Item 8. Financial Statements and Supplementary Data

SYSCO CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Consolidated Financial Statements:
Report of Management on Internal Control Over Financial Reporting			57
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (PCAOB ID: 42)			58
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID: 42)			59
Consolidated Balance Sheets			61
Consolidated Results of Operations			62
Consolidated Statements of Comprehensive Income			63
Changes in Consolidated Shareholders’ Equity			64
Consolidated Cash Flows			65
Notes to Consolidated Financial Statements			66

All schedules are omitted because they are not applicable, or the information is set forth in the consolidated financial statements or notes thereto.

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Sysco Corporation (Sysco) is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Sysco’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Sysco’s management assessed the effectiveness of Sysco’s internal control over financial reporting as of June 29, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013). Based on this assessment, management concluded that, as of June 29, 2024, Sysco’s internal control over financial reporting was effective based on those criteria.

Ernst & Young LLP, the independent registered public accounting firm that audited the company’s consolidated financial statements included in this report, has issued an audit report on the effectiveness of Sysco’s internal control over financial reporting as of June 29, 2024.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Sysco Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Sysco Corporation and its Consolidated Subsidiaries’ internal control over financial reporting as of June 29, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Sysco Corporation and its Consolidated Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 29, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated August 27, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Houston, Texas

August 27, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Sysco Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sysco Corporation and its Consolidated Subsidiaries (the Company) as of June 29, 2024 and July 1, 2023, the related consolidated results of operations, statements of comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended June 29, 2024 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 29, 2024 and July 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 29, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 29, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated August 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

						Valuation of Goodwill
Description of the Matter						At June 29, 2024, the Company’s goodwill was $5.2 billion. As discussed in Note 1 of the consolidated financial statements, goodwill is tested by the Company’s management for impairment at least annually unless there are indications of impairment at other points throughout the fiscal year. Auditing management’s impairment tests for goodwill is complex and highly judgmental due to the significant estimation required to determine the fair value of the reporting units. In particular, the fair value estimates of two reporting units were more sensitive to changes in significant assumptions including changes in projected cash flows or weighted average cost of capital. These assumptions are sensitive to and affected by expected future market or economic conditions and company-specific qualitative factors.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above. We also tested controls over management’s review of the data used in their valuation models. To test the estimated fair value of the two reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared projected cash flows to the Company’s historical cash flows and other available industry information. We involved our valuation specialists to assist in reviewing the valuation methodology and testing the weighted average cost of capital. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Houston, Texas

August 27, 2024

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In millions, except for share data)

			Jun. 29, 2024						Jul. 1, 2023
ASSETS
Current assets
Cash and cash equivalents			$	696					$	745
Accounts receivable, less allowances of $54 and $46			5,324						5,092
Inventories			4,678						4,481
Prepaid expenses and other current assets			323						284
Income tax receivable			22						6
Total current assets			11,043						10,608
Plant and equipment at cost, less accumulated depreciation			5,497						4,915
Other long-term assets
Goodwill			5,153						4,646
Intangibles, less amortization			1,188						860
Deferred income taxes			445						420
Operating lease right-of-use assets, net			923						732
Other assets			668						640
Total other long-term assets			8,377						7,298
Total assets			$	24,917					$	22,821
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	6,290					$	6,025
Accrued expenses			2,226						2,251
Accrued income taxes			131						102
Current operating lease liabilities			125						99
Current maturities of long-term debt			469						63
Total current liabilities			9,241						8,540
Long-term liabilities
Long-term debt			11,513						10,348
Deferred income taxes			345						303
Long-term operating lease liabilities			838						656
Other long-term liabilities			1,089						932
Total long-term liabilities			13,785						12,239
Noncontrolling interest			31						33
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						765
Paid-in capital			1,908						1,815
Retained earnings			12,260						11,311
Accumulated other comprehensive loss			(1,339)						(1,253)
Treasury stock at cost, 273,416,685 and 260,062,834 shares			(11,734)						(10,629)
Total shareholders’ equity			1,860						2,009
Total liabilities and shareholders’ equity			$	24,917					$	22,821

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS

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

			Year Ended
			Jun. 29, 2024						Jul. 1, 2023						Jul. 2, 2022
			(In millions except for share and per share data)
Sales			$	78,844					$	76,325					$	68,636
Cost of sales			64,236						62,370						56,316
Gross profit			14,608						13,955						12,320
Operating expenses			11,406						10,916						9,974
Operating income			3,202						3,039						2,346
Interest expense			607						527						624
Other expense (income), net (1)			30						227						(25)
Earnings before income taxes			2,565						2,285						1,747
Income taxes			610						515						388
Net earnings			$	1,955					$	1,770					$	1,359
Net earnings:
Basic earnings per share			$	3.90					$	3.49					$	2.66
Diluted earnings per share			3.89						3.47						2.64
Average shares outstanding			501,238,422						507,362,913						510,630,645
Diluted shares outstanding			503,096,086						509,719,756						514,005,827

(1)			Sysco’s second quarter of fiscal 2023 included a charge of $315 million in other expense related to pension settlement charges. See Note 14, “Company-Sponsored Employee Benefit Plans.” Sysco’s fourth quarter of fiscal 2023 included $122 million in other income related to a legacy litigation financing agreement. See Note 20, “Commitments and Contingencies.”

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

			Year Ended
			Jun. 29, 2024						Jul. 1, 2023						Jul. 2, 2022
			(In millions)
Net earnings			$	1,955					$	1,770					$	1,359
Other comprehensive income (loss):
Foreign currency translation adjustment			(33)						127						(461)
Items presented net of tax:
Amortization of cash flow hedges			7						9						9
Change in net investment hedges			(3)						(21)						54
Change in cash flow hedges			16						(56)						24
Changes in excluded components of fair value hedge			2						—						—
Amortization of actuarial loss			20						24						59
Pension settlement charge			—						237						—
Net actuarial (loss) gain arising in current year			(97)						(89)						(9)
Change in marketable securities			2						(2)						(9)
Total other comprehensive income (loss)			(86)						229						(333)
Comprehensive income			$	1,869					$	1,999					$	1,026

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY

(In millions, except for share data)

			Common Stock												Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock
			Shares						Amount															Shares						Amounts						Totals
			(In millions except for share data)
Balance as of July 3, 2021			765,174,900						$	765					$	1,620					$	10,152					$	(1,149)					253,342,595						$	(9,835)					$	1,553
Net earnings																					1,359																								1,359
Other comprehensive loss																											(333)																		(333)
Dividends declared ($1.90 per common share)																					(971)																								(971)
Treasury stock purchases																																	6,698,991						(500)						(500)
Share-based compensation awards															146																		(3,510,043)						128						274
Balance as of July 2, 2022			765,174,900						$	765					$	1,766					$	10,540					$	(1,482)					256,531,543						$	(10,207)					$	1,382
Net earnings																					1,770																								1,770
Other comprehensive income																											229																		229
Dividends declared ($1.97 per common share)																					(999)																								(999)
Treasury stock purchases																																	6,231,071						(500)						(500)
Increase in ownership interest in subsidiaries															(2)																														(2)
Share-based compensation awards															51																		(2,699,780)						78						129
Balance as of July 1, 2023			765,174,900						$	765					$	1,815					$	11,311					$	(1,253)					260,062,834						$	(10,629)					$	2,009
Net earnings																					1,955																								1,955
Other comprehensive loss																											(86)																		(86)
Dividends declared ($2.01 per common share)																					(1,006)																								(1,006)
Treasury stock purchases															(25)																		16,452,041						(1,216)						(1,241)
Share-based compensation awards															118																		(3,098,190)						111						229
Balance as of June 29, 2024			765,174,900						$	765					$	1,908					$	12,260					$	(1,339)					273,416,685						$	(11,734)					$	1,860

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS

(In millions)

			Year Ended
			Jun. 29, 2024						Jul. 1, 2023						Jul. 2, 2022
Cash flows from operating activities:
Net earnings			$	1,955					$	1,770					$	1,359
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge			—						315						—
Share-based compensation expense			104						96						122
Depreciation and amortization			873						776						773
Operating lease asset amortization			124						113						108
Amortization of debt issuance and other debt-related costs			19						20						22
Deferred income taxes			27						(16)						(64)
Provision for losses (gains) on receivables			57						36						(15)
Loss on extinguishment of debt			—						—						116
Other non-cash items			(12)						(7)						(13)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables			(110)						(271)						(971)
Increase in inventories			(70)						(22)						(709)
(Increase) decrease in prepaid expenses and other current assets			(2)						2						5
Increase in accounts payable			104						196						810
(Decrease) increase in accrued expenses			(12)						22						423
Decrease in operating lease liabilities			(144)						(134)						(126)
Increase (decrease) in accrued income taxes			13						92						(10)
Decrease (increase) in other assets			38						6						(1)
Increase (decrease) in other long-term liabilities			25						(126)						(38)
Net cash provided by operating activities			2,989						2,868						1,791
Cash flows from investing activities:
Additions to plant and equipment			(832)						(793)						(633)
Proceeds from sales of plant and equipment			79						42						24
Acquisition of businesses, net of cash acquired			(1,210)						(37)						(1,281)
Purchase of marketable securities			(33)						(16)						(19)
Proceeds from sales of marketable securities			29						12						17
Other investing activities			5						7						14
Net cash used for investing activities			(1,962)						(785)						(1,878)
Cash flows from financing activities:
Bank and commercial paper borrowings, net			200						—						—
Other debt borrowings including senior notes			1,362						249						1,248
Other debt repayments including senior notes			(447)						(830)						(494)
Redemption premiums and repayments for senior notes			—						—						(1,396)
Cash received from termination of interest rate swap agreements			—						—						23
Proceeds from stock option exercises			120						79						128
Stock repurchases			(1,232)						(500)						(500)
Dividends paid			(1,008)						(996)						(959)
Other financing activities			(33)						(58)						(37)
Net cash used for financing activities			(1,038)						(2,056)						(1,987)
Effect of exchange rates on cash, cash equivalents and restricted cash			(10)						8						(32)
Net (decrease) increase in cash, cash equivalents and restricted cash			(21)						35						(2,106)
Cash, cash equivalents and restricted cash at beginning of period			966						931						3,037
Cash, cash equivalents and restricted cash at end of period			$	945					$	966					$	931
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest			$	557					$	511					$	498
Income taxes, net of refunds			564						444						450

See Notes to Consolidated Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. SUMMARY OF ACCOUNTING POLICIES

Business and Consolidation

Sysco Corporation, acting through its subsidiaries and divisions (Sysco or the company), is engaged in the marketing and distribution of a wide range of food and related products primarily to the foodservice or food-away-from-home industry. These services are performed for approximately 730,000 customers from 340 distribution facilities located throughout North America and Europe.

Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ended June 29, 2024 for fiscal 2024, a 52-week year ended July 1, 2023 for fiscal 2023, and a 52-week year ended July 2, 2022 for fiscal 2022. The company will have a 52-week year ending June 28, 2025 for fiscal 2025.

The accompanying financial statements include the accounts of Sysco and its consolidated subsidiaries. All significant intercompany transactions and account balances have been eliminated.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses. Actual results could differ from the estimates used.

Cash and Cash Equivalents

Cash includes cash equivalents such as cash deposits, 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, which are recorded at fair value.

Accounts Receivable, Less Allowances

Accounts receivable consist primarily of trade receivables from customers and receivables from suppliers for marketing or incentive programs. Sysco determines the past due status of trade receivables based on contractual terms with each customer and evaluates the collectability of accounts receivable to determine an appropriate allowance for credit losses on trade receivables. To calculate an allowance for credit losses, we estimate uncollectible amounts based on historical loss experience, including those experienced during times of local and regional disasters, current conditions and collection rates, and expectations regarding future losses. Allowances are recorded for all other receivables based on an analysis of historical trends of write-offs and recoveries.

We utilize arrangements to sell portions of our trade accounts receivable to third-party financial institutions on a non-recourse basis in exchange for cash. The arrangements meet the requirements for the receivables transferred to be accounted for as sales and are accounted for as a reduction in trade receivables. Proceeds from the sales are reported net of negotiated discount and are recorded as a reduction to accounts receivable outstanding in the company’s consolidated balance sheets and as cash flows from operating activities in the company’s consolidated statements of cash flows. Accounts receivable sold under these arrangements were $5.5 billion and $4.2 billion for the fiscal years ended June 29, 2024 and July 1, 2023, respectively.

In certain instances, Sysco has continuing involvement subsequent to the transfer, limited to providing certain servicing and collection actions on behalf of the purchasers of the designated trade receivables. The outstanding aggregate principal amount of receivables that has been derecognized and remain outstanding was $173 million and $86 million at June 29, 2024 and July 1, 2023, respectively. We continue to service the receivables post-transfer on a non-recourse basis with no participating interest.

Inventories

Inventories consisting primarily of finished goods include food and related products and lodging products held for resale. Inventories are valued at the lower of cost (first-in, first-out method) and net realizable value. Elements of costs include

the purchase price of the product and freight charges to deliver the product to the company’s warehouses and are net of certain cash received from vendors (see Vendor Consideration).

Inventory balances are adjusted for slow-moving, excess, and obsolete inventories. Inventory valuation reserves are estimated based on the consideration of a variety of factors, including but not limited to, current economic conditions and business trends, seasonal demand, future merchandising strategies and the age of our products.

Plant and Equipment

Capital additions, improvements and major replacements are classified as plant and equipment and are carried at cost. Depreciation is recorded using the straight-line method, which reduces the book value of each asset in equal amounts over its estimated useful life. Depreciation is included within operating expenses in the consolidated results of operations. Maintenance, repairs and minor replacements are charged to earnings when they are incurred. Upon the disposition of an asset, its accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current earnings.

We capitalize certain computer software and costs incurred in developing and enhancing software for internal use. When these assets become ready for their intended use, these costs are included in computer hardware and software and amortized on a straight-line basis over their estimated useful lives. Capitalized costs related to the acquisition and development of internal use software were $171 million in fiscal 2024, $70 million in fiscal 2023 and $87 million in fiscal 2022.

Long-Lived Assets

For assets held for use, Sysco groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If the evaluation indicates that the carrying value of the asset group may not be recoverable, the potential impairment is measured using fair value. Impairment losses for assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. Management reviews long-lived assets, including finite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related asset groups are estimated over the asset group’s useful life on an undiscounted basis.

Goodwill and Indefinite-Lived Intangibles

Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill and intangibles with indefinite lives are not amortized. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of a business combination. The recoverability of goodwill and indefinite-lived intangibles is assessed annually, or more frequently as needed when events or changes have occurred that would suggest an impairment of carrying value, by determining whether the fair values of the applicable reporting units exceed their carrying values. This annual testing may be performed utilizing either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and it is determined that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, a quantitative test is performed.

For fiscal 2024, we utilized a qualitative assessment for certain reporting units. For the remaining reporting units, Sysco performed a quantitative test using a combination of the income and market approaches. The evaluation of fair value requires a discounted cash flow analysis using projections, estimates and assumptions as to the future performance of the operations in addition to assumptions regarding sales and earnings multiples that would be applied in comparable acquisitions.

In the annual fiscal 2024 assessment, all reporting units were concluded to have a fair value that exceeded book value.

Derivative Financial Instruments

All derivatives are recognized as assets or liabilities within the consolidated balance sheets at fair value at their gross values. Gains or losses on derivative financial instruments designated as fair value hedges are recognized immediately in the consolidated results of operations, along with the offsetting gain or loss related to the underlying hedged item.

Gains or losses on derivative financial instruments designated as cash flow hedges are recorded as a component of Accumulated Other Comprehensive Income (Loss) (AOCI) from inception of the hedges and are reclassified to the consolidated results of operations in conjunction with the recognition of the underlying hedged item.

For net investment hedges, the remeasurement gain or loss is recorded in accumulated other comprehensive income and will be subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.

Investments in Corporate-Owned Life Insurance

Investments in Corporate-Owned Life Insurance (COLI) policies are recorded at their cash surrender values as of each balance sheet date. Changes in the cash surrender value during the period are recorded as a gain or loss within operating expenses. Sysco has the ability and intent to hold certain of its COLI policies to maturity; therefore, the company does not record deferred tax balances related to cash surrender value gains or losses for these policies. We invest in COLI policies relating to our executive deferred compensation plan and Supplemental Executive Retirement Plan (SERP). The total amounts related to the company’s investments in COLI policies included in other assets in the consolidated balance sheets were $166 million and $160 million at June 29, 2024 and July 1, 2023, respectively.

Treasury Stock

We record treasury stock purchases at cost. Shares removed from treasury are valued at cost using the average cost method.

Foreign Currency Translation

The assets and liabilities of all foreign subsidiaries are translated at current exchange rates. Related translation adjustments are recorded as a component of AOCI.

Revenue Recognition

Sysco, in accordance with Accounting Standards Codification (ASC) Topic 606, recognizes revenues when the performance obligation is satisfied. This is the point at which control of the promised goods or services are transferred to our customers. Revenues are recorded in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods or services. For the majority of our customer arrangements, control transfers to customers at a point-in-time when goods have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfers to the customer. The timing of satisfaction of the performance obligation is not subject to significant judgment.

Sales tax collected from customers is not included in revenue, but rather recorded as a liability due to the respective taxing authorities. Shipping and handling costs include costs associated with the selection of products and delivery to customers and are included within operating expenses.

Product Sales Revenues

Sysco generates revenue primarily from the distribution and sale of food and related products to its customers. Substantially all revenue is recognized at the point in time in which the product is delivered to the customer. We grant certain customers sales incentives, such as rebates or discounts, which are accounted for as variable consideration. The variable consideration is based on amounts known at the time the performance obligation is satisfied and, therefore, requires minimal judgment. The disclosure of disaggregated revenues is presented in Note 3, “Revenue.”

Contract Balances

After completion of Sysco’s performance obligations, we have an unconditional right to consideration as outlined in its contracts with customers. We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness. Customer receivables included in accounts receivable, less allowances in the consolidated balance sheet, were $5.0 billion and $4.7 billion as of June 29, 2024 and July 1, 2023, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in other assets and amortized over the life of the contract or the expected life of the relationship with the customer on a straight-line basis. As of June 29, 2024, Sysco’s contract assets were not significant. We have no significant commissions paid that are directly attributable to obtaining a particular contract.

Vendor Consideration

Sysco recognizes consideration received from vendors in the form of invoice deductions or cash, and are recorded as a reduction to cost of sales when the related product has been sold by us. In many instances, the vendor consideration is in the form of a specified amount per case or per pound. In these instances, we will recognize the vendor consideration as a reduction of cost of sales when the product is sold.

Shipping and Handling Costs

Shipping and handling costs include costs associated with the selection of products and delivery to customers. Included in operating expenses are shipping and handling costs of approximately $4.3 billion, $4.0 billion and $3.9 billion in fiscal 2024, 2023 and 2022, respectively.

Insurance Program

Sysco maintains a self-insurance program covering portions of workers’ compensation, general and vehicle liability and property insurance costs. The amounts in excess of the self-insured levels are fully insured by third party insurers. Sysco has a wholly owned captive insurance subsidiary (the Captive) with the primary purpose to enhance Sysco’s risk financing strategies by providing Sysco the opportunity to negotiate insurance premiums in the non-retail insurance market. The Captive must maintain a sufficient level of cash to fund future reserve payments and secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. The Captive holds restricted assets in order to meet solvency requirements, including a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale, and cash and restricted cash equivalents held in a cash deposit account. Further, Sysco has letters of credit available to collateralize the remaining liabilities not covered by restricted cash, restricted cash equivalents and marketable securities. The company also maintains a fully self-insured group medical program. Liabilities associated with these risks are estimated in part by considering historical claims experience, medical cost trends, demographic factors, severity factors and other actuarial assumptions.

Share-Based Compensation

We recognize share-based compensation expense based on the fair value of the awards that are granted. The fair value of performance share unit awards is determined based on the target number of shares of common stock and the company’s stock price on the date of grant and subsequently adjusted based on actual and forecasted performance compared to planned targets. The fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model. Option pricing methods require the input of subjective assumptions, including the expected stock price volatility. The fair value of restricted stock and restricted stock unit awards are based on the company’s stock price on the date of grant. Measured compensation cost is recognized ratably over the vesting period of the related share-based compensation award.

During the vesting period, we reduce share-based compensation expense for estimated forfeitures based on an analysis of historical trends reviewed annually. Sysco’s estimate of forfeitures is applied at the grant level. The estimate of forfeitures is adjusted to the amount of actual forfeitures at the end of each vesting period.

Income Taxes

We recognize deferred tax assets and liabilities based on the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. The additional United States (U.S.) federal tax burden as a result of the global intangible low taxed income regime is accounted for as a periodic cost.

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

Acquisitions

Acquisitions of businesses are accounted for using the acquisition method of accounting. The financial statements include the results of the acquired operations from the respective dates of acquisition.

The purchase price of the acquired entities is preliminarily allocated to the net assets acquired and liabilities assumed based on the estimated fair value at the dates of acquisition. Any excess of cost over the fair value of net assets acquired, including intangibles, is recognized as goodwill. During the measurement period, up to twelve months from the date of acquisition, subsequent changes may be made to adjust the preliminary amounts recognized at the acquisition date to their subsequently determined acquisition-date fair values.

Basis of Presentation

The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, changes in consolidated shareholders’ equity 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 in conformity with GAAP for all periods presented have been made.

Sysco has interests in various jointly owned foodservice operations in Mexico and Panama for which it consolidates the results of the operations. The financial position, results of operations and cash flows for these companies have been included in Sysco’s consolidated financial statements. The value of the noncontrolling interest in each entity is considered redeemable due to certain features of the investment agreement and has been presented as mezzanine equity, which is outside of permanent equity, in the consolidated balance sheets. The income attributable to the noncontrolling interest is located within Other expense (income), net, in the consolidated results of operations because this amount is not material. The non-cash add back for the change in the value of the noncontrolling interest is located within Other non-cash items on the consolidated cash flows.

Supplemental Cash Flow Information

Within the Consolidated Statement of Cash Flows, certain items have been grouped as other financing activities. These primarily include cash paid for shares withheld to cover taxes from share-based compensation and debt issuance costs.

The following table sets forth the company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statement of Cash Flows that sum to the total of the same such amounts shown in the consolidated balance sheets:

			Jun. 29, 2024						Jul. 1, 2023						Jul. 2, 2022
			(In millions)
Cash and cash equivalents			$	696					$	745					$	867
Restricted cash (1)			249						221						64
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows			$	945					$	966					$	931

(1)			Restricted cash primarily represents cash and cash equivalents of the Captive which is restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.

The following table sets forth the company’s non-cash investing and financing activities:

			Jun. 29, 2024						Jul. 1, 2023						Jul. 2, 2022
			(In millions)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs			$	402					$	197					$	—
Assets obtained in exchange for finance lease obligations			115						114						192

2. NEW ACCOUNTING STANDARDS

Liabilities – Supplier Financing Programs

In September 2022, the FASB issued Accounting Standards Update (ASU) 2022-04, Liabilities—Supplier Finance Programs, Subtopic 405-50, that requires entities to disclose in the annual financial statements the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with information about their obligations under these programs, including a roll forward of those obligations. Additionally, the guidance requires disclosure of the outstanding amount of the obligations as of the end of each interim period. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations.

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022 (our first quarter of fiscal 2024), except for the roll forward requirement, which is effective annually for fiscal years beginning after December 15, 2023 (our fiscal year 2025). The guidance requires retrospective application to all periods in which a balance sheet is presented, except for the roll forward requirement, which will be applied prospectively.

Sysco completed its assessment of the disclosures required under ASU 2022-04 and adopted the standard, with the exception of the roll forward requirement, in the first quarter of fiscal 2024 on a retrospective basis. We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been confirmed as valid require payment by Sysco upon the due date of the obligation.

Our outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:

			Jun. 29, 2024									Jul. 1, 2023																		Jul. 2, 2022
			(In millions)
Financed payment obligations			$	102								$	100																	$	90

Recent Accounting Guidance Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 (our fiscal 2025), and interim periods for our fiscal years beginning after December 15, 2024 (our first quarter of fiscal 2026), and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-07 on our disclosures.

Income Taxes

In December 2023, the FASB issued 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 (our fiscal 2026), on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.

3. REVENUE

Disaggregation of Sales

The following tables present our sales disaggregated by reportable segment and sales mix for our principal product categories for the periods presented:

						Year Ended Jun. 29, 2024
						US Foodservice Operations						International Foodservice Operations						SYGMA						Other						Total
						(In millions)
Principal Product Categories
Canned and dry products						$	10,677					$	3,294					$	931					$	—					$	14,902
Fresh and frozen meats						10,243						2,019						2,033						—						14,295
Frozen fruits, vegetables, bakery and other						8,083						2,718						1,260						—						12,061
Dairy products						5,856						1,610						565						—						8,031
Poultry						5,502						1,115						1,069						—						7,686
Fresh produce						5,451						1,092						282						—						6,825
Paper and disposables						4,035						537						756						58						5,386
Seafood						2,196						442						183						—						2,821
Beverage products						1,436						685						583						88						2,792
Equipment and smallwares (1)						826						197						25						497						1,545
Other (2)						1,034						852						81						533						2,500
Total Sales						$	55,339					$	14,561					$	7,768					$	1,176					$	78,844

(1)			Due to the acquisition of Edward Don & Company (Edward Don), a distributor of foodservice equipment and supplies, “Equipment and smallwares” is now presented as a separate principal product category. See Note 4, “Acquisitions,” for details on this acquisition.
(2)			Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

						Year Ended Jul. 1, 2023
						US Foodservice Operations						International Foodservice Operations						SYGMA						Other						Total
						(In millions)
Principal Product Categories
Canned and dry products						$	10,441					$	2,949					$	960					$	2					$	14,352
Fresh and frozen meats						9,773						1,857						1,860						—						13,490
Frozen fruits, vegetables, bakery and other						7,662						2,396						1,307						—						11,365
Dairy products						6,022						1,537						650						—						8,209
Poultry						5,501						1,154						1,097						—						7,752
Fresh produce						5,367						1,042						272						—						6,681
Paper and disposables						3,999						551						833						59						5,442
Seafood						2,380						465						178						—						3,023
Beverage products						1,308						585						573						92						2,558
Equipment and smallwares (1)						304						203						24						526						1,057
Other (2)						926						821						89						560						2,396
Total Sales						$	53,683					$	13,560					$	7,843					$	1,239					$	76,325

(1)			Due to the acquisition of Edward Don, a distributor of foodservice equipment and supplies, “Equipment and smallwares” is now presented as a separate principal product category. See Note 4, “Acquisitions,” for details on this acquisition.
(2)			Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

						Year Ended Jul. 2, 2022
						US Foodservice Operations						International Foodservice Operations						SYGMA						Other						Total
						(In millions)
Principal Product Categories
Fresh and frozen meats						$	9,641					$	1,662					$	1,967					$	—					$	13,270
Canned and dry products						8,811						2,407						734						11						11,963
Frozen fruits, vegetables, bakery and other						6,356						2,139						1,155						—						9,650
Poultry						5,719						995						977						—						7,691
Dairy products						4,920						1,257						583						—						6,760
Fresh produce						4,539						912						261						—						5,712
Paper and disposables						3,731						493						778						84						5,086
Seafood						2,599						459						156						—						3,214
Beverage products						1,073						474						529						83						2,159
Equipment and smallwares (1)						291						268						22						431						1,012
Other (2)						841						721						84						473						2,119
Total Sales						$	48,521					$	11,787					$	7,246					$	1,082					$	68,636

(1)			Due to the acquisition of Edward Don, a distributor of foodservice equipment and supplies, “Equipment and smallwares” is now presented as a separate principal product category. See Note 4, “Acquisitions,” for details on this acquisition.
(2)			Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

4. ACQUISITIONS

During fiscal 2024, we paid cash of $1.2 billion for several acquisitions.

Edward Don & Company

On November 27, 2023, Sysco consummated its acquisition of Edward Don (or the acquiree) through a merger between Edward Don and a wholly owned subsidiary of Sysco Corporation, in which Sysco acquired 100% of the members’ equity of the acquiree for cash consideration of $965 million. Edward Don is a leading distributor of foodservice equipment, supplies and disposables and has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies across the Sysco network. The acquisition allows Sysco to add strategic capabilities and diversified offerings to complement its existing business and create a specialty equipment and supplies platform that will provide better selection and service to customers.

The assets, liabilities and operating results of Edward Don are reflected in our consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition date. The purchase price was allocated based on the company’s preliminary estimated fair value of the assets acquired and liabilities assumed, including intangibles, and the excess was assigned to goodwill. Goodwill of $362 million is attributed to the U.S. Foodservice Operations reportable segment and represents synergies and disposable, supply and foodservice equipment capabilities and offerings expected to benefit Sysco’s existing business.

In certain circumstances, purchase price allocations may be based upon preliminary estimates and assumptions. Accordingly, allocations are subject to revision until Sysco receives final information and completes its analysis during the measurement period. This includes finalizing the valuation of acquired tangible and intangible assets and related tax attributes.

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 cash deposits, 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.

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

• Cash deposits included in cash equivalents are valued at amortized cost which approximates fair value. These are included within cash equivalents as a Level 1 measurement in the tables below.

• 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 as Level 1 measurements in the tables below.

• Fixed income securities are valued using evaluated bid prices based on a compilation of observable market information or a broker quote in a non-active market. Inputs used vary by type of security, but include spreads, yields, rate benchmarks, rate of prepayment, cash flows, rating changes and collateral performance and type.

• Interest rate swap agreements are valued using a swap valuation model that utilizes an income approach using observable market inputs including Secured Overnight Financing Rate (SOFR) yield curves.

• Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments.

• Cross-currency swaps are valued based on an income approach using observable market inputs including foreign currency rates and interest rates in both countries subject to the swap.

• Fuel swap contracts are valued based on observable market transactions of forward commodity prices.

The fair value of our marketable securities is measured using inputs that are considered a Level 2 measurement, as they rely on quoted prices in markets that are not actively traded or observable inputs over the full term of the asset. The location and the fair value of our marketable securities in the consolidated balance sheet are disclosed in Note 6, “Marketable Securities.” The fair value of our derivative instruments is measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair value of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 10, “Derivative Financial Instruments.”

The following tables present our assets measured at fair value on a recurring basis as of June 29, 2024 and July 1, 2023:

			Assets and Liabilities Measured at Fair Value as of Jun. 29, 2024
			Level 1						Level 2						Level 3						Total
			(In millions)
Assets:
Cash equivalents
Cash and cash equivalents			$	269					$	—					$	—					$	269
Other assets (1)			249						—						—						249
Total assets at fair value			$	518					$	—					$	—					$	518

(1)			Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

			Assets and Liabilities Measured at Fair Value as of Jul. 1, 2023
			Level 1						Level 2						Level 3						Total
			(In millions)
Assets:
Cash equivalents
Cash and cash equivalents			$	309					$	10					$	—					$	319
Other assets (1)			221						—						—						221
Total assets at fair value			$	530					$	10					$	—					$	540

(1)			Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of Sysco’s total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt and is considered a Level 2 measurement. The fair value of total debt was approximately $11.4 billion and $9.8 billion as of June 29, 2024 and July 1, 2023, respectively. The carrying value of total debt was $12.0 billion and $10.4 billion as of June 29, 2024 and July 1, 2023, respectively.

6. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by our wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. The company includes fixed income securities maturing in less than twelve months within Prepaid expenses and other current assets and includes fixed income securities maturing in more than twelve months within Other assets in the accompanying

Consolidated Balance Sheets. We record the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.

Sysco estimates lifetime expected credit losses for all available-for-sale debt securities in an unrealized loss position by assessing credit indicators, including credit ratings, for the applicable securities. If the assessment indicates that an expected credit loss exists, the company determines the portion of the unrealized loss attributable to credit deterioration and records an allowance for the expected credit loss through the consolidated results of operations. Unrealized gains and losses on marketable securities are recorded in accumulated other comprehensive loss. The following table presents our available-for-sale marketable securities as of June 29, 2024 and July 1, 2023:

			Jun. 29, 2024
			Amortized Cost Basis						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Short-Term Marketable Securities						Long-Term Marketable Securities
			(In millions)
Fixed income securities:
Corporate bonds			$	98					$	—					$	(4)					$	94					$	24					$	70
Government bonds			34						—						(2)						32						—						32
Total marketable securities			$	132					$	—					$	(6)					$	126					$	24					$	102

			Jul. 1, 2023
			Amortized Cost Basis						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Short-Term Marketable Securities						Long-Term Marketable Securities
			(In millions)
Fixed income securities:
Corporate bonds			$	99					$	—					$	(7)					$	92					$	12					$	80
Government bonds			30						—						(2)						28						—						28
Total marketable securities			$	129					$	—					$	(9)					$	120					$	12					$	108

As of June 29, 2024, the balance of available-for-sale securities by contractual maturity is shown in the following table on a fiscal year basis. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

			Jun. 29, 2024
			(In millions)
Due in one year or less			$	24
Due after one year through five years			70
Due after five years			32
Total			$	126

There were no significant realized gains or losses in marketable securities during fiscal 2024, 2023, and 2022.

7. ALLOWANCE FOR CREDIT LOSSES ON TRADE RECEIVABLES

Sysco determines the past due status of trade receivables based on contractual terms with each customer and evaluates the collectability of accounts receivable to determine an appropriate allowance for credit losses on trade receivables. To calculate an allowance for credit losses, the company estimates uncollectible amounts based on historical loss experience, including those experienced during times of local and regional disasters, current conditions and collection rates, and expectations regarding future losses.

A summary of the activity in the allowance for credit losses on trade receivables appears below:

			2024						2023						2022
			(In millions)
Balance at beginning of period			$	46					$	71					$	118
Adjustments to costs and expenses			57						36						(15)
Customer accounts written off, net of recoveries			(57)						(62)						(24)
Other adjustments			8						1						(8)
Balance at end of period			$	54					$	46					$	71

8. PLANT AND EQUIPMENT

A summary of plant and equipment, including the related accumulated depreciation, appears below:

			Jun. 29, 2024						Jul. 1, 2023						Estimated Useful Lives
			(In millions)
Plant and equipment at cost:
Land			$	490					$	493
Buildings and improvements			5,976						5,769						10-30 years
Fleet and equipment			4,788						4,215						3-10 years
Computer hardware and software			1,769						1,587						3-5 years
Total plant and equipment at cost			13,023						12,064
Accumulated depreciation			(7,526)						(7,149)
Total plant and equipment, net			$	5,497					$	4,915

Depreciation expense, including amortization of capital leases, was $728 million in 2024, $650 million in 2023 and $641 million in 2022.

9. GOODWILL AND OTHER INTANGIBLES

The changes in the carrying amount of goodwill by reportable segment for the years presented are as follows:

			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Total
			(In millions)
Carrying amount as of July 2, 2022			$	2,211					$	2,110					$	33					$	188					$	4,542
Goodwill acquired during year			39						—						—						—						39
Currency translation/other			(3)						68						—						—						65
Carrying amount as of July 1, 2023			$	2,247					$	2,178					$	33					$	188					$	4,646
Goodwill acquired during year			510						7						—						—						517
Currency translation/other			(1)						(9)						—						—						(10)
Carrying amount as of June 29, 2024			$	2,756					$	2,176					$	33					$	188					$	5,153

Amortizable intangible assets acquired during fiscal 2024 were $294 million, with a weighted-average amortization period of 14.3 years. Amortizable intangible assets acquired during fiscal 2024 by category were customer relationships, trademarks, non-compete arrangements, and other intangibles of $273 million, $8 million, $3 million, and $10 million respectively, with a weighted-average amortization period of 14.7 years, 14.8 years, 3 years, and 6 years respectively.

Fully amortized intangible assets have been removed in the period fully amortized in the table below which presents the company’s amortizable intangible assets in total by category as follows:

			Jun. 29, 2024																		Jul. 1, 2023
			Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
			(In millions)
Customer relationships			$	1,502					$	(754)					$	748					$	1,284					$	(685)					$	599
Non-compete agreements			28						(20)						8						26						(15)						11
Trademarks			151						(32)						119						147						(26)						121
Other			10						(1)						9						—						—						—
Total amortizable intangible assets			$	1,691					$	(807)					$	884					$	1,457					$	(726)					$	731

The table below presents our indefinite-lived intangible assets by category as follows:

			Jun. 29, 2024						Jul. 1, 2023
			(In millions)
Trademarks			$	303					$	127
Licenses			1						1
Total indefinite-lived intangible assets			$	304					$	128

Amortization expense for 2024, 2023 and 2022 was $142 million, $126 million and $133 million, respectively. The estimated future amortization expense for the next five fiscal years on intangible assets outstanding as of June 29, 2024 is shown below:

			Amount
			(In millions)
2025			$	139
2026			96
2027			88
2028			84
2029			83

10. 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.

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. 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 has cross-currency swaps designated as fair value hedges for the purpose of hedging foreign currency risk associated with changes in spot rates on foreign denominated intercompany loans. 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 as a component of accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument. Except for the excluded components, changes in the fair value of the hedge are offset against changes in the fair value of the hedged assets or liabilities through earnings.

In the second quarter of fiscal 2024, we entered into a cross-currency swap to hedge the foreign currency exposure of our net investment in certain foreign operations. This cross-currency swap is designated as a net investment hedge with gains and losses recognized within accumulated other comprehensive income (loss).

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 29, 2024 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
Hedging of foreign currency risk
Various (July 2024 to August 2024)						Swedish Krona						153
Various (July 2024 to October 2024)						British Pound Sterling						15
May 2025						Mexican Peso						439
April 2025						Canadian Dollar						180
January 2029						Euro						470
Hedging of fuel risk
Various (July 2024 to March 2026)						Gallons						61

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of June 29, 2024 and July 1, 2023 are as follows:

									Derivative Fair Value
			Balance Sheet location						Jun. 29, 2024						Jul. 1, 2023
									(In millions)
Fair Value Hedges:
Interest rate swaps			Other assets						$	6					$	—
Interest rate swaps			Other current liabilities						1						—
Cross currency swaps			Other current assets						2						1
Cross currency swaps			Other current liabilities						3						—
Cash Flow Hedges:
Fuel swaps			Other current assets						$	1					$	—
Foreign currency forwards			Other current assets						—						1
Fuel swaps			Other current liabilities						2						18
Fuel swaps			Other assets						1						—
Fuel swaps			Other long-term liabilities						—						6
Net Investment Hedges:
Cross currency swaps			Other current assets						$	4					$	—
Cross currency swaps			Other long-term liabilities						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. 29, 2024						Jul. 1, 2023
																		(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																		$	637					$	753
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items																		$	(24)					$	(10)
Derivatives designated as hedging instruments																		6						(4)
Cross currency swap:
Hedged items																		$	2					$	1
Derivatives designated as hedging instruments																		(2)						(1)

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. 29, 2024						Jul. 1, 2023
																		(In millions)
Interest expense																		$	(18)					$	(7)
Increase in fair value of debt																		(6)						(2)
Foreign currency gain																		2						—
Hedged items																		$	(22)					$	(9)

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 29, 2024 and July 1, 2023, presented on a pretax basis, are as follows:

			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)
Foreign currency contracts			—						Cost of sales / Other income						—
Total			$	23											$	(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)						$	—

			2023
			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			$	(71)					Operating expense						$	29
Foreign currency contracts			—						Cost of sales / Other income						—
Total			$	(71)											$	29
Derivatives in net investment hedging relationships:
Foreign denominated debt			$	(28)					N/A						$	—
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge			$	—					Other expense (income)						$	—

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)

11. SELF-INSURED LIABILITIES

Sysco maintains a self-insurance program covering portions of workers’ compensation, general and vehicle liability and property insurance costs. The amounts in excess of the self-insured levels are fully insured by third party insurers. We also maintain a fully self-insured group medical program. A summary of the activity in self-insured liabilities appears below:

			2024						2023						2022
			(In millions)
Balance at beginning of period			$	485					$	397					$	359
Charged to costs and expenses			726						707						552
Payments			(667)						(619)						(514)
Balance at end of period			$	544					$	485					$	397

The long-term portion of the self-insured liability balance was $364 million and $315 million as of June 29, 2024, and July 1, 2023, respectively.

12. DEBT AND OTHER FINANCING ARRANGEMENTS

			Jun. 29, 2024						Jul. 1, 2023
			(In millions)
U.S. Commercial paper, interest at 5.45%, maturing in fiscal 2025			$	200					$	—
Senior notes, interest at 3.65%, maturing in fiscal 2025 (1)			365						377
Senior notes, interest at 3.75%, maturing in fiscal 2026 (1)(2)			749						749
Senior notes, interest at 3.30%, maturing in fiscal 2027 (1)(2)			998						997
Debentures, interest at 7.16%, maturing in fiscal 2027 (2)(3)			43						43
Senior notes, interest at 3.25%, maturing in fiscal 2028 (1)(2)			747						746
Debentures, interest at 6.50%, maturing in fiscal 2029 (2)			155						155
Senior notes, interest at 5.75%, maturing in fiscal 2029 (1)(2)			496						—
Senior notes, interest at 2.40%, maturing in fiscal 2030 (1)(2)			497						497
Senior notes, interest at 5.95%, maturing in fiscal 2030 (1)(2)			994						993
Senior notes, interest at 2.45%, maturing in fiscal 2032 (1)(2)			446						446
Senior notes, interest at 6.00%, maturing in fiscal 2034 (1)(2)			498						—
Senior notes, interest at 5.375%, maturing in fiscal 2036 (1)(2)			383						383
Senior notes, interest at 6.625%, maturing in fiscal 2039 (1)(2)			200						200
Senior notes, interest at 6.60%, maturing in fiscal 2040 (1)(2)			350						350
Senior notes, interest at 4.85%, maturing in fiscal 2046 (1)(2)			497						496
Senior notes, interest at 4.50%, maturing in fiscal 2046 (1)(2)			495						495
Senior notes, interest at 4.45%, maturing in fiscal 2048 (1)(2)			493						493
Senior notes, interest at 3.30%, maturing in fiscal 2050 (1)(2)			495						495
Senior notes, interest at 6.60%, maturing in fiscal 2050 (1)(2)			1,177						1,177
Senior notes, interest at 3.15%, maturing in fiscal 2052 (1)(2)			788						787
Plant and equipment financing programs, finance leases, notes payable, and other debt, interest averaging 5.13% and maturing at various dates to fiscal 2052 as of June 29, 2024, and 4.49% and maturing at various dates to fiscal 2052 as of July 1, 2023			916						532
Total debt			11,982						10,411
Less current maturities of long-term debt			(469)						(63)
Net long-term debt			$	11,513					$	10,348

(1)			Represents senior notes that are unsecured, are not subject to any sinking fund requirement and include a redemption provision that allows Sysco to retire the debentures and notes at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the debenture and note holders are not penalized by the early redemption.
(2)			Represents senior notes, debentures and borrowings under the company’s long-term revolving credit facility that are guaranteed by certain wholly owned U.S. Broadline subsidiaries of Sysco Corporation as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”
(3)			This debenture is not subject to any sinking fund requirement and is no longer redeemable prior to maturity.

As of June 29, 2024, the principal and interest payments required to be made during the next five fiscal years on Sysco’s senior notes and debentures are shown below:

			Principal						Interest (1)
			(In millions)
2025			$	365					$	512
2026			750						473
2027			1,043						442
2028			750						410
2029			655						398

(1)			Includes payments on floating rate debt based on rates as of June 29, 2024, assuming amount remains unchanged until maturity, and payments on fixed rate debt based on maturity dates. Fixed rate debt is inclusive of certain debt in which we pay a fixed interest rate on as of June 29, 2024, which will convert to floating rate debt at a later date.

The total carrying value of our debt was $12.0 billion as of June 29, 2024 and $10.4 billion as of July 1, 2023. The increase in the carrying value of our debt from the prior year was due to new issuances of senior notes, new commercial paper issuances and new leases in support of plant and equipment.

Sysco has a long-term revolving credit facility that includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to increase such commitments to $4.0 billion. The facility includes a covenant requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 over four consecutive fiscal quarters. The facility expires on April 29, 2027. As of June 29, 2024, there were no borrowings outstanding under this facility.

Sysco has a U.S commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of June 29, 2024, there were $200 million in commercial paper issuances outstanding under this program. On October 17, 2023, we entered into a new commercial paper dealer agreement in Europe for a commercial paper program with borrowings not to exceed €250 million. As of June 29, 2024, there were no commercial paper issuances outstanding under this program.

On November 17, 2023, Sysco issued senior notes (the Notes) totaling $1.0 billion to facilitate our acquisition of Edward Don and our share repurchases. Details of the Notes are as follows:

Maturity Date			Par Value (in millions)						Coupon Rate						Pricing (percentage of par)
January 17, 2029 (the 2029 Notes)			$	500					5.75		%				99.784		%
January 17, 2034 (the 2034 Notes)			500						6.00						99.037

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness. Interest on the Notes will be paid semi-annually in arrears on July 17 and January 17, beginning July 17, 2024. At Sysco’s option, any or all of the Notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the 2029 Notes before the date that is one month prior to the maturity date, or (ii) the 2034 Notes before the date that is three months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest or the sum of the present values of the remaining scheduled payments of principal and interest on the 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 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 Notes to be redeemed. Sysco will pay accrued and unpaid interest on the Notes redeemed to the redemption date.

As of June 29, 2024 and July 1, 2023, letters of credit outstanding were $271 million and $268 million, respectively.

13. LEASES

Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. We determine if an arrangement is a lease at inception and recognize a finance or operating lease liability and right-of-use (ROU) asset in the consolidated balance sheets if a lease exists. Lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. If the borrowing rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

The lease term is defined as the noncancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the company will exercise one of these options. Leases with an initial term of twelve months or less are not recorded in Sysco’s consolidated balance sheets, and we recognize expense for these leases on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate, such as insurance and property taxes, are excluded from the measurement of the lease liability and are recognized as variable lease cost when the obligation for that payment is incurred. For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance. Sysco’s leases do not contain significant residual value guarantees and do not impose significant restrictions or covenants.

The following table presents the location of the finance lease ROU assets and lease liabilities in our consolidated balance sheets at June 29, 2024 and July 1, 2023:

						Consolidated Balance Sheet Location						Jun. 29, 2024						Jul. 1, 2023
												(In millions)
Finance lease right-of-use assets						Plant and equipment at cost, less accumulated depreciation						$	339					$	285
Current finance lease liabilities						Current maturities of long-term debt						54						38
Long-term finance lease liabilities						Long-term debt						307						260

The following table presents lease costs for each of the presented periods ended June 29, 2024 and July 1, 2023:

						Consolidated Results of Operations Location												Jun. 29, 2024						Jul. 1, 2023
																		(In millions)
Operating lease cost						Operating expenses												$	154					$	139
Financing lease cost:
Amortization of right-of-use assets						Operating expenses												60						50
Interest on lease obligations						Interest expense												14						11
Variable lease cost						Operating expenses												111						73
Short-term lease cost						Operating expenses												68						55
Net lease cost																		$	407					$	328

Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of June 29, 2024 are as follows:

						Operating Leases						Finance Leases
						(In millions)
2025						$	161					$	69
2026						146						59
2027						141						53
2028						111						39
2029						92						30
Thereafter						551						224
Total undiscounted lease obligations						1,202						474
Less imputed interest						(239)						(113)
Present value of lease obligations						$	963					$	361

We have entered into operating lease agreements that have not yet commenced as of June 29, 2024 with legally binding minimum lease payments of $374 million. The leases are expected to commence during fiscal 2025.

Other information related to lease agreements was as follows:

						Jun. 29, 2024						Jul. 1, 2023
Cash Paid For Amounts Included In Measurement of Liabilities:						(Dollars in millions)
Operating cash flows for operating leases						$	144					$	134
Operating cash flows for financing leases						14						11
Financing cash flows for financing leases						51						44
Supplemental Non-cash Information on Lease Liabilities:
Assets obtained in exchange for operating lease obligations						$	287					$	105
Assets obtained in exchange for finance lease obligations						115						114
Operating lease asset adjustments, including renewals and remeasurements						24						13
Operating lease liability adjustments, including renewals and remeasurements						24						17
Lease Term and Discount Rate:
Weighted-average remaining lease term (years):
Operating leases						10.63 years						10.36 years
Financing leases						12.50 years						14.94 years
Weighted-average discount rate:
Operating leases						4.19		%				3.31		%
Financing leases						4.50		%				4.06		%

14. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

Sysco has company-sponsored defined benefit and defined contribution retirement plans for its employees. Also, the company provides certain health care benefits to eligible retirees and their dependents.

Defined Contribution Plans

Sysco operates a defined contribution 401(k) Plan as a Safe Harbor Plan, which is a plan that treats all employees’ benefits equally within the plan, under Sections 401(k) and 401(m) of the Internal Revenue Code with respect to non-union employees and those union employees whose unions adopted the Safe Harbor Plan provisions. We will make a non-elective

contribution each pay period equal to 3% of a participant’s compensation. Additionally, we will make matching contributions of 50% of a participant’s pretax contribution on the first 6% of the participant’s compensation contributed by the participant. Certain employees are also eligible for a transition contribution, and we may also make discretionary contributions. For union employees who are members of unions that did not adopt the Safe Harbor Plan provisions, the plan provides that under certain circumstances we may make matching contributions of up to 50% of the first 6% of a participant’s compensation.

Sysco also has a non-qualified, unfunded Management Savings Plan (MSP) available to key management personnel who are participants in the Management Incentive Plan (MIP). Participants may defer up to 50% of their annual salary and up to 90% of their annual bonus. We will make a non-elective contribution each pay period equal to 3% of a participant’s compensation. Additionally, we will make matching contributions of 50% of a participant’s pretax contribution on the first 6% of the participant’s eligible compensation that is deferred. Certain employees are also eligible for a transition contribution, and the company may also make discretionary contributions. All company contributions to the MSP are limited by the amounts contributed by the company to the participant’s 401(k) account. The company had deferred compensation obligations of $103 million as of June 29, 2024 and $106 million as of July 1, 2023 under the unfunded MSP and our executive deferred compensation plan, which is frozen to all participants of the plan. More than half of the June 29, 2024 obligations are due to be paid beyond fiscal 2026.

Sysco’s expense related to its defined contribution plans was $200 million in fiscal 2024, $176 million in fiscal 2023, and $146 million in fiscal 2022.

Defined Benefit Plans

Sysco maintains various qualified pension plans that pay benefits to participating employees at retirement, using formulas based on a participant’s years of service and compensation. The U.S. pension plan (U.S. Retirement Plan) is frozen for all U.S.-based salaried and non-union hourly employees, as these employees are eligible for benefits under the company’s defined contribution 401(k) plan. Various defined benefit pension plans cover certain employees, primarily in the U.K., France and Sweden; however, the U.K. pension plan (U.K. Retirement Plan) is frozen to new plan participants and future accrual of benefits. The funding policy for each plan complies with the requirements of relevant governmental laws and regulations.

In addition to receiving benefits upon retirement under the company’s U.S. Retirement Plan, certain key management personnel, who were participants in the MIP, are entitled to receive benefits under the Supplemental Executive Retirement Plan (SERP). This plan is a nonqualified, unfunded supplementary retirement plan and was amended to freeze benefits and stop future accruals effective June 29, 2013, to all participants.

We also provide certain health care benefits to eligible retirees and their dependents. These health care benefits represent Sysco’s unfunded other post-retirement medical plans. The plan had benefit obligations of $9 million as of June 29, 2024 and $7 million as of July 1, 2023.

On October 25, 2022, the U.S. Retirement Plan executed an agreement with Massachusetts Mutual Life Insurance Company (the Insurer). Under this agreement, the Plan purchased a nonparticipating single premium group annuity contract using Plan assets that transferred to the Insurer $695 million of the Plan’s defined benefit pension obligations related to certain pension benefits. The contract covers approximately 10,000 Sysco participants and beneficiaries (the Transferred Participants) in the U.S. Retirement Plan. Under the group annuity contract, the Insurer made an unconditional and irrevocable commitment to pay the pension benefits of each Transferred Participant that were due on or after January 1, 2023. The transaction resulted in no changes to the amount of benefits payable to the Transferred Participants.

As a result of the transaction, Sysco recognized a one-time, non-cash pre-tax pension settlement charge of $315 million in the second quarter of fiscal 2023 primarily related to the accelerated recognition of actuarial losses included within accumulated other comprehensive loss in the statement of changes in consolidated shareholders’ equity. The transaction also required the company to remeasure the benefit obligations and plan assets of the U.S. Retirement Plan. The remeasurement reflected the use of an updated discount rate and an expected rate of return on plan assets as of October 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

The remeasurement of the benefit obligations and plan assets of the U.S. Retirement Plan that took place on October 31, 2022 reflected an updated discount rate and an updated expected rate of return on plan assets. The discount rate used to determine benefit obligations as of the remeasurement date was 6.07%, as compared to the discount rate of 4.91% that was used to determine benefit obligations as of July 2, 2022. The expected rate of return used to determine net company-sponsored

benefit costs for the remainder of fiscal 2023 was updated to 6.00% as of the remeasurement date, as compared to the expected rate of return of 4.50% that was calculated as of July 2, 2022 to determine net company-sponsored benefit costs for fiscal 2023.

Funded Status

Accumulated pension assets measured against the obligation for pension benefits represent the funded status of a given plan. The funded status of Sysco’s company-sponsored defined benefit plans is presented in the table below. The caption “U.S. Pension Benefits” in the tables below includes both the U.S. Retirement Plan and the SERP. As Sysco’s fiscal 2024 year end is June 29, 2024, the company utilized a practical expedient permitting us to measure our defined benefit plan assets and obligations as of the month end closest to the fiscal year end and has used June 30, 2024 as the measurement date of the plan assets and obligations disclosed herein.

			U.S. Pension Benefits (1)												International Pension Benefits
			Jun. 29, 2024						Jul. 1, 2023						Jun. 29, 2024						Jul. 1, 2023
			(In millions)
Change in benefit obligation:
Benefit obligation at beginning of year			$	2,979					$	3,921					$	286					$	289
Service cost			8						8						2						2
Interest cost			164						170						14						10
Amendments			—						2						—						—
Curtailments			—						—						(1)						(1)
Actuarial (gain) loss, net			(135)						(300)						8						(11)
Benefit payments			(119)						(127)						(13)						(13)
Settlements			—						(695)						(1)						10
Benefit obligation at end of year			2,897						2,979						295						286
Change in plan assets:
Fair value of plan assets at beginning of year			2,641						3,633						185						242
Actual return on plan assets			(65)						(199)						(35)						(73)
Employer contribution			13						29						22						21
Benefit payments			(87)						(127)						(13)						(13)
Settlements			—						(695)						(1)						8
Fair value of plan assets at end of year			2,502						2,641						158						185
Funded status at end of year			$	(395)					$	(338)					$	(137)					$	(101)

(1)			The U.S. Retirement Plan had an underfunded status of $55 million and a funded status of $10 million as of June 29, 2024 and July 1, 2023, respectively.

As of June 29, 2024 and July 1, 2023, the SERP had benefit obligations of $340 million and $348 million, respectively. In order to meet a portion of its obligations under the SERP, Sysco has a rabbi trust that invests in Corporate-Owned Life Insurance policies on the lives of participants and interests in corporate-owned real estate assets. These assets are not included as plan assets or in the funded status amounts in the tables above and below. The life insurance policies on the lives of the participants had carrying values of $91 million as of both June 29, 2024 and July 1, 2023. Sysco is the sole owner and beneficiary of such policies.

The amounts recognized on Sysco’s consolidated balance sheets related to its company-sponsored defined benefit plans are as follows:

			U.S. Pension Benefits												International Pension Benefits
			Jun. 29, 2024						Jul. 1, 2023						Jun. 29, 2024						Jul. 1, 2023
			(In millions)
Noncurrent assets (Other assets)			$	—					$	10					$	—					$	—
Current accrued benefit liability (Accrued expenses)			(32)						(32)						(2)						(2)
Noncurrent accrued benefit liability (Other long-term liabilities)			(363)						(316)						(135)						(99)
Net amount recognized			$	(395)					$	(338)					$	(137)					$	(101)

Accumulated other comprehensive loss as of June 29, 2024 consists of the following amounts that had not, as of that date, been recognized in net benefit cost:

			U.S. Pension Benefits						International Pension Benefits						Total
			(In millions)
Prior service cost			$	2					$	1					$	3
Actuarial losses			1,160						111						1,271
Total			$	1,162					$	112					$	1,274

Accumulated other comprehensive loss as of July 1, 2023 consists of the following amounts that had not, as of that date, been recognized in net benefit cost:

			U.S. Pension Benefits						International Pension Benefits						Total
			(In millions)
Prior service cost			$	3					$	1					$	4
Actuarial losses			1,115						57						1,172
Total			$	1,118					$	58					$	1,176

Information for plans with accumulated benefit obligation/aggregate benefit obligation in excess of fair value of plan assets is as follows:

			U.S. Pension Benefits (1)												International Pension Benefits
			Jun. 29, 2024						Jul. 1, 2023						Jun. 29, 2024						Jul. 1, 2023
			(In millions)
Accumulated benefit obligation/aggregate benefit obligation			$	2,888					$	348					$	291					$	280
Fair value of plan assets at end of year			2,502						—						158						185

(1)			Information under U.S. Pension Benefits as of June 29, 2024 includes both the U.S. Retirement Plan and the SERP. Information under U.S. Pension Benefits as of July 1, 2023 includes the SERP.

Components of Net Benefit Costs and Other Comprehensive Income

The components of net company-sponsored pension costs for each fiscal year are as follows:

			2024												2023												2022
			U.S. Pension Benefits						International Pension Benefits						U.S. Pension Benefits						International Pension Benefits						U.S. Pension Benefits						International Pension Benefits
			(In millions)
Service cost			$	8					$	2					$	8					$	2					$	13					$	3
Interest cost			164						14						171						10						153						8
Expected return on plan assets			(143)						(12)						(148)						(11)						(206)						(10)
Amortization of prior service cost			1						—						—						—						—						—
Amortization of actuarial loss			28						1						33						—						35						—
Curtailment gain			—						(1)						—						(1)						—						(1)
Settlement loss recognized			—						—						315						—						—						—
Net pension costs (benefits)			$	58					$	4					$	379					$	—					$	(5)					$	—

The components of net company-sponsored pension costs other than the service cost component are reported in Other expense (income), net within the consolidated results of operations.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) related to company-sponsored pension plans for each fiscal year are as follows:

			2024												2023												2022
			U.S. Pension Benefits						International Pension Benefits						U.S. Pension Benefits						International Pension Benefits						U.S. Pension Benefits						International Pension Benefits
			(In millions)
Amortization of prior service cost			$	1					$	—					$	—					$	—					$	—					$	—
Amortization of actuarial loss			28						1						348						—						35						—
Prior service cost arising in current year			—						—						(3)						—						—						—
Effect of exchange rates on amounts in AOCI			—						(1)						—						(4)						—						(1)
Actuarial gain (loss) arising in current year			(73)						(54)						(46)						(72)						(13)						36
Net pension income (cost)			$	(44)					$	(54)					$	299					$	(76)					$	22					$	35

Amounts included in accumulated other comprehensive loss (income) as of June 29, 2024 that are expected to be recognized as components of net company-sponsored benefit cost during fiscal 2025 are:

			U.S. Pension Benefits						International Pension Benefits						Total
			(In millions)
Amortization of actuarial losses			$	30					$	4					$	34

Employer Contributions

We made cash contributions to our company-sponsored pension plans of $68 million and $50 million in fiscal years 2024 and 2023, respectively. There were $13 million of voluntary contributions made to the U.S. Retirement Plan in fiscal 2024, as there were no required contributions to meet ERISA minimum funding requirements in fiscal 2024. There are no required contributions to the U.S. Retirement Plan to meet ERISA minimum funding requirements in fiscal 2025. The company’s contributions to the SERP plan are made in the amounts needed to fund current year benefit payments. The estimated aggregate fiscal 2025 contribution to fund benefit payments for the SERP plan is $32 million. The estimated fiscal 2025 contributions to fund benefit payments for the international retirement plans are $20 million.

Estimated Future Benefit Payments

Estimated future benefit payments for vested participants, based on actuarial assumptions, are as follows:

			U.S. Pension Benefits						International Pension Benefits
			(In millions)
2025			$	140					$	13
2026			153						13
2027			164						14
2028			174						15
2029			183						15
Subsequent five years			1,015						77

Assumptions

Weighted-average assumptions used to determine benefit obligations as of year-end were:

			Jun. 29, 2024						Jul. 1, 2023
Discount rate — U.S. Retirement Plan			5.86		%				5.62		%
Discount rate — SERP			5.89						5.65
Discount rate — U.K. Retirement Plan			5.20						5.20
Rate of compensation increase — U.S. Retirement Plan			3.00						3.00

As benefit accruals under the SERP and U.K. Retirement Plan are frozen, future pay is not projected in the determination of the benefit obligation as of June 29, 2024 or July 1, 2023.

Weighted-average assumptions used to determine net company-sponsored pension costs for each fiscal year were:

			2024						2023						2022
Discount rate — U.S. Retirement Plan (1)			5.62		%				6.07		%				3.12		%
Discount rate — SERP			5.65						4.84						2.91
Discount rate — U.K. Retirement Plan			5.20						3.65						1.90
Expected rate of return — U.S. Retirement Plan (2)			5.50						6.00						4.50
Expected rate of return — U.K. Retirement Plan			6.65						4.65						3.30
Rate of compensation increase — U.S. Retirement Plan			3.00						3.00						2.56

(1)			The discount rate of the U.S. Retirement Plan was 4.91% for the period of July 2022 to October 2022. Due to the settlement that occurred, the rate changed to 6.07% from November 2022 to June 2023.
(2)			The expected long-term rate of return on plan assets of the U.S. Retirement Plan was 4.50% for the period of July 2022 to October 2022. Due to the settlement that occurred, the rate changed to 6.00% from November 2022 to June 2023.

For guidance in determining the discount rate for U.S. defined benefit plans, Sysco calculates the implied rate of return on a hypothetical portfolio of high-quality fixed-income investments for which the timing and amount of cash outflows approximates the estimated payouts of the company-sponsored pension plans. Sysco uses an annualized corporate bond yield curve to estimate the rate at which pension benefits could effectively be settled to estimate a discount rate for the U.K. Retirement Plan. The discount rate assumption is updated annually and revised as deemed appropriate. The discount rates to be used for the calculation of fiscal 2025 net company-sponsored benefit costs for the U.S. Retirement Plan and U.K. Retirement Plan are 5.86% and 5.20%, respectively. The discount rate to be used for the calculation of fiscal 2025 net company-sponsored benefit costs for the SERP is 5.89%.

The expected long-term rate of return on plan assets assumption for the retirement plans are net return on assets assumption, representing gross return on assets less asset management expenses. Specific to the U.S. Retirement Plan, administrative expenses are also excluded from the gross return on assets. The expected return for the U.S. Retirement Plan is derived from a mathematical asset model that incorporates assumptions as to the various asset class returns, reflecting a combination of rigorous historical performance analysis and the forward-looking views of the financial markets regarding the yield on bonds, the historical returns of the major stock markets and returns on alternative investments. The expected return for the U.K. Retirement Plan is derived from a long-term swap yield time horizon adjusted for the expected return based on the plan’s current asset allocation and historical results. The rate of return assumption is reviewed annually and revised as deemed appropriate. The expected long-term rates of return to be used in the calculation of fiscal 2025 net company-sponsored benefit costs for the U.S. Retirement Plan and U.K. Retirement Plan are 5.63% and 6.60%, respectively.

Plan Assets

Investment Strategy

The company’s overall strategic investment objectives for the U.S. Retirement Plan are to preserve capital for future benefit payments and to balance risk and return commensurate with ongoing changes in the valuation of plan liabilities using an investment strategy that closely aligns the duration of the U.S. Retirement Plan’s assets with the duration of its liabilities. In order to accomplish these objectives, the company oversees the U.S. Retirement Plan’s investment objectives and policy design, decides proper plan asset class strategies and structures, monitors the performance of plan investment managers and investment funds and determines the proper investment allocation of pension plan contributions. The strategy results in an asset portfolio that more closely matches the behavior of the liability, thereby reducing the volatility of the U.S. Retirement Plan’s funded status. This structure ensures the U.S. Retirement Plan’s investments are diversified within each asset class, in addition to being diversified across asset classes with the intent to build asset class portfolios that are structured without strategic bias for or against any subcategories within each asset class. The company has also created a set of investment guidelines for the U.S. Retirement Plan’s investment managers to specify prohibited transactions, including borrowing of money except for real estate, private equity or hedge fund portfolios where leverage is a key component of the investment strategy and permitted in the investments’ governing documents, the purchase of securities on margin unless fully collateralized by cash or cash equivalents or short sales, pledging, mortgaging or hypothecating of any securities, except for loans of securities that are fully collateralized, market timing transactions and the direct purchase of the securities of Sysco or the investment manager. The purchase or sale of derivatives for speculation or leverage is also prohibited; however, investment managers are allowed to use derivative securities so long as they do not increase the risk profile or leverage of the manager’s portfolio. Such derivative securities have been used to prevent funded status changes due to interest rate changes.

The U.S. Retirement Plan’s target and actual investment allocation as of June 29, 2024 is as follows:

			U.S. Retirement Plan
			Target Asset Allocation						Actual Asset Allocation
Growth assets			30		%				27		%
Liability hedging assets			70						73
									100		%

Sysco’s U.S. Retirement Plan investment strategy is implemented through a combination of balanced and specialized investment managers, passive investment funds and actively managed investment funds. Growth assets include, but are not limited to, equities, alternatives, real estate, and growth fixed income intended to generate returns in excess of the liability growth rate. The liability hedging assets will be comprised primarily of fixed income investments, including interest rate and credit derivatives, intended to reduce funded status volatility due to changes in interest rates and credit spreads, while generating returns consistent with the projected liability growth rate. The U.S. Retirement Plan’s portfolio includes investment funds which are selected based on each fund’s stated investment strategy to align with Sysco’s overall target mix of investments. Actual asset allocation is regularly reviewed and periodically rebalanced to the target allocation when considered appropriate.

The day-to-day management of the assets of the U.K. Retirement Plan has been delegated by the plan trustee to a fiduciary manager who decides the composition of the asset portfolio in line with the objectives of the plan’s trustee and within specific investment guidelines agreed upon with the trustee. The primary objective for the U.K. Retirement Plan is to provide sufficient assets to pay benefits as they fall due. The current objective for the U.K. Retirement Plan is to achieve a return on plan assets of 2% in excess of the return on the liability benchmark over a rolling five-year period. The liability benchmark is the portfolio of gilts, which are bonds issued by the British government, that best matches the liability profile of the U.K. Retirement Plan. The investment objective includes a risk statement that targets a level of investment tracking error versus the liability benchmark to be below 10% per year. The actual tracking error targeted may fluctuate over time as the composition of the portfolio changes and the levels of risk in markets change. The U.K. Retirement Plan’s Trustee and its Fiduciary Manager seek to achieve the Plan’s investment objectives by investing in a suitably diversified mix of assets.

The U.K. Retirement Plan’s target investment allocation and actual investment allocation for fiscal 2024 is as follows:

			U.K. Retirement Plan
			Target Asset Allocation						Actual Asset Allocation
Growth portfolio			50		%				51		%
Matching portfolio			50						49
									100		%

The U.K. Retirement Plan’s investment strategy is implemented primarily through a common contractual investment fund managed by the solvency manager. The pooled investment fund consists of investment types including (1) equity investments covering a range of geographies and including private equity investments, (2) credit investments including global investment grade and high yield bonds, loans and other debt and derivative securities, (3) property investments including global direct or indirect real estate holdings, and (4) macro-oriented funds that seek to generate return by going long and short in a variety of markets and operate strategies which focus on markets rather than individual stocks and often use derivatives rather than physical assets. Actual asset allocation is regularly reviewed and periodically rebalanced to the target allocation when considered appropriate.

As discussed above, the retirement plans’ investments in equities, debt instruments and alternative investments provide a range of returns and also expose the plan to investment risk. However, the investment policies put in place by the trustee and solvency manager ensure diversification of plan assets across issuers, industries and countries.

Fair Value of Plan Assets

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). See Note 5, “Fair Value Measurements,” for a description of the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The following is a description of the valuation methodologies used for assets and liabilities held by Sysco’s retirement plans measured at fair value.

Cash and cash equivalents: Valued at amortized cost, which approximates fair value due to the short-term maturities of these investments. Cash and cash equivalents is included as a Level 1 and Level 2 measurement in the table below.

Equity securities: Valued at the closing price reported on the exchange market. Equity securities valued at the closing price reported on the exchange market are classified as a Level 1 measurement in the table below. If a stock is not listed on a public exchange, such as an American Depository Receipt or some preferred stocks, the stock is valued using an evaluated bid

price based on a compilation of observable market information. Equity securities not listed on a public exchange are classified as a Level 2 measurement in the table below.

Fixed income securities: Valued using evaluated bid prices based on a compilation of observable market information or a broker quote in a non-active market. All fixed income securities are included as a Level 2 measurement in the table below.

Investment funds: Represents collective trust and funds holding debt, equity, hedge funds, private equity funds, exchange-traded real estate securities, and common contractual funds which are valued at the net asset value (NAV) provided by the manager of each fund. The NAV is based on the fair value of the underlying securities within the fund. Non-exchange traded real estate funds are valued based on the proportionate interest held by the U.S. Retirement Plan, which is based on the valuations of the underlying real estate investments held by each fund. Each real estate investment is valued on the basis of a discounted cash flow approach. Inputs used include future rental receipts, expenses and residual values from a market participant view of the highest and best use of the real estate as rental property. The private equity funds are valued based on the proportionate interest held by the U.S. Retirement Plan, which is based on the valuations of the underlying private equity investments held by each fund. The hedge funds are valued based on the hedge funds’ proportionate share of the net assets of the underlying private investment fund as determined by the underlying private investment fund’s general partner. Indirectly held investments are valued utilizing the latest financial reports supplied by the fund’s portfolio investments. Directly held investments are valued initially based on transaction price and are adjusted utilizing available market data and investment-specific factors, such as estimates of liquidation value, prices of recent transactions in the same or similar issuer, current operating performance and future expectations of the particular investment, changes in market outlook and the financing environment.

Derivatives: Valuation method varies by type of derivative security.

• Credit default and interest rate swaps: Valued using evaluated bid prices based on a compilation of observable market information. Inputs used for credit default swaps include spread curves and trade data about the credit quality of the counterparty. Inputs used for interest rate swaps include benchmark yields, swap curves, cash flow analysis, and interdealer broker rates. Credit default and interest rate swaps are included as a Level 2 measurement in the table below.

• Foreign currency contracts: Valued using a standardized interpolation model that utilizes the quoted prices for standard-length forward foreign currency contracts and adjusts to the remaining term outstanding on the contract being valued. Foreign currency contracts are included as a Level 2 measurement in the table below.

• Futures and option contracts: Valued at the closing price reported on the exchange market for exchange-traded futures and options. Over-the-counter options are valued using pricing models that are based on observable market information. Exchange-traded futures and options are included as a Level 1 measurement in the table below; over-the-counter options are included as a Level 2 measurement.

The following table presents the fair value of the U.S. Retirement Plan’s assets by major asset category as of June 29, 2024:

			Assets Measured at Fair Value as of Jun. 29, 2024
			Level 1						Level 2						Level 3						Measured at NAV (6)						Net Payables (7)						Total
			(In millions)
Cash and cash equivalents			$	—					$	153					$	—					$	—					$	(6)					$	147
Growth assets:
U.S. equity (1)			17						—						—						204						—						221
International equity (1)			—						—						—						152						—						152
Hedge fund of funds (2)			—						—						—						167						—						167
Real estate funds (3)			—						—						—						88						—						88
Private equity funds (4)			—						—						—						55						—						55
Liability hedging assets:
Corporate bonds			—						1,140						—						45						—						1,185
U.S. government and agency securities			—						295						—						177						—						472
Other (5)			—						15						—						—						—						15
Total investments at fair value			$	17					$	1,603					$	—					$	888					$	(6)					$	2,502

(1)			Includes direct investments in equity securities and within investment funds for which fair value is measured at NAV. There are no unfunded commitments as of June 29, 2024. The remaining investments may be redeemed once per day with advanced written notice and subject to applicable limits.
(2)			There were no unfunded commitments as of June 29, 2024, and there were no redemption restrictions as of June 29, 2024. The investment may be redeemed once per quarter.
(3)			For investments in the funds listed in this category, total unfunded commitment as of June 29, 2024 was $2 million. Less than 1% of the investments cannot be redeemed. The estimate of the liquidation period for these funds varies from 2024 to 2026. The remaining investments may be redeemed quarterly with advanced written notice and subject to applicable limits.
(4)			Total unfunded commitments in the funds listed in this category as of June 29, 2024 were $13 million. The investments cannot be redeemed, but the fund will make distributions through liquidation. The estimate of the liquidation period varies for each fund from 2024 to 2031.
(5)			Includes foreign government and state and municipal debt securities.
(6)			Includes certain investments that are measured at fair value using the NAV practical expedient that have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.
(7)			Primarily represents the net pending purchases and sales of plan assets. The net of this pending activity results in a net payable balance of $6 million as of June 29, 2024.

The following table presents the fair value of the U.K. Retirement Plan’s assets by major asset category as of June 29, 2024:

			Assets Measured at Fair Value as of Jun. 29, 2024
			Level 1						Level 2						Level 3						Measured at NAV (2)						Total
			(In millions)
Investment funds:
Common contractual fund (1)			$	—					$	—					$	—					$	158					$	158
Total investments at fair value			$	—					$	—					$	—					$	158					$	158

(1)			There were $4 million of unfunded commitments as of June 29, 2024. As of June 29, 2024 there are no monetary redemption restrictions, however timing restrictions ranged from daily to quarterly.
(2)			Includes certain investments that are measured at fair value using the NAV practical expedient that have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

The following table presents the fair value of the U.S. Retirement Plan’s assets by major asset category as of July 1, 2023:

			Assets Measured at Fair Value as of Jul. 1, 2023
			Level 1						Level 2						Level 3						Measured at NAV (6)						Total
			(In millions)
Cash and cash equivalents			$	13					$	80					$	—					$	—					$	93
Growth assets:
U.S. equity (1)			17						—						—						214						231
International equity (1)			—						—						—						165						165
Hedge fund of funds (2)			—						—						—						191						191
Real estate funds (3)			—						—						—						105						105
Private equity funds (4)			—						—						—						66						66
Liability hedging assets:
Corporate bonds			—						1,340						—						46						1,386
U.S. government and agency securities			—						200						—						197						397
Other (5)			—						7						—						—						7
Total investments at fair value			$	30					$	1,627					$	—					$	984					$	2,641

(1)			Includes direct investments in equity securities and within investment funds for which fair value is measured at NAV. There are no unfunded commitments as of July 1, 2023. The remaining investments may be redeemed once per day with advanced written notice and subject to applicable limits.
(2)			There were no unfunded commitments as of July 1, 2023, and there were no redemption restrictions as of July 1, 2023. The investment may be redeemed once per quarter.
(3)			For investments in the funds listed in this category, total unfunded commitment as of July 1, 2023 was $2 million. Less than 1% of the investments cannot be redeemed. The estimate of the liquidation period for these funds varies from 2023 to 2026. The remaining investments may be redeemed quarterly with advanced written notice and subject to applicable limits.
(4)			Total unfunded commitment as of July 1, 2023 was $15 million. The investments cannot be redeemed, but the fund will make distributions through liquidation. The estimate of the liquidation period varies for each fund from 2023 to 2031.
(5)			Includes foreign government and state and municipal debt securities.
(6)			Includes certain investments that are measured at fair value using the NAV practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

The following table presents the fair value of the U.K. Retirement Plan’s assets by major asset category as of July 1, 2023:

			Assets Measured at Fair Value as of Jul. 1, 2023
			Level 1						Level 2						Level 3						Measured at NAV (2)						Total
			(In millions)
Investment funds:
Common contractual fund (1)			$	—					$	—					$	—					$	184					$	184
Total investments at fair value			$	—					$	—					$	—					$	184					$	184

(1)			There were $5 million of unfunded commitments as of July 1, 2023. As of July 1, 2023 there are no monetary redemption restrictions, however timing restrictions ranged from daily to quarterly.
(2)			Includes certain investments that are measured at fair value using the NAV practical expedient that have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

15. MULTIEMPLOYER EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans

Sysco currently participates in several different multiemployer defined benefit pension plans in the United States (U.S.) based on obligations arising under collective bargaining agreements covering union-represented employees. Expenses related to these plans are recognized at the time we make contributions to the plans. We do not directly manage these multiemployer plans; pursuant to federal law, these plans are managed by boards of trustees, half of whom are appointed by the unions and the other half appointed by employers contributing to the plan. Some of our current employees in the U.S. are participants in such multiemployer plans as of June 29, 2024.

The risks of participating in these multiemployer plans are different from single-employer plans in the following respects:

• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

• If Sysco chooses to stop participating in some of its multiemployer plans in the U.S., Sysco may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Based upon the information available from plan administrators, management believes that all of these multiemployer plans are, to different degrees, underfunded. In addition, pension-related legislation in the U.S. requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their underfunding. As a result, we expect our future contributions to these plans to increase. In addition, if a multiemployer defined benefit plan fails to satisfy certain minimum funding requirements, the Internal Revenue Service may impose a nondeductible excise tax of 5% on the amount of the accumulated funding deficiency for those employers contributing to the fund. However, under current law, this excise tax is unlikely to apply since multiemployer pension plans experiencing accumulated funding deficiencies are considered “critical” or “critical and declining,” and the excise tax does not apply to pension plans in critical or critical and declining status. Under current law regarding multiemployer defined benefit plans, a plan’s termination, Sysco’s voluntary withdrawal, or the mass withdrawal of all contributing employers from any underfunded multiemployer defined benefit plan would require us to make withdrawal liability payments to the plan for Sysco’s allocated share of the multiemployer plan’s unfunded vested benefit liabilities.

Plan Contributions

Our contributions to multiemployer defined benefit pension plans were as follows for each fiscal year:

			2024						2023						2022
			(In millions)
Individually significant plans			$	47					$	41					$	35
All other plans			16						12						10
Total contributions			$	63					$	53					$	45

Individually Significant Plans

The following information relates to multiemployer defined benefit pension plans that Sysco has determined to be individually significant to the company. As noted below, the company has determined only one plan – the Western Conference of Teamsters Pension Plan – as currently being individually significant to the company. To determine individually significant plans, the company evaluated several factors, including Sysco’s significance to the plan in terms of employees and contributions, the funded status of the plan and the size of the company’s potential withdrawal liability if it were to voluntarily withdraw from the plan.

The following table provides information about the funded status of individually significant plans:

• The “EIN-PN” column provides the Employer Identification Number (EIN) and the three-digit plan number (PN).

• The “Pension Protection Act Zone Status” columns provide the two most recent Pension Protection Act zone statuses available from each plan. The zone status is based on information that the company received from the plan’s administrators and is certified by each plan’s actuary, together with information included in the annual return/reports filed by each plan with the U.S. Department of Labor. Among other factors, plans in the red zone are generally less than 65% funded, plans in the orange zone are both less than 80% funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans in the yellow zone are less than 80% funded and plans in the green zone are at least 80% funded. The Multiemployer Protection Act of 2014 created a new zone called “critical and declining.” Plans are generally considered “critical and declining” if they are projected to become insolvent within 15 years.

• The “FIP/RP Status” column indicates whether a financial improvement plan (FIP) for yellow/orange zone plans or a rehabilitation plan (RP) for red zone plans is pending or implemented in the current year or was put in place in a prior year. A status of “Pending” indicates a FIP/RP has been approved but actual period covered by the FIP/RP has not begun. A status of “Implemented” means the period covered by the FIP/RP began in the current year or is ongoing.

• The “Surcharge Imposed” column indicates whether a surcharge or supplemental contribution was paid during the most recent annual period presented for the company’s contributions to each plan in the yellow, orange or red zone. If the company’s current collective bargaining agreement (CBA) with a plan satisfies the requirements of a pending but not yet implemented FIP or RP, then the payment of surcharges or supplemental contributions is not required and “No” will be reflected in this column. If the company’s current CBA with a plan does not yet satisfy the requirements of a pending but not yet implemented FIP or RP, then the payment of surcharges or supplemental contributions is required and “Yes” will be reflected in this column.

												Pension Protection Act Zone Status
Pension Fund						EIN-PN						As of 12/31/23						As of 12/31/22						FIP/RP Status						Surcharge Imposed						Expiration Date(s) of CBA(s)
Western Conference of Teamsters Pension Plan						91-6145047-001						Green						Green						N/A						N/A						6/30/2024 to 9/28/2028 (1)

(1)			Sysco is party to 24 CBAs that require contributions to the Western Conference of Teamsters Pension Trust. Each agreement covers anywhere from less than 1% to 21% of the total contributions Sysco is required to pay the fund. 1 of the CBAs expired during fiscal year 2024 and is currently being renegotiated.

The following table provides information about the company’s contributions to individually significant plans:

• The “Sysco Contributions” columns provide contribution amounts based on Sysco’s fiscal years, which may not coincide with the plans’ fiscal years.

• The “Sysco 5% of Total Plan Contributions” columns indicate whether Sysco was listed on Schedule R of the plan’s most recently filed Form 5500s as providing more than five percent of the total contributions to the plan, and the plan year-end is noted.

						Sysco Contributions																		Sysco 5% of Total Plan Contributions
Pension Fund						2024						2023						2022						Year Ending 12/31/22						Year Ending 12/31/21
						(In millions)
Western Conference of Teamsters Pension Plan						$	47					$	41					$	35					No						No

For the plan noted in the table above, minimum contributions outside of the agreed upon contractual rate are not required.

16. EARNINGS PER SHARE

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

			2024						2023						2022
			(In millions, except for share and per share data)
Numerator:
Net earnings			$	1,955					$	1,770					$	1,359
Denominator:
Weighted-average basic shares outstanding			501,238,422						507,362,913						510,630,645
Dilutive effect of share-based awards			1,857,664						2,356,843						3,375,182
Weighted-average diluted shares outstanding			503,096,086						509,719,756						514,005,827
Basic earnings per share			$	3.90					$	3.49					$	2.66
Diluted earnings per share			$	3.89					$	3.47					$	2.64

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 4,611,724, 2,373,000 and 1,538,000 for fiscal 2024, 2023 and 2022, respectively.

Dividends declared were $1.0 billion, $999 million and $971 million in fiscal 2024, 2023 and 2022, respectively. Included in dividends declared for each year were dividends declared but not yet paid at year-end of approximately $251 million, $253 million and $249 million in fiscal 2024, 2023 and 2022, respectively.

Accelerated Share Repurchase Program

In January 2024, we 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, we agreed to repurchase $500 million of our common stock from Goldman under the share repurchase program authorized by our Board of Directors in May 2021.

In connection with the ASR Program, we paid $500 million to Goldman and received an initial tranche of 6,026,110 shares of Sysco’s outstanding common stock. At settlement, 323,109 incremental shares were provided to Sysco. The incremental number of shares due upon settlement was determined based on the volume-weighted average share price of Sysco’s common stock during the term of the ASR Agreement less an agreed discount. The shares received were recognized in treasury stock and reduced the number of weighted average shares outstanding in fiscal 2024. In total, 6,349,219 shares were repurchased at an average price of $78.75.

17. 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 certain hedging arrangements, amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $1.9 billion, $2.0 billion and $1.0 billion for fiscal 2024, 2023 and 2022, 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:

									2024
			Location of Expense (Income) Recognized in Net Earnings						Before Tax Amount						Tax						Net of Tax Amount
									(In millions)
Foreign currency translation:
Foreign currency translation adjustment			N/A						$	(33)					$	—					$	(33)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value hedge			Other expense, net						2						—						2
Change in cash flow hedges			Operating expenses (1)						21						5						16
Change in net investment hedges			N/A						(5)						(2)						(3)
Total other comprehensive income (loss) before reclassification adjustments									18						3						15
Reclassification adjustments:
Amortization of cash flow hedges			Interest expense						11						4						7
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss, arising in the current year			Other expense, net						(130)						(33)						(97)
Reclassification adjustments:
Amortization of actuarial loss, net			Other expense, net						28						8						20
Total reclassification adjustments									28						8						20
Marketable securities:
Change in marketable securities (2)			N/A						3						1						2
Total other comprehensive loss									$	(103)					$	(17)					$	(86)

(1)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)			Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in fiscal 2024.

									2023
			Location of Expense (Income) Recognized in Net Earnings						Before Tax Amount						Tax						Net of Tax Amount
									(In millions)
Foreign currency translation:
Foreign currency translation adjustment			N/A						$	127					$	—					$	127
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges			Operating expenses (1)						(71)						(16)						(55)
Change in net investment hedges			N/A						(28)						(7)						(21)
Total other comprehensive income (loss) before reclassification adjustments									(99)						(23)						(76)
Reclassification adjustments:
Amortization of cash flow hedges			Interest expense						11						3						8
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss, arising in the current year			Other expense, net						(121)						(32)						(89)
Settlements			Other expense, net						315						78						237
Total other comprehensive income before reclassification adjustments									194						46						148
Reclassification adjustments:
Amortization of actuarial loss, net			Other expense, net						32						8						24
Total reclassification adjustments									32						8						24
Marketable securities:
Change in marketable securities (2)			N/A						(2)						—						(2)
Total other comprehensive income									$	263					$	34					$	229

(1)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)			Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in fiscal 2023.

									2022
			Location of Expense (Income) Recognized in Net Earnings						Before Tax Amount						Tax						Net of Tax Amount
									(In millions)
Foreign currency translation:
Foreign currency translation adjustment			N/A						$	(461)					$	—					$	(461)
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges			Operating expenses (1)						31						7						24
Change in net investment hedges			N/A						72						18						54
Total other comprehensive income before reclassification adjustments									103						25						78
Reclassification adjustments:
Amortization of cash flow hedges			Interest expense						11						2						9
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial gain, arising in the current year									(11)						(2)						(9)
Reclassification adjustments:
Amortization of actuarial loss, net			Other expense, net						75						16						59
Total reclassification adjustments									75						16						59
Marketable securities:
Change in marketable securities (2)			N/A						(12)						(3)						(9)
Total other comprehensive loss									$	(295)					$	38					$	(333)

(1)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)			Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in fiscal 2022.

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

			Foreign Currency Translation						Hedging, net of tax						Pension and Other Postretirement Benefit Plans, net of tax						Marketable Securities						Total
			(In millions)
Balance as of Jul. 3, 2021			$	(40)					$	(51)					$	(1,062)					$	4					$	(1,149)
Other comprehensive income before reclassification adjustments			(461)						78						(9)						—						(392)
Amounts reclassified from accumulated other comprehensive loss			—						9						59						—						68
Change in marketable securities			—						—						—						(9)						(9)
Balance as of Jul. 2, 2022			(501)						36						(1,012)						(5)						(1,482)
Other comprehensive income before reclassification adjustments			127						(76)						148						—						199
Amounts reclassified from accumulated other comprehensive loss			—						8						24						—						32
Change in marketable securities			—						—						—						(2)						(2)
Balance as of Jul. 1, 2023			(374)						(32)						(840)						(7)						(1,253)
Other comprehensive income before reclassification adjustments			(33)						15						(97)						—						(115)
Amounts reclassified from accumulated other comprehensive loss			—						7						20						—						27
Change in marketable securities			—						—						—						2						2
Balance as of Jun. 29, 2024			$	(407)					$	(10)					$	(917)					$	(5)					$	(1,339)

18. SHARE-BASED COMPENSATION

We provide compensation benefits to employees under several share-based payment arrangements including various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In November 2018, Sysco’s Omnibus Incentive Plan (2018 Plan) was adopted and reserved up to 51,500,000 shares of Sysco common stock for share-based awards to employees, non-employee directors and key advisors. Of the 51,500,000 authorized shares, the full 51,500,000 shares may be issued as options or stock appreciation rights and up to 17,500,000 shares may be issued as restricted stock, restricted stock units or other types of stock-based awards. To date, we have issued options, restricted stock units and performance share units under the 2018 Plan. Vesting requirements for awards under the 2018 Plan vary by individual grant and may include either time-based vesting or time-based vesting subject to acceleration based on performance criteria for fiscal periods of at least one year. The contractual life of all options granted under the 2018 Plan are and will be no greater than ten years. As of June 29, 2024, there were 38,124,860 remaining shares authorized and available for grant in total under the 2018 Plan, of which the full 38,124,860 shares may be issued as options or stock appreciation rights, or as a combination of up to 10,689,230 shares that may be issued as restricted stock, restricted stock units or other types of stock-based awards, with the remainder available for issuance as options or stock appreciation rights.

We have also granted employee options under several previous employee stock option plans for which previously granted options remain outstanding as of June 29, 2024. No new options will be issued under any of the prior plans. Future grants to employees will be made through the 2018 Plan or subsequently adopted plans. Awards under these plans are subject to time-based vesting with vesting periods that vary by individual grant. The contractual life of all options granted under these plans is ten years. Our policy is to utilize treasury stock for issuing shares upon share option exercise or share unit conversion.

Performance Share Units

During fiscal 2024 and 2023, 527,081 and 460,672 performance share units (PSUs), respectively, were granted to employees. Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend

equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs 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 performance share unit granted during fiscal 2024 and 2023 was $74.91 and $84.87, respectively. The PSUs will convert into shares of Sysco common stock at the end of the performance period based on actual performance targets achieved as well as the market-based return of Sysco’s common stock relative to that of the S&P 500 index companies.

Stock Options

Our option awards are subject to graded vesting over a requisite service period with compensation cost recognized on a straight-line basis through the requisite service period over the duration of the award.

In addition, certain of our options provide that the options continue to vest as if the optionee continued as an employee or director if the optionee meets certain age and years of service thresholds upon retirement. In these cases, Sysco will recognize compensation cost for such awards over the period from the grant date to the date the employee or director first becomes eligible to retire with the options continuing to vest after retirement.

The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. Expected dividend yield is estimated based on the historical pattern of dividends and the average stock price for the year preceding the option grant. Expected volatility is based on historical volatility of Sysco’s stock, implied volatilities from traded options on Sysco’s stock, and other factors. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve in effect at the time of grant. Sysco utilizes historical data to estimate option exercise and employee termination behavior in determining the expected life of awards for valuation purposes.

The weighted average assumptions discussed above are noted in the table below for relevant periods as follows:

			2024						2023						2022
Dividend yield			2.6		%				2.4		%				2.5		%
Expected volatility			27.2		%				32.6		%				30.1		%
Risk-free interest rate			4.1		%				3.0		%				1.0		%
Expected Life			6.6 years						6.6 years						6.6 years

The following summary presents information regarding outstanding options as of June 29, 2024 and changes during the fiscal year then ended with regard to options under all stock incentive plans:

			Shares Under Option						Weighted Average Exercise Price Per Share						Weighted Average Remaining Contractual Term (in years)						Aggregate Intrinsic Value (in millions)
Outstanding as of July 1, 2023			9,750,183						$	65.05
Granted			808,279						73.06
Exercised			1,586,486						55.05
Forfeited			477,689						77.65
Expired			—						—
Outstanding as of June 29, 2024			8,494,287						$	66.97					5.19						$	63
Expected to vest as of June 29, 2024			1,444,819						77.71						8.42						NM
Exercisable as of June 29, 2024			6,997,052						$	64.68					4.50						$	63

The total number of employee options granted was 808,279, 954,249 and 1,224,150 in fiscal years 2024, 2023 and 2022, respectively.

During fiscal 2024, 322,325 options were granted to 12 executive officers and 485,954 options were granted to 167 other key employees. During fiscal 2023, 384,212 options were granted to 13 executive officers and 570,037 options were granted to 167 other key employees. During fiscal 2022, 499,554 options were granted to 11 executive officers and 724,596 were granted to 145 other key employees.

The weighted average grant date fair value of options granted in fiscal 2024, 2023 and 2022 was $19.27, $24.46 and $17.39, respectively. The total intrinsic value of options exercised during fiscal 2024, 2023 and 2022 was $1 million, $1 million and $5 million, respectively.

Restricted Stock Units

During fiscal 2024, 2023 and 2022, 1,146,158, 917,560 and 758,934 restricted stock units, respectively, were granted to employees, the majority of which will vest ratably over a three-year period. Some of these restricted stock units were granted with 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 as of the grant date during the vesting period. The weighted average grant date fair value per share of restricted stock units granted during fiscal 2024, 2023 and 2022 was $74.52, $75.66 and $80.31, respectively. The total fair value of restricted stock units vested during fiscal 2024, 2023 and 2022 was $52 million, $44 million and $42 million, respectively. The total intrinsic value of restricted stock units vested during fiscal 2024, 2023 and 2022 was $54 million, $47 million and $53 million, respectively.

Non-Employee Director Awards

During fiscal 2024, 2023 and 2022, 29,115, 22,055 and 22,293 restricted equity awards, respectively, were granted to non-employee directors (NEDs), which will vest over a one-year period. NEDs may elect to receive these awards in restricted stock shares that will vest at the end of the award stated vesting period or as deferred units that convert into shares of Sysco common stock on a date subsequent to the award stated vesting date selected by the NED. The fair value of the restricted awards is based on the company’s stock price as of the date of grant. The weighted average grant date fair value of the shares granted during fiscal 2024, 2023 and 2022 was $70.67, $84.10 and $74.93, respectively. The total fair value of restricted stock shares vested and deferred units distributed during fiscal 2024, 2023 and 2022 was $2 million, $2 million and $2 million, respectively. Restricted stock shares are valued on their vesting date. Vested deferred units are valued on their subsequent conversion and distribution date.

NEDs may elect to receive up to 100% of their annual directors’ fees in Sysco common stock on either an annual or deferred basis. As a result of such elections, a total of 5,966, 6,974 and 6,002 shares with a weighted-average grant date fair value of $72.22, $78.82 and $78.35 per share were issued in fiscal 2024, 2023 and 2022, respectively, in the form of fully vested common stock or deferred units. Common stock shares are valued on their vesting date. Vested deferred units are valued on their subsequent conversion and distribution date.

As of June 29, 2024, there were 117,455 fully vested deferred units outstanding that will convert into shares of Sysco common stock upon dates selected by the respective NED.

Summary of Equity Instruments Other Than Stock Options

The following summary presents information regarding outstanding non-vested awards as of June 29, 2024 and changes during the fiscal year then ended with regard to these awards under the stock incentive plans. Award types represented include restricted stock units granted to employees, restricted awards granted to non-employee directors and PSUs.

			Shares						Weighted Average Grant Date Fair Value Per Share
Non-vested as of July 1, 2023			2,453,904						$	82.05
Granted			1,727,704						74.58
Vested			(722,080)						73.96
Forfeited			(487,334)						77.24
Non-vested as of June 29, 2024			2,972,194						$	80.46

2015 Employee Stock Purchase Plan

The Sysco ESPP permits employees to invest in Sysco common stock by means of periodic payroll deductions at a discount of 15% from the closing price on the last business day of each calendar quarter. The total number of shares that may be sold pursuant to the ESPP may not exceed 79,000,000 shares, of which 1,127,023 remained available as of June 29, 2024.

During fiscal 2024, 1,092,062 shares of Sysco common stock were purchased by the participants, as compared to 1,032,545 shares purchased in fiscal 2023 and 868,439 shares purchased in fiscal 2022. The weighted average fair value of employee stock purchase rights issued pursuant to the ESPP was $10.83, $11.15 and $12.10 per share during fiscal 2024, 2023 and 2022, respectively. The fair value of the stock purchase rights was calculated as the difference between the stock price at date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost included in operating expenses in the consolidated results of operations was $104 million, $96 million and $122 million for fiscal 2024, 2023 and 2022, respectively. Our expense related to our PSUs decreased, as the performance metrics are trending below target for awards not yet paid. The total income tax benefit for share-based compensation arrangements was $17 million, $16 million and $19 million for fiscal 2024, 2023 and 2022, respectively.

As of June 29, 2024, there was $136 million of total unrecognized share-based compensation cost, which is expected to be recognized over a weighted-average period of 1.9 years.

Cash received from option exercises and ESPP participation was $120 million, $79 million and $128 million during fiscal 2024, 2023 and 2022, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $4 million, $2 million and $13 million during fiscal 2024, 2023 and 2022, respectively.

19. INCOME TAXES

Income Tax Provisions

For financial reporting purposes, earnings before income taxes consists of the following:

			2024						2023						2022
			(In millions)
U.S.			$	2,260					$	1,941					$	1,643
Foreign			305						344						104
Total			$	2,565					$	2,285					$	1,747

The income tax provision for each fiscal year consists of the following:

			2024						2023						2022
			(In millions)
U.S. federal income taxes			$	447					$	388					$	354
State and local income taxes			125						79						45
Foreign income taxes			38						48						(11)
Total			$	610					$	515					$	388

The current and deferred components of the income tax provisions for each fiscal year are as follows:

			2024						2023						2022
			(In millions)
Current			$	584					$	531					$	452
Deferred			26						(16)						(64)
Total			$	610					$	515					$	388

The deferred tax provisions result from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Effective Tax Rates

Reconciliations of the statutory federal income tax rate to the effective income tax rates for each fiscal year are as follows:

			2024						2023						2022
U.S. statutory federal income tax rate			21.0		%				21.0		%				21.0		%
State and local income taxes, net of any applicable federal income tax benefit			3.9						2.6						2.4
Foreign income taxes			(1.0)						(1.1)						(1.9)
Uncertain tax positions			0.1						0.1						0.8
Tax benefit of equity-based compensation			0.1						(0.1)						(0.1)
Other			(0.3)						0.1						—
Effective income tax rate			23.8		%				22.6		%				22.2		%

The effective tax rate of 23.8% for fiscal 2024 was impacted by (1) state income tax expense of $99 million and (2) the mix of earnings from our foreign operations which are taxed at rates different than our domestic tax rate, as well as credits, local permanent differences and other minimum taxes, which resulted in a net increase in the effective tax rate.

The effective tax rate of 22.6% for fiscal 2023 was impacted by (1) state income tax expense of $60 million and (2) earnings from our foreign operations which are taxed at rates different than our domestic tax rate, as well as credits, local permanent differences and other minimum taxes, which resulted in a net increase in the effective tax rate.

Deferred Tax Assets and Liabilities

Significant components of Sysco’s deferred tax assets and liabilities are as follows:

			Jun. 29, 2024						Jul. 1, 2023
			(In millions)
Deferred tax assets:
Net operating tax loss carryforwards			$	534					$	537
Operating lease liabilities			237						171
Interest carryforwards			228						205
Pension			121						101
Receivables			52						51
Inventory			30						27
Deferred compensation			28						26
Share-based compensation			27						24
Other			67						60
Deferred tax assets before valuation allowances			1,324						1,202
Valuation allowances			(278)						(267)
Total deferred tax assets			1,046						935
Deferred tax liabilities:
Goodwill and intangible assets			374						364
Excess tax depreciation and basis differences of assets			285						238
Operating lease assets			231						172
Foreign currency remeasurement losses and currency hedge			20						16
Other			36						28
Total deferred tax liabilities			946						818
Total net deferred tax assets			$	100					$	117

Our deferred tax asset for net operating loss carryforwards as of June 29, 2024 and July 1, 2023 consisted of state and foreign net operating tax loss carryforwards. The state net operating loss carryforwards outstanding as of June 29, 2024 expire

in fiscal years 2025 through 2044, with some losses having unlimited carryforward periods. The foreign net operating loss carryforward periods vary by jurisdiction, from 5 years to unlimited.

We assess the recoverability of our deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. We consider all available evidence (both positive and negative) in determining whether a valuation allowance is required. As a result of the company’s analysis, it was concluded that, as of June 29, 2024, a valuation allowance of $278 million should be established against the portion of the deferred tax asset attributable to capital losses, certain state interest, and foreign and U.S. state losses. We will continue to monitor facts and circumstances in the reassessment of the likelihood that net operating loss carryforwards will be realized.

Uncertain Tax Positions

Our uncertain tax position balance was $32 million in both fiscal 2024 and fiscal 2023. The gross amount of liability for accrued interest and penalties related to unrecognized tax benefits was $12 million as of June 29, 2024 and $8 million as of July 1, 2023. The expense recorded for interest and penalties related to unrecognized tax benefits was not material in any year presented. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months. At this time, an estimate of the range of the reasonably possible change cannot be made.

During fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. In the fourth quarter of fiscal 2023, we filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm our position regarding our foreign tax credits. We previously recorded a benefit of $131 million attributable to our interpretation of the TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to reverse all, or some portion, of the benefit previously recorded.

If we were to recognize all unrecognized tax benefits recorded as of June 29, 2024 and July 1, 2023, approximately all of the $32 million reserve would reduce the effective tax rate for each year, respectively. It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of our unrecognized tax positions will increase or decrease in the next twelve months either because our positions are sustained on 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 various jurisdictions and the allocation of income and expense between tax jurisdictions. In addition, the amount of unrecognized tax benefits recognized within the next twelve months may decrease due to the expiration of the statute of limitations for certain years in various jurisdictions; however, it is possible that a jurisdiction may open an audit on one of these years prior to the statute of limitations expiring. We anticipate an immaterial decrease to the reserve within twelve months as a result of lapse of statutes.

We remain subject to income tax examinations for our U.S. federal income taxes for fiscal 2018 and subsequent tax years. As of June 29, 2024, Sysco’s tax returns in the majority of the state and local and material foreign jurisdictions are no longer subject to audit for the years before 2017.

Other

We intend to indefinitely reinvest income of our foreign operations except for income from a Singapore entity, and, as a result, no material accruals have been made with respect to the tax effects of unremitted earnings from these reinvested foreign earnings, including impacts of outside basis differences and withholding taxes. The Singapore income for which we are not claiming permanent reinvestment only relates to income for fiscal year 2023 and forward. The company has not recorded any withholding tax liability on the current year undistributed Singapore earnings, as the distribution of this income to the U.S. would not result in any income or withholding tax liability. As a result of the U.S. Tax Cuts and Jobs Act, unremitted earnings prior to the effective date of the act have been subject to U.S. income tax. Any residual tax effects, including foreign withholding taxes, are immaterial to the financial statements.

On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One expands a country’s authority to tax profits from companies that make sales into their country but do not have a physical location in the country. Pillar Two includes an agreement on international tax reform, including rules to ensure that large corporations pay a minimum rate of corporate income

tax. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. For Sysco, Pillar Two will be effective in fiscal year 2025.

The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes reflects income earned and taxed in the various U.S. federal and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis differences, 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.

20. 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. Although the final results of legal proceedings cannot be predicted with certainty, 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.

We have been pursuing claims against a variety of vendors from which the company purchased products. To mitigate the risk of incurring significant legal fees on these claims without any ultimate gain, in calendar 2019 and 2020, we entered into agreements with a third party whereby Sysco secured a minimum amount of cash proceeds from the third party in exchange for assigning to the third party the rights to a portion of the future litigation proceeds. At the time of receipt of these cash proceeds, the amounts were deferred in “Other long-term liabilities.”

In June 2023, an agreement was reached in which we assigned all remaining claims against these vendors to the third party. As a result, Sysco is no longer obligated to pursue litigation against these vendors and therefore previous deferred proceeds were recognized within “Other expense (income), net.” In total, this agreement resulted in $122 million being recognized in “Other expense (income), net” in June 2023.

Other Commitments

Sysco has committed to aggregate product purchases for resale in order to benefit from a centralized approach to purchasing. A majority of these agreements expire within one year; however, certain agreements have terms through fiscal 2029. These agreements commit the company to a minimum volume at various pricing terms, including fixed pricing, variable pricing or a combination thereof. Minimum amounts committed to as of June 29, 2024 totaled approximately $10.6 billion. Minimum amounts committed to by year are as follows:

			Amount
			(In millions)
2025			$	7,294
2026			2,237
2027			799
2028			211
2029			15

We have contracts with various third-party service providers to receive information technology services and warehouse management services. The services have been committed for periods up to fiscal 2036 and may be extended. As of June 29, 2024, the total remaining cost of the services over that period is expected to be approximately $271 million. A portion of this committed amount may be reduced by Sysco utilizing less than estimated resources and can be increased by Sysco utilizing more than estimated resources. Certain agreements allow adjustments for inflation. Sysco may also cancel a portion or all of the services provided subject to termination fees that decrease over time. If Sysco were to terminate all of the services in fiscal 2025, the estimated termination fees incurred in fiscal 2025 would be approximately $98 million.

21. BUSINESS SEGMENT INFORMATION

We have combined certain of our operations in three reportable segments. “Other” financial information is attributable to the company’s other operating segments that do not meet the quantitative disclosure thresholds.

• U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Inc., Edward Don, acquired in the second quarter of fiscal 2024, which distributes restaurant equipment and supplies, our Asian specialty distribution company and a number of other small specialty businesses that are not material to the operations of Sysco;

• International Foodservice Operations – includes operations outside of the U.S., which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden;

• SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and

• Other – primarily our hotel supply operations, Guest Worldwide.

The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center expenses generally include all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.

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

			Fiscal Year
			2024						2023						2022
Sales:			(In millions)
U.S. Foodservice Operations			$	55,339					$	53,683					$	48,521
International Foodservice Operations			14,561						13,560						11,787
SYGMA			7,768						7,843						7,246
Other			1,176						1,239						1,082
Total			$	78,844					$	76,325					$	68,636
			Fiscal Year
			2024						2023						2022
Operating income (loss):			(In millions)
U.S. Foodservice Operations			$	3,673					$	3,587					$	3,181
International Foodservice Operations			375						314						100
SYGMA			72						56						(3)
Other			40						57						17
Total segments			4,160						4,014						3,295
Global Support Center			(958)						(975)						(949)
Total operating income			3,202						3,039						2,346
Interest expense			607						527						624
Other expense (income), net			30						227						(25)
Earnings before income taxes			$	2,565					$	2,285					$	1,747

			Fiscal Year
			2024						2023						2022
Depreciation and amortization:			(In millions)
U.S. Foodservice Operations			$	499					$	437					$	407
International Foodservice Operations			247						218						240
SYGMA			33						32						31
Other			10						8						9
Total segments			789						695						687
Global Support Center			84						81						86
Total			$	873					$	776					$	773
			Fiscal Year
			2024						2023						2022
Capital Expenditures:			(In millions)
U.S. Foodservice Operations			$	366					$	389					$	262
International Foodservice Operations			289						193						155
SYGMA			21						31						35
Other			35						23						5
Total segments			711						636						457
Global Support Center			121						157						176
Total			$	832					$	793					$	633

			Fiscal Year
			2024						2023						2022
Assets:			(In millions)
U.S. Foodservice Operations			$	12,505					$	11,398					$	9,541
International Foodservice Operations			7,545						7,433						6,596
SYGMA			923						840						835
Other			616						644						555
Total segments			21,589						20,315						17,527
Global Support Center			3,328						2,506						4,559
Total			$	24,917					$	22,821					$	22,086

Information concerning geographic areas is as follows:

			Fiscal Year
			2024						2023						2022
Sales:			(In millions)
United States			$	63,931					$	62,404					$	56,511
Canada			5,993						5,828						5,094
United Kingdom			3,760						3,340						2,859
France			1,712						1,591						1,413
Other			3,448						3,162						2,759
Total			$	78,844					$	76,325					$	68,636
Plant and equipment at cost, less accumulated depreciation:
United States			$	4,165					$	3,721					$	3,346
United Kingdom			369						298						249
Canada			364						335						337
France			308						300						304
Other			291						261						220
Total			$	5,497					$	4,915					$	4,456
Operating lease right-of-use assets, net:
United States			$	487					$	338					$	317
United Kingdom			194						197						193
Canada			88						28						39
France			59						65						78
Sweden			32						37						38
Other			63						67						58
Total			$	923					$	732					$	723

The sales mix for the principal product categories by segment is disclosed in Note 3, “Revenue.”