Commitments and Contingencies

9 Months Ended

Mar. 29, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

13.  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 definitions within contingency accounting literature, ranges from remote to reasonably possible to probable.  When probable, 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 financial position or results of operations of the company.  However, the final 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 financial position or results of operations could be materially adversely affected in future periods. 

During the first quarter of fiscal 2014, Sysco was made aware of certain alleged violations of California law relating to its use of remote storage units in the delivery of products.  These are commonly referred to as drop sites.  Sysco is cooperating fully with the investigation being conductedby authorities in California, but could be subject to penalties and injunctive relief.  In the third quarter of fiscal 2014, Sysco has recorded a contingency accrual of $20 million which represents its current estimate of the potential liability related to this investigation.

Fuel Commitments 

Sysco routinely enters into forward purchase commitments for a portion of its projected diesel fuel requirements.  As of March 29, 2014, outstanding forward diesel fuel purchase commitments totaled approximately $159.1 million at a fixed price through May 2015.

Other Commitments

Sysco has committed to aggregate product purchases for resale in order to benefit from a centralized approach to purchasing.  A majority of these agreements expire within one year;  however, certain agreements have terms through fiscal 2018.  These agreements commit the company to a minimum volume at various pricing terms, including fixed pricing, variable pricing or a combination thereof.  Minimum amounts committed to as of March 29, 2014 totaled approximately $2,449.3 million.