SYSCO CORP | 2013 | FY |

 

 

10. DEBT AND OTHER FINANCING ARRANGEMENTS

 

Sysco’s debt consists of the following:

 

 

The principal payments required to be made during the next five fiscal years on debt outstanding as of June 29, 2013 are shown below:

 

 

Short-term Borrowings

 

As of June 29, 2013 and June 30, 2012, Sysco had uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of up to $95.0 million.  There were no borrowings outstanding under these lines of credit as of June 29, 2013 or June 30, 2012, respectively.  

 

In September 2012, the company’s Irish subsidiary, Pallas Foods, entered into a €75.0 million (Euro) multicurrency revolving credit facility, which will be utilized for capital needs for the company’s European subsidiaries.  This facility provides for unsecured borrowings and expires September 25, 2013, but is subject to extension.  Outstanding borrowings under this facility were €32.0 million (Euro) as of June 29, 2013, located within Notes payable on the consolidated balance sheet. 

 

As of June 30, 2012, the company’s Irish subsidiary, Pallas Foods Limited, had a €10.0 million (Euro) committed facility for unsecured borrowings for working capital.  There were no borrowings outstanding under this facility as of June 30, 2012.  During fiscal 2013, this facility was replaced with the facility described above.

 

On June 30, 2011, a Canadian subsidiary of Sysco entered into a short-term demand loan facility for the purpose of facilitating a distribution from the Canadian subsidiary to Sysco, and Sysco concurrently entered into an agreement with the bank to guarantee the loan.  As of July 2, 2011, the amount outstanding under the facility was $182.0 million.  The interest rate under the facility was 2.0% and payable on the due date.  The loan was repaid in full on July 4, 2011.

 

 

Commercial Paper and Revolving Credit Facility

 

Sysco has a Board-approved commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $1,300.0 million. 

 

In December 2011, Sysco terminated its previously existing revolving credit facility that supported the company’s U.S. and Canadian commercial paper programs.  At the same time, Sysco and one of its subsidiaries, Sysco International, ULC, entered into a new $1,000.0 million credit facility supporting the company’s U.S. and Canadian commercial paper programs.  This facility provides for borrowings in both U.S. and Canadian dollars.  Borrowings by Sysco International, ULC under the credit agreement are guaranteed by Sysco, and borrowings by Sysco and Sysco International, ULC under the credit agreement are guaranteed by all wholly-owned subsidiaries of Sysco that are guarantors of the company’s senior notes and debentures.  The original facility in the amount of $1,000.0 million expires on December 29, 2016.  In December 2012, a portion of the facility was extended for an additional year.  This extended facility, which expires on December 29, 2017, is for $925.0 million of the original $1,000.0 million facility, but is subject to further extension.  As of June 29, 2013, commercial paper issuances outstanding were $95.5 million and were classified as long-term debt, as the company’s commercial paper programs are supported by the long-term revolving credit facility described above.  There were no commercial paper issuances outstanding as of June 30, 2012.

 

During fiscal 2013, 2012, and 2011, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from approximately zero to $330.0 million,  zero to $563.1 million, and zero to $330.3 million, respectively.

 

Fixed Rate Debt

 

In February 2012, Sysco filed with the Securities and Exchange Commission 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.

 

In June 2012, Sysco repaid the 6.1% senior notes totaling $200.0 million at maturity utilizing a combination of cash flow from operations and commercial paper issuances.

 

In June 2012, Sysco issued 0.55% senior notes totaling $300.0 million due June 12, 2015 (the 2015 notes) and 2.6% senior notes totaling $450.0 million due June 12, 2022 (the 2022 notes) under its February 2012 shelf registration.  The 2015 and 2022 notes, which were priced at 99.319% and 98.722% of par, respectively, are unsecured, are not subject to any sinking fund requirement and include a redemption provision which allows Sysco to retire the notes at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the note holders are not penalized by early redemption.  Proceeds from the notes will be utilized over a period of time for general corporate purposes, which may include acquisitions, refinancing of debt, working capital, share repurchases and capital expenditures.

 

In February 2013, Sysco repaid the 4.2% senior notes totaling $250.0 million at maturity utilizing a combination of cash flow from operations and cash on hand.

 

The  4.6% senior notes due March 15, 2014, the 5.25% senior notes due February 12, 2018, the 5.375% senior notes due March 17, 2019, the 6.5% debentures due August 1, 2028, the 5.375% senior notes due September 21, 2035 and the 6.625% senior notes due March 17, 2039 are unsecured, are not subject to any sinking fund requirement and include a redemption provision that allows Sysco to retire the debentures and notes at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the debenture and note holders are not penalized by the early redemption.

 

The 7.16% debentures due April 15, 2027 are unsecured, are not subject to any sinking fund requirement and are no longer redeemable prior to maturity.

 

Total Debt

 

Total debt as of June 29, 2013 was $2,888.9 million of which approximately 88% was at fixed rates with a weighted average of  4.7% and an average life of 13 years, and the remainder was at floating rates with a weighted average of 1.4% and an average life of one year.  Certain loan agreements contain typical debt covenants to protect note holders, including provisions to maintain the company’s long-term debt to total capital ratio below a specified level.  Sysco is currently in compliance with all debt covenants.

 

Other

 

As of June 29, 2013 and June 30, 2012, letters of credit outstanding were $42.2 million and $29.8 million, respectively.