeds of $14.5 million in connection with the redemption of these senior notes.

In January 2014, the company entered into two forward starting swap agreements with notional amounts totaling $2 billion in contemplation of securing long-term financing for the proposed US Foods merger or for other long-term financing purposes in the event the merger did not occur. The company designated these derivatives as cash flow hedges to reduce interest rate exposure on forecasted 10-year and 30-year debt due to changes in the benchmark interest rates for debt the company issued in fiscal 2015. In September 2014, in conjunction with the pricing of the $1.25 billion senior notes maturing in fiscal 2025 and the $1 billion senior notes maturing in fiscal 2045, the company terminated these swaps, locking in the effective yields on the related debt. Cash of $58.9 million was paid to settle the 10-year swap in September 2014, and cash of $129.9 million was paid

to settle the 30-year swap in October 2014. The cash payments are located within the line Cash paid for settlement of cash flow hedge within financing activities in the statement of consolidated cash flows. The cumulative losses recorded in Accumulated other comprehensive (loss) income related to these swaps will continue to be amortized through interest expense over the term of the originally issued debt as the amount hedged is anticipated to remain within our capital structure.

In August 2013, the company entered into an interest rate swap agreement that effectively converted $500 million of fixed rate debt maturing in fiscal 2018 to floating rate debt.

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of September 26, 2015, June 27, 2015 and September 27, 2014 are as follows:



	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In thousands)
Interest rate swap agreements:
Sep. 26, 2015	Other assets	$	8,219	Other liabilities	$	—
Sep. 27, 2014	Other assets	264		Other long-term liabilities	3,496

The location and effect of derivative instruments and related hedged items on the consolidated results of operations for the 13-Week Period Ended September 26, 2015 and September 27, 2014 presented on a pre-tax basis are as follows:



	Location of (Gain) or Loss Recognized	Amount of (Gain) or Loss Recognized
		13-Week Period Ended
		Sep. 26, 2015			Sep. 27, 2014
		(In thousands)
Fair Value Hedge Relationships:
Interest rate swap agreements	Interest expense	$	(1,997	)	$	(3,269	)

Cash Flow Hedge Relationships:
Interest rate swap agreements	Other comprehensive income	6,134			55,374
Interest rate contracts	Interest expense	2,720			205

Hedge ineffectiveness represents the difference between the changes in the fair value of the derivative instruments and the changes in fair value of the fixed rate debt attributable to changes in the benchmark interest rates. Hedge ineffectiveness is recorded directly in earnings within interest expense and was immaterial for the first quarter of fiscal 2016 and 2015. The interest rate swaps do not contain credit-risk-related contingent features.

7. DEBT

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $1.5 billion. As of September 26, 2015, there were $717.5 million in commercial paper issuances outstanding. These amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first quarter of 2016, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from zero to approximately $1.0 billion.

In June 2015, Sysco terminated the US Foods merger agreement triggering the redemption of the senior notes that had been issued in contemplation of the proposed merger at a redemption price equal to 101% of the principal of the senior notes. Sysco redeemed the senior notes in July 2015 using cash on hand and proceeds from our commercial paper program in the amount of $5.05 billion. The repayment of these senior notes triggered a redemption loss of $86.5 million included in interest expense

for the first quarter of fiscal 2016. Additionally, as discussed in Note 6, "Derivative Financial Instruments," the company terminated fair value hedges associated with these senior notes. Interest expense for the first quarter of fiscal 2016 includes the amounts from these transactions:



	13-Week Period Ended Sep. 27, 2015
		(In thousands)
Redemption Payment		$	50,000
Debt issuance cost write-off		28,642
Bond discount write-off		17,869
Gain on swap termination		(10,051		)
Loss on extinguishment of debt		86,460
Interest expense on senior notes		8,375
Total		$	94,835

See Note 16, "Subsequent Events" for additional information on changes in debt.

8. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

In the tables below, the caption “Pension Benefits” includes both the company-sponsored qualified pension plan and the Supplemental Executive Retirement Plan. The components of net company-sponsored benefit cost for the first quarter of fiscal 2016 and fiscal 2015 are as follows:



	Pension Benefits						Other Postretirement Plans
	Sep. 26, 2015			Sep. 27, 2014			Sep. 26, 2015			Sep. 27, 2014
	(In thousands)
Service cost	$	2,902		$	2,815		$	134		$	134
Interest cost	42,833			42,779			153			148
Expected return on plan assets	(53,203		)	(57,156		)	—			—
Amortization of prior service cost	2,743			2,777			41			42
Amortization of actuarial loss (gain)	5,435			4,968			(118		)	(109		)
Net periodic costs (benefits)	$	710		$	(3,817	)	$	210		$	215

Sysco’s contributions to its company-sponsored defined benefit plans were $37.0 million and $56.1 million during the first quarter of fiscal 2016 and 2015, respectively.

9. EARNINGS PER SHARE

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



	13-Week Period Ended
	Sep. 26, 2015		Sep. 27, 2014
	(In thousands, except for share and per share data)
Numerator:
Net earnings	$	244,420	$	278,813
Denominator:
Weighted-average basic shares outstanding	596,698,935		588,277,056
Dilutive effect of share-based awards	4,090,978		5,032,694
Weighted-average diluted shares outstanding	600,789,913		593,309,750
Basic earnings per share	$	0.41	$	0.47
Diluted earnings per share	$	0.41	$	0.47

The number of options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 4,500,000 and 600,000 for the first quarter of fiscal 2016 and fiscal 2015, respectively.

10. OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to cash flow hedging arrangements and certain amounts related to pension and other postretirement plans. Comprehensive income was $160.1 million and $178.3 million for the first quarter of fiscal 2016 and fiscal 2015, respectively.

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



		13-Week Period Ended Sep. 26, 2015
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Operating expenses	$	2,784		$	1,069		$	1,715
Amortization of actuarial loss (gain), net	Operating expenses	5,317			2,042			3,275
Total reclassification adjustments		8,101			3,111			4,990
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(87,229		)	—			(87,229		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,720			1,044			1,676
Change in fair value of cash flow hedge	N/A	(6,134		)	(2,356		)	(3,778		)
Total other comprehensive (loss) income		$	(82,542	)	$	1,799		$	(84,341	)



		13-Week Period Ended Sep. 27, 2014
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount			Tax			Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:
Reclassification adjustments:
Amortization of prior service cost	Operating expenses	$	2,819		$	1,082		$	1,737
Amortization of actuarial loss (gain), net	Operating expenses	4,859			1,866			2,993
Total reclassification adjustments		7,678			2,948			4,730
Foreign currency translation:
Other comprehensive income before reclassification adjustments:
Foreign currency translation adjustment	N/A	(71,254		)	—			(71,254		)
Interest rate swaps:
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	205			79			126
Other comprehensive income before reclassification adjustments:
Change in fair value of cash flow hedges	N/A	(55,374		)	(21,263		)	(34,111		)
Total other comprehensive (loss) income		$	(118,745	)	$	(18,236	)	$	(100,509	)

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



	13-Week Period Ended Sep. 26, 2015
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Interest Rate Swaps, net of tax			Total
	(In thousands)
Balance as of Jun. 27, 2015	$	(705,311	)	$	(97,733	)	$	(120,153	)	$	(923,197	)
Other comprehensive income before reclassification adjustments	—			(87,229		)	—			(87,229		)
Amortization of cash flow hedges	—			—			1,676			1,676
Change in fair value of cash flow hedges	—			—			(3,778		)	(3,778		)
Amortization of unrecognized prior service cost	1,715			—			—			1,715
Amortization of unrecognized net actuarial losses	3,274			—			—			3,274
Balance as of Sep. 26, 2015	$	(700,322	)	$	(184,962	)	$	(122,255	)	$	(1,007,539	)



	13-Week Period Ended Sep. 27, 2014
	Pension and Other Postretirement Benefit Plans, net of tax			Foreign Currency Translation			Interest Rate Swaps, net of tax			Total
	(In thousands)
Balance as of Jun. 28, 2014	$	(685,957	)	$	134,452		$	(91,158	)	$	(642,663	)
Other comprehensive income before reclassification adjustments	—			(71,254		)	(34,111		)	(105,365		)
Amounts reclassified from accumulated other comprehensive loss	4,730			—			126			4,856
Balance as of Sep. 27, 2014	$	(681,227	)	$	63,198		$	(125,143	)	$	(743,172	)

11. SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees and non-employee directors under several share-based payment arrangements including various employee stock incentive plans, the Employee Stock Purchase Plan, and various non‑employee director plans.

Stock Incentive Plans

In the first quarter of fiscal 2016, 2,075 restricted stock units were granted to employees. Based on the jurisdiction in which the employee resides, some of these restricted stock units were granted with forfeitable dividend equivalents. The fair value of each restricted stock unit award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For restricted stock unit awards granted without dividend equivalents, the fair value was reduced by the present value of expected dividends during the vesting period. The weighted average grant-date fair value per restricted stock unit granted during the first quarter of fiscal 2016 was $36.31.

Employee Stock Purchase Plan

Plan participants purchased 346,219 shares of Sysco common stock under the Sysco Employee Stock Purchase Plan during the first quarter of fiscal 2016.

The weighted average fair value per share of employee stock purchase rights issued pursuant to the Employee Stock Purchase Plan was $5.42 during the first quarter of fiscal 2016. The fair value of the stock purchase rights is estimated as the difference between the stock price and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $11.6 million and $12.2 million for the first quarter of fiscal 2016 and fiscal 2015, respectively.

As of September 26, 2015, there was $56.4 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.3 years.

12. INCOME TAXES

Uncertain Tax Positions

As of September 26, 2015, the gross amount of unrecognized tax benefits was $37.5 million, and the gross amount of liability for accrued interest related to unrecognized tax benefits was $34.1 million. It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months, either because Sysco prevails on positions that were being challenged upon audit or because the company agrees to their disallowance. Items that may cause changes to unrecognized tax benefits primarily include the consideration of various filing requirements in numerous states and the allocation of income and expense between tax jurisdictions. At this time, an estimate of the range of the reasonably possible change cannot be made.

Effective Tax Rate

Sysco’s effective tax rate is reflective of the jurisdictions where the company has operations. Indefinitely reinvested earnings taxed at foreign statutory rates less than our domestic tax rate have the impact of reducing the effective tax rate in all periods presented. The effective tax rates for the first quarter of fiscal 2016 and fiscal 2015 were 35.98% and 36.18%, respectively.

Other

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

13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen, but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company. However, the final results of legal proceedings cannot be predicted with certainty and, if the company failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the company’s current estimates of the range of potential losses, the company’s consolidated financial position or results of operations could be materially adversely affected in future periods.

14. BUSINESS SEGMENT INFORMATION

The company has aggregated certain of its operating companies into two reporting segments, Broadline and SYGMA in accordance with the accounting literature related to disclosures about segments of an enterprise. The Broadline reportable segment is an aggregation of the company’s U.S. and International Broadline segments located in the Bahamas, Canada, Costa Rica and Ireland. Broadline operating companies distribute a full line of food products and a wide variety of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations. "Other" financial information is attributable to the company's other operating segments, including the company's specialty produce, custom-cut meat operations, lodging industry segments, a company that distributes specialty imported products, a company that distributes to international customers and the company’s Sysco Ventures platform, which includes a suite of technology solutions that help support the business needs of Sysco’s customers. In fiscal 2015, our leadership structure was realigned and now our custom-cut meat operations no longer report through our U.S. Broadline leadership. As a result, these operations are no longer included in our Broadline segment and are now reported in "Other." Prior year amounts have been reclassified to conform to the current year presentation.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Intersegment sales primarily represent products the Broadline and SYGMA operating companies procured from the specialty produce, custom-cut meat operations, imported specialty products and a company that distributes to international customers. Management evaluates the performance of each of the operating segments based on its respective operating income results. Corporate expenses generally include all expenses of the corporate office and Sysco’s shared service center. These also include all share-based compensation costs.

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



	13-Week Period Ended
	Sep. 26, 2015			Sep. 27, 2014
Sales:	(In thousands)
Broadline	$	10,028,096		$	9,971,375
SYGMA	1,445,904			1,541,612
Other	1,446,938			1,252,086
Intersegment sales	(358,327		)	(319,992		)
Total	$	12,562,611		$	12,445,081

	13-Week Period Ended
	Sep. 26, 2015			Sep. 27, 2014
Operating income:	(In thousands)
Broadline	$	726,965		$	686,482
SYGMA	5,224			5,150
Other	26,508			37,729
Total segments	758,697			729,361
Corporate expenses	(265,223		)	(263,748		)
Total operating income	493,474			465,613
Interest expense	126,907			30,934
Other expense (income), net	(15,240		)	(2,188		)
Earnings before income taxes	$	381,807		$	436,867



	Sep. 26, 2015		Jun. 27, 2015		Sep. 27, 2014
Assets:	(In thousands)
Broadline	$	7,989,108	$	7,730,239	$	8,861,929
SYGMA	508,403		512,044		519,554
Other	1,515,458		1,415,038		1,643,808
Total segments	10,012,969		9,657,321		11,025,291
Corporate	3,358,582		8,331,960		2,568,742
Total	$	13,371,551	$	17,989,281	$	13,594,033

15. SUPPLEMENTAL GUARANTOR INFORMATION - SUBSIDIARY GUARANTEES

On January 19, 2011, the wholly-owned U.S. Broadline subsidiaries of Sysco Corporation entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. Borrowings under the company’s revolving credit facility supporting the company’s U.S. and Canadian commercial paper programs are also covered under these guarantees. As of September 26, 2015, Sysco had a total of $2.9 billion in senior notes, debentures and commercial paper outstanding that was covered by these guarantees.

All subsidiary guarantors are 100% owned by the parent company, all guarantees are full and unconditional and all guarantees are joint and several, except that the guarantee of any subsidiary guarantor with respect to a series of senior notes or debentures may be released under certain customary circumstances. If we exercise our defeasance option with respect to the senior notes or debentures of any series, then any subsidiary guarantor effectively will be released with respect to that series. Further, each subsidiary guarantee will remain in full force and effect until the earliest to occur of the date, if any, on which (1) the applicable subsidiary guarantor shall consolidate with or merge into Sysco Corporation or any successor of Sysco Corporation or (2) Sysco Corporation or any successor of Sysco Corporation consolidates with or merges into the applicable subsidiary guarantor.

The following condensed consolidating financial statements present separately the financial position, comprehensive income and cash flows of the parent issuer (Sysco Corporation), the guarantors (the majority of the company’s U.S. Broadline subsidiaries), and all other non‑guarantor subsidiaries of Sysco (Other Non-Guarantor Subsidiaries) on a combined basis with eliminating entries.



	Condensed Consolidating Balance Sheet
	Sep. 26, 2015
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	237,758	$	4,252,595		$	2,537,607	$	—		$	7,027,960
Investment in subsidiaries	9,473,425		—			—		(9,473,425		)	—
Plant and equipment, net	512,397		1,662,227			1,786,675		—			3,961,299
Other assets	203,535		525,372			1,653,385		—			2,382,292
Total assets	$	10,427,115	$	6,440,194		$	5,977,667	$	(9,473,425	)	$	13,371,551
Current liabilities	$	478,158	$	1,105,347		$	2,387,311	$	—		$	3,970,816
Intercompany payables (receivables)	1,041,230		(1,670,713		)	629,483		—			—
Long-term debt	2,884,581		9,337			110,700		—			3,004,618
Other liabilities	715,169		271,194			59,826		—			1,046,189
Noncontrolling interest	—		—			44,243		—			44,243
Shareholders’ equity	5,307,977		6,725,029			2,746,104		(9,473,425		)	5,305,685
Total liabilities and shareholders’ equity	$	10,427,115	$	6,440,194		$	5,977,667	$	(9,473,425	)	$	13,371,551



	Condensed Consolidating Balance Sheet
	Jun. 27, 2015
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	4,894,387	$	4,012,924		$	2,586,993	$	—		$	11,494,304
Investment in subsidiaries	9,088,455		—			—		(9,088,455		)	—
Plant and equipment, net	510,285		1,694,659			1,777,199		—			3,982,143
Other assets	371,802		522,566			1,618,466		—			2,512,834
Total assets	$	14,864,929	$	6,230,149		$	5,982,658	$	(9,088,455	)	$	17,989,281
Current liabilities	$	5,851,364	$	1,658,558		$	1,889,693	$	—		$	9,399,615
Intercompany payables (receivables)	973,497		(1,996,915		)	1,023,418		—			—
Long-term debt	2,154,923		10,121			106,781		—			2,271,825
Other liabilities	624,795		278,458			113,060		—			1,016,313
Noncontrolling interest	—		—			41,304		—			41,304
Shareholders’ equity	5,260,350		6,279,927			2,808,402		(9,088,455		)	5,260,224
Total liabilities and shareholders’ equity	$	14,864,929	$	6,230,149		$	5,982,658	$	(9,088,455	)	$	17,989,281



	Condensed Consolidating Balance Sheet
	Sep. 27, 2014
	Sysco		Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals
	(In thousands)
Current assets	$	233,010	$	4,345,475		$	2,529,918	$	—		$	7,108,403
Investment in subsidiaries	8,297,396		—			—		(8,297,396		)	—
Plant and equipment, net	488,618		1,758,530			1,721,565		—			3,968,713
Other assets	332,075		522,013			1,662,829		—			2,516,917
Total assets	$	9,351,099	$	6,626,018		$	5,914,312	$	(8,297,396	)	$	13,594,033
Current liabilities	$	831,556	$	953,078		$	2,751,855	$	—		$	4,536,489
Intercompany payables (receivables)	2,292		(111,694		)	109,402		—			—
Long-term debt	2,560,245		15,232			51,133		—			2,626,610
Other liabilities	635,590		318,736			121,094		—			1,075,420
Noncontrolling interest	—		—			34,098		—			34,098
Shareholders’ equity	5,321,416		5,450,666			2,846,730		(8,297,396		)	5,321,416
Total liabilities and shareholders’ equity	$	9,351,099	$	6,626,018		$	5,914,312	$	(8,297,396	)	$	13,594,033



	Condensed Consolidating Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 26, 2015
	Sysco			Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	8,524,550		$	4,426,998		$	(388,937	)	$	12,562,611
Cost of sales	—			6,912,169			3,801,384			(388,937		)	10,324,616
Gross profit	—			1,612,381			625,614			—			2,237,995
Operating expenses	199,375			956,915			588,231			—			1,744,521
Operating income (loss)	(199,375		)	655,466			37,383			—			493,474
Interest expense (income)	146,097			(39,983		)	20,793			—			126,907
Other expense (income), net	(5,077		)	(477		)	(9,686		)	—			(15,240		)
Earnings (losses) before income taxes	(340,395		)	695,926			26,276			—			381,807
Income tax (benefit) provision	(122,484		)	250,417			9,454			—			137,387
Equity in earnings of subsidiaries	462,331			—			—			(462,331		)	—
Net earnings	244,420			445,509			16,822			(462,331		)	244,420
Other comprehensive income (loss)	(84,341		)	—			(183,185		)	183,185			(84,341		)
Comprehensive income	$	160,079		$	445,509		$	(166,363	)	$	(279,146	)	$	160,079



	Condensed Consolidating Statement of Comprehensive Income
	For the 13-Week Period Ended Sep. 27, 2014
	Sysco			Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals
	(In thousands)
Sales	$	—		$	8,322,308		$	4,464,469		$	(341,696	)	$	12,445,081
Cost of sales	—			6,774,508			3,823,552			(341,696		)	10,256,364
Gross profit	—			1,547,800			640,917			—			2,188,717
Operating expenses	190,897			932,195			600,012			—			1,723,104
Operating income (loss)	(190,897		)	615,605			40,905			—			465,613
Interest expense (income)	50,166			(21,474		)	2,242			—			30,934
Other expense (income), net	(2,402		)	(399		)	613			—			(2,188		)
Earnings (losses) before income taxes	(238,661		)	637,478			38,050			—			436,867
Income tax (benefit) provision	(86,344		)	230,631			13,767			—			158,054
Equity in earnings of subsidiaries	431,130			—			—			(431,130		)	—
Net earnings	278,813			406,847			24,283			(431,130		)	278,813
Other comprehensive income (loss)	(100,509		)	—			(71,254		)	71,254			(100,509		)
Comprehensive income	$	178,304		$	406,847		$	(46,971	)	$	(359,876	)	$	178,304



	Condensed Consolidating Cash Flows
	For the 13-Week Period Ended Sep. 26, 2015
	Sysco			Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	(525,626	)	$	(317,193	)	$	581,337		$	(261,482	)
Investing activities	138,186			(13,083		)	(160,164		)	(35,061		)
Financing activities	(4,445,507		)	(800		)	8,903			(4,437,404		)
Effect of exchange rates on cash	—			—			(7,841		)	(7,841		)
Intercompany activity	59,403			329,064			(388,467		)	—
Net increase (decrease) in cash and cash equivalents	(4,773,544		)	(2,012		)	33,768			(4,741,788		)
Cash and cash equivalents at the beginning of period	4,851,074			26,377			252,593			5,130,044
Cash and cash equivalents at the end of period	$	77,530		$	24,365		$	286,361		$	388,256



	Condensed Consolidating Cash Flows
	For the 13-Week Period Ended Sep. 27, 2014
	Sysco			Certain U.S. Broadline Subsidiaries			Other Non-Guarantor Subsidiaries			Consolidated Totals
	(In thousands)
Cash flows provided by (used for):
Operating activities	$	(93,666	)	$	(24,502	)	$	180,786		$	62,618
Investing activities	(33,867		)	(33,841		)	(102,086		)	(169,794		)
Financing activities	46,544			605			37,385			84,534
Effect of exchange rates on cash	—			—			(5,506		)	(5,506		)
Intercompany activity	58,326			55,264			(113,590		)	—
Net increase (decrease) in cash and cash equivalents	(22,663		)	(2,474		)	(3,011		)	(28,148		)
Cash and cash equivalents at the beginning of period	158,957			27,772			226,317			413,046
Cash and cash equivalents at the end of period	$	136,294		$	25,298		$	223,306		$	384,898

16. SUBSEQUENT EVENTS

Senior Notes Offering

On September 28, 2015, which is in Sysco's second quarter of fiscal 2016, Sysco issued senior notes totaling $2.0 billion. Details of the senior notes are as follows:



Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
October 1, 2020	$	750	2.60	%	99.809	%
October 1, 2025	750		3.75	%	100.00	%
October 1, 2045	500		4.85	%	99.921	%

Sysco used the net proceeds from the offering to fund repurchases of outstanding shares of its common stock pursuant to Sysco’s previously announced $1.5 billion share repurchase program, to repay approximately $500 million of its outstanding commercial paper and for general corporate purposes. The notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes. Interest on the senior notes will be paid semi-annually in arrears on April 1 and October 1, beginning April 1, 2016. At Sysco’s option, any or all of the senior notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the senior notes maturing in 2020 before the date that is one month prior to the maturity date, (ii) the senior notes maturing in 2025 before the date that is three months prior to the maturity date or (iii) the senior notes maturing in 2045 before the date that is six months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the senior notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the senior notes to be redeemed that would be due if such senior notes matured on the applicable date described above. If Sysco elects to redeem a series of senior notes on or after the applicable date described in the preceding sentence, Sysco will pay an amount equal to 100% of the principal amount of the senior notes to be redeemed. Sysco will pay accrued and unpaid interest on the notes redeemed to the redemption date.

Hedging Transactions

As noted in Note 6, "Derivative Financial Instruments" the company terminated forward starting interest rate swap agreements used to hedge the senior notes offering discussed above. Payments of $6.1 million were made in relation to the termination of the swap agreements in the second quarter of fiscal 2016.

Concurrent with the offering of senior notes discussed above, the company entered into interest rate swap agreements that effectively converted $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates.

Accelerated Share Repurchase Program

On September 23, 2015, the company entered into a Master Confirmation and Supplemental Confirmation (collectively, the ASR Agreement) with Goldman, Sachs & Co. (Goldman) relating to an accelerated share repurchase program (the ASR Program). Pursuant to the terms of the ASR Agreement, Sysco agreed to repurchase $1.5 billion of its common stock from Goldman.

In connection with the ASR Program, the company paid $1.5 billion to Goldman on September 28, 2015, in exchange for 32,319,392 shares of the company’s outstanding common stock, which represents a substantial majority of the shares owed to Sysco by Goldman; however, the number of shares ultimately delivered to the company by Goldman is subject to adjustment based on the volume-weighted average share price of the company’s common stock during the term of the ASR Agreement, less an agreed discount. Sysco expects all purchases under the ASR Program to be completed by May 2016, although the exact date of completion will depend on whether or when Goldman exercises an acceleration option that it has under the ASR Agreement. At settlement, the company may be entitled to receive additional shares of common stock from Goldman or, under certain circumstances, may be required to issue additional shares or make a payment to Goldman at the company’s option.

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

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

This discussion should be read in conjunction with our consolidated financial statements as of June 27, 2015, and the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended June 27, 2015, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

The discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures and exclude the impact from severance charges, merger and integration planning, litigation costs and termination costs in connection with the merger that had been proposed with US Foods, Inc. (US Foods), facility closure charges and US Foods related financing costs. These fiscal 2016 and fiscal 2015 items are collectively referred to as "Certain Items". Also, with respect to adjusted return on invested capital targets, our invested capital is adjusted for the accumulation of any excess cash against our average debt amounts. Our US Foods financing costs related to senior notes that were issued in fiscal 2015 in order to fund the proposed merger. These senior notes were redeemed in the first quarter of fiscal 2016 and triggered a redemption loss of $86.5 million, and we incurred interest on the notes through the redemption date. These senior notes were issued subsequent to the completion of the first quarter of fiscal 2015 and, therefore, our costs in the first quarter of fiscal 2015 only represent amortization of debt issuance costs for a bridge acquisition facility that existed at that time. More information on the rationale for the use of these measures and reconciliations to GAAP numbers can be found under “Non-GAAP Reconciliations.”

Overview

Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are located throughout the United States (U.S.), Bahamas, Canada, Costa Rica, Ireland and Mexico and include broadline companies, SYGMA (our chain restaurant distribution subsidiary), specialty produce companies, custom-cut meat companies, hotel supply operations, a company that distributes specialty imported products,

a company that distributes to international customers and our Sysco Ventures platform, which includes our suite of technology solutions that help support the business needs of our customers.

Highlights

Industry trends have been mixed, exhibiting both signs of improvement and cautionary indications. While consumer confidence and unemployment figures have been encouraging and certain industry segments have experienced positive spend and traffic trends, other segments have experienced the impacts of slowing same store sales growth and negative traffic growth rates. Among these conditions, our case volume growth remained strong in the first quarter of fiscal 2016, particularly for locally-managed customers, and our gross margin performance improved in a challenging deflationary environment. Despite these items contributing to improvements, our sales growth moderated in the first quarter of fiscal 2016, as compared to the first quarter of fiscal 2015, due to product cost deflation and unfavorable impacts from foreign exchange translation. Our operating expenses for the first quarter of fiscal 2016 increased partially from higher case volumes and increased long-term incentive accruals; however, for our U.S. Broadline operations, our first quarter expense management performance trends improved on a cost per case basis. Interest expense was negatively impacted by the redemption loss and interest through the redemption date related to debt that had been issued in fiscal 2015 for the purpose of funding the merger that had been proposed with US Foods. Our net earnings and earnings per share decreased for the first quarter of fiscal 2016, as compared to the corresponding period in fiscal 2015, primarily due to these factors. An increase in outstanding shares also negatively impacted our per-share amounts. Excluding Certain Items, our net earnings slightly increased in the first quarter of fiscal 2016 as compared to the corresponding prior year period.

Comparisons of results from the first quarter of fiscal 2016 to the first quarter of fiscal 2015:

•Sales increased 0.9%, or $0.1 billion, to $13 billion;

•Operating income increased 6.0%, or $27.9 million, to $493.5 million;

•Adjusted operating income decreased 0.5%, or $2.6 million, to $506.5 million;

•Net earnings decreased 12.3%, or $34.4 million, to $244.4 million;

•Adjusted net earnings increased 0.9%, or $2.8 million, to $312 million;

•Basic earnings per share and diluted earnings per share in the first quarter of fiscal 2016 were both $0.41, a

12.8% decrease from the comparable prior year amount of $0.47 per share; and

•Adjusted diluted earnings per share were $0.52 in the first quarter of fiscal 2016 and fiscal 2015.

See “Non-GAAP Reconciliations” for an explanation of these non-GAAP financial measures.

Trends and Strategy

Trends

General economic conditions can affect the frequency of purchases and amounts spent by consumers for food-away-from-home and, in turn, can impact our customers and our sales. Consumer confidence and employment metrics, such as unemployment rates have shown some signs of improvement; however, consumer spending has been cautious. Restaurant same-store sales and traffic has been mixed.

Our sales and gross profit performance can be influenced by multiple factors including price, volume, product mix and our ability to grow both sales and gross profit. The modest level of growth in the foodservice market has created additional competitive pricing pressures, which is, in turn, negatively impacting sales and gross profits. Case growth with our locally-managed Broadline business is needed to drive gross profit dollar growth. Our locally-managed customers, including independent restaurant customers, comprise a significant portion of our overall volumes and an even greater percentage of profitability due to the high level of value added services we typically provide to this customer group. Through focused efforts, our locally-managed case volume growth has accelerated. Our sales to corporate-managed customers, including chain restaurants and multi-locational restaurants, also comprise a significant portion of our overall volumes. Gross margin on sales to our corporate-managed customers is generally lower than on sales to other types of customers due to the higher volumes we sell to these customers. Case growth for our corporate-managed customers remained strong, but competitive pricing pressure has constrained our gross margins. Inflation is a factor that contributes to the level of sales and gross profit growth and can be a factor that contributes to gross margin pressure. We experienced a small amount of deflation in the first quarter of fiscal 2016 at a rate of 0.2%, a significant decline from inflation of 4.9% experienced in the first quarter of fiscal 2015. A deflationary environment has occurred only two times over the past 10 years, each lasting three to nine months. While we cannot predict whether deflation will continue at current levels, rapid decreases in prices can make it challenging to leverage our fixed costs. Our category management efforts and focus on our Sysco branded items have helped us to manage our gross margin performance in response to several of these factors. Lastly, changes in foreign exchange rates are having a larger impact on our sales results compared to our previous fiscal quarters. The strengthening

U.S. dollar is depressing our foreign sales as we convert them to U.S. dollars, primarily from our Canadian operations. The 2.0% year-over-year decrease to sales growth from currency translation experienced in the first quarter had the highest impact in the past three years. Foreign currency translation has also negatively impacted our operating income, net earnings and earnings per share. We expect both deflation and foreign currency translation to be factors that impact our results for the next few months.

We have experienced higher operating expenses in the first quarter of fiscal 2016 as compared to the first quarter of fiscal 2015 that are attributable to higher case volumes, with payroll and compensation costs contributing to a lesser extent. Higher management incentive accruals for long-term incentives also impacted our operating expenses. These incentives are based on Sysco's total shareholder return as compared to the S&P 500. Sysco's stock performance improved relative to the S&P 500 in the first quarter of fiscal 2016. Investments in technology projects that provide key support to achieving our financial targets over the next three years also contributed to expense increases.

Interest expense for the first quarter of fiscal 2016 increased $96.0 million, as compared to the first quarter of fiscal 2015, primarily due to the redemption of the senior notes issued in fiscal 2015, to fund the merger that had been proposed with US Foods. The redemption resulted in the payment of a redemption fee, write-offs for unamortized debt issuance costs and discounts associated with these senior notes and a gain on interest rate swap agreements that had been used to hedge these senior notes. In the second quarter of fiscal 2016, Sysco issued $2.0 billion in senior notes and proceeds of $1.5 billion were used to fund our accelerated share repurchase that will lower our share count over the remainder of fiscal 2016. We believe our accelerated share repurchase will provide an expected earnings per share benefit of approximately $0.03 to $0.04 per share in fiscal 2016, driven by a 4% to 5% reduction in average shares outstanding, partially offset by higher interest expense from the new debt issuance.

Strategy

We are focused on optimizing our core broadline business in the U.S., Bahamas, Canada, Costa Rica, Ireland and Mexico, with a customer centric approach, while continuing to explore appropriate opportunities to profitably grow our market share and create shareholder value by expanding beyond our core business. Day-to-day, our business decisions are driven by our mission to market and deliver great products to our customers with exceptional service, with the aspirational vision of becoming our customers’ most valued and trusted business partner.

We have identified five components of our strategy to help us achieve our mission and vision:


•	Partnership - Profoundly enrich the experience of doing business with Sysco;


•	Productivity - Continuously improve productivity in all areas of our business;


•	Products - Enhance offerings through a customer-centric innovation program;


•	People - Implement enterprise-wide talent management process; and


•	Expansion - Explore, assess and pursue new businesses and markets.

In the first quarter of fiscal 2016, we set new three-year financial targets that placed emphasis on accelerating locally-managed customer case growth, managing our operating and administrative costs, growing operating income and return on invested capital. Our key goals are to grow our operating income by at least $400 million by the end of fiscal 2018, and improve our adjusted return on invested capital. We do not expect our improvements to occur evenly on a quarterly basis; however, we are targeting to achieve 20% to 30% of our operating income improvement goal in fiscal 2016. In accomplishing these goals, we believe we could achieve a diluted earnings per share result in the range of $2.40 to $2.50 in fiscal 2018. Return on invested capital improvements include goals to improve our working capital by four days through improved management of working capital, specifically from the combined impact of accounts receivables, inventory and accounts payable. Our underlying assumptions in achieving these goals include moderate growth in our dividend, pursuing investments through acquisitions and reducing diluted shares outstanding through a $3.0 billion share buyback program over the next two years, approximately half of which has been completed, and repurchasing shares to offset any new share issuances from employee equity compensation.

Results of Operations

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



	13-Week Period Ended
	Sep. 26, 2015		Sep. 27, 2014
Sales	100.0	%	100.0	%
Cost of sales	82.2		82.4
Gross profit	17.8		17.6
Operating expenses	13.9		13.9
Operating income	3.9		3.7
Interest expense	1.0		0.2
Other expense (income), net	(0.1	)	—
Earnings before income taxes	3.0		3.5
Income taxes	1.1		1.3
Net earnings	1.9	%	2.2	%

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



	13-Week Period Ended
Sales	0.9		%
Cost of sales	0.7
Gross profit	2.3
Operating expenses	1.2
Operating income	6.0
Interest expense	310.3
Other expense (income), net	596.5		⁽¹⁾
Earnings before income taxes	(12.6	)
Income taxes	(13.1	)
Net earnings	(12.3	)
Basic earnings per share	(12.8	)	%
Diluted earnings per share	(12.8	)
Average shares outstanding	1.4
Diluted shares outstanding	1.3


(1)	Other expense (income), net was income of $15.2 million in the first quarter of fiscal 2016 and income of $2.2 million in the first quarter of fiscal 2015.

Sales

Sales for the first quarter of fiscal 2016 were 0.9% higher than the first quarter of fiscal 2015. Sales for the first quarter of fiscal 2016 increased as a result of case volume growth and sales from acquisitions that occurred within the last 12 months. Partially offsetting this growth were unfavorable changes in exchange rates used to translate our foreign sales into U.S. dollars and product cost deflation and the resulting decrease in selling prices. Case volumes for the company's U.S. Broadline operations including acquisitions within the last 12 months improved 3.4% in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 and included a 2.0% improvement in locally-managed customer case growth. Sales from acquisitions within the last 12 months favorably impacted sales by 0.4% for the first quarter of fiscal 2016. The changes in the exchange rates used to translate our foreign sales into U.S. dollars negatively impacted sales by 2.0% in the first quarter of fiscal 2016. Change in product costs,

an internal measure of inflation or deflation, was estimated as deflation of 0.2% during the first quarter of fiscal 2016. For our U.S. Broadline operations, our rate of deflation was 1.1%. Deflation in the first quarter of fiscal 2016 has occurred primarily in the dairy, meat, poultry and seafood categories, partially offset by modest inflation in other product categories.

Operating Income

Cost of sales primarily includes our product costs, net of vendor consideration, and includes in-bound freight. Operating expenses include the costs of facilities, product handling, delivery, selling and general and administrative activities. Fuel surcharges are reflected within sales and gross profit; fuel costs are reflected within operating expenses.

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



	13-Week Period Ended Sep. 26, 2015		13-Week Period Ended Sep. 27, 2014		13-Week Period Ended Change in Dollars			13-Week Period % Change
	(In thousands)
Gross profit	$	2,237,995	$	2,188,717	$	49,278		2.3	%
Operating expenses	1,744,521		1,723,104		21,417			1.2
Operating income	$	493,474	$	465,613	$	27,861		6.0	%

Gross profit	$	2,237,995	$	2,188,717	$	49,278		2.3	%
Adjusted operating expenses (Non-GAAP)	1,731,516		1,679,669		51,847			3.1
Adjusted operating income (Non-GAAP)	$	506,479	$	509,048	$	(2,569	)	(0.5	)%

The increase in operating income for the first quarter of fiscal 2016 was impacted by lower operating expenses attributable to Certain Items, primarily merger and integration planning expenses. Adjusted operating income for the first quarter of fiscal 2016 was slightly less than the first quarter of fiscal 2015 primarily from higher pay-related expenses, which were driven by higher case volumes and increased long-term incentives. Also contributing were increased operating expenses from technology investments, partially offset by higher gross profits. An additional unfavorable impact resulted from the strengthening U.S. dollar, which is reducing our operating income as we convert those amounts to U.S. dollars. More information on the rationale for the use of these adjusted measures and reconciliations can be found under “Non-GAAP Reconciliations.”

Gross profit dollars increased in the first quarter of fiscal 2016, as compared to the first quarter of fiscal 2015, primarily due to increased sales volumes, favorable category management and improved mix, both in terms of local case growth and Sysco branded products. Gross margin, which is gross profit as a percentage of sales, was 17.81% in the first quarter of fiscal 2016, an improvement of 23 basis points from the gross margin of 17.59% in the first quarter of fiscal 2015. Our locally-managed case volume growth continues to increase and our corporate-managed customers' volume has remained strong, but competitive pricing pressure has contributed to gross margin pressure for these corporate-managed customers. Changes in product costs, an internal measure of inflation or deflation, was estimated as deflation of 0.2% during the first quarter of fiscal 2016.

Operating expenses for the first quarter of fiscal 2016 increased 1.2%, or $21.4 million, over the first quarter of fiscal 2015. Adjusted operating expenses for the first quarter of fiscal 2016 increased 3.1%, or $51.8 million, as compared to the first quarter of fiscal 2015. The increase in operating expenses resulted primarily from higher pay-related expenses, which were driven by higher case volumes and increased long-term incentives. Investments in technology projects that provide key support to achieving our financial targets over the next three years also contributed to expense increases. An additional favorable impact resulted from the strengthening U.S. dollar, which is reducing our operating expenses as we convert foreign operating expenses to U.S. dollars.

Factors Impacting Adjusted Operating Expenses

Pay-related expenses represent a significant portion of our operating costs, and can increase due to volume growth, acquisitions and pay increases, among other factors. These expenses increased by $58.3 million in the first quarter of fiscal 2016 over the first quarter of fiscal 2015 due primarily to case volume increases and also, to a lesser extent, to a $9.4 million increase in long-term incentive accruals. These incentives are based on Sysco's total shareholder return as compared to the S&P 500. Sysco's

stock performance improved relative to the S&P 500 in the first quarter of fiscal 2016, which increased the expense associated with these awards.

Cost per case is an important metric management uses to measure our expense performance. This metric is calculated by dividing the total operating expense of our U.S. Broadline companies by the number of cases sold. Adjusted cost per case is calculated similarly; however, the operating expense component excludes severance charges, which are the Certain Items applicable to these companies, dividend by the number of cases sold. Our corporate expenses are not included in the cost per cases metrics because the metric is a measure of efficiency in our operations. Our U.S. Broadline operations represent approximately 70% of Sysco's sales and nearly 70% of our operating expenses prior to corporate expenses. We seek to grow our sales and reduce our costs on a per case basis. Our cost per case and adjusted cost per case decreased $0.01 per case in the first quarter of fiscal 2016 as compared to the corresponding period of fiscal 2015. Adjustments to operating expenses were not large enough to produce a different result on an adjusted cost per case basis for the first quarter of fiscal 2016. The decreases reflect progress in productivity improvements and cost reductions in our supply chain.

Certain Items within Operating Expenses

Sysco’s operating expenses are impacted by Certain Items, which are expenses that can be difficult to predict, can be unanticipated or do not represent core operating expenses. More information on the rationale for the use of these measures and reconciliations to GAAP numbers can be found under “Non-GAAP Reconciliations.” Certain Items for the first quarter of fiscal 2016 relate primarily to costs incurred in connection with the termination of the merger that had been proposed with US Foods. These costs totaled $9.8 million in the first quarter of fiscal 2016. We do not anticipate incurring any further costs related to the merger termination. Certain Items for the first quarter of fiscal 2015 related primarily to integration planning and transaction costs incurred in connection with the merger that had been proposed with US Foods. These costs totaled $40.5 million in the first quarter of fiscal 2015.

Interest Expense

Interest expense increased $96.0 million for the first quarter of fiscal 2016, as compared to the first quarter of fiscal 2015, due to a loss of $86.5 million in connection with the redemption of the notes issued in fiscal 2015 to fund the merger that was proposed with US Foods. These items, along with interest expense incurred in fiscal 2016 through the date the senior notes were redeemed, are included in our Certain Items. Our interest expense increased $4.8 million excluding Certain Items.

Net Earnings

Net earnings decreased 12.3% in the first quarter of fiscal 2016 from the comparable period of the prior year due primarily to increased interest expense related to the redemption of the senior notes. Items impacting our income taxes from effective tax rates are discussed in Note 12, "Income Taxes". Adjusted net earnings increased 0.9% during the same period primarily from sales and gross profit growth. An additional unfavorable impact of $5.7 million resulted from the strengthening U.S. dollar, which reduced our net earnings as we converted foreign earnings to U.S. dollars.

Earnings Per Share

Basic and diluted earnings per share in the first quarter of fiscal 2016 were both $0.41, a 12.8% decrease from the comparable prior period amounts of $0.47 per share. Adjusted diluted earnings per share in the first quarter of fiscal 2016 were $0.52, matching the comparable prior period amount of $0.52 per share. These results were primarily from the factors discussed above related to net earnings and an increase in outstanding shares. As discussed below in “Liquidity and Capital Resources - Financing Activities,” our shares outstanding have increased primarily as a result of stock option exercises and restricted stock unit awards to employees. This resulted in lowering our earnings per share amounts by one cent for the first quarter of fiscal 2016. The unfavorable impact that resulted from the strengthening U.S. dollar, reduced our earnings per share as we converted foreign earnings to U.S. dollars at an estimated impact of one cent per share. As noted in our Trends discussion above, our accelerated share repurchases that occurred in the second quarter of fiscal 2016 will favorably impact our fiscal 2016 earnings per share.

Non-GAAP Reconciliations

Sysco’s results of operations are impacted by severance charges, merger and integration planning costs, litigation costs and termination costs in connection with the merger that had been proposed with US Foods, facility closure charges and US Foods related financing costs. Management believes that adjusting its operating expenses, operating income, interest expense, net earnings and diluted earnings per share to remove the impact of these charges provides an important perspective of underlying business

trends and results and provides meaningful supplemental information to both management and investors that is indicative of the performance of the company’s underlying operations and facilitates comparison on a year-over-year basis.

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. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. As a result, in the table below, each period presented is adjusted to remove the costs described above. In the table below, individual components of diluted earnings per share may not add to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

Set forth below is a reconciliation of actual operating expenses, operating income, interest expense, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented:



	13-Week Period Ended Sep. 26, 2015			13-Week Period Ended Sep. 27, 2014			13-Week Period Change in Dollars			13-Week Period % Change
	(In thousands, except for share and per share data)
Operating expenses (GAAP)	$	1,744,521		$	1,723,104		$	21,417		1.2	%
Impact of severance charges	(3,189		)	(1,804		)	(1,385		)	0.8
Impact of US Foods merger and integration planning costs	(9,816		)	(40,481		)	30,665			(0.8	)
Impact of facility closure charges	—			(1,150		)	1,150			NM
Adjusted operating expenses (Non-GAAP)	$	1,731,516		$	1,679,669		$	51,847		3.1	%
Operating income (GAAP)	$	493,474		$	465,613		$	27,861		6.0	%
Impact of severance charge	3,189			1,804			1,385			0.8
Impact of US Foods merger and integration planning costs	9,816			40,481			(30,665		)	(0.8	)
Impact of facility closure charges	—			1,150			(1,150		)	NM
Adjusted operating income (Non-GAAP)	$	506,479		$	509,048		$	(2,569	)	(0.5	)%
Interest expense (GAAP)	$	126,907		$	30,934		$	95,973		310.3	%
Impact of US Foods financing costs	(94,835		)	(3,703		)	(91,132		)	NM
Adjusted interest expense (Non-GAAP)	$	32,072		$	27,231		$	4,841		17.8	%
Net earnings (GAAP) ⁽¹⁾	$	244,420		$	278,813		$	(34,393	)	(12.3	)%
Impact of severance charge (net of tax)	1,991			1,151			840			0.7
Impact of US Foods merger and integration planning costs (net of tax)	6,128			25,835			(19,707		)	(0.8	)
Impact of facility closure charges (net of tax)	—			734			(734		)	NM
Impact of US Foods Financing Costs (net of tax)	59,203			2,363			56,840			24.1
Adjusted net earnings (Non-GAAP) ⁽¹⁾	$	311,742		$	308,896		$	2,846		0.9	%
Diluted earnings per share (GAAP) ⁽¹⁾	$	0.41		$	0.47		$	(0.06	)	(12.8	)%
Impact of US Foods merger and integration planning costs	0.01			0.04			(0.03		)	(75.0	)
Impact of US Foods Financing Costs	0.10			—			0.10			NM
Adjusted diluted earnings per share (Non-GAAP) ⁽¹⁾	$	0.52		$	0.52		$	—		—	%
Diluted shares outstanding	600,789,913			593,309,750

⁽¹⁾ The net earnings and diluted earnings per share impacts are shown net of tax. The aggregate tax impact of adjustments for Certain Items was $40.5 million and $17.1 million for the first quarter of fiscal 2016 and fiscal 2015, respectively. Amounts are calculated by multiplying the operating income impact of each item by the respective year’s effective tax rate.

Segment Results

We have aggregated certain of our operating companies into two reporting segments, Broadline and SYGMA, as defined in the accounting literature related to disclosures about segments of an enterprise. The Broadline reportable segment is an aggregation of the company’s U.S. and International Broadline segments located in the Bahamas, Canada, Costa Rica and Ireland. Broadline operating companies distribute a full line of food products and a wide variety of non-food products to both traditional

and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations. "Other" financial information is attributable to the company's other operating segments, including the company's specialty produce, custom-cut meat operations, lodging industry segments, a company that distributes specialty imported products, a company that distributes to international customers and the company’s Sysco Ventures platform, which includes a suite of technology solutions that help support the business needs of Sysco’s customers. Intersegment sales primarily represent products the Broadline and SYGMA operating companies procured from the specialty produce, custom-cut meat operations, imported specialty products and a company that distributes to international customers.

Management evaluates the performance of each of our operating segments based on its respective operating income results. Corporate expenses generally include all expenses of the corporate office and Sysco’s shared services center. These also include all share-based compensation costs. While a segment’s operating income may be impacted in the short-term by increases or decreases in gross profits, expenses, or a combination thereof, over the long-term each business segment is expected to increase its operating income at a greater rate than sales growth. This is consistent with our long-term goal of leveraging earnings growth at a greater rate than sales growth.

The following table sets forth the operating income of each of our reportable segments and the other segment expressed as a percentage of each segment’s sales for each period reported and should be read in conjunction with Note 14, "Business Segment Information":



	Operating Income as a Percentage of Sales
	13-Week Period Ended
	Sep. 26, 2015		Sep. 27, 2014
Broadline	7.2	%	6.9	%
SYGMA	0.4		0.3
Other	2.6		4.0

The following table sets forth the change in the selected financial data of each of our reportable segments and the other segment expressed as a percentage increase or decrease over the comparable period in the prior year and should be read in conjunction with Note 14, "Business Segment Information":



	Increase (Decrease)
	13-Week Period
	Sales		Operating Income
Broadline	0.6	%	5.9	%
SYGMA	(6.2	)	1.4
Other	8.2		(29.7	)

The following table sets forth sales and operating income of each of our reportable segments, the other segment, and intersegment sales, expressed as a percentage of aggregate segment sales, including intersegment sales, and operating income, respectively. For purposes of this statistical table, operating income of our segments excludes corporate expenses of $265.2 million in the first quarter of fiscal 2016, as compared to $263.7 million in the first quarter of fiscal 2015, that is not charged to our segments. This information should be read in conjunction with Note 14, "Business Segment Information":



	Components of Segment Results
	13-Week Period Ended
	Sep. 26, 2015				Sep. 27, 2014
	Sales		Segment Operating Income		Sales		Segment Operating Income
Broadline	79.8	%	95.8	%	80.1	%	94.1	%
SYGMA	11.5		0.7		12.4		0.7
Other	8.7		3.5		7.5		5.2

Total	100.0	%	100.0	%	100.0	%	100.0	%

Broadline Segment

The Broadline reportable segment is an aggregation of the company’s U.S. and International Broadline companies located in the Bahamas, Canada, Costa Rica and Ireland. Broadline operating companies distribute a full line of food products and a wide variety of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. Broadline operations have significantly higher operating margins than the rest of Sysco’s operations. In the first quarter of fiscal 2016, the Broadline operating results represented approximately 80% of Sysco’s overall sales and 96% of the aggregated operating income of Sysco’s segments, which excludes corporate expenses and adjustments.

Sales

Sales were 0.6% higher in the first quarter of fiscal 2016 than in the comparable period of the prior year. Sales for the first quarter of fiscal 2016 increased as a result of case volume growth and sales from acquisitions that occurred within the last 12 months. Partially offsetting this growth were unfavorable changes in exchange rates used to translate our foreign sales into U.S. dollars and product cost deflation and the resulting decrease in selling prices. Case volumes for the company's U.S. Broadline operations including acquisitions within the last 12 months improved 3.4% in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 and included a 2.0% improvement in locally-managed customers' case growth. Sales from acquisitions within the last 12 months favorably impacted sales by 0.4% in the first quarter of fiscal 2016. The exchange rates used to translate our foreign sales into U.S. dollars negatively impacted sales by 2.0% in the first quarter of fiscal 2016. Change in product costs, an internal measure of inflation or deflation, was estimated as deflation of 0.7% during the first quarter of fiscal 2016 for our operating companies in this segment. Deflation in the first quarter of fiscal 2016 has occurred primarily in the dairy, meat, poultry and seafood categories, partially offset by modest inflation in other product categories.

Operating Income

Operating income increased by 5.9% in the first quarter of fiscal 2016 over the first quarter of fiscal 2015 primarily due to higher gross profits, partially offset by higher operating expenses attributable to higher case volumes. Gross profit dollars increased in the first quarter of fiscal 2016 as compared to the first quarter of fiscal 2015 primarily due to increased sales volumes, favorable category management and improved mix, both in terms of local case growth and Sysco branded products. Our gross profits grew at a faster pace than operating expenses, reflecting favorable expense management. Our cost per case and adjusted cost per case decreased $0.01 in the first quarter of fiscal 2016 as compared to the corresponding period of fiscal 2015. Adjustments to operating expenses were not large enough to produce a different result on an adjusted cost per case basis for the first quarter of fiscal 2016. The decreases reflect productivity improvements and cost reductions in our supply chain.

SYGMA Segment

SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations.

Sales

Sales were 6.2% lower in the first quarter of fiscal 2016 than in the first quarter of fiscal 2015. The decrease for the first quarter of fiscal 2016 was due to lost and strategically resigned business and lower fuel surcharges.

Operating Income

Operating income increased by 1.9%, or $0.1 million, in the first quarter of fiscal 2016 from the first quarter of fiscal 2015, reflecting improved profitability. Gross profit dollars decreased 8.0%, while operating expenses decreased 7.3% in the first quarter of fiscal 2016 over the first quarter of fiscal 2015. These decreases are in line with the reduction in volumes from lost and resigned business.

Other Segment

“Other” financial information is attributable to our other operating segments, including our specialty produce, our custom-cut meat operations, lodging industry products segments, a company that distributes specialty imported products, a company that distributes to international customers and our Sysco Ventures platform, our suite of technology solutions that help support the business needs of our customers. These operating segments are discussed on an aggregate basis as they do not represent reportable segments under segment accounting literature.

Operating income decreased 29.7%, or $11.2 million in the first quarter of fiscal 2016 from the first quarter of fiscal 2015. The decrease in operating income was largely due to startup costs and early operating stage results from operations in this segment.

Liquidity and Capital Resources

Highlights

Comparisons of the cash flows from the first quarter of fiscal 2016 to the first quarter of fiscal 2015:


•	Cash flows from operations were a negative $261.5 million in 2016 compared to $62.6 million in 2015, and were negatively impacted by cash payments for Certain Items;


•	Capital expenditures totaled $121.2 million in 2016 compared to $118.8 million in 2015;


•	Free cash flow was a negative $381.2 million in 2016 compared to a negative $55.1 million in 2015, and were negatively impacted by cash payments for Certain Items (see Non-GAAP reconciliation below under the heading “Free Cash Flow”);


•	Cash used for acquisition of businesses was $83.6 million in 2016 compared to $32.1 million in 2015;


•	Net bank repayments were $717.6 million in 2016 compared to net bank borrowings of $268.6 million in 2015; and


•	Dividends paid were $179.0 million in 2016 compared to $170.0 million in 2015.

In addition, we redeemed senior notes in the amount of $5.05 billion, using cash on hand and proceeds from borrowings under our commercial paper program.

Sources and Uses of Cash

Sysco’s strategic objectives include continuous investment in our business; these investments are funded by a combination of cash from operations and access to capital from financial markets. Our operations historically have produced significant cash flow. Cash generated from operations is generally allocated to:


•	working capital requirements;


•	investments in facilities, systems, fleet, other equipment and technology;


•	return of capital to shareholders, including cash dividends and share repurchases;


•	acquisitions compatible with our overall growth strategy;


•	contributions to our various retirement plans; and


•	debt repayments.

Any remaining cash generated from operations may be invested in high-quality, short-term instruments. As a part of our ongoing strategic analysis, we regularly evaluate business opportunities, including potential acquisitions and sales of assets and businesses, and our overall capital structure. Any transactions resulting from these evaluations may materially impact our liquidity, borrowing capacity, leverage ratios and capital availability.

Our liquidity and capital resources can be influenced by economic trends and conditions that impact our results of operations. We believe our mechanisms to manage working capital, such as credit monitoring, optimizing inventory levels and maximizing payment terms with vendors, and our mechanisms to manage the items impacting our gross profits have been sufficient to limit a significant unfavorable impact on our cash flows from operations. We believe these mechanisms will continue to prevent a significant unfavorable impact on our cash flows from operations. Seasonal trends also impact our cash flows from operations and free cash flow, as we use more cash earlier in the fiscal year and then see larger, sequential quarterly increases throughout the remainder of the year. As of September 26, 2015, we had $388.3 million in cash and cash equivalents, approximately 57.0% 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 additional tax obligations; however, we do not currently anticipate the need to repatriate this cash.

We believe the following sources will be sufficient to meet our anticipated cash requirements for the next twelve months, while maintaining sufficient liquidity for normal operating purposes:


•	our cash flows from operations;


•	the availability of additional capital under our existing commercial paper programs, supported by our revolving credit facility and bank line of credit;


•	our ability to access capital from financial markets, including issuances of debt securities, either privately or under our shelf registration statement filed with the Securities and Exchange Commission (SEC); and

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.

Cash Flows

Operating Activities

We used $261.5 million in our cash flows from operations in the first quarter of fiscal 2016 compared to cash flow generation of $62.6 million in the first quarter of fiscal 2015. The decrease of $324.1 million was largely attributable to negative comparisons on accrued expenses, partially offset by a smaller increase in working capital requirements year-over-year. The negative comparison on accrued expenses was primarily due to $312.5 million in US Foods merger termination payments and a $92.4 million decrease from incentive payments. Our annual incentive payments from the prior fiscal year are paid in the first quarter of each fiscal year, and our fiscal 2015 performance resulted in higher incentive payments as compared to our fiscal 2014 performance. The cash impact of our Certain Items increased $218.6 million year-over-year.

Changes in working capital, specifically accounts receivable, inventory and accounts payable, had a positive impact of $69.5 million on the period over period comparison of cash flow from operations. Both periods were affected by increases in accounts receivable and inventory resulting from increases in sales, as well as a seasonal change in volume and customer mix. Accounts receivable experienced turnover deterioration in both periods resulting primarily from the change in customer mix, but the year-over-year comparison related to turnover was favorable for accounts receivable. Due to normal seasonal patterns, sales to multi-unit customers and school districts represent a larger percentage of our sales at the end of each first quarter period as compared to the end of each prior fiscal year, yielding an increase in the receivables outstanding for these customers. Payment terms for these types of customers are traditionally longer than average. These factors also resulted in an increase to inventories. Conversely, accounts payable experienced turnover improvement in both periods; however, the impact was more favorable in the first quarter of fiscal 2015 due to greater improvements in working capital management in that period.

Investing Activities

Our capital expenditures in the first quarter of fiscal 2016 primarily consisted of facility replacements and expansions, fleet, technology and warehouse equipment.

During the first quarter of fiscal 2016, we paid cash of $83.6 million for an acquisition made during the quarter. We also eliminated our restricted cash balance of $168.3 million by using letters of credit as security for self insurance instead of restricted cash.

Free Cash Flow

Free cash flow represents net cash provided from operating activities less purchases of plant and equipment plus proceeds from sales of plant and equipment. Sysco considers free cash flow to be a non-GAAP 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. Our free cash flow for the first quarter of fiscal 2016 decreased by $326.1 million, to negative $381.2 million as compared to the first quarter of fiscal 2015. Our cash requirements for our Certain Items were $218.6 million greater in the first quarter of fiscal 2016 than in the first quarter of fiscal 2015 and reduced free cash flow as a result.

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 used in / provided by operating activities.



	13-Week Period Ended Sep. 26, 2015			13-Week Period Ended Sep. 27, 2014			13-Week Period Change in Dollars			13-Week Period % Change
	(In thousands)
Net cash (used in) provided by operating activities (GAAP)	$	(261,482	)	$	62,618		$	(324,100	)	(517.6	)%
Additions to plant and equipment	(121,243		)	(118,821		)	(2,422		)	—
Proceeds from sales of plant and equipment	1,506			1,126			380			0.3
Free Cash Flow (Non-GAAP)	$	(381,219	)	$	(55,077	)	$	(326,142	)	(592.2	)%

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $54.8 million in the first quarter of fiscal 2016, as compared to $35.2 million in the first quarter of fiscal 2015. The increase in proceeds in the first quarter of fiscal 2016 was due to an increase in the number of options exercised in this period, as compared to the first quarter of fiscal 2015. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

We routinely engage in share repurchase programs. There were no shares repurchased during the first quarter of fiscal 2016 or fiscal 2015. In June 2015, our Board of Directors approved a repurchase program to repurchase, from time to time in the open market, through an accelerated share repurchase program or through privately negotiated transactions, shares of the company's common stock in an amount not to exceed $3.0 billion during the two year period ending July 1, 2017, in addition to amounts normally repurchased to offset benefit plan and stock option dilution. We executed $1.5 billion of this authorization through an accelerated share repurchase program that commenced in the second quarter of fiscal 2016. As a result, there were 32,319,392 shares repurchased through October 24, 2015, resulting in a remaining authorization by our Board of Directors to repurchase up to approximately $1.5 billion in additional shares. Our historical approach to share repurchases is to buy enough shares to keep our average shares outstanding relatively constant over time. In addition to the share repurchase program approved in June, in August 2015, our Board of Directors approved the repurchase of up to 20,000,000 shares for an aggregate purchase price not to exceed $800 million. The authorization expires on August 21, 2017. No shares have been purchased under this authorization through October 24, 2015. The number of shares we repurchase, if any, in the remainder of fiscal 2016 will be

dependent on many factors, including the level of future stock option exercises, as well as competing uses for available cash; however, we expect to resume purchases later this year.

Dividends paid in the first quarter of fiscal 2016 were $179.0 million, or $0.30 per share, as compared to $170.0 million, or $0.29 per share, in the first quarter of fiscal 2015. In August 2015, we declared our regular quarterly dividend for the first quarter of fiscal 2016 of $0.30 per share, which was paid in October 2015.

Debt Activity and Borrowing Availability

Our debt activity and borrowing availability is described in Note 7, "Debt". Our outstanding borrowings at September 26, 2015, are disclosed within that note. Updated amounts through October 24, 2015, include:


•	$484.0 million amounts outstanding from our commercial paper program


•	No amounts outstanding from the credit facility supporting the company’s U.S. and Canadian commercial paper programs.

During the first quarter of fiscal 2016 and 2015, our aggregate commercial paper issuances and short-term bank borrowings had weighted average interest rates of 0.28% and 0.15%, respectively.

Contractual Obligations

Our Annual Report on Form 10-K for the fiscal year ended June 27, 2015, contains a table that summarizes our obligations and commitments to make specified contractual future cash payments as of June 27, 2015. Other than as described in this Form 10-Q, there have been no material changes to our specified contractual obligations through September 26, 2015.

The following table sets forth, as of September 26, 2015, certain information concerning our obligations for long-term debt repayments:



	Payments Due by Period
	Total		< 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(In thousands)
Recorded Contractual Obligations:
Long-term debt	$	3,004,615	$	746,724	$	1,226,769	$	8,313	$	1,022,809
Unrecorded Contractual Obligations:
Interest payments related to long-term debt	$	1,323,974	$	115,953	$	231,905	$	164,605	$	811,511
Total contractual cash obligations	$	4,328,589	$	862,677	$	1,458,674	$	172,918	$	1,834,320

See Note 7, "Debt" for repayments of debt and Note 16, "Subsequent Events" for additional information on changes in debt.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to the portrayal of our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical accounting policies and estimates and this related disclosure. Sysco’s most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, self-insurance programs, pension plans, income taxes, vendor consideration, accounting for business combinations and share-based compensation, which are described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 27, 2015.

Forward-Looking Statements

Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements about:


•	Sysco’s ability to increase its sales and market share and grow earnings, and our plan to continue to explore appropriate opportunities to profitably grow market share and create shareholder value;


•	Sysco’s belief regarding accounting treatment for certain transactions;


•	expectations regarding interest expense;


•	the impact of ongoing legal proceedings and estimates of potential liability;


•	the impact of general economic conditions on our business and our industry;


•	statements regarding inflation and other economic trends;


•	expectations regarding deflation and foreign currency translation and the related impact on our results;


•	expectations regarding earnings per share;


•	expectations regarding our efforts to manage expenses;


•	beliefs regarding factors that impact our operating margins;


•	our plans related to locally-managed sales and ongoing gross margin pressures;


•	expectations related to the strategies that we have identified to help us achieve our mission and vision;


•	our plans and expectations regarding our three-year financial targets, including goals related to operating income and return on invested capital;


•	expectations related to cost per case for our U.S. Broadline companies;


•	our goal of leveraging earnings growth at a greater rate than sales growth;


•	expectations regarding operating income and sales for our business segments over the long-term;


•	expectations regarding the allocation of cash generated from operations;


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


•	Sysco’s expectations regarding cash held by international subsidiaries;


•	the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of these mechanisms;


•	Sysco’s ability to meet future cash requirements, including the ability to access debt markets effectively, and remain profitable;


•	Sysco’s ability to effectively access the commercial paper market and long-term capital markets;


•	Sysco’s expectations regarding cash flows from operations over the long-term, and the factors impacting such cash flows;


•	our expectations regarding free cash flow;


•	expectations regarding tax expense and benefits;


•	expectations regarding acquisitions and related accounting treatment;


•	our strategy and expectations regarding share repurchases and shares outstanding; and


•	expectations related to our forward diesel fuel commitments.

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 discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 27, 2015:


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


•	risks related to unfavorable conditions in the U.S. economy and local markets and the impact on our results of operations and financial condition;


•	the risk that competition in our industry 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 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;


•	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 impact on our liquidity by payments required to appeal tax assessments with certain tax jurisdictions;


•	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 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; and


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

For a more detailed discussion of factors that could cause actual results to differ from those contained in the forward-looking statements, see the risk factors discussion contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 27, 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk, foreign currency exchange rate risk, fuel price risk and investment risk. For a discussion on our exposure to market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risks”

in our Annual Report on Form 10-K for the fiscal year ended June 27, 2015. There have been no significant changes to our market risks since June 27, 2015, except as noted below.

Interest Rate Risk

At September 26, 2015, there were $717.6 million commercial paper issuances outstanding. Total debt as of September 26, 2015 was $3.0 billion, of which approximately 60% was at fixed rates of interest, including the impact of our interest rate swap agreements.

In August 2013, we entered into interest rate swap agreements that effectively converted $500 million of the new senior notes maturing in October 2017, to floating rate debt. Details of our outstanding swap agreement is below:

Maturity Date of Swap

Notional Value

(in millions)

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)

February 12, 2018

500

5.25

Six-month LIBOR

Every six months in advance

Other assets

8,219

As noted in Note 6, "Derivative Financial Instruments", the company terminated interest rate swap agreements used to hedge a senior notes offering occurring in the first quarter of fiscal 2016. Payments of $6.1 million were made in the second quarter of fiscal 2016.

As noted in Note 16, "Subsequent Events", concurrent with the offering of $2.0 billion in senior notes in the second quarter of fiscal 2016, the company entered into interest rate swap agreements that effectively converted $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates.

Fuel Price Risk

Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel fluctuates due to changes in production, seasonality and other market factors generally outside of our control. During the first quarter of fiscal 2016 and fiscal 2015, fuel costs related to outbound deliveries represented approximately 0.5% and 0.7% of sales, respectively.

We routinely enter into forward purchase commitments for a portion of our projected monthly diesel fuel requirements. As of September 26, 2015, we had forward diesel fuel commitments totaling approximately $104.5 million through September 2017. These contracts will lock in the price of approximately 50% of our fuel purchase needs for the remainder of fiscal 2016 and lesser amounts during fiscal 2017. Our remaining fuel purchase needs will occur at market rates unless contracted for a fixed price at a later date.

Item 4. Controls and Procedures

Sysco’s management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 26, 2015. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Sysco’s disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of September 26, 2015, our chief executive officer and chief financial officer concluded that, as of such date, Sysco’s disclosure controls and procedures were effective at the reasonable assurance level.

No change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the fiscal quarter ended September 26, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The information set forth in this report should be read in conjunction with the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended June 27, 2015.

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

We made the following share repurchases during the first quarter of fiscal 2016:



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	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1
June 28 – July 25	11,242	$	38.23	—	11,655,197
Month #2
July 26 – August 22	7,394	40.03		—	11,655,197
Month #3
August 23 – September 26	—	—		—	11,655,197

Total	18,636	$	38.94	—	11,655,197

The total number of shares purchased includes 11,242, 7,394 and 0 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.

In June 2015, our Board of Directors approved a repurchase program to repurchase from time to time in the open market, through an accelerated share repurchase program or through privately negotiated transactions, shares of the company's common stock in an amount not to exceed $3.0 billion during the two year period ending July 1, 2017, including $1.5 billion through an accelerated share repurchase program that commenced in the second quarter of fiscal 2016, in addition to amounts normally repurchased to offset benefit plan and stock option dilution. In addition to this share repurchase program approved in June, in August 2015, our Board of Directors approved the repurchase of up to 20,000,000 shares for an aggregate purchase price not to exceed $800 million. The authorization expires on August 21, 2017. Pursuant to the repurchase program, shares may be acquired in the open market or in privately negotiated transactions at the company’s discretion, subject to market conditions and other factors.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

The exhibits listed on the Exhibit Index immediately preceding such exhibits, which is incorporated herein by reference, are filed or furnished as a part of this Quarterly Report on Form 10-Q.

SIGNATURES

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



	Sysco Corporation
	(Registrant)



	By	/s/ WILLIAM J. DELANEY
		William J. DeLaney
		President and Chief Executive Officer

Date: November 2, 2015



	By	/s/ JOEL T. GRADE
		Joel T. Grade
		Executive Vice President and
		Chief Financial Officer

Date: November 2, 2015

EXHIBIT INDEX



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

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

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

3.4	—	Amended and Restated Bylaws of Sysco Corporation dated November 14, 2013, incorporated by reference to Exhibit 3.01 to Form 8-K filed on November 20, 2013 (File No. 1-6544).

4.1	—	Twenty-Second Supplemental Indenture dated as of September 28, 2015 among Sysco, the Guarantors and the Trustee relating to the addition of new guarantors under the Indenture, incorporated by reference to Exhibit 4.1 to Form 8-K filed on September 28, 2015 (File No. 1-6544).

4.2	—	Twenty-Third Supplemental Indenture, including form of Note, dated as of September 28, 2015 among Sysco, the Guarantors and the Trustee relating to the 2020 Notes, incorporated by reference to Exhibit 4.2 to Form 8-K filed on September 28, 2015 (File No. 1-6544).

4.3	—	Twenty-Fourth Supplemental Indenture, including form of Note, dated as of September 28, 2015 among Sysco, the Guarantors and the Trustee relating to the 2025 Notes, incorporated by reference to Exhibit 4.4 to Form 8-K filed on September 28, 2015 (File No. 1-6544).

4.4	—	Twenty-Fifth Supplemental Indenture, including form of Note, dated as of September 28, 2015 among Sysco, the Guarantors and the Trustee relating to the 2045 Notes, incorporated by reference to Exhibit 4.6 to Form 8-K filed on September 28, 2015 (File No. 1-6544).

10.1#†		Sysco Corporation Fiscal 2016 Management Incentive Program (MIP) For Corporate MIP Bonus-eligible Positions adopted effective August 20, 2015.

10.2#†		Sysco Corporation Fiscal Year 2016 Cash Performance Unit Program (Performance Period Fiscal 2016-2018) adopted effective August 20, 2015.

10.3#		Master Confirmation dated September 23, 2015, between Sysco Corporation and Goldman, Sachs & Co.

10.4#+		Supplemental Confirmation dated September 23, 2015, between Sysco Corporation and Goldman, Sachs & Co.

12.1#	—	Statement regarding Computation of Ratio of Earnings to Fixed Charges.

15.1#	—	Review Report from Ernst & Young LLP dated November 2, 2015, re: unaudited financial statements.

15.2#	—	Acknowledgement letter from Ernst & Young LLP.

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

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

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

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

101.1#	—	The following financial information from Sysco Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2015 filed with the SEC on November 2, 2015, formatted in XBRL includes: (i) Consolidated Balance Sheets as of September 26, 2015, June 27, 2015 and September 27, 2014, (ii) Consolidated Results of Operations for the thirteen week period ended September 26, 2015 and September 27, 2014, (iii) Consolidated Statements of Comprehensive Income for the thirteen period ended September 26, 2015 and September 27, 2014, (iv) Consolidated Cash Flows for the thirteen week period ended September 26, 2015 and September 27, 2014, and (v) the Notes to Consolidated Financial Statements.

___________

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

# Filed herewith

* Furnished herewith

+ Confidential treatment has been requested for certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Fiscal 2016 Management Incentive Program (MIP)

For Corporate MIP Bonus-eligible Positions

Adopted August 20, 2015

This SYSCO CORPORATION FISCAL 2016 MANAGEMENT INCENTIVE PROGRAM FOR CORPORATE MIP BONUS-ELIGIBLE PARTICIPANTS (the “Program”) was adopted pursuant to the Sysco Corporation 2013 Long-Term Incentive Plan (the “Plan”) by the Committee (as defined in the Plan) of Sysco Corporation (the “Company”) on August 20, 2015, and shall be effective for the Company’s fiscal year ending July 2, 2016 (the “Program Year”). Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Plan.

1.Participants. For purposes of this Program, “Senior Officer” shall mean the Company’s Chief Executive Officer, the Company’s Chief Financial Officer or the Company’s President of Foodservice Operations. The Participants in this Program are in groups as follows:

(A) Corporate MIP Bonus-eligible Participants: Those persons who serve in a Corporate MIP Bonus-eligible position and are designated by a Senior Officer as eligible to participate in the Program.

(B) Senior Executive Participants: Corporate MIP Bonus-eligible Participants who are “covered employees” of the Company within the meaning of Code Section 162(m) and Treasury Regulation 1.162-27(c)(2) (or any successor statute, any regulatory section, or any administrative interpretation thereof) for the Program Year. If it is determined that a Participant is a Senior Executive Participant for the Program Year, such Participant’s bonus shall be calculated subject to any and all restrictions applicable to Senior Executive Participants under the Plan and this Program for the Program Year.

Once a person is designated as a Participant in this Program, the Committee may remove the Participant as a Participant in this Program with or without cause at any time during the Program Year, and the Participant shall not be entitled to any bonus under this Program for the Program Year regardless of when during the Program Year such Participant is removed.

2. Definitions.

(A) For calculation of a performance bonus the following metrics are defined as follows:

(i) Operating Income: Means the Operating Income expressed as a dollar value, as it may be adjusted pursuant to Section 3(B), for the Program Year.

(ii) Sales Growth and Gross Profit Dollars Growth: Means the Sales Growth and Gross Profit Dollars Growth expressed as a percentage and computed by comparing the sales and gross profit, as they may be adjusted pursuant to Section 3(B), for the Program Year to the sales and gross profit dollars for the prior fiscal year, as they may be adjusted pursuant to Section 3(B).

(iii) Strategic Bonus Objectives: Means key goals for the Program Year, as established by the Committee and as set forth in the Participant’s MIP bonus award letter.

(iv) Operating Income Bonus Percentage: Means the percentage determined from Table A - Operating Income, which is computed by comparing Operating Income for the Program Year to the Projected Operating Income for the Program Year according to the operational target in the performance plan.

(v) Sales Growth and Gross Profit Dollar Growth Bonus Percentage: Means the percentage determined from Table A - Sales Growth and Gross Profit Dollar Growth, attached hereto, which is computed by comparing the Sales Growth and Gross Profit Dollar Growth for the Program Year to the Projected Sales Growth and Gross Profit Dollar Growth for the Program Year.

(vi) Strategic Bonus Objective Bonus Percentage: Means the percentage determined from Table A – Strategic Bonus Objectives, attached hereto, which coincides with Participant’s achievement of Strategic Bonus Objectives for the Program Year.

(B) Corporate MIP Bonus-eligible Position: Means (i) the Senior Officers and (ii) employees that serve in other roles with the Company, as deemed appropriate by the Chief Executive Officer.

(C) Bonus Target Amount: Means a Participant’s Target Bonus Percentage for the Program Year multiplied by the Participant’s base salary as of the end of the relevant Program Year.

(D) Bonus for a Corporate MIP Bonus-eligible Position: Means the sum of the Company Performance Bonus a MIP Bonus-eligible Position and the SBO Performance Bonus for a Corporate MIP Bonus-eligible Position.

(E) Performance Bonus for a Corporate MIP Bonus-eligible Position: As defined in Section 3(A)(i) hereof.

(G) GAAP Change Year: As defined in Section 3(C)(i) hereof.

(G) SBO Performance Bonus for a Corporate MIP Bonus-eligible Position: As defined in Section 3(A)(ii) hereof.

(H) Rate Change Year: As defined in Section 3(C)(iii) hereof.

(I) Target Bonus Percentage: The percentage set forth in the Participant’s bonus letter for the Program Year.

3.Calculation of Bonus.

(A) Bonus Formula. The Bonus for a Corporate MIP Bonus-eligible Position for the Program Year shall be based 75% on financial performance of the Company and 25% on an individual Participant’s performance with respect to Strategic Bonus Objectives, and shall be equal to the sum of the (i) and (ii), calculated as follows:

(i)Performance Bonus for a Corporate MIP Bonus-eligible Position. The Company Performance Bonus for a MIP Bonus-eligible Position shall be equal to the sum of the following:

(AA) Operating Income Bonus –



Participant’s Bonus Target Amount	X	Operating Income Bonus Percentage	X	50%	=	Operating Income Growth Bonus


(BB)	Sales Growth and Gross Profit Dollars Growth Bonus –



Participant’s Bonus Target Amount	X	Sales Growth and Gross Profit Dollars Bonus Percentage	X	25%	=	Sales Growth and Gross Profit Dollars Bonus

(ii)SBO Performance Bonus for a MIP Bonus-eligible Position. The SBO Performance Bonus for a MIP Bonus-eligible Position shall be determined based on the Participant’s achievement of the specified SBOs, and shall be equal to the sum of the following:

(CC) Strategic Bonus Objective Bonus –



Participant’s Bonus Target Amount	X	SBO Bonus Percentage	X	25%	=	SBO Bonus

Each of the above components of the Bonus for a MIP Bonus-eligible Position shall be calculated and awarded independently. Each metric based on financial performance has a possible payout between 0% and 200%, depending on actual performance relative to established targets. SBO Performance Bonus has a possible payout of between 0% and 150%, depending on actual performance relative to established targets. If performance for the Program Year with respect to a component does not meet Threshold, a Participant will not receive any bonus with respect to that component. If performance for the Program Year is between Threshold and Maximum, the amount of bonus earned with respect to that component will be determined as set forth on the applicable Table A attached to this Program. Prior to the date that is ninety (90) days after the beginning of the Program Year, the Committee shall determine the Threshold, Target and Maximum performance metrics and the respective payout percentages to be set forth on Table A for the Company.

(B) Performance Metric Adjustments. Certain items of revenue, expense, gain, losses or other adjustments resulting from extraordinary or non-recurring items, will be taken into account in the application of the relevant performance metrics used to determine the Participants’ bonuses under this Program in accordance with the following:

(i) Multi-Employer Pension Adjustments. Adjustments resulting from the Company’s or an Operating Company’s complete or partial withdrawal from a multi-employer pension plan sponsored by a third party in which the Company or an Operating Company participates (“Pension Adjustments”). The amount of any such adjustment shall be determined in accordance with GAAP. Pension Adjustments shall initially be excluded from the calculation of the performance metrics used to determine Participants’ bonuses under this Program; provided however, the Committee may include all or any portion of such Pension Adjustments in the determination of a Participant’s bonus hereunder in its discretion, provided such inclusion shall not apply to a Senior Executive Participant unless the Committee determines that the inclusion of all or any portion of such Pension Adjustments will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under this Program under Section 162(m) of the Code.

(ii) Restructuring Charges Adjustment. Adjustments resulting from the Company’s or an Operating Company’s costs including, but not limited to, severance, facility closures and consolidations and asset write downs. The foregoing notwithstanding, the following items will not be eligible for adjustment under this provision: ERB, COLI, Fuel and Tax.

(iii) Acquisitions and Divestitures. All or any portion of operating results, acquisition and divestiture expenses (including any applicable break up fees), acquisition debt, if any, and any gains or losses relating to or resulting from (AA) an acquisition by the Company of stock (or other equity interest) or substantially all of the assets of a corporation, partnership, limited liability company or other entity for a purchase price in excess of $100 million; and (BB) a divestiture of an Operating Company or operating division of the Company (or substantially all of the assets thereof) for a sale price in excess of $100 million may be excluded from the determination of the Company Performance Bonus under this Program; provided however, such exclusion shall not apply to a Senior Executive Participant unless the Committee determines that the exclusion of all or any portion of such adjustments will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under this Program under Section 162(m) of the Code.

(iii) Foreign Exchange Rate Fluctuations. Variance of actual foreign exchange rates during the Program Year versus projected foreign exchange rate assumptions used in the development of operational targets in the performance plans.

(iv) Certain Other Events. Notwithstanding the foregoing, the Committee may include or exclude from the determination of a Participant’s bonus hereunder the results of certain other extraordinary or non-recurring items not otherwise contemplated by this Section (B), and expenses related to acquisitions by, or restructuring of, the Company and its subsidiaries (whether or not such expenses are extraordinary or non-recurring); provided however, such inclusion or exclusion of results shall not apply to a Senior Executive Participant unless the Committee determines that the inclusion or exclusion of such extraordinary items will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under this Program under Section 162(m) of the Code.

(i) Consistent Accounting. In determining whether or not the results of operations for a given fiscal year result in a bonus, Company accounting practices and, except as otherwise modified in this Program, GAAP shall be applied on a basis consistent with prior periods, and such determination shall be based on the calculations made by the Company, approved (in the case of Senior Executive Participants) by the Committee and binding on each Participant. Notwithstanding the foregoing, if there is any material change in GAAP during a Program Year that results in a material change in accounting for the revenues or expenses of the Company, the calculations of the MIP bonus for such Program Year (the “GAAP Change Year”) shall be made as if such change in GAAP had not occurred during the GAAP Change Year. In determining the MIP bonus for the year following a GAAP Change Year, the calculation shall be made after taking into account such change in GAAP.

(ii) Maximum Bonus. Subject to Section 6 as to Senior Executive Participants, and notwithstanding any other provision in this Program to the contrary, in no event shall any Participant be entitled to a bonus under this Program in excess of 281.25% of such Participant’s base salary in effect as of the end of the Program Year.

(iii) Tax Law Changes. If the Internal Revenue Code is amended during the Program Year and, as a result of such amendment(s), the effective tax rate applicable to the earnings of the Company (as described in the “Summary of Accounting Policies” section of the Company’s annual report to the Securities and Exchange Commission on Form 10-K) changes during the Program Year, the determination of the Participant’s Company Performance Bonus for the Program Year (the “Rate Change Year”) shall be made as if such rate change had not occurred during the Rate Change Year. In determining the Company Performance Bonus in the year following the Rate Change Year, the calculation shall be made after taking into account such rate change.

4. Payment. Within ninety (90) days following the end of the Program Year, the Company shall determine, and, in the case of Senior Executive Participants, the Committee shall approve, the amount of any bonus earned by each Participant under this Program. Such bonus shall be payable in the manner, at the times and in the amounts provided in the Plan.

5. Clawback of Bonus. In accordance with the Company’s incentive payment clawback policy, in the event of a restatement of financial results (other than a restatement due to a change in accounting policy) within thirty-six (36) months of the payment of a bonus under this Program, if the Committee or the Company determines in its sole and absolute discretion, that the bonus paid to a Participant under the Program for the Program Year would have been lower had it been calculated based on such restated results (the “Adjusted MIP Bonus”), then the Committee or the Company shall, subject to applicable governing law, recoup from such Participant, in such form and at such time as the Committee or the Company determines in its sole and absolute discretion, the difference between the amount previously paid to such Participant pursuant to this Program (without regard to amounts deferred by such Participant under the Company’s executive benefit plans) and the Adjusted MIP Bonus.

6. Provisions Applicable to Senior Executive Participants.

(A) Overall Limitation upon Payments under the Plan to Senior Executive Participants. Notwithstanding any other provision in this Program to the contrary, in no event shall any Senior Executive Participant be granted a Cash-Based Award (including both the Bonus amount for the Program Year and Cash Performance Unit payments) in excess of one percent (1%) of the Company’s earnings before income taxes as publicly disclosed in the “Consolidated Results of Operations” section of the Company’s Annual Report on Form 10-k filed with the Securities and Exchange Commission for the fiscal year ended immediately before the date the applicable Cash-Based Awards are paid.

(B) Limitation on Amendments. Notwithstanding anything to the contrary contained herein, any amendments made to this Program after the date that is ninety (90) days after the beginning of the Program Year shall not apply to the Senior Executive Participants unless the Committee determines that such amendment will not impact the Company’s ability to deduct the bonus payable to a Senior Executive Participant under Section 162(m) of the Code.

7. Confidentiality. The target performance levels and other information set forth on Table A constitute confidential information of the Company, subject to the prohibition on disclosure of confidential information under Sysco’s Code of Conduct. Any disclosure of the target performance levels by a Participant prior to the time such target performance levels are disclosed to the public, as determined by the Committee, will result in a forfeiture (which may include a clawback) of such Participant’s Bonus for the Program Year.

8. Delegation of Authority. Pursuant to Section 2.3 of the Plan, the Committee hereby delegates discretionary authority granted to the Committee under this Program as well as under the Plan, including but not limited to the authority to determine the target, minimum and maximum performance levels applicable to Participants and the Company and the related payout percentages subject to the maximum bonus levels set forth in Section I(ii) of this Program, to the Senior Officers and each of them individually, except as to Senior Executive Participants.

CONFIDENTIAL

TABLE A

FY 2016 COMPANY PERFORMANCE BONUS

THE PERFORMANCE TARGETS SET FORTH ON THIS TABLE CONSTITUTE “CONFIDENTIAL INFORMATION” AND ANY DISCLOSURE OF SUCH PERFORMANCE TARGETS BY A PARTICIPANT PRIOR TO THE TIME SUCH PERFORMANCE TARGETS BECOME PUBLIC INFORMATION WILL RESULT IN SUCH PARTICIPANT FORFEITING HIS OR HER RIGHTS TO A BONUS UNDER THIS PROGRAM.

FISCAL YEAR 2016
CASH PERFORMANCE UNIT PROGRAM

[Performance Period Fiscal 2016-2018]

Adopted Effective August 20, 2015

This Fiscal Year 2016 Cash Performance Unit Program (the “Program”) was adopted pursuant to the 2013 Sysco Corporation Long-Term Incentive Plan (the “Plan”) by the Committee (as defined in the Plan) of Sysco Corporation (the “Company”) effective August 20, 2015. This Program is for the Performance Period commencing June 27, 2015, and ending June 30, 2018 (the “Performance Period”). Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Plan.

1. Participants. The participants (“Participants”) in the Program are those Persons designated by the Committee or the Chief Executive Officer who are employed by the Company or an operating division or subsidiary of the Company and who either (i) serve as an officer of the Company; or (ii) serve in other roles with the Company or as one or more operating divisions or subsidiaries of the Company, as deemed appropriate by the Chief Executive Officer.

2. Performance Criteria. As described below, any Payment Amount earned under the Program is a function of the Company’s average annual Return on Invested Capital (ROIC) relative to Target ROIC for each of the three fiscal years in the Performance Period, with such average further modified by the Company’s Relative TSR Percentile Rank for the Performance Period. Not later than during the first 90 days of the applicable fiscal year, the Committee shall establish the Target ROIC for each of the three fiscal years in the Performance Period.

3. Method of Operation.

(a) In General. Subject to the discretion of the Committee to formulate different Performance Goals as to any Participant other than Covered Employees, the Payment Amount which a Participant can earn with respect to Performance Units under this Program is based on the performance of the Company as a whole. Except as otherwise provided in the Plan, the Payment Amount is calculated with respect to the entire Performance Period. If earned, the Payment Amount shall be paid in accordance with the Plan.

(b) Payment Amount. The Payment Amount for a Participant shall be determined as follows:



Number of Performance Units Granted to Participant	X	Unit Value	X	Average Capital Efficiency Performance Factor	X	Relative TSR Performance Factor	=	Payment Amount

Where:


(i)	“Unit Value” is $1.00 per unit;


(ii)	“Average Capital Efficiency Performance Factor” is the quotient of the following calculation:



Sum of Annual ROIC Performance Factor for each fiscal year in the Performance Period	Divided by	Number of fiscal years in the Performance Period


(iii)	“Relative TSR Performance Factor” is the percentage corresponding to the Company’s TSR Percentile Rank for the Performance Period as set forth on the following table, with straight-line interpolation applied to determine the value of the Relative TSR Performance Multiplier for results that falls between the minimum and maximum performance thresholds specified in the table below:



Maximum, Target, Minimum Range	Relative TSR Percentile Rank	Relative TSR Performance Multiplier
Maximum	≥ 75^th Percentile Rank	120%
Target	50^th Percentile Rank	100%
Minimum	≤ 30^th Percentile Rank	80%

(c) General Rules Regarding Bonus Calculation. In determining whether or not the results of the Company for the Performance Period satisfy the Performance Goals, except as otherwise provided herein, Company accounting practices and generally accepted accounting principles shall be applied on a basis consistent with prior periods, and such determination shall be based on the calculations made by the Company, approved (in the case of Covered Employees) by the Committee and binding on each Participant.

4. Definitions.

(a) Annual Company Capital Efficiency Performance Factor: Means the percentage determined from Target Return on Invested Capital for each fiscal year, as communicated to Participants, which coincides with the Company’s Return on Invested Capital for each fiscal year in the performance period, as set forth on the following table, with straight-line interpolation applied to determine the value of the Annual Capital Efficiency Performance Factor for a result that falls between the minimum and maximum performance thresholds specified in the table below:



Maximum, Target, Minimum Range	ROIC for fiscal year	Annual Capital Efficiency Performance Factor
Maximum	≥ 110% of Target ROIC	150%
Target	100% of Target ROIC	100%
Minimum	90% of Target ROIC	50%
Below Minimum	Less than 90% of Target ROIC	0%

(b) Company Total Shareholder Return. The Company Total Shareholder Return (“TSR”) for the Performance Period is equal to the following:

Ending Stock Price – Beginning Stock Price + Dividends

Beginning Stock Price

Where:

“Beginning Stock Price”: is the average closing price of a share of the Company’s common stock, as listed on the New York Stock Exchange, for the ten trading days immediately preceding the first day of the Performance Period;

“Dividends”: is the per share dividends paid on Company common stock during the Performance Period, as deemed to be reinvested as of each applicable payment date; and

“Ending Stock Price”: is the average closing price of a share of the Company’s common stock, as listed on the New York Stock Exchange, for the ten trading days immediately preceding the last day of the Performance Period.

(c) Comparison TSR. The index, published on the last day of the Performance Period, which sets forth the three year total shareholder return of each of the companies listed in the S&P 500 Companies Index as of such date that have remained in the S&P 500 Companies Index for the entire Performance Period, as calculated in a methodology consistent with the determination of the Company’s Beginning Stock Price and Ending Stock Price.

(d) Relative TSR Percentile Rank. The percentile rank of the Company within the Comparison TSR.

(e) Total Invested Capital. Means for any given fiscal year within the Performance Period, and with respect to the Company, the sum of the following:

(i) Stockholder’s Equity: the average of the amounts outstanding of stockholder’s equity for the Company at the end of each fiscal quarter within the Performance Period, as it may be adjusted pursuant to Section 8 for which the computation is being made (quarterly average basis).

(ii) Long-Term Debt: the average of the long-term portion of the debt of the Company outstanding at the end of each fiscal quarter within the Performance Period, as it may be adjusted pursuant to Section 8 for which the computation is being made (quarterly average basis).

(A) Method of Calculating Quarterly Averages: In determining the average amount outstanding of Stockholders’ Equity and Long-Term Debt of the Company, above, such averages shall be determined by dividing five (5) into the sum of the amounts outstanding of the relevant category at the end of each of the four quarters of the relevant fiscal year within the Performance Perioed plus the amount outstanding of the relevant category at the beginning of the relevant fiscal year within the Performance Period.

(f) Return on Invested Capital or “ROIC”. Means, for each fiscal year within the Performance Period, the Return on Invested Capital for the Company, expressed as a percentage and computed by dividing the Company’s net after-tax earnings, as it may be adjusted pursuant to Section 8, by the Company’s Total Invested Capital, as it may be adjusted pursuant to Section 8.

5. Payment. Within 90 days after the end of the Performance Period, the Company shall determine, and, in the case of Covered Employees, the Committee shall approve, the Payment Amount to be made for Performance Units awarded under the Plan and earned by each Participant that is a Covered Participant pursuant to the provisions of Section 3 above. Such bonus shall be payable in cash as provided in the Plan, and shall be paid no later than the last day of the fourth month following the end of the Performance Period (the “Payment Date”), except in the case of the Retirement of a Specified Employee during the Performance Period, in which case the Payment Amount shall not be paid to the Participant until the later of six months following the date of Retirement or the Payment Date, but only to the extent that making such payment on the Payment Date would result in a violation of Section 409A of the Code.

6. Maximum Units Granted to Participants under this Program. The Committee has established the maximum number of Units that may be granted to a Participant under this Program. Nothing in this Program shall be construed to give any Participant the right to receive a number of Units for the Performance Period equal to the maximum number of Units established by the Committee, and the Committee shall have the right to grant a Participant a number of Units less than the maximum established by the Committee.

7. Annual Limitation on Cash-Based Awards. Notwithstanding any other provision in this Program or the Plan to the contrary, for any fiscal year, in no event shall any Participant be granted Cash-Based Awards (including both Cash Performance Unit payments and any bonus under the Plan) in excess of one percent (1%) of the Company’s earnings before income taxes, as publicly disclosed in the “Consolidated Results of Operations” section of the Company’s annual report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended immediately before the date the applicable Cash-Based Awards are paid.

8. Performance Metric Adjustments. Certain items of revenue, expense, gain, losses or other adjustments resulting from extraordinary or non-recurring items, may be taken into account in the application of the relevant performance metrics, other than those related to measurement of TSR or Comparison TSR, that are used to determine the performance under this Program in accordance with the following:

(i) Multi-Employer Pension Adjustments. Adjustments resulting from the Company’s or an Operating Company’s complete or partial withdrawal from a multi-employer pension plan sponsored by a third party in which the Company or an Operating Company participates (“Pension Adjustments”). The amount of any such adjustment shall be determined in accordance with GAAP. Pension Adjustments shall initially be excluded from the calculation of the performance metrics used to determine Participants’ bonuses under this Program; provided however, the Committee may include all or any portion of such Pension Adjustments in the determination of a Participant’s bonus hereunder in its discretion, provided such inclusion shall not apply to a Covered Employee Participant unless the Committee determines that the inclusion of all or any portion of such Pension Adjustments will not impact the Company’s ability to deduct the bonus payable to a Covered Employee under this Program under Section 162(m) of the Code.

(iii) Acquisitions and Divestitures. All or any portion of operating results, acquisition and divestiture expenses (including any applicable break up fees), acquisition debt, if any, and any gains or losses relating to or resulting from (AA) an acquisition by the Company of stock (or other equity interest) or substantially all of the assets of a corporation, partnership, limited liability company or other entity for a purchase price in excess of $100 million; and (BB) a divestiture of an Operating Company or operating division of the Company (or substantially all of the assets thereof) for a sale price in excess of $100 million may be excluded from the determination of the Company Performance Bonus under this Program; provided however, such exclusion shall not apply to a Covered Employee Participant unless the Committee determines that the exclusion of all or any portion of such adjustments will not impact the Company’s ability to deduct the bonus payable to a Covered Employee under this Program under Section 162(m) of the Code.

(iii) Foreign Exchange Rate Impact. Variance of actual foreign exchange rates for the Program Year versus projected foreign exchange rate assumptions used in the development of operational targets in the performance plans.

(iv) Certain Other Events. Notwithstanding the foregoing, the Committee may include or exclude from the determination of a Participant’s bonus hereunder the results of certain other extraordinary or non-recurring items not otherwise contemplated by this Section (B), and expenses related to acquisitions by, or restructuring of, the Company and its subsidiaries (whether or not such expenses are extraordinary or non-recurring); provided however, such inclusion or exclusion of results shall not apply to a Covered Employee Participant unless the Committee determines that the inclusion or exclusion of such extraordinary items will not impact the Company’s ability to deduct the bonus payable to a Covered Employee Participant under this Program under Section 162(m) of the Code.

9. Clawback of Payment Amount. The amounts payable, if any, pursuant to this Program are subject to the Company’s Clawback Policy, as described more fully in the Plan.

10. Delegation of Authority. Pursuant to Section 8.1 of the Plan, the Committee hereby delegates discretionary authority granted to the Committee under this Program as well as under the Plan to the Chief Executive Officer and each of them individually, except as to Covered Employees.

GOLDMAN, SACHS & CO. | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL: 212-902-1000

Opening Transaction



To:	Sysco Corporation 1390 Enclave Parkway Houston, Texas 77077-2099
A/C:	51139897
From:	Goldman, Sachs & Co.
Re:	Accelerated Stock Buyback
Ref. No:	As provided in the Supplemental Confirmation
Date:	September 23, 2015

This master confirmation (this “Master Confirmation”), dated as of September 23, 2015 is intended to set forth certain terms and provisions of certain Transactions (each, a “Transaction”) entered into from time to time between Goldman, Sachs & Co. (“GS&Co.”) and Sysco Corporation (“Counterparty”). This Master Confirmation, taken alone, is neither a commitment by either party to enter into any Transaction nor evidence of a Transaction. The additional terms of any particular Transaction shall be set forth in a Supplemental Confirmation in the form of Schedule A hereto (a “Supplemental Confirmation”), which shall reference this Master Confirmation and supplement, form a part of, and be subject to this Master Confirmation. This Master Confirmation and each Supplemental Confirmation together shall constitute a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Master Confirmation. This Master Confirmation and each Supplemental Confirmation evidence a complete binding agreement between Counterparty and GS&Co. as to the subject matter and terms of each Transaction to which this Master Confirmation and such Supplemental Confirmation relate and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

This Master Confirmation and each Supplemental Confirmation supplement, form a part of, and are subject to an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) (the “Agreement”) as if GS&Co. and Counterparty had executed the Agreement on the date of this Master Confirmation (but without any Schedule except for (i) the election of Loss and Second Method (it being agreed that any Loss will be determined by the relevant party acting in good faith and using commercially reasonable procedures in order to produce a commercially reasonable result), New York law (without reference to its choice of laws doctrine other than Title 14 of Article 5 of the New York General Obligations Law) as the governing law and US Dollars (“USD”) as the Termination Currency, (ii) the election that subparagraph (ii) of Section 2(c) will not apply to the Transactions, (iii) the replacement of the word “third” in the last line of Section 5(a)(i) with the word “second”, (iv) the insertion of “, absent manifest error” immediately before the period at the end of the last sentence of Section 6(d)(i) and (v) the election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to GS&Co. and Counterparty, with a “Threshold Amount” of 3% of such party’s respective stockholders’ equity as reported in its respective most recent audited financial statements, provided that (A) the words “, or becoming capable at such time of being declared,” shall be deleted from Section 5(a)(vi) and (B) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”

The Transactions shall be the sole Transactions under the Agreement. If there exists any ISDA Master Agreement between GS&Co. and Counterparty or any confirmation or other agreement between GS&Co. and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist between GS&Co. and Counterparty, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which GS&Co. and Counterparty are parties, the Transactions shall not be considered Transactions under, or otherwise governed by, such existing or deemed ISDA Master Agreement.

All provisions contained or incorporated by reference in the Agreement shall govern this Master Confirmation and each Supplemental Confirmation except as expressly modified herein or in the related Supplemental Confirmation.

If, in relation to any Transaction to which this Master Confirmation and a Supplemental Confirmation relate, there is any inconsistency between the Agreement, this Master Confirmation, any Supplemental Confirmation and the Equity Definitions, the following will prevail for purposes of such Transaction in the order of precedence indicated: (i) such Supplemental Confirmation; (ii) this Master Confirmation; (iii) the Equity Definitions; and (iv) the Agreement.

1.Each Transaction constitutes a Share Forward Transaction for the purposes of the Equity Definitions. Set forth below are the terms and conditions that, together with the terms and conditions set forth in the Supplemental Confirmation relating to any Transaction, shall govern such Transaction.

General Terms:


Trade Date:	For each Transaction, as set forth in the related Supplemental Confirmation.


Buyer:	Counterparty


Seller:	GS&Co.


Shares:	Common stock, par value $1.00 per share, of Counterparty (Ticker: SYY)


Exchange:	New York Stock Exchange


Related Exchange(s):	All Exchanges.

PrepaymentVariable


Obligation:	Applicable


Prepayment Amount:	For each Transaction, as set forth in the related Supplemental Confirmation.


Prepayment Date:	For each Transaction, as set forth in the related Supplemental Confirmation.

Valuation:

VWAP Price:

For any Exchange Business Day, as determined by the Calculation Agent based on the New York 10b-18 Volume Weighted Average Price per Share for the regular trading session (including any extensions thereof) of the Exchange on such Exchange Business Day (without regard to pre-open or after hours trading outside of such regular trading session for such Exchange Business Day), as published by Bloomberg at 4:15 p.m. New York time (or 15 minutes following the end of any extension of the regular trading session) on such Exchange Business Day, on Bloomberg page “SYY.N <Equity> AQR_SEC” (or any successor thereto), or if such price is not so reported on such Exchange Business Day for any reason or is, in the Calculation Agent’s commercially reasonable discretion, erroneous, such VWAP Price shall be as commercially reasonably determined by the Calculation Agent. For purposes of calculating the VWAP Price, the Calculation Agent will include only those trades that are reported during the period of time during which

Counterparty could purchase its own shares under Rule 10b-18(b)(2) and are effected pursuant to the conditions of Rule 10b-18(b)(3), each under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (such trades, “Rule 10b-18 eligible transactions”).


Forward Price:	The average of the VWAP Prices for the Exchange Business Days in the Calculation Period, subject to “Valuation Disruption” below

Forward Price


Adjustment Amount:	For each Transaction, as set forth in the related Supplemental Confirmation.


Calculation Period:	The period from and including the Calculation Period Start Date to and including the Termination Date.


Calculation Period Start Date:	For each Transaction, as set forth in the related Supplemental Confirmation.

Termination Date:

The Scheduled Termination Date; provided that GS&Co. shall have the right to designate any Exchange Business Day on or after the First Acceleration Date to be the Termination Date (the “Accelerated Termination Date”) by delivering notice to Counterparty of any such designation prior to 11:59 p.m. New York City time on the Exchange Business Day immediately following the designated Accelerated Termination Date.


Scheduled Termination Date:	For each Transaction, as set forth in the related Supplemental Confirmation, subject to postponement as provided in “Valuation Disruption” below


First Acceleration Date:	For each Transaction, as set forth in the related Supplemental Confirmation

Valuation Disruption:

The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and inserting the words “at any time on any Scheduled Trading Day during the Calculation Period or Settlement Valuation Period” after the word “material,” in the third line thereof.

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.

Notwithstanding anything to the contrary in the Equity Definitions, to the extent that a Disrupted Day occurs (i) in the Calculation Period, the Calculation Agent may, in its good faith and commercially reasonable discretion, postpone the Scheduled Termination Date, or (ii) in the Settlement Valuation Period, the Calculation Agent may extend the Settlement Valuation Period. If any such Disrupted Day is a Disrupted Day because of a Market Disruption Event (or a deemed Market Disruption Event as provided herein), the Calculation Agent shall determine whether (i) such Disrupted Day is a Disrupted Day in full, in which case the VWAP Price for such Disrupted Day shall not be included for purposes of determining the Forward Price or the Settlement Price, as the case may be, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day effected before the relevant Market Disruption Event and/or after the relevant Market Disruption Event, and the weighting of the VWAP Price for the relevant Exchange Business Days during the Calculation Period or the Settlement Valuation Period,

as the case may be, shall be adjusted in a commercially reasonable manner by the Calculation Agent for purposes of determining the Forward Price or the Settlement Price, as the case may be, with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares. Any Exchange Business Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be an Exchange Business Day; if a closure of the Exchange prior to its normal close of trading on any Exchange Business Day is scheduled following the date hereof, then such Exchange Business Day shall be deemed to be a Disrupted Day in full.

If a Disrupted Day occurs during the Calculation Period or the Settlement Valuation Period, as the case may be, and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its good faith and commercially reasonable discretion, may deem such ninth Scheduled Trading Day to be an Exchange Business Day that is not a Disrupted Day and determine the VWAP Price for such ninth Scheduled Trading Day using its good faith and commercially reasonable estimate of the value of the Shares on such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it reasonably deems appropriate.

Settlement Terms:

Settlement Procedures:

If the Number of Shares to be Delivered is positive, Physical Settlement shall be applicable; provided that GS&Co. does not, and shall not, make the agreement or the representations set forth in Section 9.11 of the Equity Definitions related to the restrictions imposed by applicable securities laws, to the extent arising as a result of the fact that Counterparty is the issuer of the Shares, with respect to any Shares delivered by GS&Co. to Counterparty under any Transaction. If the Number of Shares to be Delivered is negative, then the Counterparty Settlement Provisions in Annex A shall apply.

Number of Shares


to be Delivered:	A number of Shares equal to (x)(a) the Prepayment Amount divided by (b) the Divisor Amount minus (y) the number of Initial Shares.


Divisor Amount:	The greater of (i) the Forward Price minus the Forward Price Adjustment Amount and (ii) $1.00.


Excess Dividend Amount:	For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.


Settlement Date:	If the Number of Shares to be Delivered is positive, the date that is one Settlement Cycle immediately following the Termination Date.


Settlement Currency:	USD


Initial Share Delivery:	GS&Co. shall deliver a number of Shares equal to the Initial Shares to Counterparty on the Initial Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.


Initial Share Delivery Date:	For each Transaction, as set forth in the related Supplemental Confirmation.


Initial Shares:	For each Transaction, as set forth in the related Supplemental Confirmation.

Share Adjustments:


Potential Adjustment Event:	Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

It shall constitute an additional Potential Adjustment Event if the Scheduled Termination Date for any Transaction is postponed pursuant to “Valuation Disruption” above, in which case the Calculation Agent may, in good faith and in its commercially reasonable discretion, adjust any relevant terms of any such Transaction as necessary to preserve as nearly as practicable the fair value of such Transaction to GS&Co. prior to such postponement.

Extraordinary Dividend:

For any calendar quarter, any dividend or distribution on the Shares with an ex-dividend date occurring during such calendar quarter (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the Equity Definitions) (a “Dividend”) the amount or value of which (as determined by the Calculation Agent), when aggregated with the amount or value (as determined by the Calculation Agent) of any and all previous Dividends with ex-dividend dates occurring in the same calendar quarter, exceeds the Ordinary Dividend Amount for the Scheduled Ex-Dividend Date occurring in such calendar quarter. For the avoidance of doubt, except as provided under “Early Ordinary Dividend Payment” below, any Dividend the amount or value of which (as determined by the Calculation Agent), when aggregated with the amount or value (as determined by the Calculation Agent) of any and all previous Dividends with ex-dividend dates occurring in the same calendar quarter, is less than or equal to the Ordinary Dividend Amount, shall not constitute a Potential Adjustment Event.


Ordinary Dividend Amount:	For each Scheduled Ex-Dividend Date for each Transaction, as set forth in the related Supplemental Confirmation.


Method of Adjustment:	Calculation Agent Adjustment

Early Ordinary Dividend

Payment:

If an ex-dividend date for any Dividend that is not an Extraordinary Dividend occurs during any calendar quarter occurring (in whole or in part) during the Relevant Dividend Period (as defined below) and is prior to the Scheduled Ex-Dividend Date for such calendar quarter, the Calculation Agent shall make such adjustment to the exercise, settlement, payment or any other terms of the relevant Transaction as the Calculation Agent determines appropriate to preserve the fair value of such Transaction after taking into account the timing of such Dividend.

Scheduled Ex-Dividend


Dates:	For each Transaction for each calendar quarter, as set forth in the related Supplemental Confirmation.

Extraordinary Events:

Consequences of

Merger Events:


(a)	Share-for-Share: Modified Calculation Agent Adjustment


(b)	Share-for-Other: Cancellation and Payment


(c)	Share-for-Combined: Component Adjustment

Tender Offer:

Applicable; provided that (i) Section 12.1(d) of the Equity Definitions shall be amended by replacing “10%” in the third line thereof with “20%,” (ii) Section 12.1(l) of the Equity Definitions shall be amended (x) by deleting the parenthetical in the fifth line thereof, (y) by replacing “that” in the fifth line thereof with “whether or not such announcement” and (z) by adding immediately after the words “Tender Offer” in the fifth line thereof “, and any publicly announced change or amendment to such an announcement (including the announcement of an abandonment of such intention)” and (iii) Sections 12.3(a) and 12.3(d) of the Equity Definitions shall each be amended by replacing each occurrence of the words “Tender Offer Date” by “Announcement Date.”

Consequences of

Tender Offers:


(a)	Share-for-Share: Modified Calculation Agent Adjustment


(b)	Share-for-Other: Modified Calculation Agent Adjustment


(c)	Share-for-Combined: Modified Calculation Agent Adjustment

Nationalization,

Insolvency or Delisting:

Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, NYSE MKT, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.

Additional Disruption Events:

(a)

Change in Law: Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal or informal interpretation”, (ii) replacing the word “Shares” where it appears in clause (X) thereof with the words “Hedge Position” and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date”; provided further that (i) any determination as to whether (A) the adoption of or any change in any applicable law or regulation (including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute) or (B) the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law or regulation (including any action taken by a taxing authority), in each case,

constitutes a “Change in Law” shall be made by the Hedging Party in its good faith reasonable judgment and in a manner consistent with the requirements, policies or procedures of the Hedging Party that are generally applicable hereunder in similar situations and applied to the relevant Transactions hereunder in a non-discriminatory manner (but without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date), and (ii) Section 12.9(a)(ii) of the Equity Definitions is hereby amended by replacing the parenthetical beginning after the word “regulation” in the second line thereof with the words “(including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute)”.


(b)	Failure to Deliver: Applicable


(c)	Insolvency Filing: Applicable


(d)	Hedging Disruption: Applicable


(e)	Increased Cost of Hedging: Applicable


(f)	Loss of Stock Borrow: Applicable

Maximum Stock Loan Rate: 200 basis points per annum

Hedging Party: GS&Co.


(g)	Increased Cost of Stock Borrow: Applicable

Initial Stock Loan Rate: 25 basis points per annum


Hedging Party:	For all applicable events, GS&Co.

Determining Party:

For all applicable events, GS&Co.; provided that all calculations, adjustments, specifications and determinations by GS&Co acting in its capacity as the Determining Party shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Determining Party hereunder, upon a written request by the Counterparty, the Determining Party will promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by e-mail to the e-mail address provided by Counterparty in such written request a report (in a commonly used filed format for the storage and manipulations of financial data without disclosing GS&Co.’s proprietary or confidential models or any other confidential or proprietary information, in each case, used by it for such determination or calculation) displaying in reasonable detail the basis for such determination or calculation, as the case may be.

Additional Termination Event(s):

Notwithstanding anything to the contrary in the Equity Definitions, if, as a result of an Extraordinary Event, any Transaction would be cancelled or terminated (whether in whole or in part) pursuant to Article 12 of the Equity Definitions, an Additional Termination Event (with such terminated Transaction(s) (or portions thereof) being the Affected Transaction(s) and Counterparty being the sole Affected Party) shall be deemed to occur, and, in lieu of Sections 12.7, 12.8 and 12.9 of the Equity Definitions, Section 6 of the Agreement shall apply to such Affected Transaction(s).

The declaration by the Issuer of any Extraordinary Dividend, the ex-dividend date for which occurs or is scheduled to occur during the Relevant Dividend Period, will constitute an Additional Termination Event, with Counterparty as the sole Affected Party and all Transactions hereunder as the Affected Transactions. For the avoidance of doubt, there will be no additional adjustment made for such Extraordinary Dividend when calculating any amount payable pursuant to Section 6 of the Agreement in connection with such an Additional Termination Event as a result of an Extraordinary Dividend.


Relevant Dividend Period:	The period from and including the Calculation Period Start Date to and including the Relevant Dividend Period End Date.

Relevant Dividend Period


End Date:	If the Number of Shares to be Delivered is negative, the last day of the Settlement Valuation Period; otherwise, the Termination Date.

Non-Reliance/Agreements and

Acknowledgements Regarding

Hedging Activities/Additional


Acknowledgements:	Applicable

Hedging Adjustments:

For the avoidance of doubt, whenever the Calculation Agent or the Determining Party is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions or to take into account the effect of an event, the Calculation Agent or Determining Party, as the case may be, shall make such adjustment by reference to the effect of such event on GS&Co., assuming that GS&Co. maintains a commercially reasonable Hedge Position.

Transfer:

Notwithstanding anything to the contrary in the Agreement, GS&Co. may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of GS&Co. under any Transaction, in whole or in part, to an affiliate of GS&Co. whose obligations are guaranteed by The Goldman Sachs Group, Inc. without the consent of Counterparty but only if (i) Counterparty would not, at the time and as a result of such transfer or assignment, reasonably be expected to be required to pay (including a payment in kind) to the transferee at such time or on any later date an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) of the Agreement) greater than the amount in respect of which Counterparty would have been required to pay to GS&Co. in the absence of such transfer; (ii) Counterparty would not, at the time and as a result of such transfer or assignment, reasonably be expected to receive a payment (including a payment in kind) from which at such time or on any later date an amount had been withheld or deducted, on account of

a Tax under Section 2(d)(i) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) of the Agreement), in excess of that which GS&Co. would have been required to so withhold or deduct in the absence of such transfer, unless the transferee will be required to make additional payments pursuant to Section 2(d)(i)(4) of the Agreement in an amount equal to such excess; (iii) Counterparty would not, at the time and as a result of such transfer or assignment, reasonably be expected to otherwise suffer material adverse tax consequences from such transfer or assignment at such time or on any later date; (iv) immediately upon giving effect to such transfer, no Event of Default, no Potential Event of Default and no Termination Event will have occurred as a result thereof; (v) GS&Co. shall have caused the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Counterparty to permit Counterparty to determine that the results described in (i) above will not occur upon or after such transfer; (vi) such transferee is a “dealer” within the meaning of Treasury Regulation Section 1.1001-4(b)(1); and (vii) Counterparty would not, at the time and as a result of such transfer or assignment, reasonably be expected to be required to become subject to any registration or other qualification requirement under applicable law or regulation to which it would not otherwise have been subject absent such transfer or assignment.

Tax Representations and

Tax Form Deliverables:

For purposes of Section 3(f) of the Agreement, GS&Co. represents that it is a “U.S. person” (as that term is used in Sections 1.1441-1T(c)(2) and 1-1441- 4(a)(3)(ii) of the United States Treasury Regulations) for U.S. federal income tax purposes.

For purposes of Sections 4(a)(i) and (ii) of the Agreement, GS&Co. agrees to deliver to Counterparty a correct, complete (in a manner reasonably satisfactory to Counterparty) and executed United States Internal Revenue Service Form W-9 (or successor thereto) (i) promptly upon execution of this Master Confirmation, (ii) promptly upon reasonable demand by Counterparty and (iii) promptly upon learning that any such from previously provided by GS&Co. has become obsolete or incorrect.


GS&Co. Payment Instructions:	Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

ABA: 021-000021

Counterparty’s Contact Details


for Purpose of Giving Notice:	To be provided by Counterparty

GS&Co.’s Contact Details for


Purpose of Giving Notice:	Goldman, Sachs & Co.

200 West Street

New York, NY 10282-2198

Attention: Simon Watson, Equity Capital Markets

Telephone: 212-902-2317

Facsimile: 212-256-5738

Email: simon.watson@ny.ibd.email.gs.com

With a copy to:

Attention: Bryan Goldstein, Equity Capital Markets

Equity Capital Markets

Telephone: +1-212-855-9696

Facsimile: +1-212-256-5456

Email: bryan.goldstein@ny.ibd.gmail.gs.com

And email notification to the following address:

Eq-derivs-notifications@am.ibd.gs.com

Notwithstanding anything to the contrary contained herein, with respect to any notice or other communication given hereunder that is given by email (other than an email notice or communication from GS&Co. to Counterparty designating an Accelerated Termination Date hereunder, which shall not be subject to this paragraph), the parties hereby agree that the burden of proving receipt will be on the sender and will not be met by a copy of the sent message generated by the sender’s computer or other transmission device unless that copy is accompanied by (x) a copy of a delivery receipt message from the recipient’s computer or other end point device or (y) a recording or other reasonable evidence (including a contemporaneous written record) that an employee of the recipient telephonically confirmed the recipient’s receipt of the sender’s email. With respect to clause (x) above, the parties agree that if return receipt is requested, the receiving party shall promptly acknowledge receipt.

Unless otherwise expressly provided in a Supplemental Confirmation with respect to the corresponding Transaction, no notice or other communication pursuant to Section 5 or Section 6 of the Agreement given by telephone or by facsimile transmission will be effective for any purpose under this Master Confirmation; provided that the foregoing shall not preclude the use of telephonic communications to evidence that a contract has been made or a Transaction has been entered into between the parties. For the avoidance of doubt, (i) this paragraph shall not prohibit any such notice or other communication given by email and (ii) the mere inclusion of a telephone or facsimile number in this Master Confirmation or in a Supplemental Confirmation will not constitute an agreement that any such notice or other communication may be given telephonically or via facsimile transmission.

2. Calculation Agent. GS&Co; provided, that (i) as Calculation Agent, GS&Co. shall act in good faith and in a commercially reasonable manner, and (ii) following the occurrence of an Event of Default under Section 5(a)(vii) of the Agreement, with respect to which GS&Co. is the Defaulting Party, Counterparty shall have the right to designate a nationally recognized third-party dealer in over-the-counter corporate equity derivatives to act, during the period commencing on the date such Event of Default occurred and ending on the Early Termination Date with respect to such Event of Default, as the Calculation Agent with respect to the Transactions under this Master Confirmation. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by the Counterparty, the Calculation Agent will promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by e-mail to the e-mail address provided by Counterparty in such written request a report (in a commonly used filed format for the storage and manipulations of financial data without disclosing GS&Co.’s proprietary or confidential models or any other confidential or proprietary information, in each case, used by it for such determination or calculation) displaying in reasonable detail the basis for such determination or calculation, as the case may be.

3. Additional Mutual Representations, Warranties and Covenants of Each Party. In addition to the representations, warranties and covenants in the Agreement, each party represents, warrants and covenants to the other party that:

(a) Eligible Contract Participant. It is an “eligible contract participant”, as defined in the U.S. Commodity Exchange Act (as amended), and is entering into each Transaction hereunder as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.

(b) Accredited Investor. The offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(a)(2) thereof. Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D under the Securities Act and (iii) the disposition of each Transaction is restricted under this Master Confirmation, the Securities Act and state securities laws.

(c) No Recourse to Third Parties. It will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under any Transaction.

4. Additional Representations, Warranties and Covenants of Counterparty. In addition to the representations, warranties and covenants in the Agreement, Counterparty represents, warrants and covenants to GS&Co. that:

(a) As of the Trade Date, Counterparty is not engaged in an “issuer tender offer” as such term is defined in Rule 13e-4 under the Exchange Act, nor is it aware of any third party tender offer with respect to the Shares within the meaning of Rule 13e-1 under the Exchange Act.

(b) It is not entering into any Transaction (i) on the basis of, and is not aware of, any material non-public information with respect to the Shares (ii) in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer or (iii) to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares).

(c) Each Transaction is being entered into pursuant to a publicly disclosed Share buy-back program and its Board of Directors has approved the use of an accelerated share repurchase program to effect the Share buy-back program.

(d) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that neither GS&Co. nor any of its affiliates is making any representations or warranties or taking any position or expressing any view with respect to the treatment of any Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity.

(e) As of (i) the date hereof and (ii) the Trade Date for each Transaction hereunder, Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as amended and supplemented to the date of this representation, do not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(f) Counterparty shall report each Transaction as required under the Exchange Act and the rules and regulations thereunder.

(g) The Shares are not, and Counterparty will not cause the Shares to be, subject to a “restricted period” (as defined in Regulation M promulgated under the Exchange Act) at any time during any Regulation M Period (as defined below) for any Transaction unless Counterparty has provided written notice to GS&Co. of such restricted period not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”; Counterparty acknowledges that any such notice may cause a Disrupted Day to occur pursuant to Section 5 below; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 6 below; “Regulation M Period” means, for any Transaction, (i) the Relevant Period (as defined below) and (ii) the Settlement Valuation Period, if any, for such Transaction. “Relevant Period” means, for any Transaction, the period commencing on the Calculation Period Start Date for such Transaction and ending on the earlier of (i) the Scheduled Termination Date and (ii) the last Additional Relevant Day (as specified in the related Supplemental Confirmation) for such Transaction, or such earlier day as elected by GS&Co. and communicated to Counterparty on such day (or, if later, the First Acceleration Date without regard to any acceleration thereof pursuant to “Special Provisions for Acquisition Transaction Announcements” below).

(h) As of the Trade Date, the Prepayment Date, the Initial Share Delivery Date and the Settlement Date for each Transaction, Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase a number of Shares with a value equal to the Prepayment Amount in compliance with the laws of the jurisdiction of Counterparty’s incorporation.

(i) Counterparty is not and, after giving effect to any Transaction, will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(j) Counterparty has not and will not enter into agreements with respect to the Shares similar to the Transactions described herein where any initial hedge period, calculation period, relevant period or settlement valuation period (each however defined) in such other transaction will overlap at any time (including as a result of extensions in such initial hedge period, calculation period, relevant period or settlement valuation period as provided in the relevant agreements) with any Relevant Period or, if applicable, any Settlement Valuation Period under this Master Confirmation, without the prior written consent of GS&Co. In the event that the initial hedge period, relevant period, calculation period or settlement valuation period in any other similar transaction entered into without GS&Co.’s prior written consent overlaps with any Relevant Period or, if applicable, Settlement Valuation Period under this Master Confirmation as a result of any postponement of the Scheduled Termination Date or extension of the Settlement Valuation Period pursuant to “Valuation Disruption” above, Counterparty shall promptly amend such transaction to avoid any such overlap.

4A. Guarantee of The Goldman Sachs Group, Inc. The obligations of GS&Co. in respect of each Transaction hereunder will be guaranteed by The Goldman Sachs Group, Inc. pursuant to (i) the General Guarantee Agreement, dated January 30, 2006, made by The Goldman Sachs Group, Inc. relating to certain obligations of GS&Co. (available as Exhibit 10.45 to The Goldman Sachs Group, Inc. Annual Report on Form 10-K for the fiscal year ended November 25, 2005), or (ii) any replacement or successor guarantee, which may be in the form of a general guarantee or a guarantee that specifically references the Transactions. The parties agree and acknowledge that neither such General Guarantee Agreement nor any such replacement or successor guarantee shall be a Credit Support Document hereunder, and that The Goldman Sachs Group, Inc. shall not be a Credit Support Provider hereunder.

4B. Material Non-public Information. GS&Co. hereby represents, warrants and covenants to Counterparty that GS&Co. has implemented policies and procedures, taking into consideration the nature of its business, reasonably designed to prevent individuals making investment decisions related to any Transaction from having access to material non-public information regarding Issuer that may be in possession of other individuals at GS&Co.

5. Regulatory Disruption. In the event that GS&Co. concludes, in its good faith, reasonable discretion, based on the advice of counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by GS&Co., and provided that such policies or procedures are related to legal, regulatory or self-regulatory issues and are generally applicable hereunder and in similar situations and applied to any Transaction hereunder in a non-discriminatory manner), for it to refrain from or decrease any market activity in the Shares (or any related Hedge Position) in order to maintain or unwind a commercially reasonable hedge position on any one or more Scheduled Trading Days during the Calculation Period or, if applicable, the Settlement Valuation Period, GS&Co. may by written notice to Counterparty elect to deem that a Market Disruption Event has occurred and will be continuing on such Scheduled Trading Days, subject to the other provisions under “Valuation Disruption” in Section 1 above.

6. 10b5-1 Plan. Counterparty represents, warrants and covenants to GS&Co. that:

(a) Counterparty is entering into this Master Confirmation and each Transaction hereunder in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act (“Rule 10b-5”) or any other antifraud or anti-manipulation provisions of the federal or applicable state securities laws and that it has not entered into or altered and will not enter into or alter any corresponding or hedging transaction or position with respect to the Shares. Counterparty acknowledges that it is the intent of the parties that each Transaction entered into under this Master Confirmation comply with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and each Transaction entered into under this Master Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c).

(b) Counterparty will not seek to control or influence GS&Co.’s decision to make any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into under this Master Confirmation, including, without limitation, GS&Co.’s decision to enter into any hedging transactions. Counterparty

represents that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Master Confirmation and each Supplemental Confirmation under Rule 10b5-1.

(c) Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of this Master Confirmation or the relevant Supplemental Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer, director, manager or similar person of Counterparty is aware of any material non-public information regarding Counterparty or the Shares.

7. Counterparty Purchases. Counterparty (or any “affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall not, without the prior written consent of GS&Co., directly or indirectly purchase any Shares (including by means of a derivative instrument), listed contracts on Shares or securities that are convertible into, or exchangeable or exercisable for, Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any Relevant Period or, if applicable, Settlement Valuation Period (other than privately executed purchases from employees or directors), except through GS&Co., and, if GS&Co. is requested to make any such purchases, GS&Co. will cooperate in good faith and in a commercially reasonable manner with Counterparty to execute and deliver mutually acceptable documentation pursuant to which GS&Co. shall make any such purchases (each such purchase, an “Open Market Repurchase”). All Open Market Repurchases will be subject to the “Concurrent OMR Parameters” set forth in any Supplemental Confirmation for a Transaction then outstanding. The documentation governing any Open Market Repurchases shall include, without limitation, customary provisions relating to Rule 10b-18.

7A. GS&Co. Purchases. With respect to purchases of Shares by GS&Co. in connection with any Transaction during the Calculation Period for such Transaction (other than any purchases made by GS&Co or any of its affiliates in connection with dynamic hedging (including, without limitation, dynamic hedging in respect of timing options embedded in any Transaction) made by GS&Co. or its affiliate in respect of the embedded optionality in such Transaction (which, for the avoidance of doubt shall include, without limitation, dynamic hedging related to purchases in connection with, or to hedge GS&Co.’s equity price risk upon, exercise of GS&Co.’s option to shorten the Calculation Period)), GS&Co. will use good faith, commercially reasonable efforts to effect such purchases in a manner so that, if such purchases were made by Counterparty, they would meet the requirements of Rule 10b-18(b)(2) and (3), and effect calculations in respect thereof, taking into account any applicable Securities and Exchange Commission no-action letters as appropriate and subject to any delays between the execution and reporting of a trade of the Shares on the Exchange and other circumstances beyond GS&Co.’s control. Notwithstanding the foregoing, GS&Co. shall not be responsible for any failure to comply with paragraph (b)(3) of Rule 10b-18 that would not have resulted if (i) a bid that was actually entered or deemed to be entered by or on behalf of Counterparty (other than as provided in the Supplemental Confirmation for such Transaction) had instead been an “independent bid” for purposes of paragraph (b)(3) of Rule 10b-18, or (ii) a transaction that was actually executed or deemed to be executed by or on behalf of Counterparty (other than as provided in the Supplemental Confirmation for such Transaction) had instead been an “independent transaction” within the meaning of paragraph (b)(3) of Rule 10b-18.

8. Special Provisions for Merger Transactions. Notwithstanding anything to the contrary herein or in the Equity Definitions:

(a) Counterparty agrees that it:

(i) will not during the period commencing on the Trade Date through the end of the Relevant Period or, if applicable, the Settlement Valuation Period for any Transaction make, or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction (a “Public Announcement”) except to the extent required by any law, unless such Public Announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares;

(ii) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify GS&Co. following any such Public Announcement that such Public Announcement has been made; and

(iii) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide GS&Co. with written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date that were not effected through GS&Co. or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the date of such Public Announcement. Such written notice shall be deemed to be a certification by Counterparty to GS&Co. that such information is true and correct. In addition, Counterparty shall promptly notify GS&Co. of the earlier to occur of the completion of the relevant Merger Transaction and the completion of the vote by target shareholders.

(b) Counterparty acknowledges that a Public Announcement may cause the terms of any Transaction to be adjusted or such Transaction to be terminated; accordingly, Counterparty acknowledges that in making any Public Announcement, it must comply with the standards set forth in Section 6 above.

(c) Upon the occurrence of any Public Announcement (whether made by Counterparty or a third party) GS&Co. in its sole discretion may (i) in good faith and in its commercially reasonable discretion make adjustments to the terms of any Transaction to account for the economic effect on the Transaction of such Public Announcement, including, without limitation, the Scheduled Termination Date or the Forward Price Adjustment Amount, and/or suspend the Calculation Period and/or any Settlement Valuation Period (including adjustments to account for changes in stock price, volatility, expected dividends, interest rates, stock loan rate, value of any commercially reasonable Hedge Positions in connection with the Transaction, liquidity relevant to the Shares or to such Transaction and taking into account whether the Calculation Period had fewer Scheduled Trading Days than originally anticipated) or (ii) treat the occurrence of such Public Announcement as an Additional Termination Event with Counterparty as the sole Affected Party and the Transactions hereunder as the Affected Transactions and with the amount under Section 6(e) of the Agreement determined taking into account the fact that the Calculation Period or Settlement Valuation Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated.

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

9. Special Provisions for Acquisition Transaction Announcements.

(a) If an Acquisition Transaction Announcement (as defined below) occurs on or prior to the Settlement Date for any Transaction, then the Calculation Agent shall make such adjustments in a commercially reasonable manner to the exercise, settlement, payment or any other terms of such Transaction as the Calculation Agent determines is commercially reasonable (including, without limitation and for the avoidance of doubt, adjustments to the Forward Price Adjustment Amount that would allow the Number of Shares to be Delivered to be less than zero), at such time or at multiple times as the Calculation Agent determines appropriate, to account for the economic effect on such Transaction of such Acquisition Transaction Announcement (including adjustments to account for changes in stock price, volatility, expected dividends, interest rates, stock loan rate, value of any commercially reasonable Hedge Positions in connection with the Transaction and liquidity relevant to the Shares or to such Transaction). If an Acquisition Transaction Announcement occurs after the Trade Date, but prior to the First Acceleration Date of any Transaction, the First Acceleration Date shall be the date of such Acquisition Transaction Announcement.

(b) “Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, (iv) any other announcement that in the reasonable judgment of the Calculation Agent is reasonably likely to result in an Acquisition Transaction or (v) any announcement of any change or amendment to any previous Acquisition Transaction

Announcement (including any announcement of the abandonment of any such previously announced Acquisition Transaction, agreement, letter of intent, understanding or intention). For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by the Issuer or a third party.

(c) “Acquisition Transaction” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “25%” and to “50%” by “75%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition), Tender Offer or Merger Transaction or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 25% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

10. Acknowledgments. (a) The parties hereto intend for:

(i) each Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code, a “swap agreement” as defined in Section 101(53B) of the Bankruptcy Code and a “forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 555, 556, 560 and 561 of the Bankruptcy Code;

(ii) the Agreement to be a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code;

(iii) a party’s right to liquidate, terminate or accelerate any Transaction, net out or offset termination values or payment amounts, and to exercise any other remedies upon the occurrence of any Event of Default or Termination Event under the Agreement with respect to the other party or any Extraordinary Event that results in the termination or cancellation of any Transaction to constitute a “contractual right” (as defined in the Bankruptcy Code); and

(iv) all payments for, under or in connection with each Transaction, all payments for the Shares (including, for the avoidance of doubt, payment of the Prepayment Amount) and the transfer of such Shares to constitute “settlement payments” and “transfers” (as defined in the Bankruptcy Code).

(b) Counterparty acknowledges that:

(i) during the term of any Transaction, GS&Co. and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to establish, adjust or unwind its hedge position with respect to such Transaction;

(ii) GS&Co. and its affiliates may also be active in the market for the Shares and derivatives linked to the Shares other than in connection with hedging activities in relation to any Transaction, including acting as agent or as principal and for its own account or on behalf of customers;

(iii) GS&Co. shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Forward Price and the VWAP Price;

(iv) any market activities of GS&Co. and its affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the Forward Price and VWAP Price, each in a manner that may be adverse to Counterparty; and

(v) each Transaction is a derivatives transaction in which it has granted GS&Co. an option; GS&Co. may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the related Transaction.

(i) is an “institutional account” as defined in FINRA Rule 4512(c);

(ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating the recommendations of GS&Co. or its associated persons, unless it has otherwise notified GS&Co. in writing; and

(iii) will notify GS&Co. if any of the statements contained in clause (i) or (ii) of this Section 10(c) ceases to be true.

11. Credit Support Documents. The parties hereto acknowledge that no Transaction hereunder is secured by any collateral that would otherwise secure the obligations of Counterparty herein or pursuant to the Agreement.

12. No Set-off. Obligations under the Agreement shall not be subject to any Set-off by either party against any obligations of the other party or of that other party’s affiliates. “Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the relevant payer of an amount is entitled or subject (whether arising under the Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer.

13. Delivery of Shares. Notwithstanding anything to the contrary herein, GS&Co. may, by prior notice to Counterparty, satisfy its obligation to deliver any Shares or other securities on any date due (an “Original Delivery Date”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

14. Early Termination. In the event that an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction (except as a result of a Merger Event in which the consideration or proceeds to be paid to all holders of Shares consists solely of cash), if either party would owe any amount to the other party pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Amount”), then, in lieu of any payment of such Payment Amount, Counterparty may, no later than the Early Termination Date or the date on which such Transaction is terminated, elect to deliver or for GS&Co. to deliver, as the case may be, to the other party a number of Shares (or, in the case of a Merger Event, a number of units, each comprising the number or amount of the securities or property that each holder of one Share would receive in such Merger Event (each such unit, an “Alternative Delivery Unit” and, the securities or property comprising such unit, “Alternative Delivery Property”)) with a value equal to the Payment Amount, as determined by the Calculation Agent in a good faith and commercially reasonable manner (and the parties agree that, in making such determination of value, the Calculation Agent may take into account a number of factors, including the market price of the Shares or Alternative Delivery Property on the date of early termination and, if such delivery is made by GS&Co., the prices at which GS&Co. purchases, in a commercially reasonable manner, Shares or Alternative Delivery Property to fulfill its delivery obligations under this Section 14); provided that in determining the composition of any Alternative Delivery Unit, if the relevant Merger Event involves a choice of consideration to be received by all holders, each such holder shall be deemed to have elected to receive the maximum possible amount of cash; and provided further that Counterparty may make such election only if Counterparty represents and warrants to GS&Co. in writing on the date it notifies GS&Co. of such election that, as of such date, Counterparty is not aware of any material non-public information concerning the

Shares and is making such election in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws. If such delivery is made by Counterparty, paragraphs 2 through 7 of Annex A shall apply as if such delivery were a settlement of the Transaction to which Net Share Settlement applied, the Cash Settlement Payment Date were the Early Termination Date and the Forward Cash Settlement Amount were zero (0) minus the Payment Amount owed by Counterparty.

15. Calculations and Payment Date upon Early Termination. The parties acknowledge and agree that in calculating Loss pursuant to Section 6 of the Agreement GS&Co. may (but need not) determine losses and/or gains without reference to actual losses and/or gains incurred but based on expected losses and/or gains assuming a commercially reasonable (including without limitation with regard to reasonable legal and regulatory guidelines) risk bid were used to determine loss to avoid awaiting the delay associated with closing out any hedge or related trading position in a commercially reasonable manner prior to or sooner following the designation of an Early Termination Date. Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement, all amounts calculated as being due in respect of an Early Termination Date under Section 6(e) of the Agreement will be payable on the day that notice of the amount payable is effective; provided that if Counterparty elects to receive Shares or Alternative Delivery Property in accordance with Section 14, such Shares or Alternative Delivery Property shall be delivered on a date selected by GS&Co. as promptly as practicable.

16. Automatic Termination Provisions. Notwithstanding anything to the contrary in Section 6 of the Agreement, if a Termination Price is specified in any Supplemental Confirmation, then an Additional Termination Event with Counterparty as the sole Affected Party and the Transaction to which such Supplemental Confirmation relates as the Affected Transaction will automatically occur without any notice or action by GS&Co. or Counterparty if the price of the Shares on the Exchange at any time falls below such Termination Price, and the Exchange Business Day that the price of the Shares on the Exchange at any time falls below the Termination Price will be the “Early Termination Date” for purposes of the Agreement.

17. Delivery of Cash. For the avoidance of doubt, nothing in this Master Confirmation shall be interpreted as requiring Counterparty to deliver cash in respect of the settlement of the Transactions contemplated by this Master Confirmation following payment by Counterparty of the relevant Prepayment Amount, except in circumstances where the required cash settlement thereof is permitted for classification of the contract as equity by ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, as in effect on the relevant Trade Date (including, without limitation, where Counterparty so elects to deliver cash or fails timely to elect to deliver Shares or Alternative Delivery Property in respect of the settlement of such Transactions).

18. Claim in Bankruptcy. GS&Co. acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transactions that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy.

19. Governing Law. The Agreement, this Master Confirmation, each Supplemental Confirmation and all matters arising in connection with the Agreement, this Master Confirmation and each Supplemental Confirmation shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (without reference to its choice of laws doctrine other than Title 14 of Article 5 of the New York General Obligations Law).

20. Illegality. The parties agree that, for the avoidance of doubt, for purposes of Section 5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and the consequences specified in the Agreement, including without limitation, the consequences specified in Section 6 of the Agreement, shall apply to any Illegality arising from any such act, rule or regulation.


21.	Offices.

(a) The Office of GS&Co. for each Transaction is: 200 West Street, New York, New York 10282-2198.

(b) The Office of Counterparty for each Transaction is: 1390 Enclave Parkway, Houston, Texas 77077-2099.

22. Arbitration. The Agreement, this Master Confirmation and each Supplemental Confirmation are subject to the following arbitration provisions:

(a) All parties to this Master Confirmation are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.

(b) Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.

(c) The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.

(d) The arbitrators do not have to explain the reason(s) for their award.

(e) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry, unless Counterparty is a member of the organization sponsoring the arbitration facility, in which case all arbitrators may be affiliated with the securities industry.

(f) The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.

(g) The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Master Confirmation.

Counterparty agrees that any and all controversies that may arise between Counterparty and GS&Co., including, but not limited to, those arising out of or relating to the Agreement or any Transaction hereunder, shall be determined by arbitration conducted before the FINRA Dispute Resolution (“FINRA-DR”), or, if the FINRA-DR declines to hear the matter, before the American Arbitration Association, in accordance with their arbitration rules then in force. The award of the arbitrator shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.

No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) Counterparty is excluded from the class by the court.

Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Master Confirmation except to the extent stated herein.

23. Counterparts. This Master Confirmation may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Master Confirmation by signing and delivering one or more counterparts.

Counterparty hereby agrees (a) to check this Master Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to any particular Transaction to which this Master Confirmation relates, by manually signing this Master Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, Facsimile No. 212-428-1980/83.

Yours faithfully,

GOLDMAN, SACHS & CO.

By: /s/ Eugene Parloff
Eugene Parloff

Vice President

Agreed and Accepted By:

SYSCO CORPORATION


By:	/s/ Gregory S. Keyes

Name:

Title:

SCHEDULE A

SUPPLEMENTAL CONFIRMATION



To:	Sysco Corporation 1390 Enclave Parkway Houston, Texas 77077-2099
From:	Goldman, Sachs & Co.
Subject:	Accelerated Stock Buyback
Ref. No:	[Insert Reference No.]
Date:	[Insert Date]

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Sysco Corporation (“Counterparty”) (together, the “Contracting Parties”) on the Trade Date specified below. This Supplemental Confirmation is a binding contract between GS&Co. and Counterparty as of the relevant Trade Date for the Transaction referenced below.

1. This Supplemental Confirmation supplements, forms part of, and is subject to the Master Confirmation dated as of September 23, 2015 (the “Master Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. All provisions contained in the Master Confirmation govern this Supplemental Confirmation except as expressly modified below.

2. The terms of the Transaction to which this Supplemental Confirmation relates are as follows:



Trade Date:	[ ]
Forward Price Adjustment Amount:	USD [ ]
Calculation Period Start Date:	[ ]
Scheduled Termination Date:	[ ]
First Acceleration Date:	[ ]
Prepayment Amount:	USD [ ]
Prepayment Date:	[ ]

A-1



Initial Shares:	[ ] Shares; provided that if, in connection with the Transaction, GS&Co. is unable after using good faith and commercially reasonable efforts to borrow or otherwise acquire a number of Shares equal to the Initial Shares for delivery to Counterparty on the Initial Share Delivery Date, the Initial Shares delivered on the Initial Share Delivery Date shall be reduced to such number of Shares that GS&Co. is able to so borrow or otherwise acquire in order to establish a commercially reasonable hedge position. For the avoidance of doubt, in using such commercially reasonable efforts, GS&Co. shall act in good faith and in accordance with its then current policies, practices and procedures (including without limitation any policies, practices or procedures relating to counterparty risk, market risk, reputational risk, credit, documentation, legal, regulatory capital, compliance and collateral), and shall not be required to enter into any securities lending transaction or transact with any potential securities lender if such transaction would not be in accordance with such policies, practices and procedures.
Initial Share Delivery Date:	[ ]
Ordinary Dividend Amount:	For any calendar quarter, USD [ ]
Scheduled Ex-Dividend Dates:	[ ]
Termination Price:	USD [ ] per Share
Additional Relevant Days	The [______] Exchange Business Days immediately following the Calculation Period
[Concurrent OMR Parameters:	Up to [__]% of ADTV (as defined in Rule 10b-18) daily repurchase amount.]

3. Counterparty represents and warrants to GS&Co. that neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during either (i) the four full calendar weeks immediately preceding the Trade Date or (ii) during the calendar week in which the Trade Date occurs, except as otherwise disclosed in writing to GS&Co.

4. This Supplemental Confirmation may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Supplemental Confirmation by signing and delivering one or more counterparts.

A-2

Counterparty hereby agrees (a) to check this Supplemental Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to the Transaction to which this Supplemental Confirmation relates, by manually signing this Supplemental Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, facsimile No. 212-428-1980/83.

Yours sincerely,

GOLDMAN, SACHS & CO.

By: ________________________________
Authorized Signatory

Agreed and Accepted By:

SYSCO CORPORATION

By: ________________________________
Name:
Title:

A-4

ANNEX A

COUNTERPARTY SETTLEMENT PROVISIONS

1. The following Counterparty Settlement Provisions shall apply to the extent indicated under the Master Confirmation:


Settlement Currency:	USD

Settlement Method Election:

Applicable; provided that (i) Section 7.1 of the Equity Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and (ii) the Electing Party may make a settlement method election only if the Electing Party represents and warrants to GS&Co. in writing on the date it notifies GS&Co. of its election that, as of such date, the Electing Party is not aware of any material non-public information concerning Counterparty or the Shares and is electing the settlement method in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws.


Electing Party:	Counterparty

Settlement Method


Election Date:	The earlier of (i) the Scheduled Termination Date and (ii) the second Exchange Business Day immediately following the Accelerated Termination Date (in which case the election under Section 7.1 of the Equity Definitions shall be made no later than 10 minutes prior to the open of trading on the Exchange on such second Exchange Business Day), as the case may be


Default Settlement Method:	Cash Settlement

Forward Cash Settlement


Amount:	The Number of Shares to be Delivered multiplied by the Settlement Price


Settlement Price:	The average of the VWAP Prices for the Exchange Business Days in the Settlement Valuation Period, subject to Valuation Disruption as specified in the Master Confirmation

Settlement Valuation Period:

A number of Scheduled Trading Days selected by GS&Co. in good faith and in a commercially reasonable manner, taking into consideration the length of time required to unwind a commercially reasonable Hedge Position, beginning on the Scheduled Trading Day immediately following the earlier of (i) the Scheduled Termination Date or (ii) the Exchange Business Day immediately following the Termination Date


Cash Settlement:	If Cash Settlement is applicable, then Buyer shall pay to Seller the absolute value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date.

Cash Settlement


Payment Date:	The date one Settlement Cycle following the last day of the Settlement Valuation Period.

Net Share Settlement


Procedures:	If Net Share Settlement is applicable, Net Share Settlement shall be made in accordance with paragraphs 2 through 7 below.

2. Net Share Settlement shall be made by delivery on the Cash Settlement Payment Date of a number of Shares satisfying the conditions set forth in paragraph 3 below (the “Registered Settlement Shares”), or a number of Shares not satisfying such conditions (the “Unregistered Settlement Shares”), in either case with a value equal to the absolute value of the Forward Cash Settlement Amount, with such Shares’ value as commercially reasonably determined by GS&Co. (which value shall, in the case of Unregistered Settlement Shares, take into account a commercially reasonable illiquidity discount).

3. Counterparty may only deliver Registered Settlement Shares pursuant to paragraph 2 above if:

(a) a registration statement covering public resale of the Registered Settlement Shares by GS&Co. (the “Registration Statement”) shall have been filed with the Securities and Exchange Commission under the Securities Act and been declared or otherwise become effective on or prior to the date of delivery, and no stop order shall be in effect with respect to the Registration Statement; a printed prospectus relating to the Registered Settlement Shares (including any prospectus supplement thereto, the “Prospectus”) shall have been delivered to GS&Co., in such quantities as GS&Co. shall reasonably have requested, on or prior to the date of delivery;

(b) the form and content of the Registration Statement and the Prospectus (including, without limitation, any sections describing the plan of distribution) shall be reasonably satisfactory to GS&Co.;

(c) as of or prior to the date of delivery, GS&Co. and its agents shall have been afforded a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities and the results of such investigation are satisfactory to GS&Co., in its good faith discretion; and

(d) as of the date of delivery, an agreement (the “Underwriting Agreement”) shall have been entered into with GS&Co. in connection with the public resale of the Registered Settlement Shares by GS&Co. substantially similar to underwriting agreements customary for underwritten offerings of equity securities of similar size, in form and substance reasonably satisfactory to GS&Co., which Underwriting Agreement shall include, without limitation, provisions substantially similar to those contained in such underwriting agreements relating, without limitation, to the indemnification of, and contribution in connection with the liability of, GS&Co. and its affiliates and the provision of customary opinions, accountants’ comfort letters and lawyers’ negative assurance letters.

4. If Counterparty delivers Unregistered Settlement Shares pursuant to paragraph 2 above:

(a) all Unregistered Settlement Shares shall be delivered to GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof;

(b) as of or prior to the date of delivery, GS&Co. and any potential purchaser of any such shares from GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) identified by GS&Co. shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for private placements of equity securities of similar size (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);

(c) as of the date of delivery, Counterparty shall enter into an agreement (a “Private Placement Agreement”) with GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) in connection with the private placement of such shares by Counterparty to GS&Co. (or any such affiliate) and the private resale of such shares by GS&Co. (or any such affiliate), substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance commercially reasonably satisfactory to GS&Co., which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating, without limitation, to the indemnification of, and contribution in connection with the liability of, GS&Co. and its affiliates and the provision of customary opinions, accountants’ comfort letters and lawyers’ negative assurance letters, and shall provide for the payment by Counterparty of all commercially reasonable fees and expenses in connection with such resale, including all commercially reasonable fees and expenses of counsel for GS&Co., and shall contain representations, warranties, covenants and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales; and

(d) in connection with the private placement of such shares by Counterparty to GS&Co. (or any such affiliate) and the private resale of such shares by GS&Co. (or any such affiliate), Counterparty shall, if so requested by GS&Co., prepare, in cooperation with GS&Co., a private placement memorandum in form and substance reasonably satisfactory to GS&Co.

5. GS&Co., itself or through an affiliate (the “Selling Agent”) or any underwriter(s), using commercially reasonable efforts to achieve the highest available price subject to market conditions, will sell all, or such lesser portion as may be required hereunder, of the Registered Settlement Shares or Unregistered Settlement Shares and any Makewhole Shares (as defined below) (together, the “Settlement Shares”) delivered by Counterparty to GS&Co. pursuant to paragraph 6 below commencing on the Cash Settlement Payment Date and continuing until the date on which the aggregate Net Proceeds (as such term is defined below) of such sales, as commercially reasonably determined by GS&Co., is equal to the absolute value of the Forward Cash Settlement Amount (such date, the “Final Resale Date”). GS&Co. will not sell any Settlement Shares if, as a result of any such sale, the aggregate proceeds generated from sales of Settlement Shares, net of any commercially reasonable fees and commissions (including, without limitation, underwriting or placement fees) customary for similar transactions under the circumstances at the time of the offering, together with commercially reasonable carrying charges and expenses incurred in connection with the offer and sale of such Settlement Shares (including, but without limitation to, the covering of any over-allotment or short position (syndicate or otherwise)) (the “Net Proceeds”), would exceed the absolute value of the Forward Cash Settlement Amount and, if any portion of the Settlement Shares remains unsold, GS&Co. shall return to Counterparty on the date that is one Settlement Cycle following the Final Resale Date such unsold Shares.

6. If the Calculation Agent determines that the Net Proceeds received from the sale of the Registered Settlement Shares or Unregistered Settlement Shares or any Makewhole Shares, if any, pursuant to this paragraph 6 are less than the absolute value of the Forward Cash Settlement Amount (the amount in USD by which the Net Proceeds are less than the absolute value of the Forward Cash Settlement Amount being the “Shortfall” and the date on which such determination is made, the “Deficiency Determination Date”), Counterparty shall on the Exchange Business Day next succeeding the Deficiency Determination Date (the “Makewhole Notice Date”) deliver to GS&Co., through the Selling Agent, a notice of Counterparty’s election that Counterparty shall either (i) pay an amount in cash equal to the Shortfall on the day that is one (1) Currency Business Day after the Makewhole Notice Date, or (ii) deliver additional Shares. If Counterparty elects to deliver to GS&Co. additional Shares, then Counterparty shall deliver additional Shares in compliance with the terms and conditions of paragraph 3 or paragraph 4 above, as the case may be (the “Makewhole Shares”), on the first Clearance System Business Day which is also an Exchange Business Day following the Makewhole Notice Date in such number as the Calculation Agent reasonably believes would have a market value on that Exchange Business Day equal to the Shortfall. Such Makewhole Shares shall be sold by GS&Co. in accordance with the provisions above; provided that if the sum of the Net Proceeds from the sale of the originally delivered Shares and the Net Proceeds from the sale of any Makewhole Shares is less than the absolute value of the Forward Cash Settlement Amount then Counterparty shall, at its election, either make such cash payment or deliver to GS&Co. further Makewhole Shares until such Shortfall has been reduced to zero.

7. Notwithstanding the foregoing, in no event shall the aggregate number of Settlement Shares and Makewhole Shares be greater than the Reserved Shares (the “Capped Number”). Counterparty represents and warrants (which shall be deemed to be repeated on each day that a Transaction is outstanding) that the Capped Number is equal to or less than the number of Shares determined according to the following formula:

A – B


Where	A = the number of authorized but unissued shares of the Counterparty that are not reserved for future issuance on the date of the determination of the Capped Number; and

B = the maximum number of Shares required to be delivered to third parties if Counterparty elected Net Share Settlement of all transactions in the Shares (other than Transactions in the Shares under this Master Confirmation) with all third parties that are then currently outstanding and unexercised.

“Reserved Shares” means initially, 76,045,627 Shares. The Reserved Shares may be increased or decreased in a Supplemental Confirmation.

CONFIDENTIAL TREATMENT REQUESTED

[***] – CONFIDENTIAL PORTIONS OF THIS AGREEMENT THAT HAVE BEEN

REDACTED ARE MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS

BEEN FILED SEPARATELY WITH THE UNITED STATES SECURITIES AND EXCHANGE

COMMISSION.

SUPPLEMENTAL CONFIRMATION



To:	Sysco Corporation 1390 Enclave Parkway Houston, Texas 77077-2099
From:	Goldman, Sachs & Co.
Subject:	Accelerated Stock Buyback
Ref. No:	SDB2502817763
Date:	September 23, 2015

2. The terms of the Transaction to which this Supplemental Confirmation relates are as follows:



Trade Date:	September 23, 2015
Forward Price Adjustment Amount:	USD [***]
Calculation Period Start Date:	September 24, 2015
Scheduled Termination Date:	May 23, 2016
First Acceleration Date:	[***]
Prepayment Amount:	USD 1,500,000,000
Prepayment Date:	September 28, 2015
Initial Shares:	32,319,392 Shares; provided that if, in connection with the Transaction, GS&Co. is unable after using good faith and commercially reasonable efforts to borrow or otherwise acquire a number of Shares equal to the Initial Shares for delivery to Counterparty on the Initial Share Delivery Date, the Initial Shares delivered on the Initial Share Delivery Date shall be reduced to such number of Shares that GS&Co. is able to so borrow or otherwise acquire in order to establish a commercially reasonable hedge position. For the avoidance of doubt, in using such commercially reasonable efforts, GS&Co. shall act in good faith and in accordance with its then current policies, practices and procedures (including without limitation any policies, practices or procedures relating to counterparty risk, market risk, reputational risk, credit, documentation, legal, regulatory capital, compliance and collateral), and shall not be required to enter into any securities lending transaction or transact with any potential securities lender if such transaction would not be in accordance with such policies, practices and procedures.
Initial Share Delivery Date:	September 28, 2015
Ordinary Dividend Amount:	USD 0.30 for the Scheduled Ex-Dividend Date occurring on September 30, 2015 and USD 0.31 for each Scheduled Ex-Dividend Date thereafter
Scheduled Ex-Dividend Dates:	September 30, 2015, December 30, 2015 and March 30, 2016
Termination Price:	USD 19.73 per Share
Additional Relevant Days	The three Exchange Business Days immediately following the Calculation Period
Concurrent OMR Parameters:	Up to 3% of ADTV (as defined in Rule 10b-18) daily repurchase amount.

Yours sincerely,

GOLDMAN, SACHS & CO.

By: /s/ Eugene Parloff
Eugene Parloff

Vice President

Agreed and Accepted By:

SYSCO CORPORATION


By:	/s/ Gregory S. Keyes

Name:

Title:



											Exhibit 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	13-Week Period Ending		Fiscal Year
(dollars in thousands)	Sep. 26, 2015		June 27, 2015		June 28, 2014		June 29, 2013		June 30, 2012		July 2, 2011

Earnings before income taxes	$	381,807	$	1,008,147	$	1,475,624	$	1,547,455	$	1,784,002	$	1,827,454
Add: Fixed charges		133,332		281,756		147,922		153,840		154,965		151,990
Subtract: Capitalized interest		218		866		1,097		4,242		20,816		13,887
Total	$	514,921	$	1,289,037	$	1,622,449	$	1,697,053	$	1,918,151	$	1,965,557

Fixed Charges:
Interest expense	$	126,907	$	254,807	$	123,741	$	128,495	$	113,396	$	118,267
Capitalized interest		218		866		1,097		4,242		20,816		13,887
Rent expense interest factor		6,207		26,083		23,084		21,103		20,753		19,836
Total	$	133,332	$	281,756	$	147,922	$	153,840	$	154,965	$	151,990

Ratio of earnings to fixed charges (1)		3.9		4.6		11.0		11.0		12.4		12.9

(1) For the purpose of calculating this ratio, “earnings” consist of earnings before income taxes and fixed charges (exclusive of interest capitalized). “Fixed charges” consist of interest expense, capitalized interest and the estimated interest portion of rents.

Exhibit 15.1

REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Sysco Corporation

We have reviewed the consolidated balance sheets of Sysco Corporation (a Delaware Corporation) and subsidiaries as of September 26, 2015 and September 27, 2014, and the related consolidated results of operations, consolidated statements of comprehensive income, and consolidated cash flows for the thirteen week periods then ended. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Sysco Corporation and subsidiaries as of June 27, 2015, and the related consolidated results of operations, statements of comprehensive income and shareholders’ equity, and cash flows for the year then ended (not presented herein) and in our report dated August 24, 2015, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying consolidated balance sheet as of June 27, 2015, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Houston, Texas

November 2, 2015

Exhibit 15.2

To the Board of Directors and Shareholders

Sysco Corporation

We are aware of the incorporation by reference of our report dated November 2, 2015 relating to the unaudited consolidated interim financial statements of Sysco Corporation and subsidiaries that are included in its Form 10-Q for the quarter ended September 26, 2015 in the following registration statements.

Sysco Corporation Form S-3 File No. 333-206568

Sysco Corporation Form S-3 File No. 333-126199

Sysco Corporation Form S-4 File No. 333-50842

Sysco Corporation Form S-8 File No. 333-147338

Sysco Corporation Form S-8 File No. 33-45820

Sysco Corporation Form S-8 File No. 333-58276

Sysco Corporation Form S-8 File No. 333-163189

Sysco Corporation Form S-8 File No. 333-163188

Sysco Corporation Form S-8 File No. 333-170660

Sysco Corporation Form S-8 File No. 333-192353

Sysco Corporation Form S-8 File No. 333-201216

/s/ Ernst & Young LLP

Houston, Texas

November 2, 2015

Exhibit 31.1

CERTIFICATION

I, William J. DeLaney, certify that:


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


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


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


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


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


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

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

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


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


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


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

Date: November 2, 2015

/s/ WILLIAM J. DELANEY

William J. DeLaney

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Joel T. Grade, certify that:


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


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


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


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


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


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


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


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


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

Date: November 2, 2015

/s/ JOEL T. GRADE

Joel T. Grade

Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

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


1.	The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2015 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and


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

Date: November 2, 2015

/s/ WILLIAM J. DELANEY

William J. DeLaney

President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

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


1.	The company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2015 (“Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and


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

Date: November 2, 2015

/s/ JOEL T. GRADE

Joel T. Grade

Executive Vice President and Chief Financial Officer

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