Sysco 2012 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2012 Sysco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

SYSCO CORPORATION-Form10-K74
PARTII
ITEM8Financial Statements and Supplementary Data
As noted in the table above, payments related to the settlement were $212.0million, $212.0million and $528.0million in fi scal 2012, fi scal 2011 and fi scal
2010, respectively. The company had previously accrued interest for a portion of the exposure pertaining to the IRS proposed adjustments and as a result
of the settlement with the IRS, Sysco recorded an income tax benefi t of approximately $29.0million in the fi rst quarter of fi scal 2010.
Sysco’s deferred taxes were impacted by the timing of these installment payments. Sysco reclassifi ed amounts due within one year from deferred taxes to
accrued income taxes at the beginning of each of fi scal 2012,2011, and 2010. Additionally, beginning in fi scal 2009, the company is not deferring taxes
for federal purposes according to its agreement with the IRS.
Deferred Tax Assets and Liabilities
Signifi cant components of Sysco’s deferred tax assets and liabilities are as follows:
(In thousands)
June30,2012 July2,2011
Deferred tax liabilities:
Deferred supply chain distributions $ - $ 276,001
Excess tax depreciation and basis differences of assets 473,947 384,702
Goodwill and intangible assets 186,921 175,747
Other 19,756 35,497
Total deferred tax liabilities 680,624 871,947
Deferred tax assets:
Net operating tax loss carryforwards 21,609 32,648
Benefi t on unrecognized tax benefi ts 23,287 23,463
Pension 362,391 162,212
Share-based compensation 63,522 61,273
Deferred compensation 36,639 37,659
Self-insured liabilities 41,030 40,454
Receivables 51,607 52,614
Inventory 59,619 54,853
Other 40,257 56,465
Total deferred tax assets 699,961 521,641
TOTAL NET DEFERRED TAX (ASSETS) LIABILITIES $ (19,337) $ 350,306
The company had state net operating tax loss carryforwards as of June30,2012 and July2,2011. The net operating tax loss carryforwards outstanding
as of June30,2012 expire in fi scal years 2013 through 2031. There were no valuation allowances recorded for the state tax loss carryforwards as of
June30,2012 and July2,2011 because management believes it is more likely than not that these benefi ts will be realized based on utilization forecasts.
Effective Tax Rates
Reconciliations of the statutory federal income tax rate to the effective income tax rates for each fi scal year are as follows:
2012 2011 2010
UnitedStates statutory federal income tax rate 35.00% 35.00% 35.00%
State and local income taxes, net of any applicable federal income tax benefi t 2.65 1.96 2.89
Foreign income taxes (1.07) (0.50) (0.31)
Impact of uncertain tax benefi ts 0.12 0.51 (1.46)
Impact of adjusting carrying value of corporate-owned life insurance policies to their cash
surrender values (0.08) (0.61) (0.45)
Other 0.51 0.60 0.53
37.13% 36.96% 36.20%
The effective tax rate for fi scal 2012 was 37.13%. Indefi nitely reinvested earnings taxed at foreign statutory rates less than our domestic tax rate had the
impact of reducing the effective tax rate.
The effective tax rate of 36.96% for fi scal 2011 was favorably impacted primarily by two items. First, the company recorded a tax benefi t of approximately
$17.0million for the reversal of valuation allowances previously recorded on state net operating loss carryforwards. Second, the company adjusted the
carrying values of the company’s COLI policies to their cash surrender values. The gain of $28.2million recorded in fi scal 2011 was primarily non-taxable
for income tax purposes, and had the impact of decreasing income tax expense for the period by $11.1million. Partially offsetting these favorable impacts
was the recording of $9.3million in tax and interest related to various federal, foreign and state uncertain tax positions.
The effective tax rate of 36.20% for fi scal 2010 was favorably impacted primarily by two items. First, as discussed above, the company recorded an income
tax benefi t of approximately $29.0million resulting from the one-time reversal of previously accrued interest related to the settlement with the IRS. Second,
the gain of $21.6million recorded to adjust the carrying value of COLI policies to their cash surrender values in fi scal 2010 was non-taxable for income tax
purposes, and had the impact of decreasing income tax expense for the period by $8.3million.