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LEASES | 12 Months Ended
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Jul. 01, 2023
Leases [Abstract] |
LEASES | LEASES Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The company determines if an arrangement is a lease at inception and recognizes 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, Sysco uses its 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 the company recognizes 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 the company’s consolidated balance Sheets at July 1, 2023 and July 2, 2022:
|  | Consolidated Balance Sheet Location |  | Jul. 1, 2023 |  | Jul. 2, 2022
|  |  |  | (In thousands)
Finance lease right-of-use assets |  | Plant and equipment at cost, less accumulated depreciation |  | $ | 285,192 |  |  | $ | 222,372 |
Current finance lease liabilities |  | Current maturities of long-term debt |  | 37,929 |  |  | 39,121 |
Long-term finance lease liabilities |  | Long-term debt |  | 259,887 |  |  | 187,225 |
The following table presents lease costs for each of the presented periods ended July 1, 2023 and July 2, 2022:
|  | Consolidated Results of Operations Location |  |  |  | Jul. 1, 2023 |  | Jul. 2, 2022
|  |  |  |  | (In thousands)
Operating lease cost |  | Operating expenses |  |  |  | $ | 139,428 |  |  | $ | 126,743 |
Financing lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | Operating expenses |  |  |  | 49,890 |  |  | 41,606 |
Interest on lease obligations |  | Interest expense |  |  |  | 10,914 |  |  | 6,506 |
Variable lease cost |  | Operating expenses |  |  |  | 73,524 |  |  | 44,734 |
Short-term lease cost |  | Operating expenses |  |  |  | 54,618 |  |  | 31,659 |
Net lease cost |  |  |  |  |  | $ | 328,374 |  |  | $ | 251,248 |
Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of July 1, 2023 are as follows:
|  | Operating Leases |  | Finance Leases
|  | (In thousands)
2024 |  | $ | 124,221 |  |  | $ | 48,814 |
2025 |  | 115,526 |  |  | 42,181 |
2026 |  | 104,559 |  |  | 34,574 |
2027 |  | 101,040 |  |  | 28,377 |
2028 |  | 77,816 |  |  | 20,072 |
Thereafter |  | 403,012 |  |  | 233,973 |
Total undiscounted lease obligations |  | 926,174 |  |  | 407,991 |
Less imputed interest |  | (170,854) |  |  | (110,175) |
Present value of lease obligations |  | $ | 755,320 |  |  | $ | 297,816 |
The Company has entered into operating lease agreements that have not yet commenced as of July 1, 2023 with legally binding minimum lease payments of $288.5 million. The leases are expected to commence during the next two fiscal years. Other information related to lease agreements was as follows:
|  | Jul. 1, 2023 |  | Jul. 2, 2022
Cash Paid For Amounts Included In Measurement of Liabilities: |  | (Dollars in thousands)
Operating cash flows for operating leases |  | $ | 133,754 |  |  | $ | 125,741 |
Operating cash flows for financing leases |  | 10,914 |  |  | 6,506 |
Financing cash flows for financing leases |  | 44,422 |  |  | 40,238 |
Supplemental Non-cash Information on Lease Liabilities: |  |  |  |
Assets obtained in exchange for operating lease obligations |  | $ | 105,289 |  |  | $ | 156,505 |
Assets obtained in exchange for finance lease obligations |  | 114,098 |  |  | 191,523 |
Operating lease asset adjustments, including renewals and remeasurements |  | 13,271 |  |  | 22,087 |
Operating lease liability adjustments, including renewals and remeasurements |  | 17,173 |  |  | 13,045 |
Lease Term and Discount Rate: |  |  |  |
Weighted-average remaining lease term (years): |  |  |  |
Operating leases |  | 10.36 years |  | 11.04 years
Financing leases |  | 14.94 years |  | 14.65 years
Weighted-average discount rate: |  |  |  |
Operating leases |  | 3.31 | % |  | 2.85 | %
Financing leases |  | 4.06 | % |  | 3.17 | %
LEASES | LEASES Sysco leases certain of its distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The company determines if an arrangement is a lease at inception and recognizes 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, Sysco uses its 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 the company recognizes 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 the company’s consolidated balance Sheets at July 1, 2023 and July 2, 2022:
|  | Consolidated Balance Sheet Location |  | Jul. 1, 2023 |  | Jul. 2, 2022
|  |  |  | (In thousands)
Finance lease right-of-use assets |  | Plant and equipment at cost, less accumulated depreciation |  | $ | 285,192 |  |  | $ | 222,372 |
Current finance lease liabilities |  | Current maturities of long-term debt |  | 37,929 |  |  | 39,121 |
Long-term finance lease liabilities |  | Long-term debt |  | 259,887 |  |  | 187,225 |
The following table presents lease costs for each of the presented periods ended July 1, 2023 and July 2, 2022:
|  | Consolidated Results of Operations Location |  |  |  | Jul. 1, 2023 |  | Jul. 2, 2022
|  |  |  |  | (In thousands)
Operating lease cost |  | Operating expenses |  |  |  | $ | 139,428 |  |  | $ | 126,743 |
Financing lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | Operating expenses |  |  |  | 49,890 |  |  | 41,606 |
Interest on lease obligations |  | Interest expense |  |  |  | 10,914 |  |  | 6,506 |
Variable lease cost |  | Operating expenses |  |  |  | 73,524 |  |  | 44,734 |
Short-term lease cost |  | Operating expenses |  |  |  | 54,618 |  |  | 31,659 |
Net lease cost |  |  |  |  |  | $ | 328,374 |  |  | $ | 251,248 |
Future minimum lease obligations under existing noncancelable operating and finance lease agreements by fiscal year as of July 1, 2023 are as follows:
|  | Operating Leases |  | Finance Leases
|  | (In thousands)
2024 |  | $ | 124,221 |  |  | $ | 48,814 |
2025 |  | 115,526 |  |  | 42,181 |
2026 |  | 104,559 |  |  | 34,574 |
2027 |  | 101,040 |  |  | 28,377 |
2028 |  | 77,816 |  |  | 20,072 |
Thereafter |  | 403,012 |  |  | 233,973 |
Total undiscounted lease obligations |  | 926,174 |  |  | 407,991 |
Less imputed interest |  | (170,854) |  |  | (110,175) |
Present value of lease obligations |  | $ | 755,320 |  |  | $ | 297,816 |
The Company has entered into operating lease agreements that have not yet commenced as of July 1, 2023 with legally binding minimum lease payments of $288.5 million. The leases are expected to commence during the next two fiscal years. Other information related to lease agreements was as follows:
|  | Jul. 1, 2023 |  | Jul. 2, 2022
Cash Paid For Amounts Included In Measurement of Liabilities: |  | (Dollars in thousands)
Operating cash flows for operating leases |  | $ | 133,754 |  |  | $ | 125,741 |
Operating cash flows for financing leases |  | 10,914 |  |  | 6,506 |
Financing cash flows for financing leases |  | 44,422 |  |  | 40,238 |
Supplemental Non-cash Information on Lease Liabilities: |  |  |  |
Assets obtained in exchange for operating lease obligations |  | $ | 105,289 |  |  | $ | 156,505 |
Assets obtained in exchange for finance lease obligations |  | 114,098 |  |  | 191,523 |
Operating lease asset adjustments, including renewals and remeasurements |  | 13,271 |  |  | 22,087 |
Operating lease liability adjustments, including renewals and remeasurements |  | 17,173 |  |  | 13,045 |
Lease Term and Discount Rate: |  |  |  |
Weighted-average remaining lease term (years): |  |  |  |
Operating leases |  | 10.36 years |  | 11.04 years
Financing leases |  | 14.94 years |  | 14.65 years
Weighted-average discount rate: |  |  |  |
Operating leases |  | 3.31 | % |  | 2.85 | %
Financing leases |  | 4.06 | % |  | 3.17 | %

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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