Sysco 2009 Annual Report Download - page 50

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The following table presents our interest rate position as of June 27, 2009. All amounts are stated in U.S. dollar equivalents.
2010 2011 2012 2013 2014 Thereafter Total Fair Value
Interest Rate Position as of June 27, 2009
Principal Amount by Expected Maturity
Average Interest Rate
(In thousands)
U.S. $ Denominated:
Fixed Rate Debt ........ $ 6,311 $ 5,073 $ 203,428 $ 251,583 $ 206,097 $ 1,765,629 $ 2,438,121 $ 2,509,602
Average Interest Rate . . . 4.3% 4.5% 6.1% 4.3% 4.1% 5.8% 5.5%
Floating Rate Debt ...... $ — $ — $ — $ — $ — $ 13,600 $ 13,600 $ 13,600
Average Interest Rate . . . — — — — — 1.3% 1.2%
Canadian $ Denominated:
Fixed Rate Debt ........ $ 659 $ 652 $ 738 $ 731 $ 790 $ 18,020 $ 21,590 $ 22,223
Average Interest Rate . . . 8.1% 8.4% 8.6% 9.6% 9.8% 9.8% 9.7%
Euro cDenominated:
Fixed Rate Debt ........ $ 2,193 $ 921 $ 224 $ — $ — $ — $ 3,338 $ 3,436
Average Interest Rate . . . 7.7% 7.7% 7.7% — — — 7.7%
Fiscal 2008
As of June 28, 2008, we had no commercial paper outstanding. Our long-term debt obligations as of June 28, 2008 were $1,980,331,000, of
which approximately 99% were at fixed rates of interest. We had no interest rate swaps outstanding as of June 28, 2008.
The following table presents our interest rate position as of June 28, 2008. All amounts are stated in U.S. dollar equivalents.
2009 2010 2011 2012 2013 Thereafter Total Fair Value
Interest Rate Position as of June 28, 2008
Principal Amount by Expected Maturity
Average Interest Rate
(In thousands)
U.S. $ Denominated:
Fixed Rate Debt . ....... $ 4,437 $ 3,366 $ 2,318 $ 201,205 $ 251,055 $ 1,478,309 $ 1,940,690 $ 1,889,602
Average Interest Rate . . 3.7% 3.8% 4.2% 6.1% 4.3% 5.5% 5.4%
Floating Rate Debt . . . . . . $ — $ — $ — $ — $ — $ 15,000 $ 15,000 $ 15,000
Average Interest Rate . . — — — — — 2.2% 2.2%
Canadian $ Denominated:
Fixed Rate Debt . ....... $ 459 $ 506 $ 637 $ 744 $ 818 $ 21,477 $ 24,641 $ 23,992
Average Interest Rate . . 9.8% 9.8% 9.8% 9.8% 9.8% 9.8% 9.8%
Foreign Currency Exchange Rate Risk
The majority of our foreign subsidiaries use their local currency as their functional currency. To the extent that business transactions are not
denominated in a foreign subsidiary’s functional currency, we are exposed to foreign currency exchange rate risk. We will also incur gains and losses
within our shareholders’ equity due to the translation of our financial statements from foreign currencies into U.S. dollars. Our income statement
trends may be impacted by the translation of the income statements of our foreign subsidiaries into U.S. dollars. The changes in the exchange rates
used to translate our foreign sales into U.S. dollars negatively impacted sales by 1.2% in fiscal 2009 compared to fiscal 2008 and increased sales
1.0% in fiscal 2008 compared to fiscal 2007. The impact to our operating income, net earnings and earnings per share was not material in fiscal
2009 and fiscal 2008. A 10% unfavorable change in the fiscal 2009 year-end exchange rate and the resulting impact on our financial statements
would have negatively impacted fiscal 2009 sales by an additional 0.8% and would not have materially impacted our operating income, net earnings
and earnings per share. We do not routinely enter into material agreements to hedge foreign currency exchange rate risks.
Our Canadian financing subsidiary has the U.S. dollar as its functional currency and has notes denominated in U.S. dollars.We have the potential
to create taxable income in Canada when this 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 2009 year-end exchange rate and the resulting increase in the tax liability associated with these notes
would not have a material impact on our results of operations.
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 2009, 2008 and 2007, fuel costs
related to outbound deliveries represented approximately 0.8%, 0.7% and 0.6% of sales, respectively. Fuel costs, excluding any amounts recovered
through fuel surcharges, incurred by Sysco increased by approximately $33,154,000 in fiscal 2009 over fiscal 2008 and $34,023,000 in fiscal 2008
over fiscal 2007.
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