Sysco 2007 Annual Report Download - page 58

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foreign currency exchange rate risk. We will also incur gains and losses within shareholders’ equity due to translation of
the financial statements from Canadian dollars to U.S. dollars. Our Canadian financing subsidiary has notes denominated
in U.S. dollars, which has the potential to create taxable income in Canada when the debt is paid due to changes in the
exchange rate from the inception of the debt through the payment date. A 10% unfavorable change in the fiscal 2007 year-
end exchange rate would not materially increase the tax liability associated with these notes. We do not routinely enter
into material agreements to hedge foreign currency risks.
FUEL PRICE RISK
The price and availability of diesel fuel fluctuates due to changes in production, seasonality and other market factors
generally outside of our control. Increased fuel costs may have a negative impact on our results of operations in three
areas. First, the high cost of fuel can negatively impact consumer confidence and discretionary spending and thus reduce
the frequency and amount spent by consumers for food prepared away from home. Second, the high cost of fuel can
increase the price we pay for product purchases and we may not be able to pass these costs fully to our customers.
Third, increased fuel costs impact the costs we incur to deliver product to our customers. During fiscal 2007, 2006 and
2005, fuel costs represented approximately 0.6%, 0.5% and 0.4% of sales, respectively. Fuel costs incurred by SYSCO
increased by approximately $21,225,000 in fiscal 2007 over fiscal 2006 and $48,600,000 in fiscal 2006 over fiscal 2005.
In order to partially manage the volatility and uncertainty of fuel costs, from time to time, we will enter into forward
purchase commitments for a portion of our projected monthly diesel fuel requirements. As of June 30, 2007, outstanding
forward diesel fuel purchase commitments totaled approximately $44,500,000, which will lock in the price on a substantial
portion of our fuel purchases through the end of calendar year 2007.
page 32 ][ SYSCO Corporation