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SYSCO CORPORATION-Form10-K68
PARTII
ITEM8Financial Statements and Supplementary Data
De ned Bene t Plans
Sysco maintains a quali ed pension plan (Retirement Plan) that pays bene ts to employees at retirement, using formulas based on a participant’s years of
service and compensation. At the end of  scal 2012, Sysco approved a plan to freeze future bene t accruals under the Retirement Plan as of December31,
2012 for all U.S.-based salaried and non-union hourly employees. Effective January 1, 2013, these employees were eligible for additional contributions
under the company’s de ned contribution 401(k) plan.
In addition to receiving bene ts upon retirement under the company’s Retirement Plan, key management personnel who are participants in the Management
Incentive Plan will receive bene ts under a Supplemental Executive Retirement Plan (SERP). This plan is a nonquali ed, unfunded supplementary retirement
plan. In November 2012, Sysco approved a plan to restructure its executive nonquali ed retirement program including the SERP. Future bene t accruals
have been frozen under this plan as of June 29, 2013, for all participants.
Also, the company provides certain health care bene ts to eligible retirees and their dependents.
Funded Status
Accumulated pension assets measured against the obligation for pension bene ts represents the funded status of a given plan. The funded status of
Sysco’s company-sponsored de ned bene t plans is presented in the table below. The caption “Pension Bene ts” in the tables below includes both the
Retirement Plan and the SERP.
(Inthousands)
Pension Bene ts Other Postretirement Plans
June28,2014 June29,2013 June28,2014 June29,2013
Change in bene t obligation:
Bene t obligation at beginning of year $ 3,089,022 $ 3,164,974 $ 14,248 $ 12,954
Service cost 9,657 70,166 546 541
Interest cost 160,436 148,561 748 614
Amendments (347) 53,902 - -
Curtailments - (72,967) - -
Actuarial (gain) loss, net 492,720 (201,517) (3,280) 188
Total disbursements (79,780) (74,097) 349 (49)
Bene t obligation at end of year 3,671,708 3,089,022 12,611 14,248
Change in plan assets:
Fair value of plan assets at beginning of year 2,518,009 2,234,869 - -
Actual return on plan assets 474,538 263,675 - -
Employer contribution 24,752 93,562 (349) 49
Total disbursements (79,780) (74,097) 349 (49)
Fair value of plan assets at end of year 2,937,519 2,518,009 - -
FUNDED STATUS AT END OF YEAR $ (734,189) $ (571,013) $ (12,611) $ (14,248)
As a result of the SERP freeze discussed above in November 2012, the liabilities of this plan were remeasured using a discount rate of 3.96%. A curtailment
gain of $73.0 million was recognized as a component of actuarial losses (net of tax) within other comprehensive income with an offsetting reduction to
bene ts obligations to accumulated bene ts. Further, an $8.3 million loss was recognized in the income statement arising from the write-off of prior service
costs. In addition to the plan freeze, participants will be fully vested in their frozen bene ts on their date of freeze. This resulted in an increase in the bene t
obligation of $48.6 million which was re ected as unrecognized prior service cost in other comprehensive income. This amount will amortize into pension
expense over the next seven years. The SERP bene t obligation resulting after these changes on the date of the approved plan was $486.6 million.
In order to meet a portion of its obligations under the SERP, Sysco has contributed to a rabbi trust COLI policies on the lives of participants and corporate-
owned real estate assets. These assets are not included as plan assets or in the funded status amounts in the tables above and below. As they are held
in a rabbi trust, these assets are available to satisfy the claims of the company’s creditors in the event of bankruptcy or insolvency of the company. The life
insurance policies on the lives of the participants had carrying values of $96.5 million as of June 28, 2014 and $95.0 million as of June 29, 2013. Sysco
is the sole owner and bene ciary of such policies.
The amounts recognized on Sysco’s consolidated balance sheets related to its company-sponsored de ned bene t plans are as follows:
(Inthousands)
Pension Bene ts Other Postretirement Plans
June28,2014 June29,2013 June28,2014 June29,2013
Current accrued bene t liability (Accrued expenses) $ (25,712) $ (25,181) $ (313) $ (380)
Non-current accrued bene t liability (Other long-term liabilities) (708,477) (545,832) (12,298) (13,868)
NET AMOUNT RECOGNIZED $ (734,189) $ (571,013) $ (12,611) $ (14,248)