Sysco 2007 Annual Report Download - page 86

Non-employee directors may also elect to receive up to 50% of their annual directors’ fees in SYSCO common stock.
As a result of such elections, a total of 11,721, 12,907 and 11,836 shares with a weighted-average grant date fair value
of $33.80, $33.63 and $35.38 per share were issued in fiscal 2007, 2006 and 2005, respectively.
All Share-Based Payment Arrangements
The total share-based compensation cost that has been recognized in results of operations was $97,985,000, $126,837,000
and $19,749,000 for fiscal 2007, 2006 and 2005, respectively, and is included within operating expenses in the consolidated
results of operations. The total income tax benefit recognized in results of operations for share-based compensation
arrangements was $21,549,000, $15,607,000 and $8,597,000 for fiscal 2007, 2006 and 2005, respectively.
As of June 30, 2007, there was $82,175,000 of total unrecognized compensation cost related to share-based compensation
arrangements. That cost is expected to be recognized over a weighted-average period of 2.68 years.
Cash received from option exercises was $172,734,000, $93,337,000 and $124,701,000 during fiscal 2007, 2006 and 2005,
respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $22,575,000, $12,507,000
and $20,887,000 during fiscal 2007, 2006 and 2005, respectively.
Pro Forma Net Earnings
The following table provides pro forma net earnings and earnings per share had SYSCO applied the fair value method
of SFAS 123 for fiscal 2005:
2005
Net earnings:
Reported net earnings _______________________________________________________________________ $961,457,000
Add: Stock-based employee compensation expense included in reported earnings, net of related tax
effects
(1)
_______________________________________________________________________________ 11,152,000
Deduct: Total stock-based employee compensation expense determined under fair value based method
for all awards, net of related tax effects ____________________________________________________ (98,815,000)
Pro forma net earnings ______________________________________________________________________ $873,794,000
Basic earnings per share:
Reported basic earnings per share ____________________________________________________________ $ 1.51
Pro forma basic earnings per share ___________________________________________________________ 1.37
Diluted earnings per share:
Reported diluted earnings per share ___________________________________________________________ $ 1.47
Pro forma diluted earnings per share __________________________________________________________ 1.36
(1)
Amounts represent the after-tax compensation costs for stock grants.
The pro forma presentation includes only options granted after 1995.
14. INCOME TAXES
The income tax provision for each fiscal year consists of the following:
2007 2006 2005
United States federal income taxes ___________________________________ $539,997,000 $486,642,000 $485,499,000
State, local and foreign income taxes _________________________________ 80,142,000 62,264,000 78,480,000
Total ______________________________________________________________ $620,139,000 $548,906,000 $563,979,000
Included in the income taxes charged to earnings are net deferred tax provisions of $566,334,000, $533,108,000, and
$554,850,000 in fiscal 2007, 2006 and 2005, respectively. The deferred tax provisions result from the effects of net changes
during the year in deferred tax assets and liabilities arising from temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In addition to the
deferred tax provision, changes in the deferred tax liability balances in fiscal 2007, 2006 and 2005 were also impacted by
the reclassification of deferred supply chain distributions from current deferred tax liabilities to accrued income taxes
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