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SYSCO CORPORATION-Form10-K32
PARTII
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the note holders are not penalized by early
redemption. Proceeds from the notes will be utilized over a period of time for general corporate purposes, which may include acquisitions, refi nancing of
debt, working capital, share repurchases and capital expenditures.
Total Debt
Total debt as of June30,2012 was $3.0billion of which approximately 84% was at fi xed rates with a weighted average of 4.7% and an average life of 13
years, and the remainder was at fl oating rates with a weighted average of 2.3% and an average life of one year. Certain loan agreements contain typical
debt covenants to protect note holders, including provisions to maintain the company’s long-term debt to total capital ratio below a specifi ed level. We are
currently in compliance with all debt covenants.
Other
As part of normal business activities, we issue letters of credit through major banking institutions as required by certain vendor and insurance agreements.
In addition, in connection with our audits in certain tax jurisdictions, we have posted of letters of credit in order to proceed to the appeals process. As of
June30,2012 and July2,2011, letters of credit outstanding were $29.8million and $23.0million, respectively.
Other Considerations - Multiemployer Pension Plans
As discussed in Note14, “Multiemployer Employee Benefi t Plans”, to the Consolidated Financial Statements in Item8, we contribute to several multiemployer
defi ned benefi t pension plans based on obligations arising under collective bargaining agreements covering union-represented employees.
Under certain circumstances, including our voluntary withdrawal or a mass withdrawal of all contributing employers from certain underfunded plans, we
would be required to make payments to the plans for our proportionate share of the multiemployer plan’s unfunded vested liabilities. We believe that one
of the above-mentioned events is reasonably possible with certain plans in which we participate and estimate our share of withdrawal liability for these
plans could have been as much as $100.0million as of June30,2012 and August15,2012. This estimate excludes plans for which we have recorded
withdrawal liabilities or where the likelihood of the above-mentioned events is deemed remote. Due to the lack of current information, we believe our current
share of the withdrawal liability could materially differ from this estimate.
Required contributions to multiemployer plans could increase in the future as these plans strive to improve their funding levels. In addition, pension-related
legislation in the UnitedStates requires underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their
underfunding. We believe that any unforeseen requirements to pay such increased contributions, withdrawal liability and excise taxes would be funded
through cash fl ow from operations, borrowing capacity or a combination of these items.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.