DEBT AND OTHER FINANCING ARRANGEMENTS

Sysco’s debt consists of the following:



	Jun. 30, 2018			Jul. 1, 2017
	(In thousands)
Commercial paper, interest at 1.42% as of July 1, 2017	$	—		$	119,691
Senior notes, interest at 5.25%, matured in fiscal 2018 ⁽¹⁾	—			500,311
Senior notes, interest at 1.90%, maturing in fiscal 2019 ⁽¹⁾	491,700			491,260
Senior notes, interest at 5.375%, maturing in fiscal 2019 ⁽¹⁾	249,701			249,456
Senior notes, interest at 2.60%, maturing in fiscal 2021 ⁽¹⁾	724,047			739,239
Senior notes, interest at 2.50%, maturing in fiscal 2022 ⁽¹⁾	477,411			488,554
Senior notes, interest at 2.60%, maturing in fiscal 2022 ⁽¹⁾	446,681			445,853
Senior notes, interest at 1.25%, maturing in fiscal 2023 ⁽¹⁾	580,196			566,767
Senior notes, interest at 3.55%, maturing in fiscal 2025 ⁽¹⁾	492,606			—
Senior notes, interest at 3.75%, maturing in fiscal 2026 ⁽¹⁾	746,879			746,288
Senior notes, interest at 3.30%, maturing in fiscal 2027 ⁽¹⁾	992,176			991,370
Debentures, interest at 7.16%, maturing in fiscal 2027 ⁽²⁾	44,276			50,000
Senior notes, interest at 3.25%, maturing in fiscal 2028 ⁽¹⁾	742,555			742,526
Debentures, interest at 6.50%, maturing in fiscal 2029 ⁽¹⁾	162,276			223,822
Senior notes, interest at 5.375%, maturing in fiscal 2036 ⁽¹⁾	382,010			497,089
Senior notes, interest at 6.625%, maturing in fiscal 2039 ⁽¹⁾	201,766			248,396
Senior notes, interest at 4.85%, maturing in fiscal 2046 ⁽¹⁾	495,709			495,552
Senior notes, interest at 4.50%, maturing in fiscal 2046 ⁽¹⁾	494,090			493,981
Senior notes, interest at 4.45%, maturing in fiscal 2048 ⁽¹⁾	493,165			—
Notes payable, capital leases, and other debt, interest averaging 6.33% and maturing at various dates to fiscal 2026 as of June 30, 2018 and 6.14% and maturing at various dates to fiscal 2026 as of July 1, 2017	110,026			104,735
Total debt	8,327,270			8,194,890
Less current maturities of long-term debt	(782,329		)	(530,075		)
Less notes payable	(4,176		)	(3,938		)
Net long-term debt	$	7,540,765		$	7,660,877


⁽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 June 30, 2018, 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)
2019	$	788,309
2020	23,764
2021	768,076
2022	962,884
2023	590,112

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 June 30, 2018, there were no 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 2018, aggregate outstanding commercial paper issuances and short-term bank borrowings ranged from zero to approximately $1.5 billion.

Senior notes offering

On March 19, 2018, Sysco issued senior notes (the Notes) totaling $1.0 billion. Details of the Notes are as follows:



Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
March 15, 2025 (the 2025 Notes)	$	500	3.55	%	99.480	%
March 15, 2048 (the 2048 Notes)	500		4.45		99.378

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness. Interest on the Notes will be paid semi-annually on March 15 and September 15, beginning September 15, 2018. At Sysco’s option, any or all of the Notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the 2025 Notes before the date that is two months prior to the maturity date or (ii) the 2048 Notes before the date that is six 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. If Sysco elects to redeem a series of Notes on or after the applicable 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.

Senior notes and debentures redemption related to the tender offer

Sysco used a portion of the net proceeds of the offering to fund the purchase, pursuant to a tender offer, of $230.5 million in combined aggregate principal amount of the following securities: its 7.160% debentures due 2027, its 6.500% debentures due 2028, its 5.375% senior notes due 2035 and its 6.625% senior notes due 2039. Holders of securities received an early tender payment of $50 per $1,000 principal amount of securities. Holders of such securities also received accrued and unpaid interest from, and including, the last interest payment date for their tendered securities, but not including, the early settlement date, which was March 23, 2018. The tender offer transaction was considered to be a debt extinguishment. As such, Sysco recognized a loss on extinguishment of $53.1 million, which was recorded as a component of interest expense in the accompanying consolidated results of operations. Of this loss, $51.2 million was attributable to the purchase premium paid to the lenders, $1.1 million was attributable to the write-off of unamortized debt issuance costs associated with the redeemed debentures and notes, and $0.8 million was attributable to an accelerated charge on the debt discount related to these debentures and notes.

Details of the debentures and senior notes purchased are as follows:



Maturity Date	Par Value		Coupon Rate		Principal amount tendered		Remaining Par Value after tender offer		Cash amount paid (including interest)
	(Dollars in millions)
April 15, 2027	$	50	7.160	%	$	5.7	$	44.3	$	7.4
August 1, 2028	225		6.500		61.9		163.1		77.3
September 21, 2035	500		5.375		115.9		384.1		134.3
March 17, 2039	250		6.625		47.0		203.0		63.7

The remaining net proceeds from the offering were used to fund a pension contribution, repay outstanding borrowings under Sysco’s commercial paper program and for other general corporate purposes.

In February 2018, Sysco repaid 5.25% senior notes totaling $500.0 million at maturity utilizing commercial paper borrowings.

As of June 30, 2018 and July 1, 2017, letters of credit outstanding were $221.7 million and $191.3 million, respectively.