Sysco 2015 Annual Report Download - page 60
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Please find page 60 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-K52
PARTII
ITEM8Financial Statements and Supplementary Data
The determination of the company’s provision for income taxes requires signi cant judgment, the use of estimates and the interpretation and application
of complex tax laws. The company’s provision for income taxes primarily re ects a combination of income earned and taxed in the various U.S. federal
and state, as well as various foreign jurisdictions. Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax
items, accruals or adjustments of accruals for tax contingencies or valuation allowances, and the company’s change in the mix of earnings from these
taxing jurisdictions all affect the overall effective tax rate.
Acquisitions
Acquisitions of businesses are accounted for using the acquisition method of accounting, and the nancial statements include the results of the acquired
operations from the respective dates of acquisition.
The purchase price of the acquired entities is allocated to the net assets acquired and liabilities assumed based on the estimated fair value at the dates of
acquisition, with any excess of cost over the fair value of net assets acquired, including intangibles, recognized as goodwill. The balances included in the
consolidated balance sheets related to recent acquisitions are based upon preliminary information and are subject to change when nal asset and liability
valuations are obtained. Subsequent changes to the preliminary balances are re ected retrospectively, if material. Material changes to the preliminary
allocations are not anticipated by management.
Noncontrolling interest
In scal 2015, Sysco acquired a 50% interest in a foodservice company in Costa Rica. It was determined that consolidation of the entity was appropriate
and, therefore, the nancial position, results of operations and cash ows for this company have been included in Sysco’s nancial statements. The value
of the 50% noncontrolling interest is considered redeemable due to certain features of the investment agreement and has been presented as mezzanine
equity, which is outside of permanent equity, in the consolidated balance sheets. The income attributable to the noncontrolling interest is located within
other expense (income), net in the consolidated results of operations, as this amount is not material. The non-cash add back for the change in the value
of the noncontrolling interest is located within Other non-cash items on the consolidated cash ows.
NOTE2 Changes in Accounting
Presentation of an Unrecognized Tax Bene t When a Net Operating Loss Carryforward, a Similar
Tax Loss, or a Tax Credit Carryforward Exists
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-11, “Presentation of an Unrecognized Tax
Bene t When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” This update amends ASC 740, “Income Taxes,”
to require that in certain cases, an unrecognized tax bene t, or portion of an unrecognized tax bene t, should be presented in the nancial statements as
a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the same
taxing jurisdiction. The amendments in this update are effective for scal years, and interim periods within those years, beginning after December15, 2013,
which was scal 2015 for Sysco. The company’s adoption of this guidance did not have a material impact on the company’s balance sheets, results of
operations or cash ows.
Simplifying the Presentation of Debt Issuance Costs
In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.
The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying
amount of the related debt liability, instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective
interest rate. The update requires retrospective application and represents a change in accounting principle. We adopted this standard for the scal year
ended June 27, 2015. Although the new guidance had no impact on the company’s results of operations, the debt issuance costs presented as assets
within the company’s consolidated balance sheet as of June 28, 2014, of $26.8 million has been reclassi ed as reductions of the related debt liability as
a result of early adoption.
Practical Expedient for the Measurement Date of an Employer’s De ned Bene t Obligation
and Plan Assets
In April 2015, the FASB issued ASU 2015-04, “Compensation-Retirement Bene ts (Topic 715), Practical Expedient for the Measurement Date of an
Employer’s De ned Bene t Obligation and Plan Assets.” The amendments in this ASU provide a practical expedient for employers with scal year-ends
that do not fall on a month-end by permitting those employers to measure de ned bene t plan assets and obligations as of the month-end that is closest
to the entity’s scal year-end. Sysco early adopted this standard in scal 2015 using a June 30
th
measurement date as a practical expedient. The adoption
did not have a material impact on the nancial position of Sysco.