Sysco 2013 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2013 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 101

  • 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

SYSCO CORPORATION-Form10-K42
PARTII
ITEM7AQuantitative and Qualitative Disclosures AboutMarket Risk
The following tables present our interest rate position as of June30,2012. All amounts are stated in U.S. dollar equivalents.
(Inthousands)
Interest Rate Position as of June30,2012
Principal Amount by Expected Maturity
Average Interest Rate
2013 2014 2015 2016 2017 Thereafter Total Fair Value
U.S. $ Denominated:
Fixed Rate Debt $ 3,570 $ 2,979 $ 299,846 $ 1,153 $ 604 $ 2,216,827 $ 2,524,979 $ 3,030,042
Average Interest Rate 4.5% 4.1% 0.8% 4.7% 4.9% 5.2% 4.7%
Floating Rate Debt(1) $ 249,964 $ 206,673 $ 1,100 $ - $ - $ 12,500 $ 470,237 $ 481,475
Average Interest Rate 2.6% 2.1% 0.2% - - 0.5% 2.3%
Canadian $
Denominated:
Fixed Rate Debt $ 1,116 $ 1,147 $ 1,189 $ 1,187 $ 1,203 $ 17,280 $ 23,122 $ 27,746
Average Interest Rate 8.4% 8.7% 8.9% 9.3% 9.8% 9.7% 9.6%
(1) Includes fixed rate debt that has been converted to floating rate debt through interest rate swap agreements.
(Inthousands)
Interest Rate Position as of June30,2012
Notional Amount by Expected Maturity
Average Interest Swap Rate
2013 2014 2015 2016 2017 Thereafter Total Fair Value
Interest Rate Swaps
Related To Debt:
Pay Variable/Receive Fixed $ 250,000 $ 200,000 $ - $ - $ - $ - $ 450,000 $ 8,694
Average Variable Rate Paid:
Rate A Plus 2.1% 2.1% - - - - 2.1%
Fixed Rate Received 4.2% 4.6% - - - - 4.4%
Rate A– three-month LIBOR
Foreign Currency Exchange Rate Risk
The majority of our foreign subsidiaries use their local currency as their functional currency. To the extent that business transactions are not denominated in
a foreign subsidiary’s functional currency, we are exposed to foreign currency exchange rate risk. We will also incur gains and losses within our shareholders’
equity due to the translation of our  nancial statements from foreign currencies into U.S. dollars. Our income statement trends may be impacted by the
translation of the income statements of our foreign subsidiaries into U.S. dollars. The changes in the exchange rates used to translate our foreign sales into
U.S. dollars did not have a signi cant impacton sales in  scal 2013 when compared to  scal 2012 or in  scal 2012 when compared to  scal 2011. The
impact to our operating income, net earnings and earnings per share was not material in  scal 2013or  scal 2012. A 10% unfavorable change in the  scal
2013 weighted year-to-date exchange rate and the resulting impact on our  nancial statements would have negatively impacted  scal 2013 sales by 1.1%
and would not have materially impacted our operating income, net earnings and earnings per share. We do not routinely enter into material agreements
to hedge foreign currency exchange rate risks.
Fuel Price Risk
Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel  uctuates due
to changes in production, seasonality and other market factors generally outside of our control. Increased fuel costs may have a negative impact on our
results of operations in three areas. First, the high cost of fuel can negatively impact consumer con dence and discretionary spending and thus reduce the
frequency and amount spent by consumers for food-away-from-home purchases. Second, the high cost of fuel can increase the price we pay for product
purchases and we may not be able to pass these costs fully to our customers. Third, increased fuel costs impact the costs we incur to deliver product to
our customers. During  scal 2013,2012 and 2011, fuel costs related to outbound deliveries represented approximately 0.7%, 0.7% and 0.6% of sales,
respectively. Fuel costs, excluding any amounts recovered through fuel surcharges, incurred by Sysco increased byapproximately $18.9millionin  scal
2013 from  scal 2012 and by $39.8million in  scal 2012 over  scal 2011.
We routinely enter into forward purchase commitments for a portion of our projected monthly diesel fuel requirements. As of June29,2013, we had forward
diesel fuel commitments totaling approximately $204million through August2014. These contracts will lock in the price of approximately 60% to 65% of
our fuel purchase needs for the contracted periods at prices slightly lower than the current market price for diesel.