8-K

UNITED STATES
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): August 25, 2009

Sysco Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-06544	74-1648137
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1390 Enclave Parkway, Houston, TX 77077-2099
(Address of principal executive office) (zip code)

Registrant’s telephone number, including area code: (281) 584-1390

N/A
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 1 — REGISTRANT’S BUSINESS AND OPERATIONS

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On August 21, 2009, Sysco Corporation (“Sysco”) and its affiliate, Baugh Supply Chain Cooperative (“BSCC”), entered into a settlement agreement (the “Settlement Agreement”) with the Internal Revenue Service (the “IRS”). As previously disclosed in Sysco’s Quarterly Reports on Form 10-Q for the first three quarters of fiscal 2009, the IRS, in connection with its audit of Sysco’s fiscal 2003 and 2004 federal income tax returns, proposed adjustments related to the federal income tax treatment of the operations of the BSCC cooperative that would have accelerated amounts that Sysco had deferred and resulted in payment of interest by Sysco on the federal income tax liability on those deferred amounts. During the fourth quarter of fiscal 2009, the IRS also proposed similar adjustments for Sysco’s fiscal 2005 and 2006 federal income tax returns. The Settlement Agreement fully resolves these disputes. Sysco issued a press release dated August 25, 2009 to announce resolution of the matter and hereby incorporates by reference herein the information set forth in the press release, a copy of which is attached hereto as Exhibit 99.1.

The material terms of the Settlement Agreement are:

• Sysco will pay to the IRS the following amounts:

o $104,000,000 by August 31, 2009;

o $212,000,000 on September 15, 2009; and

o $636,000,000 to be paid in payments of $53,000,000 with Sysco’s estimated quarterly tax payments, commencing October 15, 2009 and ending June 15, 2012.

• The parties agree that the issue of BSCC’s method of accounting for distributions to its domestic members for the taxable years ended October 25, 2003, October 30, 2004, October 29, 2005 and October 28, 2006 is settled, with finality, and that no adjustments shall be made to BSCC’s gross income, taxable income or income tax liability for such taxable years.

• Beginning with Sysco’s tax year ended June 28, 2008, Sysco’s method of accounting for distributions received from BSCC is changed so that Sysco will include such amounts in the income reported in its federal consolidated return at the same time that these amounts are included in income by BSSC, rather than when the distributions are received by Sysco. BSCC is allowed a corresponding deduction for such income at the time of the income inclusion in Sysco’s consolidated return.

• The parties agree that BSCC and its domestic regional cooperatives are corporations operating on a cooperative basis under Subchapter T of the Internal Revenue Code.

SECTION 9 — FINANCIAL STATEMENTS AND EXHIBITS.

ITEM 9.01 EXHIBITS.

(a) Financial Statements of Businesses Acquired.

Not applicable.

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(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d) Exhibits.

Exhibit Number	Description
99.1	Press release dated August 25, 2009

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, Sysco Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Sysco Corporation
Date: August 25, 2009	By:	/s/ Michael C. Nichols
		Michael C. Nichols
		Senior Vice President, General Counsel   and Corporate Secretary

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EX-99.1

Exhibit 99.1

     Press Release


For more information
Investor Contact
Neil Russell
Vice President, Investor Relations
T       281-584-1308



Media Contact
Mark Palmer
Vice President, Corporate Communications
T       281-584-1303

SYSCO REACHES AGREEMENT WITH IRS ON TAX PAYMENT SCHEDULE

Contingent interest uncertainty removed

Federal tax deferral to be paid over next three years

HOUSTON, August 25, 2009 — Sysco Corporation (NYSE: SYY) announced today that it has agreed with the Internal Revenue Service to a payment schedule related to a disputed tax deferral for its Baugh Supply Chain Cooperative.

§	Sysco agrees to three year payment schedule related to deferred tax liability.
§	Sysco has sufficient liquidity to pay tax and interest on agreed schedule.
§	Agreement will result in a modest increase in first quarter fiscal 2010 earnings.

     “Reaching agreement on this matter at this point in time is an appropriate and a favorable development for Sysco because it removes the uncertainty regarding the ultimate resolution of our tax deferral,” said Bill DeLaney, Sysco’s chief executive officer. “Our current cash levels, anticipated future cash flow from operations, and current access to capital are more than sufficient to cover this payment schedule. We are now better positioned to take advantage of investment opportunities that present themselves in the future and to deliver value to our stakeholders.”

Payment Schedule

§	$104 million by August 31, 2009.
§	$212 million on September 15, 2009.
§	$212 million in annual payments to be paid quarterly over three years commencing October 15, 2009 through June 15, 2012.

     While the majority of the $952 million in scheduled payments over the next three years represents the payment of taxes previously deferred and provided for, also included in the August 2009 payment is $41 million representing prior interest the majority of which is not deductible. The company had previously accrued interest during the period of appeals and as a result of this agreement, Sysco expects to record an approximate $30 million after tax income benefit, or $0.05 per diluted share, in its first quarter financial results for fiscal 2010.

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     The Cooperative, in place since 2002, administers a consolidated product procurement program to develop, obtain and ensure consistent quality products. This agreement finalizes the federal tax matters related to the Cooperative.

     Additional details regarding the impact of this agreement are contained in the company’s Form 10-K for the year ended June 27, 2009 as filed with the Securities and Exchange Commission.

Conference Call & Webcast

     Sysco management will host a conference call on Tuesday, August 25, 2009 at 10:00 a.m. EST to discuss the agreement. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com in the Investor Relations section.

About Sysco

     Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. The company operates 186 distribution facilities serving approximately 400,000 customers. For the fiscal year 2009 that ended June 27, 2009, the company generated more than $36 billion in sales. For more information about Sysco visit the company’s Internet home page at www.sysco.com.

Forward-Looking Statements

     Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding the company’s ability to fund the cash payments required by the settlement from cash on hand and operating cash flow and the estimated impact of the settlement on earnings per share. 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 factors that could negatively impact Sysco’s business, and capital expenditures or acquisitions in excess of those currently anticipated or other unexpected cash requirements. Any of these factors, as well as stock repurchases at historical levels, could result in a need for additional borrowings or other capital. In addition, the diluted earnings per share impact of the settlement is impacted by share repurchases and the number of anti-dilutive stock options excluded from the diluted shares calculation. Risks to Sysco’s business include risks relating to the foodservice distribution industry’s relatively low profit margins and sensitivity to general economic conditions, including the current economic environment and decreases in consumer spending; increased fuel costs; Sysco’s leverage and debt risks; the successful completion of acquisitions and integration of acquired companies as well as the risk that

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acquisitions could negatively impact the Company’s stock price, operating results or debt ratio or significantly increase the Company’s liquidity requirements; 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; risks related to the Company’s implementation of its enterprise wide integrated software project, including the risk that the project may not be successfully implemented or may not prove cost effective; and internal factors such as the ability to control expenses. Capital expenditures may vary from those projected based on changes in business plans and other factors, including those described above. For a discussion of additional risk factors, see the Company’s Annual Report on Form 10-K for the year ended June 27, 2009 as filed with the Securities and Exchange Commission.

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