Sysco 2010 Annual Report Download - page 56
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Please find page 56 of the 2010 Sysco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.2011 2012 2013 2014 2015 Thereafter Total Fair Value
Interest Rate Position as of July 3, 2010
Notional Amount by Expected Maturity
Average Interest Swap Rate
(In thousands)
Interest Rate Swaps
Related To Debt:
Pay Variable/Receive
Fixed . . ........... $ — $ — $250,000 $200,000 $ — $ — $ 450,000 $ 11,045
Average Variable Rate
Paid:
Rate A Plus ........ 0.0% 0.0% 2.1% 2.1% 0.0% 0.0% 0.0%
Fixed Rate Received . . 0.0% 0.0% 4.2% 4.6% 0.0% 0.0% 0.0%
Rate A — three-month LIBOR
Fiscal 2009
As of June 27, 2009, we had no commercial paper outstanding. Our long-term debt obligations as of June 27, 2009 were $2.5 billion, of which
approximately 99% were at fixed rates of interest. We had no interest rate swaps outstanding as of June 27, 2009.
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 ¤ Denominated:
Fixed Rate Debt. . . .... $ 2,193 $ 921 $ 224 $ — $ — $ — $ 3,338 $ 3,436
Average Interest
Rate . ........... 7.7% 7.7% 7.7% — — — 7.7%
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 positively impacted sales by 0.9% in fiscal 2010 compared to fiscal 2009 and negatively impacted
sales by 1.2% in fiscal 2009 compared to fiscal 2008. The impact to our operating income, net earnings and earnings per share was not material in
fiscal 2010 and fiscal 2009. A 10% unfavorable change in the fiscal 2010 weighted year-to-date exchange rate and the resulting impact on our
financial statements would have negatively impacted fiscal 2010 sales by 0.2% 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 2010 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
Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. 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-away-from-home purchases. 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 2010, 2009 and 2008, fuel costs related to outbound deliveries represented
approximately 0.6%, 0.8% and 0.7% of sales, respectively. Fuel costs, excluding any amounts recovered through fuel surcharges, incurred by Sysco
decreased by approximately $71.8 million in fiscal 2010 from fiscal 2009 and increased by $33.2 million in fiscal 2009 over fiscal 2008.
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