DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Jun. 28, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

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

Hedging of interest rate risk

We manage our debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates. In the third quarter of fiscal 2025, we entered into receive-fixed, pay-floating swap agreements to trade the fixed interest rate on $550 million of 5.40% senior notes with variable rates. The interest rate swap agreements are designated as fair value hedges. Changes in the fair value of the hedge and the carrying value of the hedged item attributable to changes in the benchmark interest rates being hedged are recognized in interest expense.

Hedging of foreign currency risk

Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the Euro, U.S. dollar, Polish zloty and Danish krone. Accounts payable associated with these inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. We enter into foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

Sysco routinely manages foreign currency risk with spot and forward-rate cross-currency swaps on foreign-denominated balances. The swaps are designated as fair value hedges and for swaps hedging the change in foreign currency spot rates, we have elected to exclude the changes in fair value of the forward points from the assessments of hedge effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of the excluded components. Unrealized gains or losses on components excluded from hedge effectiveness are recorded within accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument.

Sysco has cross-currency swaps that hedge the foreign currency exposure of our net investment in certain foreign operations. These cross-currency swaps are designated as net investment hedges with gains and losses recognized within accumulated other comprehensive income (loss). In the third quarter of fiscal 2025, we entered into cross-currency swaps to hedge the foreign currency exposure of the net investment in our Canadian operations.

Hedging of fuel price risk

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

None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of June 28, 2025 are presented below:

Maturity Date of the Hedging Instrument	Currency / Unit of Measure	Notional Value
		(In millions)
Hedging of interest rate risk
January 2034	U.S. Dollar	500
March 2035	U.S. Dollar	550
Hedging of foreign currency risk
January 2029	Euro	470
September 2030	Euro	670
September 2030	Canadian Dollar	998
Hedging of fuel risk
Various (March 2025 to February 2027)	Gallons	77

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of June 28, 2025 and June 29, 2024 are as follows:

		Derivative Fair Value
	Balance Sheet location	Jun. 28, 2025		Jun. 29, 2024
		(In millions)
Fair Value Hedges:
Interest rate swaps	Other assets	$	31	$	6
Interest rate swaps	Accrued expenses	1		1
Cross currency swaps	Prepaid expenses and other current assets	—		2
Cross currency swaps	Accrued expenses	—		3
Cash Flow Hedges:
Fuel swaps	Prepaid expenses and other current assets	$	—	$	1
Fuel swaps	Other assets	—		1
Fuel swaps	Accrued expenses	7		2
Fuel swaps	Other long-term liabilities	2		—
Net Investment Hedges:
Cross currency swaps	Prepaid expenses and other current assets	$	11	$	4
Cross currency swaps	Other assets	55		—
Cross currency swaps	Accrued expenses	2		—
Cross currency swaps	Other long-term liabilities	134		10

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

	Jun. 28, 2025		Jun. 29, 2024
	(In millions)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded	$	673	$	637
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items	$	(65)	$	(24)
Derivatives designated as hedging instruments	24		6
Cross currency swaps:
Hedged items	$	2	$	2
Derivatives designated as hedging instruments	(2)		(2)

The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above are comprised of the following components for each of the periods presented:

	Jun. 28, 2025		Jun. 29, 2024
	(In millions)
Interest expense	$	(40)	$	(18)
Increase in fair value of debt	(25)		(6)
Foreign currency gain	2		2
Hedged items	$	(63)	$	(22)

The location and effect of cash flow and net investment hedge accounting on the consolidated statements of comprehensive income for the fiscal years ended June 28, 2025 and June 29, 2024, presented on a pretax basis, are as follows:

	2025
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In millions)			(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(7)	Operating expense	$	11
Derivatives in net investment hedging relationships:
Cross currency contracts	$	(65)	N/A	$	—
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge	$	(2)	Other expense (income)	$	—

	2024
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In millions)			(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	23	Operating expense	$	(1)
Derivatives in net investment hedging relationships:
Cross currency contracts	$	(5)	N/A	$	—
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge	$	2	Other expense (income)	$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 28, 2025 are as follows:

	Jun. 28, 2025
	Carrying Amount of Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In millions)
Balance sheet location:
Long-term debt	$	(1,069)	$	(31)

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2024 are as follows:

	Jun. 29, 2024
	Carrying Amount of Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In millions)
Balance sheet location:
Long-term debt	$	(498)	$	(6)