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DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended
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Jul. 01, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, the company does not use derivative financial instruments for trading or speculative purposes. Hedging of interest rate risk Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates. Details of outstanding swap agreements as of July 1, 2017 are set forth below:
Maturity Date of Swap |  | Notional Value (in millions) |  | Fixed Coupon Rate on Hedged Debt |  | Floating Interest Rate on Swap |  | Floating Rate Reset Terms
February 12, 2018 |  | $ | 500 |  |  | 5.25 | % |  | Six-month LIBOR |  | Every six months in arrears
April 1, 2019 |  | $ | 500 |  |  | 1.90 | % |  | Three-month LIBOR |  | Every three months in advance
October 1, 2020 |  | $ | 750 |  |  | 2.60 | % |  | Three-month LIBOR |  | Every three months in advance
July 15, 2021 |  | $ | 500 |  |  | 2.50 | % |  | Three-month LIBOR |  | Every three months in advance
Hedging of foreign currency risk In fiscal 2017, Sysco entered into cross-currency swap contracts to hedge the foreign currency transaction risk of certain pound sterling-denominated intercompany loans with a total notional value of £234.2 million. These swaps have been designated as cash flow hedges and mature at the same time as the related loans in July 2021. There are no credit-risk-related contingent features associated with these swaps. These intercompany loans are considered to be of a long-term investment nature, therefore, the effective portion of the derivative gain or loss is recorded in accumulated other comprehensive income and will be subsequently reclassified to earnings when the loan balances are no longer considered to be of a long-term investment nature. The company entered into cross currency swap contracts to hedge the foreign currency exposure of our net investment in certain foreign operations. The effective portion of the derivative gain or loss is recorded in accumulated other comprehensive income and will be subsequently reclassified to earnings when the hedged net investment is either sold or substantially liquidated. Sysco designated its Euro-denominated debt of €500 million issued in June 2016 as a net investment hedge. Sysco also designated its cross currency swap contracts entered into in August 2016 as a net investment hedge with a total notional value of €534 million. 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. Sysco's operations in the U.K. and Sweden 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. The company enters 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. These swap contracts are recorded at fair value on the balance sheet and within accumulated other comprehensive income. The amount of ineffectiveness, if any, is recorded in earnings. Amounts in accumulated other comprehensive income are reclassified into earnings in the same period during which the hedged forecasted transactions affect earnings, which is the period in which the company recognizes the sales associated with the specified foreign currency-denominated inventory purchases. Hedging of fuel price risk In fiscal 2017, Sysco began utilizing fuel commodity swap contracts to hedge against the risk of the change in the price of diesel on anticipated future purchases. These swaps, with a total notional value of $78 million, have maturity dates extending into June 2018 and have been designated as cash flow hedges. These swap contracts are recorded at fair value on the balance sheet and the effective portion of any derivative gain or loss is initially recorded in accumulated other comprehensive income. The amount of ineffectiveness, if any, is recorded in earnings. Amounts in accumulated other comprehensive income are reclassified into earnings in the same period during which the hedged forecasted transactions occur, which is when the fuel is consumed. The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of July 1, 2017, July 2, 2016 and June 27, 2015 are as follows:
|  |  | Derivative Fair Value
| Balance Sheet Location |  | Jul. 1, 2017 |  | Jul. 2, 2016 |  | Jun. 27, 2015
|  |  | (In thousands)
Fair Value Hedges: |  |  |  |  |  |  |
Interest rate swaps | Other current assets |  | $ | 707 |  |  | $ | — |  |  | $ | — |
Interest rate swaps | Other assets |  |  |  | 36,805 |  |  | 12,597 |
Interest rate swaps | Other long-term liabilities |  | (21,390 | ) |  | — |  |  | — |
Cash Flow Hedges: |  |  |  |  |  |  |
Fuel swaps | Other current assets |  | $ | 717 |  |  | $ | — |  |  | $ | — |
Fuel swaps | Other current liabilities |  | (6,160 | ) |  |  |  |
Foreign currency forwards | Other current liabilities |  | (154 | ) |  | — |  |  | — |
Fuel swaps | Other long-term liabilities |  | (160 | ) |  |  |  |
Cross currency swaps | Other long-term liabilities |  | (5,816 | ) |  | — |  |  | — |
Net Investment Hedges: |  |  |  |  |  |  |
Foreign currency swaps | Other long-term liabilities |  | $ | (12,308 | ) |  | $ | — |  |  | $ | — |
The location and effect of derivative instruments and related hedged items on the consolidated results of operations for the fiscal periods ended July 1, 2017, July 2, 2016 and June 27, 2015 presented on a pretax basis are as follows:
| Location of (Gain) or Loss Recognized |  | Amount of (Gain) or Loss Recognized
|  |  | 2017 |  | 2016 |  | 2015
|  |  | (In thousands)
Fair Value Hedge Relationships: |  |  |  |  |  |  |
Interest rate swaps | Interest expense |  | $ | (9,022 | ) |  | $ | (12,033 | ) |  | $ | (21,960 | )
Cash Flow Hedge Relationships: |  |  |  |  |  |  |  |  |
Forward starting interest rate swaps (1) | Interest expense |  | $ | 11,495 |  |  | $ | 11,543 |  |  | $ | 8,305 |
Forward starting interest rate swaps | Other comprehensive income |  | — |  |  | (6,134 | ) |  | (55,374 | )
Fuel swaps | Other comprehensive income |  | (5,335 | ) |  | — |  |  | — |
Foreign currency forwards | Other comprehensive income |  | (4,389 | ) |  | — |  |  | — |
Cross currency swaps | Other comprehensive income |  | (1,148 | ) |  | — |  |  | — |
Net Investment Hedge Relationships: |  |  |  |  |  |  |
Foreign currency swaps | Other comprehensive income |  | $ | (34,152 | ) |  | $ | — |  |  | $ | — |
(1) | Represents amortization of losses on forward starting interest rate swap agreements that were previously settled.
For fair value hedges of interest rate risk, hedge ineffectiveness represents the difference between the changes in the fair value of the derivative instruments and the changes in fair value of the fixed rate debt attributable to changes in the benchmark interest rate. For cash flow hedges, hedge ineffectiveness is the difference of the change in the fair value of the derivative compared to the change in the hedged transaction. Hedge ineffectiveness is recorded directly in earnings within interest expense for interest rate swaps, other income and expense, net for hedging of the foreign exchange risk on intercompany loans, cost of sales for foreign exchange risk on inventory purchases and operating expense for fuel hedging. All amounts were immaterial for fiscal 2017, 2016 and 2015. None of the instruments contain credit-risk-related contingent features.

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- References No definition available. + Details
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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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