Sysco 2015 Annual Report Download - page 48
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Please find page 48 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-K40
PARTII
ITEM 7AQuantitative and Qualitative Disclosures About Market Risk
The following tables present our interest rate position as of June 27, 2015. All amounts are stated in United States (U.S.) dollar equivalents.
(Dollars in thousands)
Interest Rate Position as of June 27, 2015
Principal Amount by Expected Maturity
Average Interest Rate
2016 2017 2018 2019 2020 Thereafter Total Fair Value
U.S. $ Denominated:
Fixed Rate Debt $ 3,713,525 $ 4,258 $ 3,017 $ 250,874 $ 1,399 $ 1,460,334 $ 5,433,407 $ 5,675,462
Average Interest Rate 3.8% 3.6% 4.4% 5.5% 6.1% 5.1% 4.5%
Floating Rate Debt (1) $ 1,254,138 $ 21,794 $ 503,875 $ 15,094 $ - $ - $ 1,794,901 $ 1,794,902
Average Interest Rate 2.0% 3.9% 5.4% 2.9% - - 3.0%
Canadian $ Denominated:
Fixed Rate Debt $ 1,456 $ 1,475 $ 1,325 $ 1,268 $ 1,350 $ 10,717 $ 17,590 $ 18,374
Average Interest Rate 8.3% 8.3% 9.0% 9.6% 9.7% 9.8% 9.5%
(1) Includes fixed rate debt that has been converted to floating rate debt through an interest rate swap agreement.
(Dollars in thousands)
Interest Rate Position as of June 27, 2015
Notional Amount by Expected Maturity
Average Interest Swap Rate
2016 2017 2018 2019 2020 Thereafter Total
Interest Rate Swaps
Related To Debt:
Pay Variable/Receive Fixed $ 1,250,000 $ - $ 500,000 $ - $ - $ - $ 1,750,000
Average Variable Rate Paid:
Rate A Plus 3.2% - -
Rate B Plus (1) - -
Fixed Rate Received (2) 5.25% - -
Rate A – six-month LIBOR
Rate B – three-month LIBOR
(1) 0.22% for notional amount of $500,000 maturing on October 2, 2017 and .046% for notional amount of $750,000 maturing on October 2, 2019
(2) 1.45% for notional amount of $500,000 maturing on October 2, 2017 and 2.35% for notional amount of $750,000 maturing on October 2, 2019
In August 2015, the company entered into two forward starting swap agreements with notional amounts totaling $500 million. The company designated
these derivatives as cash ow hedges to reduce interest rate exposure on forecasted 10-year debt due to changes in the benchmark interest rates for
debt the company expects to issue in scal 2016.
Foreign Currency Exchange Rate Risk
The majority of our foreign subsidiaries use their local currency as their functional currency. To the extent that business transactions are not denominated
in a foreign subsidiary’s functional currency, we are exposed to foreign currency exchange rate risk. We will also incur gains and losses within our
shareholders’ equity due to the translation of our nancial statements from foreign currencies into U.S. dollars. Our income statement trends may be
impacted by the translation of the income statements of our foreign subsidiaries into U.S. dollars. The exchange rates used to translate our foreign
sales into U.S. dollars negatively impacted sales by 1.0% in scal 2015 when compared to scal 2014. The exchange rate used to translate our
foreign sales into U.S. dollars negatively impacted sales by 0.7% in scal 2014 when compared to scal 2013. The impact to our operating income,
net earnings and earnings per share was not material in scal 2015 or scal 2014. A 10% unfavorable change in the scal 2015 weighted year-to-date
exchange rate and the resulting impact on our nancial statements would have negatively impacted scal 2015 sales by 1.2% and would not have
materially impacted our operating income, net earnings and earnings per share. We do not routinely enter into material agreements to hedge foreign
currency exchange rate risks.
Fuel Price Risk
Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel uctuates due
to changes in production, seasonality and other market factors generally outside of our control. Increased fuel costs may have a negative impact on our
results of operations in three areas. First, the high cost of fuel can negatively impact consumer con dence and discretionary spending and thus reduce the
frequency and amount spent by consumers for food-away-from-home purchases. Second, the high cost of fuel can increase the price we pay for product
purchases and we may not be able to pass these costs fully to our customers. Third, increased fuel costs impact the costs we incur to deliver product
to our customers. During scal 2015 fuel costs related to outbound deliveries represented approximately 0.6% of sales. For scal 2014 and scal 2013,
these costs represented approximately 0.7% of sales.