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COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Jul. 01, 2023
Retirement Benefits [Abstract] |
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS | 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 The company 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. The company will make a non-elective contribution each pay period equal to 3% of a participant’s compensation. Additionally, the company 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 the company 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 the company may make matching contributions of up to 50% of the first 6% of a participant’s compensation. The company 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. The company will make a non-elective contribution each pay period equal to 3% of a participant’s compensation. Additionally, the company 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 $105.6 million as of July 1, 2023 and $101.3 million as of July 2, 2022 under the unfunded MSP and the company’s executive deferred compensation plan, which is frozen to all participants of the plan. More than half of the July 1, 2023 obligations are due to be paid beyond fiscal 2026. Sysco’s expense related to its defined contribution plans was $176.3 million in fiscal 2023, $145.5 million in fiscal 2022, and $145.8 million in fiscal 2021. 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. The company also provides 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 $7.3 million as of July 1, 2023 and $8.1 million as of July 2, 2022. 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 $695.0 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 $315.4 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 represents 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 2023 year end is July 1, 2023, the company utilized a practical expedient permitting Sysco to measure its defined benefit plan assets and obligations as of the month end closest to the fiscal year end, and has used June 30, 2023 as the measurement date of the plan assets and obligations disclosed herein.
| U.S. Pension Benefits (1) |  | International Pension Benefits
| Jul. 1, 2023 |  | Jul. 2, 2022 |  | Jul. 1, 2023 |  | Jul. 2, 2022
| (In thousands)
Change in benefit obligation: |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 3,920,672 |  |  | $ | 5,000,998 |  |  | $ | 288,523 |  |  | $ | 434,451 |
Service cost | 8,109 |  |  | 13,490 |  |  | 2,182 |  |  | 3,101 |
Interest cost | 170,149 |  |  | 152,401 |  |  | 10,184 |  |  | 7,456 |
Amendments | 2,884 |  |  | — |  |  | — |  |  | — |
Curtailments | — |  |  | — |  |  | (841) |  |  | (1,291) |
Actuarial gain, net | (300,256) |  |  | (1,081,865) |  |  | (11,512) |  |  | (93,717) |
Benefit payments | (127,182) |  |  | (164,352) |  |  | (13,008) |  |  | (13,882) |
Settlements | (694,998) |  |  | — |  |  | 9,930 |  |  | (47,595) |
Benefit obligation at end of year | 2,979,378 |  |  | 3,920,672 |  |  | 285,458 |  |  | 288,523 |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | 3,633,167 |  |  | 4,654,763 |  |  | 241,884 |  |  | 319,616 |
Actual return on plan assets | (198,874) |  |  | (888,805) |  |  | (72,671) |  |  | (48,710) |
Employer contribution | 29,155 |  |  | 31,561 |  |  | 21,058 |  |  | 21,220 |
Benefit payments | (127,182) |  |  | (164,352) |  |  | (13,008) |  |  | (13,882) |
Settlements | (694,998) |  |  | — |  |  | 7,695 |  |  | (36,360) |
Fair value of plan assets at end of year | 2,641,268 |  |  | 3,633,167 |  |  | 184,958 |  |  | 241,884 |
Funded status at end of year | $ | (338,110) |  |  | $ | (287,505) |  |  | $ | (100,500) |  |  | $ | (46,639) |
(1) | The U.S. Retirement Plan had a funded status of $10.1 million and $94.9 million as of July 1, 2023 and July 2, 2022, respectively.
As of July 1, 2023 and July 2, 2022, the SERP had benefit obligations of $348.3 million and $382.4 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 $91.2 million as of July 1, 2023 and $92.6 million as of July 2, 2022. 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
| Jul. 1, 2023 |  | Jul. 2, 2022 |  | Jul. 1, 2023 |  | Jul. 2, 2022
| (In thousands)
Noncurrent assets (Other assets) | $ | 10,143 |  |  | $ | 94,934 |  |  | $ | — |  |  | $ | 5,116 |
Current accrued benefit liability (Accrued expenses) | (32,138) |  |  | (31,969) |  |  | (1,460) |  |  | (1,399) |
Noncurrent accrued benefit liability (Other long-term liabilities) | (316,115) |  |  | (350,470) |  |  | (99,040) |  |  | (50,356) |
Net amount recognized | $ | (338,110) |  |  | $ | (287,505) |  |  | $ | (100,500) |  |  | $ | (46,639) |
Accumulated other comprehensive loss (income) 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 thousands)
Prior service cost | $ | 2,545 |  |  | $ | 1,258 |  |  | $ | 3,803 |
Actuarial losses | 1,115,019 |  |  | 56,692 |  |  | 1,171,711 |
Total | $ | 1,117,564 |  |  | $ | 57,950 |  |  | $ | 1,175,514 |
Accumulated other comprehensive loss (income) as of July 2, 2022 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 thousands)
Prior service cost | $ | 54 |  |  | $ | 1,103 |  |  | $ | 1,157 |
Actuarial losses (gains) | 1,417,073 |  |  | (18,768) |  |  | 1,398,305 |
Total | $ | 1,417,127 |  |  | $ | (17,665) |  |  | $ | 1,399,462 |
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 (2)
| Jul. 1, 2023 |  | Jul. 2, 2022 |  | Jul. 1, 2023 |  | Jul. 2, 2022
| (In thousands)
Accumulated benefit obligation/aggregate benefit obligation | $ | 348,165 |  |  | $ | 382,334 |  |  | $ | 280,429 |  |  | $ | 46,895 |
Fair value of plan assets at end of year | — |  |  | — |  |  | 184,958 |  |  | 263 |
(1) | Information under Pension Benefits as of July 1, 2023 and July 2, 2022 includes both the U.S. Retirement Plan and the SERP.
(2) | U.K. Retirement Plan fair value of plan assets exceeded the accumulated benefit obligation/aggregate benefit obligation as of July 2, 2022
Components of Net Benefit Costs and Other Comprehensive Income The components of net company-sponsored pension costs for each fiscal year are as follows:
| 2023 |  | 2022 |  | 2021
| U.S. Pension Benefits |  | International Pension Benefits |  | U.S. Pension Benefits |  | International Pension Benefits |  | U.S. Pension Benefits |  | International Pension Benefits
| (In thousands)
Service cost | $ | 8,109 |  |  | $ | 2,182 |  |  | $ | 13,490 |  |  | $ | 3,101 |  |  | $ | 16,472 |  |  | $ | 3,288 |
Interest cost | 170,149 |  |  | 10,184 |  |  | 152,401 |  |  | 7,456 |  |  | 145,299 |  |  | 6,810 |
Expected return on plan assets | (147,827) |  |  | (10,830) |  |  | (206,320) |  |  | (9,770) |  |  | (206,406) |  |  | (7,426) |
Amortization of prior service cost (credit) | 393 |  |  | (35) |  |  | 393 |  |  | (43) |  |  | 729 |  |  | (61) |
Amortization of actuarial loss (gain) | 33,044 |  |  | (410) |  |  | 34,961 |  |  | 92 |  |  | 42,288 |  |  | 250 |
Curtailment gain | — |  |  | (911) |  |  | — |  |  | (1,003) |  |  | — |  |  | (1,230) |
Settlement loss recognized | 315,455 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net pension costs (benefits) | $ | 379,323 |  |  | $ | 180 |  |  | $ | (5,075) |  |  | $ | (167) |  |  | $ | (1,618) |  |  | $ | 1,631 |
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:
| 2023 |  | 2022 |  | 2021
| U.S. Pension Benefits |  | International Pension Benefits |  | U.S. Pension Benefits |  | International Pension Benefits |  | U.S. Pension Benefits |  | International Pension Benefits
| (In thousands)
Amortization of prior service cost (credit) | $ | 393 |  |  | $ | (105) |  |  | $ | 393 |  |  | $ | (129) |  |  | $ | 729 |  |  | $ | (131) |
Amortization of actuarial loss (gain) | 348,498 |  |  | (410) |  |  | 34,961 |  |  | 92 |  |  | 42,288 |  |  | 250 |
Prior service credit arising in current year | (2,884) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Effect of exchange rates on amounts in AOCI | — |  |  | (3,111) |  |  | — |  |  | (752) |  |  | — |  |  | (3,254) |
Actuarial gain (loss) arising in current year | (46,444) |  |  | (71,989) |  |  | (13,259) |  |  | 35,610 |  |  | 192,041 |  |  | 16,493 |
Net pension income (cost) | $ | 299,563 |  |  | $ | (75,615) |  |  | $ | 22,095 |  |  | $ | 34,821 |  |  | $ | 235,058 |  |  | $ | 13,358 |
Amounts included in accumulated other comprehensive loss (income) as of July 1, 2023 that are expected to be recognized as components of net company-sponsored benefit cost during fiscal 2024 are:
| U.S. Pension Benefits |  | International Pension Benefits |  | Total
| (In thousands)
Amortization of prior service cost (credit) | $ | 393 |  |  | $ | (36) |  |  | $ | 357 |
Amortization of actuarial losses (gains) | 27,931 |  |  | 1,241 |  |  | 29,172 |
Total | $ | 28,324 |  |  | $ | 1,205 |  |  | $ | 29,529 |
Employer Contributions The company made cash contributions to its company-sponsored pension plans of $50.2 million and $52.8 million in fiscal years 2023 and 2022, respectively. There were no contributions made to the U.S. Retirement Plan in fiscal 2023, as there were no required contributions to meet ERISA minimum funding requirements in fiscal 2023. There are no required contributions to the U.S. Retirement Plan to meet ERISA minimum funding requirements in fiscal 2024. The company’s contributions to the SERP plan are made in the amounts needed to fund current year benefit payments. The estimated aggregate fiscal 2024 contribution to fund benefit payments for the SERP plan is $32.1 million. The estimated fiscal 2024 contributions to fund benefit payments for the international retirement plans are $21.3 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 thousands)
2024 | $ | 133,180 |  |  | $ | 13,156 |
2025 | 143,809 |  |  | 14,404 |
2026 | 154,771 |  |  | 14,553 |
2027 | 165,229 |  |  | 15,336 |
2028 | 175,161 |  |  | 15,651 |
Subsequent five years | 988,657 |  |  | 83,670 |
Assumptions Weighted-average assumptions used to determine benefit obligations as of year-end were:
| Jul. 1, 2023 |  | Jul. 2, 2022
Discount rate — U.S. Retirement Plan | 5.62 | % |  | 4.91 | %
Discount rate — SERP | 5.65 |  |  | 4.84 |
Discount rate — U.K. Retirement Plan | 5.20 |  |  | 3.65 |
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 July 1, 2023 or July 2, 2022. Weighted-average assumptions used to determine net company-sponsored pension costs for each fiscal year were:
| 2023 |  | 2022 |  | 2021
Discount rate — U.S. Retirement Plan (1) | 6.07 | % |  | 3.12 | % |  | 2.94 | %
Discount rate — SERP | 4.84 |  |  | 2.91 |  |  | 2.91 |
Discount rate — U.K. Retirement Plan | 3.65 |  |  | 1.90 |  |  | 1.60 |
Expected rate of return — U.S. Retirement Plan (2) | 6.00 |  |  | 4.50 |  |  | 4.75 |
Expected rate of return — U.K. Retirement Plan | 4.65 |  |  | 3.30 |  |  | 2.55 |
Rate of compensation increase — U.S. Retirement Plan | 3.00 |  |  | 2.56 |  |  | 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 2024 net company-sponsored benefit costs for the U.S. Retirement Plan and U.K. Retirement Plan are 5.62% and 5.20%, respectively. The discount rate to be used for the calculation of fiscal 2024 net company-sponsored benefit costs for the SERP is 5.65%. 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 2024 net company-sponsored benefit costs for the U.S. Retirement Plan and U.K. Retirement Plan are 5.50% and 6.65%, 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 July 1, 2023 is as follows:
| U.S. Retirement Plan
| Target Asset Allocation |  | Actual Asset Allocation
Growth assets | 30 | % |  | 29 | %
Liability hedging assets | 70 |  |  | 71 |
|  |  | 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 2.1% 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 2023 is as follows:
| U.K. Retirement Plan
| Target Asset Allocation |  | Actual Asset Allocation
Growth portfolio | 50 | % |  | 49 | %
Matching portfolio | 50 |  |  | 51 |
|  |  | 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 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 thousands)
Cash and cash equivalents | $ | 12,515 |  |  | $ | 79,702 |  |  | $ | — |  |  | $ | — |  |  | $ | 92,217 |
Growth assets: |  |  |  |  |  |  |  |  |
U.S. equity (1) | 17,496 |  |  | — |  |  | — |  |  | 213,565 |  |  | 231,061 |
International equity (1) | 60 |  |  | — |  |  | — |  |  | 164,611 |  |  | 164,671 |
Hedge fund of funds (2) | — |  |  | — |  |  | — |  |  | 191,332 |  |  | 191,332 |
Real estate funds (3) | — |  |  | — |  |  | — |  |  | 105,542 |  |  | 105,542 |
Private equity funds (4) | — |  |  | — |  |  | — |  |  | 66,517 |  |  | 66,517 |
Liability hedging assets: |  |  |  |  |  |  |  |  |
Corporate bonds | — |  |  | 1,340,451 |  |  | — |  |  | 45,846 |  |  | 1,386,297 |
U.S. government and agency securities | — |  |  | 199,780 |  |  | — |  |  | 197,011 |  |  | 396,791 |
Other (5) | — |  |  | 6,840 |  |  | — |  |  | — |  |  | 6,840 |
Total investments at fair value | $ | 30,071 |  |  | $ | 1,626,773 |  |  | $ | — |  |  | $ | 984,424 |  |  | $ | 2,641,268 |
(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 $2.0 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 commitments in the funds listed in this category as of July 1, 2023 were $14.6 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 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.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 thousands)
Investment funds: |  |  |  |  |  |  |  |  |
Common contractual fund (1) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 183,944 |  |  | $ | 183,944 |
Total investments at fair value | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 183,944 |  |  | $ | 183,944 |
(1) | There were $5.3 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.
The following table presents the fair value of the U.S. Retirement Plan’s assets by major asset category as of July 2, 2022:
| Assets Measured at Fair Value as of Jul. 2, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Measured at NAV (6) |  | Total
| (In thousands)
Cash and cash equivalents | $ | 88,962 |  |  | $ | 30,365 |  |  | $ | — |  |  | $ | — |  |  | $ | 119,327 |
Growth assets: |  |  |  |  |  |  |  |  |
U.S. equity (1) | 20,894 |  |  | 25,508 |  |  | — |  |  | 257,711 |  |  | 304,113 |
International equity (1) | 166 |  |  | — |  |  | — |  |  | 241,209 |  |  | 241,375 |
Hedge fund of funds (2) | — |  |  | — |  |  | — |  |  | 276,844 |  |  | 276,844 |
Real estate funds (3) | — |  |  | — |  |  | — |  |  | 116,638 |  |  | 116,638 |
Private equity funds (4) | — |  |  | — |  |  | — |  |  | 87,140 |  |  | 87,140 |
Liability hedging assets: |  |  |  |  |  |  |  |  |
Corporate bonds | — |  |  | 1,792,891 |  |  | — |  |  | 71,151 |  |  | 1,864,042 |
U.S. government and agency securities | — |  |  | 345,333 |  |  | — |  |  | 265,094 |  |  | 610,427 |
Other (5) | — |  |  | 13,261 |  |  | — |  |  | — |  |  | 13,261 |
Total investments at fair value | $ | 110,022 |  |  | $ | 2,207,358 |  |  | $ | — |  |  | $ | 1,315,787 |  |  | $ | 3,633,167 |
(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 2, 2022. 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 2, 2022, and there were no redemption restrictions as of July 2, 2022. The investment may be redeemed once per quarter.
(3) | For investments in the funds listed in this category, total unfunded commitment as of July 2, 2022 was $2.0 million. Less than 1% of the investments cannot be redeemed. The estimate of the liquidation period for these funds varies from 2022 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 2, 2022 was $15.9 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 2022 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 2, 2022:
| Assets Measured at Fair Value as of Jul. 2, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Measured at NAV (3) |  | Total
| (In thousands)
Liability hedging assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 5,451 |  |  | $ | 38,537 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,988 |
Corporate bonds | — |  |  | 25,544 |  |  | — |  |  | — |  |  | 25,544 |
U.K. government securities | — |  |  | 75,125 |  |  | — |  |  | — |  |  | 75,125 |
International government securities | — |  |  | 10,214 |  |  | — |  |  | — |  |  | 10,214 |
Derivative assets (liabilities), net (1) | — |  |  | (22,947) |  |  | — |  |  | — |  |  | (22,947) |
Investment funds: |  |  |  |  |  |  |  |  |
Common contractual fund (2) | — |  |  | — |  |  | — |  |  | 109,831 |  |  | 109,831 |
Total investments at fair value | $ | 5,451 |  |  | $ | 126,473 |  |  | $ | — |  |  | $ | 109,831 |  |  | $ | 241,755 |
(1) | Includes interest rate swaps and zero coupon swaps. The fair value of asset positions totaled $8.0 million; the fair value of liability positions totaled $30.9 million.
(2) | There were $11.2 million of unfunded commitments as of July 2, 2022, and there were no redemption restrictions as of July 2, 2022. The investment may be redeemed twice per month.
(3) | 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.

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