EX-99.1 2 h69476exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
(PRESS RELEASE LOGO)

For more information
Contact
Neil Russell
Vice President, Investor Relations
T 281-584-1308
  (SYSCO LOGO)
SYSCO REPORTS SECOND FISCAL QUARTER DILUTED EPS OF $0.45,
AN INCREASE OF 12.5% COMPARED TO THE PRIOR YEAR
HOUSTON, February 1, 2010 — Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week second quarter ended December 26, 2009.
Second Quarter Fiscal 2010 Highlights
  Sales were $8.9 billion, a decrease of 3.1% from $9.1 billion in the second quarter of fiscal 2009.
  Operating income was $462 million, an increase of 9.6% compared to $422 million in last year’s second quarter.
  Diluted earnings per share (EPS) was $0.45, an increase of 12.5% compared to $0.40 in last year’s second quarter.
First Half Fiscal 2010 Highlights
  Sales were $17.9 billion, a decrease of 5.7% from $19.0 billion in the first half of fiscal 2009.
  Operating income was $960 million, an increase of 3.6% compared to $927 million in last year’s first half.
  Diluted EPS was $1.00, an increase of 16.3% compared to $0.86 in last year’s first half.
     “I am encouraged by our operating performance this quarter,” said Bill DeLaney, Sysco’s chief executive officer. “While the business environment remains challenging, deflation pressures appear to be moderating from highs we saw early in the quarter and case volume trends continue to improve. I want to recognize our associates for their efforts during the quarter, as they continued to provide excellent service to our customers, improve productivity and maintain strong cost controls.”

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Second Quarter Fiscal 2010 Summary
     Sales for the second quarter were $8.9 billion, a decrease of 3.1% compared to the same period last year. Food cost deflation, as measured by the estimated change in Sysco’s cost of goods, was 3.5% percent for the quarter. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the quarter increased sales by 1.2%.
     Operating expenses declined $96 million, or 7.2%, for the second quarter of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $37 million favorable change in the value of Corporate Owned Life Insurance (COLI) and a $25 million decline in payroll expense related to reduced headcount. Operating income increased $40 million, or 9.6%, to $462 million during the second quarter, and operating margin was 5.2%.
     Net earnings for the second quarter were $268 million, an increase of $31 million, or 12.9%. Diluted EPS was $0.45, aided by a $0.01 favorable impact from COLI, compared to $0.40 in the prior year period which included a $0.05 negative impact from COLI.
First Half Fiscal 2010 Summary
     Sales for the first half of fiscal 2010 were $17.9 billion, a decrease of 5.7% compared to the same period last year. Food cost deflation, as measured by the estimated change in Sysco’s cost of goods, was 3.4% percent for the first half of the year. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the first half of the year increased sales by 0.3%.
     Operating expenses declined $227 million, or 8.4%, for the first half of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $95 million decline in payroll expense related to reduced headcount and lower incentive compensation, as well as an $81 million favorable change in the value of COLI. Operating income increased $33 million, or 3.6%, to $960 million during the first half of fiscal 2010, and operating margin was 5.3%.
     Net earnings for the first half of fiscal 2010 were $595 million, an increase of $80 million, or 15.6%. Diluted EPS was $1.00, aided by a $0.04 favorable impact from COLI and a $0.05 tax benefit related to the company’s IRS settlement announced in the first quarter of fiscal 2010. Diluted EPS in the prior year period was $0.86 which included a $0.09 negative impact from COLI.
Capital Spending
     Capital expenditures totaled $138 million and $248 million for the second quarter and first half of fiscal 2010, respectively. The primary areas for investments included facility replacements and expansions, technology, and additions and replacements to Sysco’s fleet. For the fiscal 2010 year, the company projects capital expenditures will be in the range of $600 million to $650 million.

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Conference Call & Webcast
     Sysco’s second quarter fiscal 2010 earnings conference call will be held on Monday, February 1, 2010 at 10:00 a.m. EST. 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 continued improvement in volume trend, moderation of deflation pressures and projections regarding capital expenditures. 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 sales volume and deflation include risks relating to sensitivity to general economic conditions, including the current economic environment and decreases in consumer spending; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; and labor issues. Capital expenditures may vary from those projected based on changes in business plans and other factors, including risks related to the implementation of our business transformation project, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending. For a discussion of additional factors impacting Sysco’s business, 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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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands, Except for Share and Per Share Data)
                                 
    26-Week Period Ended     13-Week Period Ended  
    Dec. 26, 2009     Dec. 27, 2008     Dec. 26, 2009     Dec. 27, 2008  
Sales
  $ 17,949,925     $ 19,027,232     $ 8,868,499     $ 9,149,803  
Cost of sales
    14,507,679       15,390,563       7,173,612       7,399,690  
 
                       
Gross margin
    3,442,246       3,636,669       1,694,887       1,750,113  
Operating expenses
    2,482,567       2,710,053       1,232,536       1,328,249  
 
                       
Operating income
    959,679       926,616       462,351       421,864  
Interest expense
    65,322       54,810       31,522       28,400  
Other income, net
    (3,150 )     (8,036 )     (1,138 )     (5,223 )
 
                       
Earnings before income taxes
    897,507       879,842       431,967       398,687  
Income taxes
    302,953       365,374       163,618       161,033  
 
                       
Net earnings
  $ 594,554     $ 514,468     $ 268,349     $ 237,654  
 
                       
 
                               
Net earnings:
                               
Basic earnings per share
  $ 1.00     $ 0.86     $ 0.45     $ 0.40  
Diluted earnings per share
    1.00       0.86       0.45       0.40  
 
                               
Average shares outstanding
    592,110,975       599,903,629       592,651,712       597,549,831  
Diluted shares outstanding
    592,678,989       601,100,591       593,372,477       598,233,384  
 
                               
Dividends declared per common share
  $ 0.49     $ 0.46     $ 0.25     $ 0.24  
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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share Data)
                         
    Dec. 26, 2009     June 27, 2009     Dec. 27, 2008  
    (unaudited)             (unaudited)  
ASSETS
                       
Current assets
                       
Cash and cash equivalents
  $ 647,606     $ 1,087,084     $ 373,074  
Short-term investments
    61,860              
Accounts and notes receivable, less allowances of $67,035, $36,078 and $67,400
    2,526,044       2,468,511       2,623,509  
Inventories
    1,790,327       1,650,666       1,862,187  
Prepaid expenses and other current assets
    63,674       64,418       60,938  
 
                 
Total current assets
    5,089,511       5,270,679       4,919,708  
Plant and equipment at cost, less depreciation
    3,072,721       2,979,200       2,890,641  
Other assets
                       
Goodwill
    1,551,550       1,510,795       1,384,790  
Intangibles, less amortization
    118,032       121,089       78,976  
Restricted cash
    128,683       93,858       93,541  
Prepaid pension cost
    70,753       26,746       249,840  
Other assets
    245,716       214,252       193,926  
 
                 
Total other assets
    2,114,734       1,966,740       2,001,073  
 
                 
Total assets
  $ 10,276,966     $ 10,216,619     $ 9,811,422  
 
                 
 
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                       
Current liabilities
                       
Accounts payable
  $ 1,906,745     $ 1,856,887     $ 1,707,331  
Accrued expenses
    793,303       797,756       806,055  
Accrued income taxes
    56,775       323,983       538,790  
Deferred taxes
    18,482       162,365       234,286  
Current maturities of long-term debt
    8,438       9,163       6,747  
 
                 
Total current liabilities
    2,783,743       3,150,154       3,293,209  
Other liabilities
                       
Long-term debt
    2,468,690       2,467,486       1,972,612  
Deferred taxes
    545,863       526,377       539,534  
Other long-term liabilities
    548,383       622,900       712,055  
 
                 
Total other liabilities
    3,562,936       3,616,763       3,224,201  
Commitments and contingencies
                       
Shareholders’ equity
                       
Preferred stock, par value $1 per share, Authorized 1,500,000 shares, issued none
                 
Common stock, par value $1 per share, Authorized 2,000,000,000 shares, issued 765,174,900 shares
    765,175       765,175       765,175  
Paid-in capital
    788,138       760,352       750,843  
Retained earnings
    6,844,095       6,539,890       6,281,575  
Accumulated other comprehensive loss
    (180,095 )     (277,986 )     (197,287 )
Treasury stock at cost, 173,100,605, 175,148,403 and 173,746,062 shares
    (4,287,026 )     (4,337,729 )     (4,306,294 )
 
                 
Total shareholders’ equity
    3,930,287       3,449,702       3,294,012  
 
                 
Total liabilities and shareholders’ equity
  $ 10,276,966     $ 10,216,619     $ 9,811,422  
 
                 
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Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
                 
    26-Week Period Ended  
    Dec. 26, 2009     Dec. 27, 2008  
Cash flows from operating activities:
               
Net earnings
  $ 594,554     $ 514,468  
Adjustments to reconcile net earnings to cash provided by operating activities:
               
Share-based compensation expense
    39,913       35,129  
Depreciation and amortization
    189,428       190,609  
Deferred tax (benefit) provision
    (172,756 )     337,453  
Provision for losses on receivables
    19,815       30,652  
Other non-cash items
    536       (112 )
Additional investment in certain assets and liabilities, net of effect of businesses acquired:
               
(Increase) decrease in receivables
    (53,597 )     26,769  
(Increase) in inventories
    (121,626 )     (57,859 )
Decrease in prepaid expenses and other current assets
    1,307       2,144  
Increase (decrease) in accounts payable
    27,688       (301,018 )
(Decrease) in accrued expenses
    (16,974 )     (149,811 )
(Decrease) in accrued income taxes
    (236,099 )     (68,877 )
(Increase) decrease in other assets
    (30,372 )     2,087  
(Decrease) increase in other long-term liabilities and prepaid pension cost, net
    (97,343 )     2,889  
Excess tax benefits from share-based compensation arrangements
    (475 )     (2,774 )
 
           
Net cash provided by operating activities
    143,999       561,749  
 
           
Cash flows from investing activities:
               
Additions to plant and equipment
    (247,575 )     (178,596 )
Proceeds from sales of plant and equipment
    2,422       2,077  
Acquisition of businesses, net of cash acquired
    (9,161 )     (16,277 )
Purchases of short-term investments
    (60,162 )      
(Increase) in restricted cash
    (34,825 )     (954 )
 
           
Net cash used for investing activities
    (349,301 )     (193,750 )
 
           
Cash flows from financing activities:
               
Other debt borrowings
    4,580       9,316  
Other debt repayments
    (5,601 )     (5,610 )
Common stock reissued from treasury for share-based compensation awards
    36,914       85,628  
Treasury stock purchases
          (358,751 )
Dividends paid
    (283,766 )     (264,687 )
Excess tax benefits from share-based compensation arrangements
    475       2,774  
 
           
Net cash used for financing activities
    (247,398 )     (531,330 )
 
           
Effect of exchange rates on cash
    13,222       (15,147 )
 
           
Net (decrease) in cash and cash equivalents
    (439,478 )     (178,478 )
Cash and cash equivalents at beginning of period
    1,087,084       551,552  
 
           
Cash and cash equivalents at end of period
  $ 647,606     $ 373,074  
 
           
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
Interest
  $ 67,670     $ 55,577  
Income taxes
    759,704       73,830  
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Sysco Corporation and its Consolidated Subsidiaries
COMPARATIVE SEGMENT DATA (Unaudited)

(In Thousands)
                                 
    26-Week Period Ended     13-Week Period Ended  
    Dec. 26, 2009     Dec. 27, 2008     Dec. 26, 2009     Dec. 27, 2008  
Sales:
                               
Broadline
  $ 14,393,429     $ 15,077,939     $ 7,084,723     $ 7,205,372  
SYGMA
    2,308,174       2,460,809       1,157,313       1,232,574  
Other
    1,495,543       1,726,797       752,666       831,057  
Intersegment
    (247,221 )     (238,313 )     (126,203 )     (119,200 )
 
                       
Total
  $ 17,949,925     $ 19,027,232     $ 8,868,499     $ 9,149,803  
 
                       
Comparative Supplemental Statistical Information Related to Sales (Unaudited)
Comparative Sysco Brand Sales and Marketing Associate-Served Sales data are summarized below.
                                 
    26-Week Period Ended   13-Week Period Ended
    Dec. 26, 2009   Dec. 27, 2008   Dec. 26, 2009   Dec. 27, 2008
Sysco Brand Sales as a % of MA-Served Sales
    46.82 %     49.17 %     46.71 %     48.86 %
Sysco Brand Sales as a % of Total Broadline Sales
    37.97 %     40.35 %     37.54 %     39.83 %
MA-Served Sales as a % of Total Broadline Sales
    46.52 %     47.02 %     44.76 %     45.31 %
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