Sysco 2013 Annual Report Download - page 46

SYSCO CORPORATION-Form10-K 35
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Other Considerations - Multiemployer Pension Plans
As discussed in Note14, “Multiemployer Employee Bene t Plans”, to the Consolidated Financial Statements in Item8, we contribute to several multiemployer
de ned bene 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 $80.0million as of June29,2013 and as much as $90.0million as of August14,2013, based on the latest available information
available as of each date. 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  ow from operations, borrowing capacity or a combination of these items.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations
The following table sets forth, as of June29,2013, certain information concerning our obligations and commitments to make contractual future payments:
(Inthousands)
Payments Due by Period
Total < 1 Year 1-3 Years 3-5 Years More Than 5Years
Recorded Contractual Obligations:
Revolving credit facility borrowings $ 41,632 $ 41,632 $ - $ - $ -
Commercial paper 95,500 95,500 - - -
Long-term debt 2,715,408 202,730 299,615 498,534 1,714,529
Capital lease obligations 36,379 4,571 7,518 4,139 20,151
Deferred compensation(1) 82,081 8,522 14,079 9,926 49,554
SERP and other postretirement plans(2) 295,354 26,185 55,120 59,267 154,782
Multiemployer pension plans(3) 40,744 40,744 - - -
Unrecognized tax bene ts and interest(4) 145,099 17,393
Unrecorded Contractual Obligations:
Interest payments related to debt(5) 1,637,553 119,623 227,714 226,063 1,064,153
Retirement plan(6) 160,249 - 6,926 119,758 33,565
Long-term non-capitalized leases 162,393 41,371 59,147 29,126 32,749
Purchase obligations(7) 3,475,007 2,411,469 890,982 172,539 17
TOTAL CONTRACTUAL CASH OBLIGATIONS $ 8,750,267 $ 2,872,608 $ 1,561,101 $ 1,119,352 $ 3,069,500
(1) The estimate of the timing of future payments under the Executive Deferred Compensation Plan involves the use of certain assumptions, including retirement ages and payout periods.
(2) Includes estimated contributions to the unfunded SERP and other postretirement benefit plans made in amounts needed to fund benefit payments for vested participants in these plans through
fiscal 2023, based on actuarial assumptions.
(3) Represents voluntary withdrawal liabilities recorded and excludes normal contributions required under our collective bargaining agreements.
(4) Unrecognized tax benefits relate to uncertain tax positions recorded under accounting standards related to uncertain tax positions. As of June29,2013, we had a liability of $108.3million for
unrecognized tax benefits for all tax jurisdictions and $36.8million for related interest that could result in cash payment. We are not able to reasonably estimate the timing of non-current payments
or the amount by which the liability will increase or decrease over time. Accordingly, the related non-current balances have not been reflected in the “Payments Due by Period” section of the table.
(5) Includes payments on floating rate debt based on rates as of June29,2013, assuming amount remains unchanged until maturity, and payments on fixed rate debt based on maturity dates. The
impact of our outstanding fixed-to-floating interest rate swap on the fixed rate debt interest payments is included as well based on the floating rates in effect as of June29,2013.
(6) Provides the estimated minimum contribution to the Retirement Plan through fiscal 2023 to meet ERISA minimum funding requirements under the assumption that we only make minimum funding
requirement contributions each year, based on actuarial assumptions.
(7) For purposes of this table, purchase obligations include agreements for purchases of product in the normal course of busine ss, for which all significant terms have been confirmed, including
minimum quantities resulting from our sourcing initiative. Such amounts included in the table above are based on estimates. Purchase obligations also includes amounts committed with various
third party service providers to provide information technology services for period up to fiscal 2016 (See discussion under Note20, “Commitments and Contingencies”, to the Notes to Consolidated
Financial Statements in Item8), fixed electricity agreements and fixed fuel purchase commitments. Purchase obligations exclude full requirements electricity contracts where no stated minimum
purchase volume is required.
Certain acquisitions involve contingent consideration, typically payable only in the event that certain operating results are attained or certain outstanding
contingencies are resolved. Aggregate contingent consideration amounts outstanding as of June29,2013were$108.0million. This amount is not included
in the table above.