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SYSCO CORPORATION-Form10-K 39
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
In March 2014, Sysco repaid the 4.6% senior notes totaling $200.0 million at maturity utilizing a combination of cash  ow from operations and commercial
paper issuances.
Total Debt
Total debt as of June 28, 2014 was $2.8 billion of which approximately 74% was at  xed rates with a weighted average of 4.6% and an average life of
13years, and the remainder was at  oating rates with a weighted average of 2.7% and an average life of three years. Certain loan agreements contain
typical debt covenants to protect note holders, including provisions to maintain the company’s long-term debt to total capital ratio below a speci ed level.
We are currently in compliance with all debt covenants.
Other
As part of normal business activities, we issue letters of credit through major banking institutions as required by certain vendor and insurance agreements.
In addition, in connection with our audits in certain tax jurisdictions, we have posted letters of credit in order to proceed to the appeals process. As of
June28, 2014, letters of credit outstanding were $45.7 million.
Other Considerations
Multiemployer Plans
As discussed in Note 15, “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 $90.0 million as of June 28, 2014 and August 13, 2014, 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.
As of June 28, 2014 and June 29, 2013, Sysco had approximately $1.4 million and $40.7 million, respectively, in liabilities recorded related to certain
multiemployer de ned bene t plans for which Sysco’s voluntary withdrawal had already occurred.
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 U.S. 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.
Potential Contingencies Impacting Liquidity
Certain tax jurisdictions require partial to full payment on audit assessments or the posting of letters of credit in order to proceed to the appeals process.
Sysco has posted approximately $32.5 million in letters of credit, representing a partial payment of the audit assessments, in order to appeal the Canadian
Revenue Agency assessments of transfer pricing adjustments relating to our cross border procurement activities through our former purchasing cooperative
on our 2004 and 2005  scal years. We are protesting these adjustments through appeals and competent authority. If assessed on later years currently
under examination using these same positions, we could have to pay cash or post additional letters of credit of as much as $129.0 million, in order to
appeal these further assessments.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.