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PARTII
ITEM8Financial Statements and Supplementary Data
NOTE8 Goodwill and Other Intangibles
The changes in the carrying amount of goodwill and the amount allocated by reportable segment for the years presented are as follows:
(Inthousands)
Broadline SYGMA Other Total
Carrying amount as of June 29, 2013 $ 1,123,419 $ 32,609 $ 728,207 $ 1,884,235
Goodwill acquired during year 48,425 - 14,408 62,833
Currency translation/other 3,649 - (45) 3,604
Carrying amount as of June 28, 2014 1,175,493 32,609 742,570 1,950,672
Goodwill acquired during year 79,802 - 8,408 88,210
Currency translation/other (78,524) - (541) (79,065)
CARRYING AMOUNT AS OF JUNE 27, 2015 $ 1,176,771 $ 32,609 $ 750,437 $ 1,959,817
Amortizable intangible assets acquired during scal 2015 were $27.7 million with a weighted-average amortization period of 7.9 years. By intangible asset
category, the amortizable intangible assets acquired during scal 2015 were customer relationships of $19.5 million with a weighted-average amortization
period of 9.4 years, non-compete agreements of $4.3 million with a weighted-average amortization period of 4.6 years and other intangibles of $3.9 million
with a weighted-average amortization period of 4.0 years.
The following table presents details of the company’s amortizable intangible assets:
(Inthousands)
June 27, 2015 June 28, 2014
Gross Carrying
Amount
Accumulated
Amortization Net
Gross Carrying
Amount
Accumulated
Amortization Net
Customer relationships $ 236,916 $ (130,506) $ 106,410 $ 246,019 $ (124,223) $ 121,796
Non-compete agreements 33,436 (14,525) 18,911 33,164 (10,629) 22,535
Trademarks 10,768 (4,117) 6,651 12,063 (3,200) 8,863
Other 13,437 (4,871) 8,566 13,498 (2,070) 11,428
TOTAL AMORTIZABLE
INTANGIBLE ASSETS $ 294,557 $ (154,019) $ 140,538 $ 304,744 $ (140,122) $ 164,622
Intangible assets that have been fully amortized have been removed in the schedule above in the period full amortization is reached.
The following table presents details of the company’s inde nite-lived intangible assets:
(Inthousands)
June 27, 2015 June 28, 2014
Trademarks $ 13,304 $ 11,639
Licenses 966 966
TOTAL INDEFINITE-LIVED INTANGIBLE ASSETS $ 14,271 $ 12,605
Amortization expense for the past three years was $40.0 million in 2015, $42.2 million in 2014 and $32.1 million in 2013. The estimated future amortization
expense for the next ve scal years on intangible assets outstanding as of June 27, 2015 is shown below:
(Inthousands)
Amount
2016 $ 33,570
2017 29,264
2018 26,162
2019 16,245
2020 12,215
NOTE9 Derivative Financial Instruments
Sysco manages its debt portfolio to achieve an overall desired position of xed and oating rates and may employ interest rate swaps from time to time to
achieve this position. The company does not use derivative nancial instruments for trading or speculative purposes.
In scal 2014, the company entered into an interest rate swap agreement that effectively converted $500 million of xed rate debt maturing in scal 2018 to
oating rate debt. In October 2014, Sysco obtained long-term nancing for the proposed US Foods merger by completing a six-part senior notes offering
totaling $5 billion. At the same time of these note issuances, the company entered into interest rate swap agreements that effectively converted $500million
of senior notes maturing in scal 2018 and $750 million of senior notes maturing in scal 2020 to oating rate debt. These are collectively referred to as
the 2015 swaps. See Note 11, “Debt and Other Financing Arrangements,” for further discussion of the senior notes issuance. These transactions were
designated as fair value hedges against the changes in fair value of xed rate debt resulting from changes in interest rates. Subsequent to scal 2015,
weterminated our 2015 swaps in connection with the redemption of the senior notes.