-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WiTsJS8okb5DisPWciTQ0vjk2v5J2NcBBywVh4lGgAq2FWumuYIPrXw3eSYgSnNK 6xkJ35tg+FI6EL5+kuvPaw== 0000914062-04-000031.txt : 20040126 0000914062-04-000031.hdr.sgml : 20040126 20040126092754 ACCESSION NUMBER: 0000914062-04-000031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040126 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSCO CORP CENTRAL INDEX KEY: 0000096021 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 741648137 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06544 FILM NUMBER: 04542325 BUSINESS ADDRESS: STREET 1: 1390 ENCLAVE PKWY CITY: HOUSTON STATE: TX ZIP: 77077 BUSINESS PHONE: 2815841390 MAIL ADDRESS: STREET 1: 1390 ENCLAVE PKWY CITY: HOUSTON STATE: TX ZIP: 77077 8-K 1 sysco8k12604.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 26, 2004 SYSCO CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation)
1-06544 74-1648137 (Commission File Number) (IRS Employer Identification No.)
1390 Enclave Parkway, Houston, Texas 77077-2099 (Address of principal executive offices, including zip code) (281) 584-1390 (Registrant's telephone number, including area code) -------------------------------- (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. Exhibit Number Description -------------- ----------- 99.1 Press Release dated January 26, 2004 ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION The information provided pursuant to this Item 12 is to be considered "filed" under the Securities Exchange Act of 1934 ("Exchange Act") and incorporated by reference in those filings of Sysco Corporation ("SYSCO") that provide for the incorporation of all reports and documents filed by SYSCO under the Exchange Act. On January 26, 2004, SYSCO issued a press release announcing its results of operations for the second quarter ended December 27, 2003 of its fiscal year ending July 3, 2004. SYSCO hereby incorporates by reference herein the information set forth in its Press Release dated January 26, 2004, a copy of which is attached hereto as Exhibit 99.1. Except for the historical information contained in this report, the statements made by SYSCO are forward looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. SYSCO's future financial performance could differ significantly from the expectations of management and from results expressed or implied in the Press Release. For further information on other risk factors, please refer to the "Risk Factors" contained in SYSCO's Annual Report on Form 10-K for the fiscal year ended June 28, 2003 as filed with the Securities and Exchange Commission. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, SYSCO has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SYSCO CORPORATION Date: January 26, 2004 By: /s/ John K. Stubblefield, Jr. ------------------------------ Name: John K. Stubblefield, Jr. Title:Executive Vice President, Finance and Administration 3 EXHIBIT INDEX Exhibit Number Description Page - -------------- ----------- ---- 99.1 Press Release dated January 26, 2004 5 4 EX-99.1 3 sysco8k12604ex99.txt PRESS RELEASE EXHIBIT 99.1 SYSCO [COMPANY LOGO] - -------------------------------------------------------------------------------- SYSCO Corporation 1390 Enclave Parkway NEWS RELEASE Houston, Texas 77077-2099 (281) 584-1390 FOR MORE INFORMATION CONTACT: John M. Palizza Assistant Treasurer (281) 584-1308 SYSCO'S SECOND QUARTER DILUTED EPS INCREASE 21.4%, NET EARNINGS RISE 20.3% HOUSTON, JANUARY 26, 2004 -- SYSCO Corporation (NYSE: SYY), North America's leading foodservice marketer and distributor, today announced results for the second quarter of its fiscal year 2004. SECOND QUARTER HIGHLIGHTS: - ------------------------- o Diluted earnings per share rose 21.4% to $0.34 compared to $0.28 in the same period last year o Net earnings climbed 20.3% to $222.0 million vs. $184.6 million in last year's second quarter o Sales increased 10.8% to $7.0 billion vs. $6.3 billion in last year's second quarter o Operating expenses as a percent to sales improved to 14.17% compared to last year's 14.76% Richard J. Schnieders, SYSCO's chairman and chief executive officer, said, "The solid sales and strong net earnings performance during the quarter was a direct result of our 47,400 associates and their daily commitment to helping our customers succeed. Our strategies, skills and products allowed us to increase market share and record a sales growth rate of 10.8 percent." Sales from acquisitions contributed 0.8 percentage points to the second quarter sales increase compared to 6.8 percentage points in last year's second fiscal quarter. Mr. Schnieders noted that SYSCO's internally measured food cost inflation for the quarter was 7.3 percent primarily due to price increases in the meat, dairy, and poultry categories. This compares to 0.9 percent food cost deflation during the prior year's second fiscal quarter. "This marked our third consecutive quarter of increasing food costs," Mr. Schnieders noted, "and we experienced food cost deflation for three consecutive quarters prior to that. I am optimistic that the inflationary spike will be tempered somewhat as we go forward, and that food cost trends will return to more stable levels. "For the fifth consecutive quarter we leveraged operating expenses as a percent to sales to generate increased operating income," Mr. Schnieders continued. "Our operating expenses as a percent to sales declined 59 basis points in the second quarter primarily as a result of the knowledge and other benefits that our technology systems continue to provide and our efforts to share best business practices at all 145 SYSCO distribution facilities. In addition, our fixed costs during the quarter were not impacted by inflation, which also contributed to our reduced operating expenses as a percent to sales. "That excellent expense control more than offset a 28 basis point decline in our gross margins during the quarter, which was expected and can be principally attributed to two factors. The first was a change in our customer mix - specifically the growth of multi-unit business during the second quarter. In addition, gross margins were impacted by the inflation effects of the increased sales of our meat products during the quarter." Mr. Schnieders added that sales at The SYGMA Network, Inc., the company's chain restaurant distribution specialist, increased 21.6 percent in the second quarter to $863.5 million. SYSCO's other specialty operations, including custom-cut meat, produce, hotel supply and Asian foodservice, combined for sales of $571.9 million, a 20.2% gain over the prior year's second fiscal quarter. - more - 5 Thomas E. Lankford, SYSCO's president and chief operating officer, added, "Our operating companies continued to record significant gains in key productivity performance metrics during the second quarter. These results, in areas including pieces per stop, lines per stop, pieces per error and overtime costs, contributed to our strong earnings gains in the quarter and also were beneficial in the expense control efforts. We firmly believe that our people and our systems are the best in the industry and together they continue to enhance shareholder value. "With the recent implementation of the new business development manager position, our operating companies have done a great job of cultivating new customer relationships with foodservice operators that have good potential for future profitability," Mr. Lankford continued. He also noted that sales, profitability and expense reduction efforts all were positively impacted as operating companies continued to work with unprofitable customers to develop strategies to bring them to profitability, adding that in certain cases, this effort resulted in SYSCO exiting some accounts. Mr. Lankford also commented on the Company's internal growth efforts, including an announcement that a fold-out distribution facility would be constructed in Post Falls, Idaho that is expected to be operational in 2005 and previously announced fold-out companies in Fargo, North Dakota and Oxnard, California, are progressing according to plan. "Strategic investment in our business remains a fundamental component to our internal and external growth initiatives," continued Mr. Lankford. "Accordingly, capital expenditures for the second quarter totaled $145.6 million, or a six month total of $248.7 million, and we continue to project capital expenditures of approximately $490 million for the fiscal year. SYSCO's National Supply Chain project progressed according to plan during the quarter and to date $154.3 million has been expended on the project since it began in fiscal 2002." Mr. Lankford also added that second quarter expenditures for the Northeast Redistribution Center, which is expected to begin operations in the fall of 2004, were $41.7 million, $33.3 million of which was capitalized. "Our performance in the second quarter provided further proof that our growth strategies are fundamentally sound and successful," concluded Mr. Lankford. "We believe that SYSCO continues to grow sales and earnings at a rate above the industry average and we remain confident that we will continue to increase our market share from its current 13 percent level." SYSCO is the largest foodservice marketing and distribution organization in North America, providing food and related products and services to approximately 420,000 restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. The company generated sales of $27.5 billion for calendar year 2003. SYSCO's operations are located throughout the United States and Canada and include broadline companies, specialty produce and custom-cut meat operations, Asian foodservice and hotel supply operations and SYGMA, the company's chain restaurant distribution subsidiary. For more information about SYSCO visit the company's Internet home page at www.sysco.com. As previously announced, SYSCO's second quarter 2004 earnings conference call will be held at 10:00 a.m. eastern time on Monday, January 26, 2004. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com under Investor Relations. Forward-Looking Statements Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding SYSCO's ability to continue to profitably grow its business, improve its operational efficiencies and performance and gain market share, as well as statements regarding inflationary trends, capital expenditures and the expected timing, cost and benefits of fold-outs, its national supply chain project and northeast redistribution center. These statements involve risks and uncertainties and are based on management's current expectations and estimates; actual results may differ materially. Those risks and uncertainties that could impact these statements include the risks relating to the foodservice distribution industry's relatively low profit margins and sensitivity to general economic conditions, including the current economic environment; SYSCO's leverage and debt risks; the successful completion of acquisitions and integration of acquired companies; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; construction schedules; management's allocation of capital and the timing of capital purchases such as fleet and equipment; competitive conditions; labor issues; and internal factors such as the ability to control expenses. For a discussion of additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company's Annual Report on Form 10-K for the fiscal year ended June 28, 2003 as filed with the Securities and Exchange Commission. - more - 6 SYSCO CORPORATION CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) (In Thousands Except for Share Data)
FOR THE 13-WEEK PERIOD ENDED -------------------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ---------------------- -------------------- Sales $7,036,520 $6,348,797 Costs and expenses Cost of sales 5,669,399 5,097,716 Operating expenses 996,853 937,290 Interest expense 16,376 17,503 Other, net (7,052) (2,606) ---------------------- -------------------- Total costs and expenses 6,675,576 6,049,903 ---------------------- -------------------- Earnings before income taxes 360,944 298,894 Income taxes 138,963 114,327 ---------------------- -------------------- Net earnings $ 221,981 $ 184,567 ====================== ==================== Basic earnings per share $ 0.34 $ 0.28 ====================== ==================== Diluted earnings per share $ 0.34 $ 0.28 ====================== ==================== Average shares outstanding 644,723,466 652,030,164 ====================== ==================== Diluted average shares outstanding 661,632,986 664,083,274 ====================== ==================== - ------------------------------------------------------------------------------------------------------------------- Comparative segment sales data for the second quarter of fiscal years 2004 and 2003 are summarized below. ($000) FOR THE 13-WEEK PERIOD ENDED -------------------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ---------------------- -------------------- SALES Broadline $5,681,387 $5,227,677 SYGMA 863,539 710,334 Other 571,873 475,654 Intersegment Sales (80,279) (64,868) ---------------------- -------------------- Total Sales $7,036,520 $6,348,797 ====================== ==================== - -------------------------------------------------------------------------------------------------------------------
- more - 7 SYSCO CORPORATION CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) (In Thousands Except for Share Data)
FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ---------------------- -------------------- Sales $14,170,801 $12,773,219 Costs and expenses Cost of sales 11,423,166 10,252,420 Operating expenses 2,021,189 1,897,925 Interest expense 35,007 34,331 Other, net (9,035) (6,018) ---------------------- -------------------- Total costs and expenses 13,470,327 12,178,658 ---------------------- -------------------- Earnings before income taxes 700,474 594,561 Income taxes 269,682 227,420 ---------------------- -------------------- Net earnings $ 430,792 $ 367,141 ====================== ==================== Basic earnings per share $ 0.67 $ 0.56 ====================== ==================== Diluted earnings per share $ 0.65 $ 0.55 ====================== ==================== Average shares outstanding 645,301,941 653,240,266 ====================== ==================== Diluted average shares outstanding 660,127,514 664,304,371 ====================== ==================== - ------------------------------------------------------------------------------------------------------------------- Comparative segment sales data for the first half of fiscal years 2004 and 2003 are summarized below. ($000) FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ---------------------- -------------------- SALES Broadline $11,508,476 $10,548,934 SYGMA 1,688,102 1,419,918 Other 1,133,333 927,004 Intersegment Sales (159,110) (122,637) ---------------------- -------------------- Total Sales $14,170,801 $12,773,219 ====================== ==================== - -------------------------------------------------------------------------------------------------------------------
- more - 8 SYSCO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands)
December 27, 2003 December 28, 2002 ----------------- ----------------- ASSETS Current assets Cash $ 232,595 $ 128,574 Receivables 2,086,107 1,878,315 Inventories 1,359,886 1,270,604 Prepaid expenses 60,201 63,286 ----------------- ----------------- Total current assets 3,738,789 3,340,779 Plant and equipment at cost, less depreciation 2,029,718 1,804,691 Other assets Goodwill and intangibles 1,166,336 1,055,271 Restricted cash 170,877 84,056 Other 199,857 199,190 ----------------- ----------------- Total other assets 1,537,070 1,338,517 ----------------- ----------------- Total assets $ 7,305,577 $6,483,987 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 124,609 $ 64,612 Accounts payable 1,645,948 1,408,475 Accrued expenses 589,394 571,291 Accrued income taxes 172,420 25,462 Deferred taxes 190,175 158,719 Current maturities of long-term debt 12,322 22,341 ----------------- ----------------- Total current liabilities 2,734,868 2,250,900 Other liabilities Long-term debt 1,395,981 1,394,647 Deferred taxes 524,989 461,312 Other long-term liabilities 283,915 176,012 ----------------- ----------------- Total other liabilities 2,204,885 2,031,971 Contingencies Shareholders' equity Preferred stock - - Common stock, par $l per share 765,175 765,175 Paid-in capital 290,744 240,170 Retained earnings 3,649,583 3,105,487 Other comprehensive loss (142,027) (65,435) Treasury stock (2,197,651) (1,844,281) ----------------- ----------------- Total shareholders' equity 2,365,824 2,201,116 ----------------- ----------------- Total liabilities and shareholders' equity $ 7,305,577 $6,483,987 ================= =================
- more - 9 SYSCO CORPORATION CONSOLIDATED CASH FLOWS (Unaudited) (In Thousands)
For the 26-Week Period Ended -------------------------------------------- December 27, 2003 December 28, 2002 ----------------- ----------------- Cash flows from operating activities: Net earnings $ 430,792 $ 367,141 Add non-cash items: Depreciation and amortization 138,679 133,437 Deferred tax provision 265,053 213,488 Provision for bad debts 14,895 15,908 Additional investment in certain assets and liabilities, net of effect of businesses acquired: (Increase) in receivables (73,428) (98,222) (Increase) in inventories (120,215) (130,767) (Increase) in prepaid expenses (7,755) (21,251) Increase in accounts payable 3,905 38,411 (Decrease) in accrued expenses and other long-term liabilities (75,854) (42,346) (Decrease) in accrued income taxes (186,649) (12,091) (Increase) in other assets (24,644) (7,171) ----------------- ----------------- Net cash provided by operating activities 364,779 456,537 ----------------- ----------------- Cash flows from investing activities: Additions to plant and equipment (248,697) (217,799) Proceeds from sales of plant and equipment 9,815 7,976 Acquisition of businesses, net of cash acquired (33,703) (168,244) Increase in restricted cash balances (90,000) (52,056) ----------------- ----------------- Net cash used for investing activities (362,585) (430,123) ----------------- ----------------- Cash flows from financing activities: Bank and commercial paper borrowings 182,739 208,102 Other debt repayments (12,964) (5,255) Common stock reissued from treasury 86,337 62,650 Treasury stock purchases (218,149) (243,381) Dividends paid (142,501) (118,395) ----------------- ----------------- Net cash used for financing activities (104,538) (96,279) ----------------- ----------------- Effect of exchange rate changes on cash (2,508) - ----------------- ----------------- Net decrease in cash (104,852) (69,865) Cash at beginning of period 337,447 198,439 ----------------- ----------------- Cash at end of period $ 232,595 $ 128,574 ================= ================= Cash paid during the period for: Interest $ 36,598 $ 34,492 Income taxes $ 190,761 $ 29,120
-more- 10 COMPARATIVE SUPPLEMENTAL STATISTICAL INFORMATION RELATED TO SALES Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the second quarter of fiscal years 2004 and 2003 is summarized below.
FOR THE 13-WEEK PERIOD ENDED -------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ------------------ ------------------ SYSCO Brand Sales as a % of MA-Served Sales 57.2% 56.8% SYSCO Brand Sales as a % of Total Traditional Broadline Sales in the U.S. 49.0% 49.0% MA-Served Sales as a % of Total Traditional Broadline Sales in the U.S. 53.6% 53.8% - --------------------------------------------------------------------------------------------------------------------
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the first half of fiscal years 2004 and 2003 is summarized below.
FOR THE 26-WEEK PERIOD ENDED -------------------------------------------- DECEMBER 27, 2003 DECEMBER 28, 2002 ------------------ ------------------ SYSCO Brand Sales as a % of MA-Served Sales 57.1% 56.8% SYSCO Brand Sales as a % of Total Traditional Broadline Sales in the U.S. 49.0% 49.0% MA-Served Sales as a % of Total Traditional Broadline Sales in the U.S. 54.8% 55.1% - --------------------------------------------------------------------------------------------------------------------
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