DEBT AND OTHER FINANCING ARRANGEMENTS

Sysco’s debt consists of the following:



	Jul. 1, 2017			Jul. 2, 2016
	(In thousands)
Commercial paper, interest at 1.42% as of July 1, 2017	$	119,691		$	—
Senior notes, interest at 5.25%, maturing in fiscal 2018 ⁽¹⁾	500,311			506,456
Senior notes, interest at 1.90%, maturing in fiscal 2019 ⁽¹⁾	491,260			502,151
Senior notes, interest at 5.375%, maturing in fiscal 2019 ⁽¹⁾	249,456			249,141
Senior notes, interest at 2.60%, maturing in fiscal 2021 ⁽¹⁾	739,239			762,227
Senior notes, interest at 2.50%, maturing in fiscal 2022 ⁽¹⁾	488,554			506,484
Senior notes, interest at 2.60%, maturing in fiscal 2022 ⁽¹⁾	445,853			445,026
Senior notes, interest at 1.25%, maturing in fiscal 2023 ⁽¹⁾	566,767			552,391
Senior notes, interest at 3.75%, maturing in fiscal 2026 ⁽¹⁾	746,288			746,023
Senior notes, interest at 3.30%, maturing in fiscal 2027 ⁽¹⁾	991,370			990,603
Debentures, interest at 7.16%, maturing in fiscal 2027 ⁽²⁾	50,000			50,000
Senior notes, interest at 3.25%, maturing in fiscal 2028 ⁽¹⁾	742,526			—
Debentures, interest at 6.50%, maturing in fiscal 2029 ⁽¹⁾	223,822			223,716
Senior notes, interest at 5.375%, maturing in fiscal 2036 ⁽¹⁾	497,089			496,932
Senior notes, interest at 6.625%, maturing in fiscal 2039 ⁽¹⁾	248,396			244,655
Senior notes, interest at 4.85%, maturing in fiscal 2046 ⁽¹⁾	495,552			495,395
Senior notes, interest at 4.50%, maturing in fiscal 2046 ⁽¹⁾	493,981			493,897
Notes payable, capital leases, and other debt, interest averaging 6.14% and maturing at various dates to fiscal 2026 as of July 1, 2017 and 3.12% and maturing at various dates to fiscal 2025 as of July 2, 2016	104,735			170,305
Total debt	8,194,890			7,435,402
Less current maturities of long-term debt	(530,075		)	(8,909		)
Less notes payable	(3,938		)	(89,563		)
Net long-term debt	$	7,660,877		$	7,336,930


⁽¹⁾	Represents senior notes that 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.


⁽²⁾	This debenture is not subject to any sinking fund requirement and is no longer redeemable prior to maturity.

As of July 1, 2017, the principal payments required to be made during the next five fiscal years on long-term debt, excluding notes payable and commercial paper, are shown below:



	Amount
	(In thousands)
2018	$	529,579
2019	774,138
2020	23,862
2021	762,906
2022	956,420

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2 billion. As of July 1, 2017, there were $119.7 million in commercial paper issuances outstanding. Any outstanding amounts are classified within long-term debt, as the program is supported by a long-term revolving credit facility. During the first 52 weeks of 2017, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from zero to approximately $1.6 billion.

Senior notes offering related to repayment of commercial paper borrowings

On June 19, 2017, Sysco issued 3.25% senior notes totaling $750 million in principal amount. Sysco used the net proceeds from the offering to pay off a portion of its outstanding commercial paper borrowings. The notes are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes. Interest on the senior notes maturing in 2027 will be paid semi-annually in arrears on January 15 and July 15, commencing on January 15, 2018. At Sysco’s option, any or all of the senior notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem the notes before the date that is three months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due if such notes matured on the applicable date described above. If Sysco elects to redeem the notes on or after the date described in the preceding sentence, Sysco will pay an amount equal to 100% of the principal amount of the notes to be redeemed. Sysco will pay accrued and unpaid interest on the notes redeemed to the redemption date.

Interest expense on redemption of senior notes related to US Foods Merger

On June 26, 2015, Sysco terminated the US Foods merger agreement, triggering the redemption of the senior notes that had been issued in contemplation of the proposed merger at a redemption price equal to 101% of the principal of the senior notes. The repayment of these senior notes in July 2015 triggered a redemption loss of $86.5 million included in interest expense for the first quarter of fiscal 2016.

At the time of the offering of notes, the company entered into interest rate swap agreements that effectively converted $500 million of senior notes maturing in fiscal 2018 and $750 million of senior notes maturing in fiscal 2020 to floating rate debt. These transactions were designated as fair value hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates. The company terminated the swaps in fiscal 2016 for proceeds of $14.5 million in connection with the redemption of these senior notes.

Interest expense for fiscal 2016 includes the following amounts from these transactions:



	53-Week Period Ended Jul. 2, 2016
	(In thousands)
Redemption premium payment	$	50,000
Debt issuance cost write-off	28,642
Bond discount write-off	17,869
Gain on swap termination	(10,051		)
Loss on extinguishment of debt	86,460
Interest expense on senior notes	8,375
Total	$	94,835

As of July 1, 2017 and July 2, 2016, letters of credit outstanding were $191.3 million and $207.7 million, respectively.