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): October 30, 2006

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)

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:

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))

TABLE OF CONTENTS

Press Release

Item 2.02. Results of Operations and Financial Condition

     On October 30, 2006, SYSCO Corporation (“SYSCO”) issued a press release announcing its results of operations and financial condition for the first quarter ended September 30, 2006 of the fiscal year ending June 30, 2007. SYSCO hereby incorporates by reference herein the information set forth in its press release dated October 30, 2006 (the “Press Release”), 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. Forward-looking statements in the Press Release are subject to certain risks and uncertainties described 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 July 1, 2006 as filed with the Securities and Exchange Commission.

     The information in this Current Report is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in Item 2.02 of this report, including the Press Release attached hereto as Exhibit 99.1, will not be incorporated by reference into any registration statement filed by SYSCO under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01. Financial Statements and Exhibits.

(a)	Financial Statements of Businesses Acquired.
	Not applicable.
(b)	Pro Forma Financial Information.
	Not applicable.
(c)	Shell company transactions.
	Not applicable.
(d)	Exhibits.

Exhibit Number	Description
99.1	Press Release dated October 30, 2006

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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: October 30, 2006	By:	/s/ Michael C. Nichols
		Name:	Michael C. Nichols
		Title:	Vice President, General Counsel and Corproate Secretary

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated October 30, 2006

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EX-99.1

Exhibit 99.1

SYSCO

SYSCO Corporation
1390 Enclave Parkway
Houston, Texas 77077-2099
(281) 584-1390 NEWS RELEASE

FOR IMMEDIATE RELEASE	FOR MORE INFORMATION
	CONTACT:	John M. Palizza Assistant Treasurer (281) 584-1308

SYSCO ANNOUNCES FIRST QUARTER FISCAL 2007 RESULTS

HOUSTON, October 30, 2006 — SYSCO Corporation (NYSE: SYY) today announced sales and earnings results for its 13-week first quarter that ended September 30, 2006.

First Quarter Fiscal 2007 Highlights:

• Sales increased 8.3% to $8.672 billion from $8.010 billion in last year’s first quarter.

• The impact of EITF 04-13 (Accounting for Purchases and Sales of Inventory with the Same Counterparty) reduced first quarter fiscal 2007 sales growth by 1.1%, or $91.5 million.

• Earnings — before the cumulative effect of accounting changes — increased 14.8% to 228.8 million compared to $199.2 million in the first fiscal quarter of 2006.

• Diluted earnings per share — before the cumulative effect of accounting changes — increased 19.4% to $0.37 compared to $0.31 in the first fiscal quarter of 2006.

• Net earnings for the first quarter of fiscal 2007 include a $39.7 million loss due to a change in accounting relating to SYSCO’s adoption of FASB Staff Position No. FTB 85-4-1, “Accounting for Life Settlement Contracts by Third Party Investors.” This change allows SYSCO to account for corporate owned life insurance policies using the investment method or historical cost method prospectively. In addition, net earnings for last year’s first fiscal quarter included a gain of $9.3 million which resulted from a change in the measurement date for SYSCO’s pension and other post retirement benefit plans.

• Net earnings after both accounting changes are taken into effect were $189.0 million this year compared to $208.5 million last year, a decrease of 9.3 percent. Diluted earnings per share after both accounting changes are taken into effect were $0.30 this year compared to $0.33 last year, a decrease of 9.1 percent.

     Richard J. Schnieders, SYSCO’s chairman, chief executive officer and president, commented, “Our company continued to gain market share by growing sales at a faster pace than the industry. In addition, we leveraged our operating expenses during the quarter and generated sound earnings growth and cash flow. Our growth initiatives, including business reviews and increasing the number of our customer contact professionals, remain competitive advantages and continue to produce positive results. This was a very positive quarter and we believe it sets the foundation for the remainder of fiscal 2007.”

Sales:

     Sales growth for the first quarter of fiscal 2007 was 8.3%. The impact of EITF 04-13 reduced first quarter 2007 sales growth by 1.1 percent, or $91.5 million. Sales from non-comparable acquisitions (less than 12 months) contributed 1.0 percent to the first quarter’s sales growth. Food cost inflation, as measured by the change in SYSCO’s cost of goods, was 2.4 percent.

     During the first quarter more than 11,000 business reviews were performed at SYSCO’s U.S. broadline operations. Sales to customers that participated in the review process continued to increase, on average, in the mid-teens range. SYSCO’s staff of customer contact professionals increased by approximately one percent during the first quarter.

Gross Profit Margins:

     Gross profit margins increased 15 basis points in the first quarter to 19.25 percent compared to 19.10 percent in last year’s first quarter, including a 20 basis point benefit due to the impact of EITF 04-13. The slight reduction in margins during the quarter was attributable to a shift in sales mix as some lower margin segments grew faster than the broadline segment.

Expenses:

     Operating expenses as a percent of sales were 14.74 percent during the first quarter compared to 14.69 percent in the same quarter last year. The impact of EITF 04-13 increased first quarter 2007 expenses as a percent of sales by 15 basis points due to the reduction of $91.5 million in reported sales. Fuel costs increased $9.0 million in the quarter. That expense was offset by lower expenses for pension and share-based compensation, which were $14.0 million and $11.7 million, respectively, below last year.

Capital Spending & Other Recent Developments:

     Capital expenditures during the quarter were $115.9 million, primarily for growth investments in facility replacements and expansions, construction of fold-out operations and additions to fleet.

     During the first quarter SYSCO received its construction permit and has begun land work for construction of its second redistribution center in Alachua, Florida. That facility is currently expected to be operational in the third quarter of fiscal 2008.

     SYSCO’s broadline fold-out operation in Raleigh, North Carolina — the company’s sixteenth broadline fold-out to open since 1995 — began distributing product to customers during the first quarter of fiscal 2007. The Knoxville, Tennessee broadline fold-out that was announced in March 2006 continues to progress according to plan and is expected to be operational in the first quarter of fiscal 2008. On August 7, SYSCO also announced plans to construct a broadline fold-out in Longview, Texas to service customers throughout east Texas and portions of Arkansas and Louisiana.

     One acquisition — the purchase of certain foodservice assets of Bunn Capitol Company in Springfield, Illinois — was completed in the first quarter.

Overview of FASB Staff Position No. FTB 85-4-1 “Accounting for Life Settlement Contracts by Third Party Investors”:

     SYSCO has corporate-owned life insurance (COLI) policies on key individuals that are used to fund obligations under non-qualified executive retirement plans. Previously, accounting for these policies required that they be carried at fair value and any gain or loss be recognized each quarter in earnings. The FASB now allows companies to account for its investments using either the investment method or the fair value method. SYSCO has begun accounting for these life insurance policies under the investment method beginning this fiscal year. In doing so, the company recorded a cumulative change in accounting adjustment of a loss of $39.7 million. This represents the reversal of the cumulative amount of gains recorded in years prior to 2007 on existing agreements. On a prospective basis, by accounting for these polices under the investment method, SYSCO will no longer be recording a gain or a loss due to the change in the fair market value of these policies.

Overview of Last Year’s 1Q06 Accounting Change:

     Net earnings for last year’s first fiscal quarter included a gain of $9.3 million. The prior year’s accounting change was the result of SYSCO changing its measurement date for pension and other postretirement benefit plans (from fiscal year end to May 31) to accommodate accelerated SEC filing deadlines.

Conference Call & Webcast:

     As previously announced, SYSCO’s first quarter fiscal 2007 earnings conference call will be held at 10:00 a.m. EDT on Monday, October 30, 2006. 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. For the fiscal year 2006 that ended July 1, 2006, the company generated $32.6 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 continued competitive advantages and positive results from growth initiatives; the potential for future success in fiscal 2007; the ability to achieve growth in sales and market 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 risks that pertain to SYSCO’s business, including the risks relating to the foodservice distribution industry’s relatively low profit margins and sensitivity to general economic conditions, including the current economic environment and 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 acquisitions could negatively impact the Company’s stock price or operating results; 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. Earnings are also impacted by option expensing, which is based on certain assumptions regarding the number and fair value of options granted, resulting tax benefits and shares outstanding. 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 July 1, 2006 as filed with the Securities and Exchange Commission.

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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)

	For the 13-Weeks Ended
	September 30,			October 1,
	2006			2005
Sales	$	8,672,072		$	8,010,484
Costs and expenses
Cost of sales		7,002,856			6,480,793
Operating expenses		1,278,277			1,176,656
Interest expense		25,766			22,246
Other, net		(9,038	)		(3,115	)
Total costs and expenses		8,297,861			7,676,580
Earnings before income taxes		374,211			333,904
Income taxes ( 38.87% in ‘07; 40.34% in ‘06)		145,458			134,694
Earnings before cumulative effect of accounting change		228,753			199,210
Cumulative effect of accounting change		(39,735	)		9,285
Net earnings	$	189,018		$	208,495
Earnings before cumulative effect of accounting change:
Basic earnings per share	$	0.37		$	0.32
Diluted earnings per share	$	0.37		$	0.31
Earnings after cumulative effect of accounting change:
Basic earnings per share	$	0.30		$	0.33
Diluted earnings per share	$	0.30		$	0.33
Average shares outstanding		620,127,064			626,554,930
Diluted average shares outstanding		625,486,950			634,959,278

Comparative segment sales data:
(Unaudited)
($000)

	For the 13-Weeks Ended
	September 30,			October 1,
	2006			2005
Sales:
Broadline	$	6,844,822		$	6,403,567
SYGMA		1,072,077			1,008,438
Other		868,815			684,972
Intersegment		(113,642	)		(86,493	)
Total	$	8,672,072		$	8,010,484

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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)

	September 30,			October 1,
	2006			2005
ASSETS
Current assets Cash	$	180,721		$	177,918
Receivables		2,636,834			2,406,855
Inventories		1,715,608			1,568,546
Deferred taxes		87,292			65,184
Prepaid expenses		74,735			67,344
Total current assets		4,695,190			4,285,847
Plant and equipment at cost, less depreciation		2,486,301			2,280,580
Other assets
Goodwill		1,329,782			1,245,390
Intangibles		96,136			79,706
Restricted cash		111,673			102,178
Prepaid pension cost		400,049			381,510
Other		201,829			230,575
Total other assets		2,139,469			2,039,359
Total assets	$	9,320,960		$	8,605,786
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable	$	6,000		$	31,606
Accounts payable		1,913,688			1,806,046
Accrued expenses		694,069			667,429
Accrued income taxes		480,775			473,645
Deferred taxes		0			0
Current maturities of long-term debt		106,933			210,431
Total current liabilities		3,201,465			3,189,157
Other liabilities
Long-term debt		1,738,858			1,451,697
Deferred taxes		861,776			854,889
Other long-term liabilities		372,149			389,653
Total other liabilities		2,972,783			2,696,239
Contingencies
Shareholders’ equity
Preferred stock		—			—
Common stock, par $1 per share		765,175			765,175
Paid-in capital		555,409			438,692
Retained earnings		5,083,232			4,667,348
Other comprehensive income		84,171			21,910
Treasury stock		(3,341,275	)		(3,172,735	)
Total shareholders’ equity		3,146,712			2,720,390
Total liabilities and shareholders’ equity	$	9,320,960		$	8,605,786

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SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)

	For the 13-Weeks Ended
	September 30,			October 1,
	2006			2005
Cash flows from operating activities:
Net earnings	$	189,018		$	208,495
Add non-cash items:
Cumulative effect of accounting change		39,735			(9,285	)
Share-based compensation expense		29,621			41,280
Depreciation and amortization		90,060			85,056
Deferred tax provision		133,866			112,007
Provision for losses on receivables		8,915			7,703
(Gain) loss on sale of assets		(5,452	)		360
Additional investment in certain assets and liabilities, net of effect of businesses acquired:
(Increase) in receivables		(151,316	)		(112,765	)
(Increase) in inventories		(104,342	)		(93,571	)
(Increase) in prepaid expenses		(15,588	)		(7,021	)
Increase (decrease) in accounts payable		27,364			(2,470	)
(Decrease) in accrued expenses		(53,704	)		(40,341	)
(Decrease) in accrued income taxes		(4,596	)		(23,462	)
(Increase) in other assets		(5,510	)		(6,005	)
(Decrease) increase in other long-term liabilities and prepaid pension cost, net		(2,112	)		42,595
Excess tax benefits from share-based compensation arrangements		(2,776	)		(2,236	)
Net cash provided by operating activities		173,183			200,340
Cash flows from investing activities:
Additions to plant and equipment		(115,879	)		(94,028	)
Proceeds from sales of plant and equipment		10,252			9,654
Acquisition of businesses, net of cash acquired		(43,443	)		(28,357	)
Increase in restricted cash balances		(11,899	)		(447	)
Net cash used for investing activities		(160,969	)		(113,178	)
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments), net		(23,300	)		(36,269	)
Other debt borrowings		114,675			499,765
Other debt repayments		(2,152	)		(202,533	)
Debt issuance costs		—			(3,752	)
Cash paid for termination of interest rate swap		—			(21,196	)
Common stock reissued from treasury		45,186			52,355
Treasury stock purchases		(65,281	)		(295,424	)
Dividends paid		(105,233	)		(94,557	)
Excess tax benefits from share-based compensation arrangements		2,776			2,236
Net cash used for financing activities		(33,329	)		(99,375	)
Effect of exchange rate changes on cash		(61	)		(1,547	)
Net decrease in cash		(21,176	)		(13,760	)
Cash at beginning of period		201,897			191,678
Cash at end of period	$	180,721		$	177,918
Cash paid during the period for:
Interest	$	32,816		$	21,076
Income taxes		15,658			42,024

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Comparative Supplemental Statistical Information Related to Sales (Unaudited)

Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data are summarized below.

	For the 13-Weeks Ended
	September 30,			October 1,
	2006			2005
SYSCO Brand Sales as a % of MA-Served Sales		53.5	%		56.9	%
SYSCO Brand Sales as a % of Total     Traditional Broadline Sales in the U.S.		46.6	%		49.2	%
MA-Served Sales as a % of Total Traditional     Broadline Sales in the U.S.		53.5	%		53.0	%

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