DEBT AND OTHER FINANCING ARRANGEMENTS

12 Months Ended

Jun. 27, 2020

Sysco’s debt consists of the following:


	Jun. 27, 2020		Jun. 29, 2019
	(In thousands)
U.S. Commercial paper, interest at 2.56% as of June 29, 2019	$	—	$	132,081
U.K. Commercial paper, interest at 0.454%, maturing in fiscal 2021	740,226		—
Senior notes, interest at 2.60%, maturing in fiscal 2021 ⁽¹⁾⁽²⁾	751,312		744,034
Senior notes, interest at 2.50%, maturing in fiscal 2022 ⁽¹⁾⁽²⁾	504,352		494,814
Senior notes, interest at 2.60%, maturing in fiscal 2022 ⁽¹⁾⁽²⁾	448,336		447,509
Senior notes, interest at 1.25%, maturing in fiscal 2023⁽¹⁾⁽²⁾	568,011		576,771
Senior notes, interest at 3.55%, maturing in fiscal 2025⁽¹⁾⁽²⁾	551,756		521,490
Senior notes, interest at 3.65%, maturing in fiscal 2025 ⁽¹⁾	362,785		379,658
Senior notes, interest at 5.65%, maturing in fiscal 2025 ⁽¹⁾⁽²⁾	745,241		—
Senior notes, interest at 3.75%, maturing in fiscal 2026⁽¹⁾⁽²⁾	747,727		747,330
Senior notes, interest at 3.30%, maturing in fiscal 2027⁽¹⁾⁽²⁾	993,978		993,084
Debentures, interest at 7.16%, maturing in fiscal 2027⁽²⁾⁽³⁾	44,273		44,272
Senior notes, interest at 3.25%, maturing in fiscal 2028⁽¹⁾⁽²⁾	744,046		743,304
Debentures, interest at 6.50%, maturing in fiscal 2029⁽²⁾⁽³⁾	162,416		162,150
Senior notes, interest at 2.40%, maturing in fiscal 2030 ⁽¹⁾⁽²⁾	495,273		—
Senior notes, interest at 5.95%, maturing in fiscal 2030 ⁽¹⁾⁽²⁾	1,239,439		—
Senior notes, interest at 5.375%, maturing in fiscal 2036 ⁽¹⁾⁽²⁾	382,190		382,250
Senior notes, interest at 6.625%, maturing in fiscal 2039 ⁽¹⁾⁽²⁾	199,390		199,198
Senior notes, interest at 6.60%, maturing in fiscal 2040 ⁽¹⁾⁽²⁾	740,188		—
Senior notes, interest at 4.85%, maturing in fiscal 2046⁽¹⁾⁽²⁾	496,017		495,860
Senior notes, interest at 4.50%, maturing in fiscal 2046⁽¹⁾⁽²⁾	494,338		494,215
Senior notes, interest at 4.45%, maturing in fiscal 2048 ⁽¹⁾⁽²⁾	492,662		492,579
Senior notes, interest at 6.60%, maturing in fiscal 2050 ⁽¹⁾⁽²⁾	1,233,666		—
Senior notes, interest at 3.30%, maturing in fiscal 2050 ⁽¹⁾⁽²⁾	494,428		—
Long-term revolving credit facility, interest at 2.125%, maturing in fiscal 2024 ⁽²⁾	694,951		—
Notes payable, capital leases, and other debt, interest averaging 4.53% and maturing at various dates to fiscal 2046 as of June 27, 2020 and 4.99% and maturing at various dates to fiscal 2031 as of June 29, 2019	119,878		112,738
Total debt	14,446,879		8,163,337
Less current maturities of long-term debt	(1,542,128)		(37,322)
Less notes payable	(2,266)		(3,957)
Net long-term debt	$	12,902,485	$	8,122,058

⁽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⁾Represents senior notes, debentures and borrowings under the company’s long-term revolving credit facility that are guaranteed by certain wholly owned U.S. Broadline subsidiaries of Sysco Corporation as discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

⁽³⁾This debenture is not subject to any sinking fund requirement and is no longer redeemable prior to maturity.

As of June 27, 2020, the principal payments required to be made during the next five fiscal years on total debt, excluding notes payable, are shown below:


	Amount
	(In thousands)
2021	$	1,490,284
2022	950,000
2023	561,098
2024	700,000
2025	1,614,538

The company has a $2.0 billion long-term revolving credit facility that expires on June 28, 2024, subject to extension. As of June 27, 2020, there were $700.0 million in borrowings outstanding under this facility. On May 20, 2020, Sysco entered into an amendment to the credit agreement providing for the long-term revolving credit facility. The amendment revises the existing credit agreement to (1) adjust the covenant requiring Sysco to maintain a certain ratio of consolidated earnings before interest, tax, depreciation and amortization (EBITDA) to consolidated interest expense; (2) include a covenant requiring Sysco to maintain a certain level of liquidity until the earlier of September 2022 or the date on which Sysco has achieved a certain ratio of consolidated EBITDA to consolidated interest expense; (3) include additional pricing levels and a 0.75% interest rate floor; and (4) include a new covenant that restricts (a) increases to Sysco’s regular quarterly dividend and (b) repurchases of equity interests of Sysco, in each case, until the earlier of September 2022 or the date on which Sysco has achieved a certain ratio of consolidated EBITDA to consolidated interest expense.

Sysco has a commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $2.0 billion. As of June 27, 2020, there were no commercial paper issuances outstanding under this U.S. program. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility.

Effective May 4, 2020, Sysco’s United Kingdom-based subsidiary, Brake Bros Limited, established a separate commercial paper program for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible for purchase under the Joint HM Treasury and Bank of England Covid Corporate Financing Facility in an aggregate amount not to exceed £600.0 million. As of June 27, 2020, there were £600.0 million in aggregate principal amount of notes outstanding under this commercial paper program. The notes bear interest at a rate of 0.454% and will mature on May 7, 2021.

Effective May 20, 2020, Sysco established a 364-day credit facility in the amount of $750.0 million scheduled to expire on May 19, 2021. As of June 27, 2020, there were no borrowings under this credit facility.

During fiscal 2020, aggregate outstanding commercial paper issuances, borrowings under our long-term revolving credit facility and short-term bank borrowings ranged from approximately $18.4 million to approximately $1.9 billion.

Senior notes offering

On April 2, 2020, Sysco issued senior notes (Senior Notes) totaling $4.0 billion in aggregate principal amount in order to enhance the company’s liquidity position in response to the COVID-19 pandemic. Details of the senior notes are as follows:


Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
April 1, 2025 (the 5.650% Senior Notes due 2025)	$	750	5.65	%	99.931	%
April 1, 2030 (the 5.950% Senior Notes due 2030)	1,250		5.95		99.792
April 1, 2040 (the 6.600% Senior Notes due 2040)	750		6.60		99.802
April 1, 2050 (the 6.600% Senior Notes due 2050)	1,250		6.60		99.767

Sysco used a portion of the net proceeds from the offering to pay off its commercial paper borrowings and for other general corporate purposes. The company anticipates using an additional portion of the net proceeds from the offering to redeem its $750 million aggregate principal amount of Senior Notes due October 2020. The Senior Notes initially 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 will be paid semi-annually in arrears on April 1 and October 1, beginning October 1, 2020. 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 (1) the Senior Notes maturing in 2025 before the date that is one month prior to the maturity date, (2) the Senior Notes maturing in 2030 before the date that is three months prior to the maturity date, (3) the Senior Notes maturing in 2040 before the date that is six months prior to the maturity date or (4) the Senior Notes maturing in 2050 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 Senior Notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes to be redeemed that would be due if such Senior Notes matured on the applicable date described above. If Sysco elects to redeem a series of Senior 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 Senior Notes to be redeemed. Sysco will pay accrued and unpaid interest on the Senior Notes redeemed to the redemption date. The interest rate payable on each series of Senior Notes will be subject to adjustment from time to time if either Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or Fitch Ratings (or, in either case, a substitute rating agency), downgrades (or subsequently upgrades) its rating assigned to the Senior Notes, as set forth in the supplemental indentures under which the Senior Notes were issued.

On February 13, 2020, 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)
February 15, 2030 (the 2030 Notes) ⁽¹⁾	$	500	2.40	%	99.647	%
February 15, 2050 (the 2050 Notes)	500		3.30		99.811

⁽¹⁾The net proceeds from this issuance have been and will be used to fund, in whole or in part, “Eligible Projects.” “Eligible Projects” are investments and expenditures made by Sysco in new projects and projects that have received funding in the three years prior to the issuance of the 2030 notes, which meet one or more of the following categories of eligible criteria: (1) renewable energy; (2) energy efficiency; (3) clean transportation; (4) waste reduction; (5) sustainable water and wastewater management; (6) environmentally sustainable management of living natural resources and land use/food security; (7) aquatic biodiversity conservation/food security; and (8) socioeconomic advancement and empowerment.

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 February 15 and August 15, beginning August 15, 2020. 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 (1) the 2030 Notes before the date that is three months prior to the maturity date or (2) the 2050 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.

As of June 27, 2020 and June 29, 2019, letters of credit outstanding were $233.2 million and $226.0 million, respectively.