COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

9 Months Ended

Apr. 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.

On October 25, 2022, the Sysco Corporation Retirement Plan (the 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. pension plan (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, the company 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 reflects 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.

Funded Status

The following table presents the changes in benefit obligations and plan assets of the U.S. Retirement Plan affected by the interim remeasurements described above for the 39-week period ended April 1, 2023:

	U.S. Retirement Plan
	(In thousands)
Change in benefit obligation:
Benefit obligation at July 2, 2022	$	3,538,232
Service cost	6,247
Interest cost	116,508
Actuarial gain, net	(440,311)
Benefit payments	(96,768)
Settlements	(694,998)
Benefit obligation at April 1, 2023	2,428,910
Change in plan assets:
Fair value of plan assets at July 2, 2022	3,633,167
Actual return on plan assets	(420,775)
Benefit payments	(96,768)
Settlements	(694,998)
Fair value of plan assets at April 1, 2023	2,420,626
Funded status at April 1, 2023	$	(8,284)

Components of Net Benefit Costs

The components of net company-sponsored benefit cost for the U.S. Retirement Plan for the third quarter and first 39 weeks of fiscal 2023 and fiscal 2022 are as follows:

	13-Week Period Ended				39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
	(In thousands)				(In thousands)
Service cost	$	1,890	$	3,382	$	6,247	$	10,146
Interest cost	35,904		34,792		116,508		104,376
Expected return on plan assets	(35,425)		(51,580)		(112,402)		(154,740)
Amortization of prior service cost	98		99		295		297
Amortization of actuarial loss	7,018		7,304		23,627		21,912
Settlement loss recognized	—		—		315,354		—
Net pension (benefits) costs	$	9,485	$	(6,003)	$	349,629	$	(18,009)

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

Assumptions

The remeasurement of the benefit obligations and plan assets of the U.S. Retirement Plan that took place on October 31, 2022 reflects 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.