Sysco 2011 Annual Report Download - page 76

The location and effect of derivative instruments and related hedged items on the consolidated results of operations for each fiscal year
presented on a pre-tax basis are as follows:
Location of (Gain)
or Loss Recognized
in Income 2011
2010
(53 Weeks) 2009
Amount of (Gain) or Loss
Recognized in Income
(In thousands)
Fair Value Hedge Relationships:
Interest rate swap agreements . ................................ Interest expense $ (9,026) $ (10,557) N/A
Hedge ineffectiveness represents the difference between the changes in the fair value of the derivative instruments and the changes in fair
value of the fixed rate debt attributable to changes in the benchmark interest rate. Hedge ineffectiveness is recorded directly in earnings within
interest expense and was immaterial for fiscal 2011 and fiscal 2010. The interest rate swaps do not contain a credit-risk-related contingent feature.
9. SELF-INSURED LIABILITIES
Sysco maintains a self-insurance program covering portions of workers’ compensation, general and vehicle liability and property insurance
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:
2011 2010 2009
(In thousands)
Balance at beginning of period .......................................... $ 128,997 $ 132,551 $ 117,725
Charged to costs and expenses ......................................... 325,540 321,373 328,830
Payments ........................................................ (324,866) (324,927) (314,004)
Balance at end of period .............................................. $ 129,671 $ 128,997 $ 132,551
10. DEBT AND OTHER FINANCING ARRANGEMENTS
Sysco’s debt consists of the following:
July 2, 2011 July 3, 2010
(In thousands)
Short-term bank borrowings, interest at 2.0% as of July 2, 2011 ............................... $ 181,975 $ —
Senior notes, interest at 6.1%, maturing in fiscal 2012 . ..................................... 200,092 200,186
Senior notes, interest at 4.2%, maturing in fiscal 2013 . ..................................... 253,316 252,801
Senior notes, interest at 4.6%, maturing in fiscal 2014 . ..................................... 208,779 208,249
Senior notes, interest at 5.25%, maturing in fiscal 2018 ..................................... 497,724 497,379
Senior notes, interest at 5.375%, maturing in fiscal 2019 .................................... 248,693 248,524
Debentures, interest at 7.16%, maturing in fiscal 2027 . ..................................... 50,000 50,000
Debentures, interest at 6.5%, maturing in fiscal 2029 . . ..................................... 224,593 224,570
Senior notes, interest at 5.375%, maturing in fiscal 2036 .................................... 499,639 499,625
Senior notes, interest at 6.625%, maturing in fiscal 2039 .................................... 245,524 245,364
Industrial Revenue Bonds and other debt, interest averaging 5.9% as of July 2, 2011 and 5.7% as of July 3,
2010, maturing at various dates to fiscal 2026........................................... 58,188 53,934
Total debt ..................................................................... 2,668,523 2,480,632
Less current maturities of long-term debt ............................................... (207,031) (7,970)
Less short-term bank borrowings ..................................................... (181,975) —
Net long-term debt . . . ............................................................ $2,279,517 $2,472,662
The principal payments required to be made during the next five fiscal years on debt outstanding as of July 2, 2011 are shown below:
Amount
(In thousands)
2012 ................................................................................. $ 207,031
2013 ................................................................................. 258,171
2014 ................................................................................. 211,908
2015 ................................................................................. 3,481
2016 ................................................................................. 1,896
Short-term Borrowings
As of July 2, 2011, Sysco had uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of up to
$95.0 million. As of July 3, 2010, Sysco had uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of up
to $88.0 million. There were no borrowings outstanding under these lines of credit as of July 2, 2011 or July 3, 2010, respectively.
As of July 2, 2011 and July 3, 2010, the company’s Irish subsidiary, Pallas Foods Limited, had a e10.0 million (Euro) committed facility for
unsecured borrowings for working capital. There were no borrowings outstanding under this facility as of July 2, 2011 or July 3, 2010.
On June 30, 2011, a Canadian subsidiary of Sysco entered into a short-term demand loan facility for the purpose of facilitating a distribution
from the Canadian subsidiary to Sysco, and Sysco concurrently entered into an agreement with the bank to guarantee the loan. As of July 2, 2011,
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