Sysco 2009 Annual Report Download - page 65

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years, amortized trademarks of $1,091,000 with a weighted-average amortization period of ten years. Non-amortized trademarks acquired during
fiscal 2009 were $6,747,000.
The following table presents details of the company’s other intangible assets:
Gross Carrying
Amount
Accumulated
Amortization Net
Gross Carrying
Amount
Accumulated
Amortization Net
June 27, 2009 June 28, 2008
Amortized intangible assets:
Customer relationships ............... $ 162,652,000 $ 56,192,000 $106,460,000 $123,605,000 $43,756,000 $79,849,000
Non-compete agreements ............. 3,733,000 1,981,000 1,752,000 4,163,000 2,443,000 1,720,000
Trademarks ....................... 1,547,000 471,000 1,076,000 500,000 220,000 280,000
Total amortized intangible assets . . ...... 167,932,000 58,644,000 109,288,000 128,268,000 46,419,000 81,849,000
Unamortized intangible assets:
Trademarks ....................... 11,801,000 — 11,801,000 5,679,000 — 5,679,000
Total . . ............................ $ 179,733,000 $ 58,644,000 $121,089,000 $133,947,000 $46,419,000 $87,528,000
Intangible assets that have been fully amortized have been removed in the schedule above in the period full amortization is reached.
Amortization expense for the past three years was $15,746,000 in 2009, $13,865,000 in 2008 and $12,711,000 in 2007. The estimated future
amortization expense for the next five fiscal years on intangible assets outstanding as of June 27, 2009 is shown below:
Amount
2010 ................................................................................ $ 20,055,000
2011 ................................................................................ 19,569,000
2012 ................................................................................ 19,005,000
2013 ................................................................................ 17,048,000
2014 ................................................................................ 15,994,000
8. RESTRICTED CASH
Sysco is required by its insurers to collateralize a part of the self-insured portion of its workers’ compensation and liability claims. Sysco has
chosen to satisfy these collateral requirements by depositing funds in insurance trusts or by issuing letters of credit. All amounts in restricted cash at
June 27, 2009 and June 28, 2008 represented funds deposited in insurance trusts.
9. DERIVATIVE FINANCIAL INSTRUMENTS
Sysco manages its debt portfolio by targeting an overall desired position of fixed and floating rates and may employ interest rate swaps from
time to time to achieve this goal. The company does not use derivative financial instruments for trading or speculative purposes.
In March 2005, Sysco entered into a forward-starting interest rate swap with a notional amount of $350,000,000. In accordance with
derivatives accounting literature, the company designated this derivative as a cash flow hedge of the variability in the cash outflows of interest
payments on $350,000,000 of the September 2005 forecasted debt issuance due to changes in the benchmark interest rate. In September 2005, in
conjunction with the issuance of the 5.375% senior notes, Sysco settled the $350,000,000 notional amount forward-starting interest rate swap.
Upon settlement, Sysco paid cash of $21,196,000, which represented the fair value of the swap agreement at the time of settlement.This amount is
being amortized as interest expense over the 30-year term of the debt, and the unamortized balance is reflected as a loss, net of tax, in other
comprehensive income (loss).
10. SELF-INSURED LIABILITIES
Sysco maintains a self-insurance program covering portions of workers’ compensation, general and vehicle liability costs. The amounts in
excess of the self-insured levels are fully insured by third party insurers. The company also maintains a fully self-insured group medical program. A
summary of the activity in self-insured liabilities appears below:
2009 2008 2007
Balance at beginning of period . ................................ $ 117,725,000 $ 125,844,000 $ 115,557,000
Charged to costs and expenses . ............................... 353,252,000 306,571,000 302,812,000
Payments . .............................................. (338,426,000) (314,690,000) (292,525,000)
Balance at end of period . . ................................... $ 132,551,000 $ 117,725,000 $ 125,844,000
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