Sysco 2008 Annual Report Download - page 71

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Adoption of SFAS 158
On June 30, 2007, SYSCO adopted the recognition and disclosure provisions of SFAS 158. SFAS 158 requires the company to recognize
the funded status of its company-sponsored defined benefit plans in its statement of financial position, with a corresponding adjustment to
accumulated other comprehensive income, net of tax.The adjustment to accumulated other comprehensive income at adoption represents
the net actuarial losses, prior service costs, and transition obligation remaining from the initial adoption of SFAS 87/106, all of which were
previously netted against the funded status of the plans in the company’s statement of financial position pursuant to the provisions of
SFAS 87/106.These amounts will subsequently be recognized as net benefit cost consistent with the company’s historical accounting policy
for amortizing such amounts. In addition, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic
benefit cost in the same periods will be recognized as a component of other comprehensive income. Those amounts will subsequently be
recognized as a component of net periodic benefit cost on the same basis as the amounts recognized in accumulated other comprehensive
income at the adoption of SFAS 158.
The effects of the adoption of the recognition and disclosure provisions of SFAS 158 on the company’s consolidated balance sheet as of
June 30, 2007 are presented in the following table. The adoption of SFAS 158 had no effect on the company’s consolidated results of
operations for the fiscal year ended June 30, 2007, or for any prior period presented, and it will not affect the company’s consolidated results
of operations in future periods. Prior to the adoption of SFAS 158 on June 30, 2007, the company recognized an additional minimum pension
liability pursuant to the provisions of SFAS 87/106.The effect of recognizing the additional minimum pension liability is included in the table
below in the column labeled “Prior to Adopting SFAS 158.”
Prior to Adopting
SFAS 158
Effect of Adopting
SFAS 158
As Reported at
June 30, 2007
As of June 30, 2007
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 436,236,000 $ (83,846,000) $ 352,390,000
Intangible asset (Other assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,854,000 (43,854,000) —
Current accrued benefit liability (Accrued expenses) . . . . . . . . . . . . . . . — (10,967,000) (10,967,000)
Long-term deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38,196,000) 73,328,000 35,132,000
Non-current accrued benefit liability (Other long-term liabilities) . . . . . . . (271,369,000) (52,289,000) (323,658,000)
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . 7,637,000 117,628,000 125,265,000
SFAS 158 also has a measurement date provision, which is a requirement to measure plan assets and benefit obligations as of the date
of the employer’s fiscal year-end statement of financial position, effective for fiscal years ending after December 15, 2008. In the first quarter
of fiscal 2006, SYSCO changed the measurement date for company-sponsored pension and other postretirement benefit plans from fiscal
year-end to May 31st to allow additional time for management to evaluate and report the actuarial pension measurements in the year-end
financial statements and disclosures within the accelerated filing deadlines of the Securities and Exchange Commission. The cumulative
effect of this change in accounting resulted in an increase to earnings in the first quarter of fiscal 2006 of $9,285,000, net of tax. With the
issuance of SFAS 158, SYSCO elected to early adopt the measurement date provision in order to adopt both provisions of this accounting
standard at the same time. As a result, beginning in fiscal 2008, the measurement date for all plans returned to correspond with fiscal year-
end. The company performed measurements as of May 31, 2007 and June 30, 2007 of the plan assets and benefit obligations. SYSCO
recorded a charge to beginning retained earnings on July 1, 2007 of $3,572,000, net of tax, for the impact of the difference in our company-
sponsored pension expense between the two measurement dates. The company also recorded a benefit to beginning accumulated other
comprehensive income (loss) on July 1, 2007 of $22,780,000, net of tax, for the impact of the difference in the recognition provision
between the two measurement dates.
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