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SYSCO CORPORATION-Form10-K 59
PARTII
ITEM8Financial Statements and Supplementary Data
NOTE13 Company-Sponsored Employee Benefi t Plans
Sysco has company-sponsored defi ned benefi t and defi ned contribution retirement plans for its employees. Also, the company provides certain health
care benefi ts to eligible retirees and their dependents.
Sysco maintains a qualifi ed pension plan (Retirement Plan) that pays benefi ts to employees at retirement, using formulas based on a participant’s years
of service and compensation.
The company’s defi ned contribution 401(k) plan provides that under certain circumstances the company may make matching contributions of up to 50%
of the fi rst 6% of a participant’s compensation. Sysco’s expense related to this plan was $17.2million in fi scal 2012, $19.8million in fi scal 2011, and
$22.8million in fi scal 2010.
At the end of fi scal 2012, Sysco approved a plan to freeze future benefi t accruals under the Retirement Plan as of December31,2012 for all U.S.-based
salaried and non-union hourly employees. Effective January1,2013, these employees will be eligible for additional contributions under the company’s defi ned
contribution 401(k) plan. The measurements for the Retirement Plan at June30,2012 included the impact of the freeze. This resulted in the recognition of
a curtailment gain as a component of actuarial loss arising in current year in other comprehensive loss.
In addition to receiving benefi ts upon retirement under the company’s Retirement Plan, key management personnel who are participants in the Management
Incentive Plan will receive benefi ts under a Supplemental Executive Retirement Plan (SERP). This plan is a nonqualifi ed, unfunded supplementary retirement plan.
Funded Status
Accumulated pension assets measured against the obligation for pension benefi ts represents the funded status of a given plan. The funded status of
Sysco’s company-sponsored defi ned benefi t plans is presented in the table below. The caption “Pension Benefi ts” in the tables below includes both the
Retirement Plan and the SERP.
(In thousands)
Pension Benefi ts Other Postretirement Plans
June30,2012 July2,2011 June30,2012 July2,2011
Change in benefi t obligation:
Benefi t obligation at beginning of year $ 2,516,660 $ 2,212,304 $ 10,812 $ 8,461
Service cost 108,223 99,443 457 396
Interest cost 147,512 134,973 632 524
Amendments 8,705 8,252 - 987
Curtailments (176,531) - - -
Actuarial loss, net 625,890 121,913 924 157
Total disbursements (65,485) (60,225) 129 287
Benefi t obligation at end of year 3,164,974 2,516,660 12,954 10,812
Change in plan assets:
Fair value of plan assets at beginning of year 2,106,313 1,666,972 - -
Actual return on plan assets 31,597 337,889 - -
Employer contribution 162,444 161,677 (129) (287)
Total disbursements (65,485) (60,225) 129 287
Fair value of plan assets at end of year 2,234,869 2,106,313 - -
FUNDED STATUS AT END OF YEAR $ (930,105) $ (410,347) $ (12,954) $ (10,812)
In order to meet a portion of its obligations under the SERP, Sysco maintains life insurance policies on the lives of the participants with carrying values
of $97.6million as of June30,2012 and $170.0million as of July2,2011. In the second quarter of fi scal 2012, approximately $75.0million of these
policies were redeemed and corporate-owned real estate assets were substituted for these policies. These policies are not included as plan assets or in
the funded status amounts in the tables above and below; rather, the assets are held in a rabbi trust and are therefore available to satisfy the claims of
the company’s creditors in the event of bankruptcy or insolvency of the company. Sysco is the sole owner and benefi ciary of such policies. The projected
benefi t obligation for the SERP of $473.1million and $402.0million as of June30,2012 and July2,2011, respectively, was included in Other long-term
liabilities on the balance sheet.
The amounts recognized on Sysco’s consolidated balance sheets related to its company-sponsored defi ned benefi t plans are as follows:
(In thousands)
Pension Benefi ts Other Postretirement Plans
June30,2012 July2,2011 June30,2012 July2,2011
Current accrued benefi t liability (Accrued expenses) $ (22,810) $ (22,426) $ (369) $ (336)
Non-current accrued benefi t liability (Other long-term liabilities) (907,295) (387,921) (12,585) (10,476)
NET AMOUNT RECOGNIZED $ (930,105) $ (410,347) $ (12,954) $ (10,812)