EX-99.1 3 sysco8k1002ex99.txt PRESS RELEASE EXHIBIT 99.1 SYSCO Corporation NEWS RELEASE 1390 Enclave Parkway ------------ Houston, Texas 77077-2099 (281) 584-1390 FOR MORE INFORMATION CONTACT: John Palizza Assistant Treasurer 281-584-1308 SYSCO'S FIRST QUARTER EPS RISE 16.7% ON SALES INCREASE OF 10.2% HOUSTON, October 25, 2002 -- SYSCO Corporation (NYSE: SYY), North America's leading foodservice marketer and distributor, today announced results for its first quarter of fiscal year 2003 ended September 28, 2002. First Quarter Highlights: ------------------------ o Diluted earnings per share rose 16.7% to $0.28 compared to $0.24 in the same period last year o Net earnings climbed 11.4% to $183 million vs. $164 million in last year's first quarter o Sales increased 10.2% to $6.4 billion vs. $5.8 billion in last year's first quarter o Real sales growth was 7.0% compared to last year's first quarter o Marketing associate-served sales as a percentage of traditional broadline sales increased to 57.2% from 56.2% o SYSCO Brand items accounted for 56.7% of marketing associate-served sales and 48.9% of all traditional broadline company sales Charles H. Cotros, SYSCO's chairman and chief executive officer, said, "The first quarter's accomplishments were a direct result of our commitment to supreme customer service and the unflagging dedication of our associates in a soft economic environment. Our exceptional performance was a testimony to our ability to maintain appropriate customer mix, focus on expense reduction and provide value-added products and services. "For the first time in the past eight quarters we achieved our stated long-term growth objective of high single-digit real sales growth. Real sales growth continued an upward trend, accelerating in the final weeks of the period to produce a solid 7.0 percent gain," he said. Mr. Cotros also noted that acquisitions contributed 5.4 percent to sales growth while food cost deflation, primarily in the categories of dairy, fresh and frozen meat, seafood and poultry, was 2.2 percent. "Our broadline operating companies generated good gross margin performance, which was slightly offset by the gross margins of the SERCA operations, which have a higher mix of multi-unit type accounts," added Mr. Cotros. "Coupled with the performance of our SYGMA and Other segments, overall gross profit margins increased 12 basis points for the quarter." - more - 5 Mr. Cotros concluded his remarks by noting that SYSCO's operating companies exhibited good expense control during the first quarter. Total expenses for the quarter increased as a percent to sales from the same quarter last year due to a $15.5 million expense required to reflect a decline in the value of the equity component of investments which are maintained to meet obligations for certain non-qualified retirement programs. Richard J. Schnieders, SYSCO's president and chief operating officer, also commented that The SYGMA Network, Inc., SYSCO's chain restaurant distribution subsidiary, generated $710 million in sales for the quarter, a gain of 9.1 percent compared against the same period last year, while the company's specialty meat, produce and hotel supply operations combined for $394 million in sales, a gain of 4.8 percent. "The performance of recent broadline fold-out companies in Las Vegas and Columbia, South Carolina is in line with our expectations, and just this week we began delivering products from our first-ever specialty meat company fold-out in Chicago," continued Mr. Schnieders. "In addition, the integration of the SERCA foodservice operations in Canada is going as planned, and our strategies of focusing on marketing associate-served customers and success in introducing SYSCO Branded products are generating positive results. "Our sales momentum has continued into the second quarter of fiscal 2003," Mr. Schnieders said. "We remain positioned to continue gaining market share while adding value to our employees, customers, shareholders and suppliers. SYSCO operates in an industry that is somewhat resilient to economic conditions, an industry that is supported by consumers' desire, and often necessity, to enjoy meals prepared away from home. By focusing on common goals we have again been able to provide value to our shareholders, customers and suppliers alike." SYSCO is the largest foodservice marketing and distribution organization in North America, providing food and related products and services to approximately 415,000 restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. SYSCO's operations are located throughout the United States and Canada and include broadline companies, specialty produce, meat 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. 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, gain market share and achieve real sales growth.. 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; 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 29, 2002 as filed with the Securities and Exchange Commission. - more - 6 SYSCO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In Thousands Except for Share Data)
For the 13-Week Period Ended ----------------------------------------------- September 28, 2002 September 29, 2001 ------------------ ------------------ Sales $ 6,424,422 $ 5,828,678 Costs and expenses Cost of sales 5,154,704 4,683,617 Operating expenses 960,635 864,456 Interest expense 16,828 15,864 Other, net (3,412) (769) ------------------ ------------------ Total costs and expenses 6,128,755 5,563,168 ------------------ ------------------ Earnings before income taxes 295,667 265,510 Income taxes 113,093 101,558 ------------------ ------------------ Net earnings $ 182,574 $ 163,952 ================== ================== Basic earnings per share $ 0.28 $ 0.25 ================== ================== Diluted earnings per share $ 0.28 $ 0.24 ================== ================== Average shares outstanding 654,176,221 666,765,148 ================== ================== Diluted average shares outstanding 663,542,498 677,916,766 ================== ==================
The comparative segment sales data for the first quarter of fiscal years 2003 and 2002 are summarized below.
For the 13-Week Period Ended (Unaudited) ----------------------------------------------- September 28, 2002 September 29, 2001 ------------------ ------------------ Sales (In Thousands) Broadline $ 5,321,257 $ 4,802,933 SYGMA 709,584 650,298 Other 393,581 375,447 ------------------ ------------------ Total sales $ 6,424,422 $ 5,828,678 ================== ==================
- more - 7 SYSCO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands)
September 28, 2002 September 29, 2001 ------------------ ------------------ Current assets Cash $ 163,189 $ 123,586 Receivables 1,869,128 1,684,672 Inventories 1,226,885 1,119,856 Deferred taxes 41,699 94,657 Prepaid expenses 73,030 65,439 ------------------ ------------------ Total current assets 3,373,931 3,088,210 Plant and equipment at cost, less depreciation 1,718,941 1,554,193 Other assets Goodwill and intangibles 922,491 781,727 Restricted cash 57,000 - Other 173,094 183,758 ------------------ ------------------ Total other assets 1,152,585 965,485 ------------------ ------------------ Total assets $ 6,245,457 $ 5,607,888 ================== ================== Current liabilities Notes payable $ 50,016 $ 108,671 Accounts payable 1,420,276 1,292,984 Accrued expenses 709,137 574,406 Accrued income taxes 38,241 130,676 Current maturities of long-term debt 13,474 22,665 ------------------ ------------------ Total current liabilities 2,231,144 2,129,402 Other liabilities Long-term debt 1,265,938 1,081,305 Deferred taxes 554,690 263,521 ------------------ ------------------ Total other liabilities 1,820,628 1,344,826 Shareholders' equity Common stock, par $l per share 765,175 765,175 Paid-in capital 233,727 210,148 Retained earnings 2,992,849 2,532,458 Other comprehensive loss (65,435) (5,624) Treasury stock (1,732,631) (1,368,497) ------------------ ------------------ Total shareholders' equity 2,193,685 2,133,660 ------------------ ------------------ Total liabilities and shareholders' equity $ 6,245,457 $ 5,607,888 ================== ==================
- more - 8 SYSCO CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In Thousands)
For the 13-Week Period Ended --------------------------------------------- September 28, 2002 September 29, 2001 ------------------ ------------------ Cash flows from operating activities: Net earnings $ 182,574 $ 163,952 Add non-cash items: Depreciation and amortization 65,796 66,615 Deferred tax provision (benefit) 105,609 (12,075) Provision for bad debts 7,546 7,371 Additional investment in certain assets and liabilities, net of effect of businesses acquired: (Increase) in receivables (115,847) (37,823) (Increase) in inventories (109,016) (74,304) (Increase) in prepaid expenses (31,064) (24,954) Increase in accounts payable 70,946 19,516 (Decrease) in accrued expenses (59,082) (79,893) Increase in accrued income taxes 2,342 7,304 Decrease in other assets 7,433 4,985 ------------------ ------------------ Net cash provided by operating activities 127,237 40,694 ------------------ ------------------ Cash flows from investing activities: Additions to plant and equipment (88,025) (88,301) Proceeds from sales of plant and equipment 4,782 1,716 Acquisition of businesses, net of cash acquired (48) (11,232) Increase in restricted cash (25,000) - ------------------ ------------------ Net cash used for investing activities (108,291) (97,817) ------------------ ------------------ Cash flows from financing activities: Bank and commercial paper borrowings 75,509 197,452 Other debt repayments (2,502) (140) Common stock reissued from treasury 41,936 35,619 Treasury stock purchases (109,899) (140,979) Dividends paid (59,240) (46,986) ------------------ ------------------ Net cash (used for) provided by financing activities (54,196) 44,966 ------------------ ------------------ Net decrease in cash (35,250) (12,157) Cash at beginning of period 198,439 135,743 ------------------ ------------------ Cash at end of period $ 163,189 $ 123,586 ------------------ ------------------ Cash paid during the period for: Interest $ 7,938 $ 10,170 Income taxes 8,268 108,910
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