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Income Taxes
6 Months Ended
Dec. 27, 2014
Income Taxes [Abstract]  
Income Taxes

 

13.  INCOME TAXES 

 

Uncertain Tax Positions 

 

As of December 27, 2014, the gross amount of unrecognized tax benefits was $49.1 million and the gross amount of liability for accrued interest related to unrecognized tax benefits was $37.9 million.  It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the company’s unrecognized tax positions will increase or decrease in the next twelve months, either because Sysco prevails on positions that were being challenged upon audit or because the company agrees to their disallowance.   Items that may cause changes to unrecognized tax benefits primarily include the consideration of various filing requirements in numerous states and the allocation of income and expense between tax jurisdictions.  At this time, an estimate of the range of the reasonably possible change cannot be made. 

 

Effective Tax Rates 

 

Sysco’s effective tax rates are reflective of the jurisdictions where the company has operations.  Indefinitely reinvested earnings taxed at foreign statutory rates less than our domestic tax rate have the impact of reducing the effective tax rate. 

 

The effective tax rate for the second quarter of fiscal 2015 was 33.12%.  This tax rate was impacted by several items including reduced state taxes from legal restructuring, a $2.2 million tax benefit related to disqualifying dispositions of Sysco stock pursuant to share-based compensation arrangements and foreign earnings at lower tax rates. Partially offsetting these benefits was an increase in expense from increased tax contingencies. The effective tax rate for the second quarter of fiscal 2014 of 35.37% was favorably impacted by the recording of $4.3 million of net tax benefit related to various federal and state uncertain tax positions and $2.1 million of tax benefit related to disqualifying dispositions of Sysco stock pursuant to share-based compensation arrangements.

 

The effective tax rate for the first 26 weeks of fiscal 2015 of 35.10% was favorably impacted by lower state taxes. The effective tax rate for the first 26 weeks of fiscal 2014 of 36.23% was favorably impacted by the recording of $3.7 million of tax benefit related to disqualifying dispositions of Sysco stock pursuant to share-based compensation arrangements and $3.5 million of net tax benefit related to various federal and state uncertain tax positions.

 

Other 

 

The determination of the company’s provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws.  The company’s provision for income taxes reflects a combination of income earned and taxed in the various U.S. federal and state, as well as foreign, jurisdictions.  Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.