Sysco 2015 Annual Report Download - page 85
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Please find page 85 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 77
PARTII
ITEM8Financial Statements and Supplementary Data
NOTE20 Commitments And Contingencies
Legal Proceedings
Sysco is engaged in various legal proceedings which have arisen but have not been fully adjudicated. The likelihood of loss for these legal proceedings,
based on de nitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably
estimable, the losses have been accrued. Based on estimates of the range of potential losses associated with these matters, management does not
believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated nancial
position or results of operations of the company. However, the nal results of legal proceedings cannot be predicted with certainty and if the company
failed to prevail in one or more of these legal matters, and the associated realized losses were to exceed the company’s current estimates of the range of
potential losses, the company’s consolidated nancial position or results of operations could be materially adversely affected in future periods.
Fuel Commitments
Sysco routinely enters into forward purchase commitments for a portion of its projected diesel fuel requirements. As of June 27, 2015, we had forward
diesel fuel commitments totaling approximately $99.3 million through June 2016.
Other Commitments
Sysco has committed to aggregate product purchases for resale in order to bene t from a centralized approach to purchasing. A majority of these
agreements expire within one year; however, certain agreements have terms through scal 2019. These agreements commit the company to a minimum
volume at various pricing terms, including xed pricing, variable pricing or a combination thereof. Minimum amounts committed to as of June 27, 2015
totaled approximately $3.4 billion. Minimum amounts committed to by year are as follows:
(Inthousands)
Amount
2016 $ 2,553,305
2017 818,521
2018 29,035
2019 2,863
2020 2,863
2021 1,491
Sysco has contracts with various third party service providers to receive information technology services. The services have been committed for periods
up to scal 2019 and may be extended. As of June 27, 2015, the total remaining cost of the services over that period is expected to be approximately
$485.5 million. A portion of this committed amount may be reduced by Sysco utilizing less than estimated resources and can be increased by Sysco
utilizing more than estimated resources. Certain agreements allow adjustments for in ation. Sysco may also cancel a portion or all of the services provided
subject to termination fees that decrease over time. If Sysco were to terminate all of the services in scal 2016, the estimated termination fees incurred in
scal 2016 would be approximately $18.1 million.
NOTE21 Business Segment Information
The company has aggregated its operating companies into two reporting segments, Broadline and SYGMA, as de ned in the accounting literature related
to disclosures about segments of an enterprise. The Broadline reportable segment is an aggregation of the company’s U.S. and International Broadline
segments located in the Bahamas, Canada, Costa Rica and Ireland. Broadline operating companies distribute a full line of food products and a wide
variety of non-food products to both traditional and chain restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where
foodservice products are served. SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain
restaurant customer locations. “Other” nancial information is attributable to the company’s other operating segments, including the company’s specialty
produce, custom-cut meat operations, lodging industry segments, a company that distributes specialty imported products, a company that distributes to
international customers and the company’s Sysco Ventures platform, which includes a suite of technology solutions that help support the business needs
of Sysco’s customers. In scal 2015, our leadership structure was realigned and now our custom-cut meat operations no longer report through our U.S.
broadline leadership. As a result, these operations are no longer included in our Broadline segment and now reported in “Other.” Prior year amounts have
been reclassi ed to conform to the current year presentation.