Sysco 2011 Annual Report Download - page 53

Contractual Obligations
The following table sets forth, as of July 2, 2011, certain information concerning our obligations and commitments to make contractual future
payments:
Total G1 Year 1-3 Years 3-5 Years
More Than
5 Years
Payments Due by Period
(In thousands)
Recorded Contractual Obligations:
Short-term bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . $ 181,975 $ 181,975 $ — $ — $ —
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,442,839 200,164 462,239 1,245 1,779,191
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,709 6,867 7,840 4,132 24,870
Deferred compensation
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,985 11,010 15,793 11,005 53,177
SERP and other postretirement plans
(2)
. . . . . . . . . . . . . . . . . . . 287,247 23,427 49,592 54,655 159,573
Multi-employer pension plans
(3)
. . . . . . . . . . . . . . . . . . . . . . . . 42,442 5,426 37,016 — —
Unrecognized tax benefits and interest
(4)
. . . . . . . . . . . . . . . . . . 80,632
IRS deferred tax settlement
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . 212,000 212,000 — — —
Unrecorded Contractual Obligations:
Interest payments related to commercial paper and debt
(5)
. . . . . . 1,347,640 126,093 221,305 202,664 797,578
Retirement plan
(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 972,090 — 285,780 229,090 457,220
Long-term non-capitalized leases . . . . . . . . . . . . . . . . . . . . . . . 221,457 50,962 69,590 43,479 57,426
Purchase obligations
(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,186,350 1,882,961 242,436 60,953 —
Total contractual cash obligations . . . . . . . . . . . . . . . . . . . . . $ 8,109,366 $ 2,700,885 $ 1,391,591 $ 607,223 $ 3,329,035
(1)
The estimate of the timing of future payments under the Executive Deferred Compensation Plan involves the use of certain
assumptions, including retirement ages and payout periods.
(2)
Includes estimated contributions to the unfunded SERP and other postretirement benefit plans made in amounts needed to fund
benefit payments for vested participants in these plans through fiscal 2021, based on actuarial assumptions.
(3)
Represents voluntary withdrawal liabilities recorded and excludes normal contributions required under our collective bargaining
agreements.
(4)
Unrecognized tax benefits relate to uncertain tax positions recorded under accounting standards related to uncertain tax positions. As
of July 2, 2011, we had a liability of $56.2 million for unrecognized tax benefits for all tax jurisdictions and $24.5 million for related
interest that could result in cash payment. Sysco reached a settlement with the IRS in the first quarter of fiscal 2010 related to timing of
tax payments. Apart from this item, we are not able to reasonably estimate the timing of non-current payments or the amount by
which the liability will increase or decrease over time. Accordingly, the related non-current balances have not been reflected in the
“Payments Due by Period” section of the table.
(5)
Includes payments on floating rate debt based on rates as of July 2, 2011, assuming amount remains unchanged until maturity, and
payments on fixed rate debt based on maturity dates. The impact of our outstanding fixed-to-floating interest rate swaps on the fixed
rate debt interest payments is included as well based on the floating rates in effect as of July 2, 2011.
(6)
Provides the estimated minimum contribution to the Retirement Plan through fiscal 2021 to meet ERISA minimum funding
requirements under the assumption that we only make minimum funding requirement contributions each year, based on actuarial
assumptions.
(7)
For purposes of this table, purchase obligations include agreements for purchases of product in the normal course of business, for
which all significant terms have been confirmed, including minimum quantities resulting from our sourcing initiative. Such amounts
included in the table above are based on estimates. Purchase obligations also includes amounts committed with a third party to
provide hardware and hardware hosting services over a ten year period ending in fiscal 2015 (See discussion under Note 18,
“Commitments and Contingencies”, to the Notes to Consolidated Financial Statements in Item 8), fixed electricity agreements and
fixed fuel purchase commitments. Purchase obligations exclude full requirements electricity contracts where no stated minimum
purchase volume is required.
Certain acquisitions involve contingent consideration, typically payable only in the event that certain operating results are attained or certain
outstanding contingencies are resolved. Aggregate contingent consideration amounts outstanding as of July 2, 2011 included $56.6 million. This
amount is not included in the table above.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, sales and expenses in the accompanying financial statements. Significant
accounting policies employed by Sysco are presented in the notes to the financial statements.
Critical accounting policies and estimates are those that are most important to the portrayal of our financial condition and results of
operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters
that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical
accounting policies and estimates and this related disclosure. Our most critical accounting policies and estimates pertain to the allowance for
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