Sysco 2008 Annual Report Download - page 70

The 4.60% senior notes due March 15, 2014 and the 6.5% debentures due August 1, 2028 are unsecured, are not subject to any sinking
fund requirement and include a redemption provision that allows SYSCO to retire the debentures and notes at any time prior to maturity at
the greater of par plus accrued interest or an amount designed to ensure that the debenture and note holders are not penalized by the early
redemption.
The 7.16% debentures due April 15, 2027 are unsecured, are not subject to any sinking fund requirement and are no longer redeemable
prior to maturity.
The 6.10% senior notes due June 1, 2012 , issued by SYSCO International, Co., a wholly-owned subsidiary of SYSCO, are fully and
unconditionally guaranteed by Sysco Corporation, are not subject to any sinking fund requirement, and include a redemption provision
which allows SYSCO International, Co. to retire the notes at any time prior to maturity at the greater of par plus accrued interest or an
amount designed to ensure that the note holders are not penalized by the early redemption.
SYSCO’s Industrial Revenue Bonds have varying structures. Final maturities range from three to 18 years and certain of the bonds
provide SYSCO the right to redeem the bonds at various dates. These redemption provisions generally provide the bondholder a premium in
the early redemption years, declining to par value as the bonds approach maturity.
Total Debt
Total debt as of June 28, 2008 was $1,980,331,000, of which approximately 99% was at fixed rates averaging 5.4% with an average life
of 14 years, and the remainder was at floating rates averaging 2.2%. Certain loan agreements contain typical debt covenants to protect note
holders, including provisions to maintain the company’s long-term debt to total capital ratio below a specified level. SYSCO was in
compliance with all debt covenants as of June 28, 2008.
The fair value of SYSCO’s total long-term debt is estimated based on the quoted market prices for the same or similar issues or on the
current rates offered to the company for debt of the same remaining maturities. The fair value of total long-term debt approximated
$1,928,595,000 as of June 28, 2008 and $1,693,619,000 as of June 30, 2007, respectively.
Other
As of June 28, 2008 and June 30, 2007 letters of credit outstanding were $35,785,000 and $62,645,000, respectively.
11. LEASES
Although SYSCO normally purchases assets, it has obligations under capital and operating leases for certain distribution facilities,
vehicles and computers. Total rental expense under operating leases was $95,315,000, $94,163,000, and $100,690,000, in fiscal 2008,
2007 and 2006, respectively. Contingent rentals, subleases and assets and obligations under capital leases are not significant.
Aggregate minimum lease payments by fiscal year under existing non-capitalized long-term leases are as follows:
Amount
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,000,000
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,292,000
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,624,000
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,699,000
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,657,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,571,000
12. EMPLOYEE BENEFIT PLANS
SYSCO has defined benefit and defined contribution retirement plans for its employees. Also, the company contributes to various
multi-employer plans under collective bargaining agreements and provides certain health care benefits to eligible retirees and their
dependents.
SYSCO maintains a qualified retirement plan (Retirement Plan) that pays benefits to employees at retirement, using formulas based on
a participant’s years of service and compensation.
The defined contribution 401(k) 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. SYSCO’s contributions to this plan were $31,901,000 in 2008, $26,032,000 in
2007, and $21,898,000 in 2006.
SYSCO’s contributions to multi-employer pension plans were $35,040,000, $32,974,000, and $29,796,000 in fiscal 2008, 2007 and
2006, respectively. See further discussion of SYSCO’s participation in multi-employer pension plans in Note 18, Commitments and
Contingencies.
In addition to receiving benefits upon retirement under the company’s defined benefit plan, participants in the Management Incentive
Plan (see “Management Incentive Compensation” in Note 15, Share-Based Compensation Plans) will receive benefits under a Supplemental
Executive Retirement Plan (SERP). This plan is a nonqualified, unfunded supplementary retirement plan.
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