DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Sep. 27, 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, we do not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate risk, foreign currency risk and fuel price risk.

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates. The interest rate swaps are designated as fair value hedges and gains or losses on the hedges impact interest expense within the consolidated statements of income.

Hedging of foreign currency risk

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).

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’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 periodically 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.

Hedging of fuel price risk

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

None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of September 27, 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	Canadian Dollar	998
Hedging of fuel risk
Various (September 2025 to April 2027)	Gallons	72

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheets as of September 27, 2025 and June 28, 2025 are as follows:

		Derivative Fair Value
	Balance Sheet location	Sep. 27, 2025		Jun. 28, 2025
		(In millions)
Fair Value Hedges:
Interest rate swaps	Prepaid expenses and other current assets	$	3	$	—
Interest rate swaps	Other assets	31		31
Interest rate swaps	Accrued expenses	—		1
Cash Flow Hedges:
Fuel swaps	Prepaid expenses and other current assets	$	5	$	—
Fuel swaps	Other assets	2		—
Fuel swaps	Accrued expenses	1		7
Fuel swaps	Other long-term liabilities	—		2
Net Investment Hedges:
Cross currency swaps	Prepaid expenses and other current assets	$	15	$	11
Cross currency swaps	Other assets	63		55
Cross currency swaps	Accrued expenses	3		2
Cross currency swaps	Other long-term liabilities	128		134

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

	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 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	$	200	$	166
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items	$	(19)	$	(33)
Derivatives designated as hedging instruments	3		25
Cross currency swaps and foreign currency forwards:
Hedged items	$	—	$	(4)
Derivatives designated as hedging instruments	—		4

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

	13-Week Period Ended
	Sep. 27, 2025		Sep. 28, 2024
	(In millions)
Interest expense	$	(15)	$	(8)
(Increase) decrease in fair value of debt	(4)		(25)
Foreign currency gain (loss)	—		(4)
Hedged items	$	(19)	$	(37)

The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 13-week periods ended September 27, 2025 and September 28, 2024, presented on a pretax basis, are as follows:

	13-Week Period Ended Sep. 27, 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	$	13	Operating expense	$	1
Derivatives in net investment hedging relationships:
Cross currency contracts	$	18	N/A	$	—
	13-Week Period Ended Sep. 28, 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	$	(19)	Operating expense	$	—
Foreign currency contracts	(1)		Cost of sales / Other income	—
Total	$	(20)		$	—
Derivatives in net investment hedging relationships:
Cross currency contracts	$	(18)	N/A	$	—

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 27, 2025 are as follows:

	Sep. 27, 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	$	(1,073)	$	(35)

The carrying amount of hedged liabilities in the consolidated balance sheet as of June 28, 2025 is $1.1 billion.