Sysco 2012 Annual Report Download - page 96

SYSCO CORPORATION-Form10-K 73
PARTII
ITEM8Financial Statements and Supplementary Data
All Share-Based Payment Arrangements
The total share-based compensation cost that has been recognized in results of operations was $70.3million, $59.2million and $66.4million for fi scal
2012,2011 and 2010, respectively, and is included within operating expenses in the consolidated results of operations. The total income tax benefi t
recognized in results of operations for share-based compensation arrangements was $21.7million, $18.2million and $13.9million for fi scal 2012,2011
and 2010, respectively.
As of June30,2012, there was $63.7million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is
expected to be recognized over a weighted-average period of 2.36years.
Cash received from option exercises and purchases ofshares under the Employees’ Stock Purchase Plan was $99.4million, $332.7million and $94.8million
during fi scal 2012,2011 and 2010, respectively. The actual tax benefi t realized for the tax deductions from option exercises totaled $3.0million, $15.9million
and $5.4million during fi scal 2012,2011 and 2010, respectively.
NOTE18 Income Taxes
Income Tax Provisions
For fi nancial reporting purposes, earnings before income taxes consists of the following:
(In thousands) 2012 2011
2010
(53Weeks)
UnitedStates $ 1,606,928 $ 1,639,258 $ 1,679,867
Foreign 177,074 188,196 169,722
TOTAL $ 1,784,002 $ 1,827,454 $ 1,849,589
The income tax provision for each fi scal year consists of the following:
(In thousands) 2012 2011
2010
(53Weeks)
UnitedStates federal income taxes $ 540,861 $ 556,663 $ 533,832
State and local income taxes 77,064 60,081 80,492
Foreign income taxes 44,492 58,680 55,282
TOTAL $ 662,417 $ 675,424 $ 669,606
The current and deferred components of the income tax provisions for each fi scal year are as follows:
(In thousands) 2012 2011
2010
(53Weeks)
Current $ 840,745 $ 840,173 $ 791,120
Deferred (178,328) (164,749) (121,514)
TOTAL $ 662,417 $ 675,424 $ 669,606
The deferred tax provisions result from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differences
between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for income tax purposes.
Internal Revenue Service Settlement
Sysco’s affi liate, Baugh Supply Chain Cooperative (BSCC), was a cooperative taxed under subchapter T of the UnitedStates Internal Revenue Code, the operation
of which has resulted in a deferral of tax payments. The Internal Revenue Service (IRS), in connection with its audits of the company’s 2003 through 2006 federal
income tax returns, proposed adjustments that would have accelerated amounts that the company had previously deferred and would have resulted in the payment
of interest on those deferred amounts. Sysco reached a settlement with the IRS in the fi rst quarter of fi scal 2010 to cease paying U.S. federal taxes related to
BSCC on a deferred basis, pay the amounts that were recorded within deferred taxes related to BSCC over a three-year period and make a one-time payment
of $41.0million, of which approximately $39.0million was non-deductible. The settlement addressed the BSCC deferred tax issue as it related to the IRS audit of
the company’s 2003 through 2006 federal income tax returns, and settled the matter for all subsequent periods, including the 2007 and 2008 federal income tax
returns already under audit. As a result of the settlement, the company agreed to pay the amounts owed in the following schedule:
(In thousands)
Fiscal 2010 $ 528,000
Fiscal 2011 212,000
Fiscal 2012 212,000