Sysco (SYY) Reports Restructuring to Overall Retirement Benefits
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Price: $76.73 +1.44%
EPS Growth %: +5.6%
Financial Fact:
Operating income: 566.83M
Today's EPS Names:
MAXN, CSTR, ACU, More
EPS Growth %: +5.6%
Financial Fact:
Operating income: 566.83M
Today's EPS Names:
MAXN, CSTR, ACU, More
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Sysco Corporation’s (NYSE" SYY) ongoing Business Transformation Project currently consists of three main components including a cost transformation initiative to lower Sysco’s cost structure. The cost transformation includes initiatives to increase productivity in the warehouse and delivery activities, improve sales productivity, and reduce general and administrative expenses, partially through more closely aligning compensation and benefit plans.
As part of this Business Transformation Project, the Company has restructured its overall retirement benefits. In fiscal 2012, the Company announced changes to the Company’s qualified pension plan, including a freeze to future benefit accruals under the company-sponsored qualified pension plan as of December 31, 2012 for all United States-based salaried and non-union hourly employees, and the enhancement of the Company’s defined contribution 401(k) plan (together, the “Company Plans”). In a Current Report on Form 8-K filed with the SEC on November 19, 2012, the Company disclosed that it had made the decision to restructure its executive nonqualified retirement program (the “Executive Plans”). This restructuring more closely aligns the Executive Plans with the Company Plans. As part of the restructuring of the Executive Plans, the Company expects to incur approximately $24 million in charges, of which approximately $12 million in charges were incurred in the second quarter of fiscal 2013, with the remaining $12 million in charges expected to be incurred in the second half of fiscal 2013. Over the long-term, the Company believes the changes to the Company Plans and the Executive Plans will result in reduced volatility of retirement related expenses and a reduction in total retirement related expenses.
As discussed in the Company’s Form 10-Q for the quarterly period ended September 29, 2012 (first quarter fiscal 2013), the Company restructured its information technology department and contracted with a third party provider for information technology managed services. The Company incurred approximately $6 million of additional severance charges in the second quarter of fiscal 2013 largely related to the restructuring of the information technology department.
On January 12, 2013, the union employees of Sysco Indianapolis, a wholly owned subsidiary of the Company, approved a collective bargaining agreement, which, among other things, includes an agreement to withdraw from an underfunded multi-employer pension plan, and allows the represented employees to become participants in the company-sponsored qualified pension plan. This withdrawal furthers the Company’s plan to mitigate its exposure to multi-employer pension plans in underfunded status. In the third quarter of fiscal 2013, the Company expects to incur approximately $40 million in charges for withdrawal liability from this multi-employer pension plan. The payment of this amount is likely to occur in late fiscal 2013 or early fiscal 2014.
As part of this Business Transformation Project, the Company has restructured its overall retirement benefits. In fiscal 2012, the Company announced changes to the Company’s qualified pension plan, including a freeze to future benefit accruals under the company-sponsored qualified pension plan as of December 31, 2012 for all United States-based salaried and non-union hourly employees, and the enhancement of the Company’s defined contribution 401(k) plan (together, the “Company Plans”). In a Current Report on Form 8-K filed with the SEC on November 19, 2012, the Company disclosed that it had made the decision to restructure its executive nonqualified retirement program (the “Executive Plans”). This restructuring more closely aligns the Executive Plans with the Company Plans. As part of the restructuring of the Executive Plans, the Company expects to incur approximately $24 million in charges, of which approximately $12 million in charges were incurred in the second quarter of fiscal 2013, with the remaining $12 million in charges expected to be incurred in the second half of fiscal 2013. Over the long-term, the Company believes the changes to the Company Plans and the Executive Plans will result in reduced volatility of retirement related expenses and a reduction in total retirement related expenses.
As discussed in the Company’s Form 10-Q for the quarterly period ended September 29, 2012 (first quarter fiscal 2013), the Company restructured its information technology department and contracted with a third party provider for information technology managed services. The Company incurred approximately $6 million of additional severance charges in the second quarter of fiscal 2013 largely related to the restructuring of the information technology department.
On January 12, 2013, the union employees of Sysco Indianapolis, a wholly owned subsidiary of the Company, approved a collective bargaining agreement, which, among other things, includes an agreement to withdraw from an underfunded multi-employer pension plan, and allows the represented employees to become participants in the company-sponsored qualified pension plan. This withdrawal furthers the Company’s plan to mitigate its exposure to multi-employer pension plans in underfunded status. In the third quarter of fiscal 2013, the Company expects to incur approximately $40 million in charges for withdrawal liability from this multi-employer pension plan. The payment of this amount is likely to occur in late fiscal 2013 or early fiscal 2014.
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