Sysco 2008 Annual Report Download - page 79

Non-Employee Director Stock Grants
Prior to fiscal 2008, one-time retainer awards were granted to newly elected directors under the 2005 Non-Employee Directors Stock
Plan. These awards were of 6,000 shares of SYSCO common stock that vest one-third every year over a three-year period. In fiscal 2007,
12,000 shares in the aggregate of restricted stock were granted to two non-employee directors as one-time retainer awards under the 2005
Non-Employee Directors Stock Plan. There were no one-time retainer awards issued in fiscal 2006. The 2005 Non-Employee Directors
Stock Plan was amended during fiscal 2008 to discontinue the issuance of one-time retainer awards under the plan.
In addition, there are one-time retainer awards outstanding under the Non-Employee Directors Stock Plan, which was replaced by the
2005 Non-Employee Directors Stock Plan. The remaining outstanding unvested awards under this plan vest over a six-year period if certain
earnings goals are met.
The 2005 Non-Employee Directors Stock Plan provides for the issuance of restricted stock to current non-employee directors. During
fiscal 2008, 2007 and 2006, 52,430, 30,000 and 27,000 shares, respectively, of restricted stock were granted to non-employee directors.
These shares will vest ratably over a three-year period.
The total amount of unvested shares related to the one-time retainer awards and other restricted stock awards as of June 28, 2008 was
not significant.
Non-employee directors may also elect to receive up to 50% of their annual directors’ fees in SYSCO common stock. SYSCO provides a
matching grant of 50% of the number of shares received for the stock election. As a result of such elections, a total of 13,051, 11,721 and
12,907 shares with a weighted-average grant date fair value of $33.33, $33.80 and $33.63 per share were issued in fiscal 2008, 2007 and
2006, respectively
All Share-Based Payment Arrangements
The total share-based compensation cost that has been recognized in results of operations was $80,650,000, $97,985,000, and
$126,837,000 for fiscal 2008, 2007 and 2006, 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 $15,722,000,
$21,549,000, and $15,607,000 for fiscal 2008, 2007 and 2006, respectively.
As of June 28, 2008, there was $66,432,000 of total unrecognized compensation cost related to share-based compensation
arrangements. That cost is expected to be recognized over a weighted-average period of 2.88 years.
Cash received from option exercises was $88,443,000, $172,734,000 and $93,337,000 during fiscal 2008, 2007 and 2006,
respectively.The actual tax benefit realized for the tax deductions from option exercises totaled $9,371,000, $22,575,000, and $12,507,000
during fiscal 2008, 2007 and 2006, respectively.
16. INCOME TAXES
Income Tax Provisions
The income tax provision for each fiscal year consists of the following:
2008 2007 2006
United States federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 584,584,000 $ 539,997,000 $ 486,642,000
State and local income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,587,000 63,139,000 45,738,000
Foreign income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,016,000 17,003,000 16,526,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 685,187,000 $ 620,139,000 $ 548,906,000
Included in the income taxes charged to earnings are net deferred tax provisions of $642,357,000, $566,334,000, and $533,108,000
in fiscal 2008, 2007 and 2006, 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 2008, 2007 and 2006 were also impacted by the reclassification of deferred supply chain distributions from current
deferred tax liabilities to accrued income taxes based on the timing of when payments related to these items become payable. These
reclassifications were $575,248,000 and $536,492,000 in fiscal 2008 and 2007, respectively. Deferred supply chain distributions are
classified as current or deferred tax liabilities based on when the related income tax payments will become payable.
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