Sysco 2015 Annual Report Download - page 41
Download and view the complete annual report
Please find page 41 of the 2015 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.SYSCO CORPORATION-Form10-K 33
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
We traditionally have engaged in Board-approved share repurchase programs. No shares were acquired in scal 2015 due to the proposed US Foods
merger. The number of shares acquired and their cost during 2014 and 2013 were 10,059,000 shares for $332.4 million in scal 2014 and 21,672,403shares
for $721.6 million in scal 2013. No additional shares were repurchased through August 13, 2015, resulting in a remaining authorization by our Board
of Directors to repurchase up to 11,655,197 shares from a repurchase program that expired on August 23, 2015. In June 2015, our Board of Directors
approved a repurchase program to repurchase from time to time in the open market, through an accelerated share repurchase program or through privately
negotiated transactions, shares of the company’s common stock in an amount not to exceed $3.0 billion during the two year period ending July 1, 2017,
including $1.5 billion through a planned accelerated share repurchase in scal 2016, in addition to amounts normally repurchased to offset bene t plan and
stock option dilution. In addition to the share repurchase program approved in June, in August 2015, our Board of Directors approved the repurchase of up
to 20,000,000 shares for an aggregate purchase price not to exceed $800 million. The authorization expires on August 21, 2017. Beyond our $3.0 billion
share repurchase program approved in June 2015, our share repurchase strategy is to purchase enough shares to keep our average shares outstanding
relatively constant over time. The number of shares we repurchase in scal 2016 will be dependent on many factors, including the level of future stock
option exercises as well as competing uses for available cash.
We have made dividend payments to our shareholders in each scal year since our company’s inception over 40 years ago. We target a dividend payout
of 40% to 50% of net earnings. We paid in excess of that range in scal 2015 and scal 2014 primarily due to increased expenses from our Certain Items.
Dividends paid were $695.3 million, or $1.17 per share, in scal 2015, $667.2 million, or $1.14 per share, in scal 2014 and $648.3 million, or $1.10 per share,
in scal 2013. In May 2015, we declared our regular quarterly dividend for the rst quarter of scal 2016 of $0.30 per share, which was paid in July 2015.
In November 2000, we led with the SEC a shelf registration statement covering 30,000,000 shares of common stock to be offered from time to time in
connection with acquisitions. As of August 13, 2015, 29,477,835 shares remained available for issuance under this registration statement.
Debt Activity and Borrowing Availability
Our debt activity, including issuances and repayments, and our borrowing availability is described in Note 11, “Debt and Other Financing Arrangements.”
Our outstanding borrowings at June 27, 2015, and repayment activity since the close of scal 2015, are disclosed within that note. Updated amounts
through August 13, 2015, include:
•$744.0 million outstanding from our commercial paper program
•No amounts outstanding from the credit facility supporting the company’s U.S. and Canadian commercial paper programs.
Our aggregate commercial paper issuances and short-term bank borrowings had a weighted average interest rate of 0.54%, for scal 2015 and 0.16%
for each of scal 2014 and 2013 respectively.
In the rst quarter of scal 2016, we intend to le with the SEC an automatically effective well-known seasoned issuer shelf registration statement for the
issuance of an indeterminate amount of common stock, preferred stock, debt securities and guarantees of debt securities that may be issued from time
to time.
Other Considerations
Multiemployer Plans
Our exposure to multiemployer de ned bene t plans is discussed in Note 15, “Multiemployer Employee Bene t Plans,” including our estimate of our share
of withdrawal liability for these plans. An update of this amount through August 13, 2015, based on the latest available information, is unchanged from
the amount disclosed in Note 15.
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 $90 million in letters of credit, representing a partial payment of the audit assessments, in order to appeal the Canadian
Revenue Authority assessments of transfer pricing adjustments relating to our cross border procurement activities through our former purchasing cooperative
on our scal 2004 through scal 2009 scal years. We are protesting these adjustments through appeals. We could have to pay cash or post additional
letters of credit of as much as $16.0 million, in order to appeal these assessments.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.