-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ITeV2mSToX6RJSaTOPml8JJPvQ3e43tV9jEXSq8KZioqTup3s6VEdDCUePOZy+/2 DO0RzuZT8t6eT9dQAaxduQ== 0000950129-94-000711.txt : 19941007 0000950129-94-000711.hdr.sgml : 19941007 ACCESSION NUMBER: 0000950129-94-000711 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940702 FILED AS OF DATE: 19940929 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSCO CORP CENTRAL INDEX KEY: 0000096021 STANDARD INDUSTRIAL CLASSIFICATION: 5140 IRS NUMBER: 741648137 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06544 FILM NUMBER: 94551005 BUSINESS ADDRESS: STREET 1: 1390 ENCLAVE PKWY CITY: HOUSTON STATE: TX ZIP: 77077 BUSINESS PHONE: 7135841390 10-K 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 2, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-6544 SYSCO CORPORATION (Exact name of registrant as specified in its charter) Delaware 74-1648137 (State or other jurisdiction of (IRS employer incorporation or organization) identification number) 1390 ENCLAVE PARKWAY, HOUSTON, TEXAS 77077-2099 (Address of principal executive offices) Registrant's telephone number, including area code: (713) 584-1390 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered ------------------- ------------------------ Common Stock, $1.00 par value New York Stock Exchange Liquid Yield Option Notes due 2004 New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY STOCKHOLDERS WHO WERE NOT AFFILIATES (AS DEFINED BY REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION) OF THE REGISTRANT WAS APPROXIMATELY $4,459,000,000 AT SEPTEMBER 9, 1994 (BASED ON THE CLOSING SALES PRICE ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SEPTEMBER 9, 1994, AS REPORTED BY THE WALL STREET JOURNAL (SOUTHWEST EDITION)). AT SEPTEMBER 9, 1994, THE REGISTRANT HAD ISSUED AND OUTSTANDING AN AGGREGATE OF 183,421,732 SHARES OF ITS COMMON STOCK. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the proxy statement to be filed not later than 120 days after July 2, 1994 are incorporated by reference into Part III. 2 PART I ITEM 1. BUSINESS Sysco Corporation (together with its subsidiaries and divisions hereinafter referred to as "SYSCO" or the "Company") is engaged in the marketing and distribution of a wide range of food and related products to the foodservice or "away-from-home-eating" industry. The foodservice industry consists of two major customer segments -- "traditional" and "chain restaurants". Traditional foodservice customers include restaurants, hospitals, schools, hotels and industrial caterers. SYSCO's chain restaurant customers include regional pizza and French-style bakery operations and national hamburger, chicken and steak chain operations. Services to the Company's traditional foodservice and chain restaurant customers are supported by similar physical facilities, vehicles, materials handling equipment and techniques, and marketing, merchandising and operating staffs. CUSTOMERS AND PRODUCTS The traditional foodservice segment includes businesses and organizations which prepare and serve food to be eaten away from home. Products distributed by the Company include a full line of frozen foods, such as frozen meats, fully prepared frozen entrees, frozen fruits, vegetables and desserts, and a full line of canned and dry goods. In addition, SYSCO's broader line of product offerings includes such items as fresh meat, imported specialties and fresh produce. The Company also supplies a wide variety of nonfood items, including paper products such as disposable napkins, plates and cups; tableware such as china and silverware; restaurant and kitchen equipment and supplies; medical/surgical supplies; and cleaning supplies. SYSCO distributes both nationally-branded merchandise and products packaged under its own private brands. The Company believes that prompt and accurate delivery of orders, close contact with customers and the ability to provide a full array of products and services to assist customers in their foodservice operations are of primary importance in the marketing and distribution of products to the foodservice industry. SYSCO offers daily delivery to certain customer locations and has the capability of delivering special orders on short notice. Through its more than 8,100 sales, marketing and service representatives, the Company keeps informed as to its customers' needs and acquaints them with new products. SYSCO also provides ancillary services relating to its foodservice distribution such as providing customers with product usage reports and other data, menu-planning advice, contract services for installing kitchen equipment, installation and service of beverage dispensing machines and assistance in inventory control. No single traditional foodservice customer accounted for as much as 3% of SYSCO's sales for its fiscal year ended July 2, 1994. Approximately 5% of traditional foodservice sales during fiscal 1994 resulted from a process of competitive bidding. There are no 1 3 material long-term contracts with any traditional foodservice customer that may not be cancelled by either party at its option. The Company's SYGMA Network operations specialize in customized service to chain restaurants, which service is also provided to a lesser extent by many of the Company's traditional foodservice operations. SYSCO's sales to the chain restaurant industry consist of a variety of food products necessitated by the increasingly broad menus of chain restaurants. The Company believes that consistent product quality and timely and accurate service are important factors in the selection of a chain restaurant supplier. No chain restaurant customer accounted for as much as 3% of SYSCO's sales for its fiscal year ended July 2, 1994, and there are no material long-term contracts with any chain restaurant customer that may not be cancelled by either party at its option. SYSCO does not record sales on the basis of the type of foodservice industry customer, but based upon available information, the Company estimates that sales by type of customer during the past three fiscal years were as follows:
Fiscal Fiscal Fiscal Type of Customer 1994 1993 1992 ---------------- ------ ------ ------ Restaurants 60% 60% 60% Hospitals and nursing homes 13 13 13 Schools and colleges 7 7 8 Hotels and motels 6 6 6 Other 14 14 13 --- --- --- Totals 100% 100% 100% === === ===
SOURCES OF SUPPLY SYSCO estimates that it purchases from thousands of independent sources, none of which represents the source of more than 5% of the Company's purchases. These sources of supply consist generally of large corporations selling brand name and private label merchandise and independent private label processors and packers. Generally, purchasing is carried out on a decentralized basis through centrally developed purchasing programs (see "Corporate Headquarters' Services and Controls" below) and direct purchasing programs established by the Company's various operating subsidiaries and divisions. The Company continually develops relationships with suppliers but has no material long-term purchase commitments with any supplier. ACQUISITIONS AND DIVESTITURES Since its formation as a Delaware corporation in 1969 and commencement of operations in March 1970, SYSCO has grown both through internal expansion of existing operations and acquisitions of formerly independent companies. The shareholders of nine companies exchanged their stock for SYSCO common stock at the formation of the Company, and through the end of fiscal 1994, fifty-one companies have been acquired, as follows: 2 4
Date Accounted Company Acquired for as a: ------- -------- ------------- The Grant Grocer Company June 1970 Pooling The Albany Frosted Foods, Inc. and Affiliated Companies September 1970 Pooling Arrow Food Distributors, Inc. January 1971 Purchase Koon Food Sales, Inc. March 1971 Pooling Rome Foods Company October 1971 Pooling Saunders Food Distributors, Inc. October 1971 Purchase Hallsmith Company, Inc. April 1972 Pooling The Miesel Company June 1972 Pooling Robert Orr & Company July 1972 Pooling Jay Rodgers Co. July 1972 Pooling Hardin's, Inc. August 1972 Pooling Baraboo Food Products, Inc. May 1973 Pooling E. R. Cochran Company December 1973 Purchase The Fialkow Company December 1973 Purchase Sterling-Keeleys Incorporated December 1973 Purchase Harrisonburg Fruit & Produce Co. April 1974 Pooling Alabama Complete Foods, Inc. July 1974 Pooling Swan Food Sales, Inc. October 1974 Purchase Tri-State General Food Supply Co., Inc. December 1974 Purchase Marietta Institutional Wholesalers, Inc. June 1975 Purchase Monticello Provision Company August 1975 Purchase Oregon Film Service, Inc. and Affiliated Companies September 1975 Purchase Mid-Central Fish & Frozen Foods, Inc. December 1975 Purchase Glen-Webb & Co. December 1978 Purchase Select-Union Foods, Inc. April 1979 Purchase S.E. Lankford, Jr. Produce, Inc. September 1981 Purchase General Management Corporation and Subsidiaries January 1982 Purchase Frosted Foods, Inc. January 1982 Purchase Pegler & Company October 1983 Purchase Bell Distributing Company December 1983 Purchase DiPaolo Food Distributors, Inc. June 1985 Purchase B. A. Railton Company September 1985 Purchase CML Company, Inc. September 1985 Purchase New York Tea Company September 1985 Purchase Operating divisions of PYA/Monarch, Inc. and PYA/Monarch of Texas, Inc. (Wholly-owned subsidiaries of Sara Lee Corporation) Amarillo, Texas September 1985 Purchase Austin, Texas September 1985 Purchase Beaumont, Texas September 1985 Purchase Trammell, Temple & Staff, Inc. January 1986 Purchase Deaktor Brothers Provision Co. March 1986 Purchase Bangor Wholesale Foods, Inc. June 1986 Purchase General Foodservice Supply, Inc. December 1986 Purchase Vogel's June 1987 Purchase Major-Hosking's, Inc. July 1987 Purchase Foodservice distribution - related businesses of Staley Continental, Inc. (CFS Continental) August 1988 Purchase Olewine's, Inc. December 1988 Purchase Oklahoma City-based foodservice distribution businesses of Scrivner, Inc. April 1990 Purchase New York and Pennsylvania-based foodservice distribution businesses of Scrivner, Inc. April 1991 Purchase Benjamin Polakoff & Son, Inc. May 1992 Purchase Perloff Brothers, Inc. (Tartan Foods) December 1992 Purchase St. Louis Division of Clark Foodservice, Inc. February 1993 Purchase Ritter Food Corporation August 1993 Purchase
3 5 SYSCO sold its Global/Sysco division, its last remaining consumer-sized frozen food distribution business, in August 1992. Two companies were acquired in fiscal 1993. Tartan Sysco Food Services, Inc. (formerly Perloff Brothers, Inc.) of Philadelphia, Pennsylvania is a full-line foodservice distributor to customers in Pennsylvania, Delaware, New Jersey and Maryland. Sysco Food Services of St. Louis, Inc. (formerly the St. Louis Division of Clark Foodservice, Inc.) is a full-line foodservice distributor to customers in St. Louis, Missouri and surrounding communities. On August 20, 1993 SYSCO purchased Ritter Sysco Food Services, Inc. (formerly Ritter Food Corporation) of Elizabeth, New Jersey, a full-line foodservice distributor to customers in New Jersey, metropolitan New York, western Connecticut and the Philadelphia, Pennsylvania area. CORPORATE HEADQUARTERS' SERVICES AND CONTROLS SYSCO's corporate staff, currently consisting of approximately 690 persons, provides a number of services to the Company's operating divisions and subsidiaries. These persons possess experience and expertise in, among other areas, accounting and finance, cash management, data processing, employee benefits, engineering and insurance. Also provided are legal, marketing and tax compliance services as well as warehousing and distribution services which provide assistance in space utilization, energy conservation, fleet management and work flow. The corporate staff also administers a consolidated product procurement program engaged in the task of developing, obtaining and assuring consistent quality food and nonfood products. The program covers the purchasing and marketing of SYSCO (R) Brand merchandise, as well as private label and national brand merchandise, encompassing substantially all product lines. The Company's operating subsidiaries and divisions may participate in the program at their option. CAPITAL IMPROVEMENTS To maximize productivity and customer service, the Company continues to construct and modernize its distribution facilities where the appropriate return on investment is projected. During fiscal 1994, 1993 and 1992, approximately $161,000,000, $128,000,000 and $134,000,000, respectively, were invested in facility expansions, fleet additions and other capital asset enhancements. The Company estimates its capital expenditures in fiscal 1995 should be in the range of $150,000,000 to $200,000,000. During the three years ended July 2, 1994, capital expenditures have been financed primarily by internally generated funds and bank borrowings. EMPLOYEES As of July 2, 1994, the Company had approximately 26,200 employees, 21.9% of whom are represented by unions, primarily the International Brotherhood of Teamsters. 4 6 Contract negotiations are handled locally with monitoring and assistance by the corporate staff. Collective bargaining agreements covering approximately 12% of the Company's union employees expire during fiscal 1995. SYSCO considers its labor relations to be satisfactory. COMPETITION The business of SYSCO is competitive with numerous companies engaged in foodservice distribution. While competition is encountered primarily from local and regional distributors, a few companies compete with SYSCO on a national basis. The Company believes that, although price and customer contact are important considerations, the principal competitive factor in the foodservice industry is the ability to deliver a wide range of quality products and related services on a timely and dependable basis. Although SYSCO has less than 10% of the foodservice industry market in the United States, SYSCO believes, based upon industry trade data, that its sales to the "away-from-home-eating" industry are the largest of any foodservice distributor. While adequate industry statistics are not available, the Company believes that in most instances its local operations are among the leading distributors of food and related nonfood products to foodservice customers in their respective trading areas. GENERAL Except for the SYSCO (R) trademark, the Company does not own or have the right to use any patents, trademarks, licenses, franchises or concessions, the loss of which would have a materially adverse effect on the operations or earnings of the Company. SYSCO is not engaged in material research activities relating to the development of new products or the improvement of existing products. The Company is engaged in an internally developed project that involves the redesign and development of the computer operating systems through which SYSCO's operating companies will process, control and report the results of all transactions. The project is approaching completion, with the first installation scheduled during calendar 1995. The costs of this project will be amortized over future earnings as completed portions of the project are put into use. The Company's distribution facilities have tanks for the storage of diesel fuel and other petroleum products which are subject to laws regulating such storage tanks. Other federal, state and local provisions relating to the protection of the environment or the discharge of materials do not materially impact the Company's use or operation of its facilities. The Company anticipates that compliance with these laws will not have a material effect on the capital expenditures, earnings or competitive position of SYSCO and its subsidiaries. Sales of the Company do not generally fluctuate on a seasonal basis, and therefore, the business of the Company is not deemed to be seasonal. The Company operates 106 facilities within the United States and two in Canada. 5 7 ITEM 2. PROPERTIES As of July 2, 1994 the table below shows the number of distribution facilities and self-serve centers occupied by the Company in each state or province and the aggregate cubic footage devoted to cold and dry storage.
Number of Cold Storage Dry Storage Facilities (Thousands (Thousands Location and Centers Cubic Feet) Cubic Feet) -------- ----------- ------------ ----------- Alabama 2 125 424 Arizona 1 1,485 3,410 Arkansas 1 1,200 1,145 California 9 7,566 15,479 Colorado 5 2,759 5,476 Florida 3 6,054 5,158 Georgia 3 1,969 6,381 Idaho 1 578 656 Illinois 2 2,471 2,870 Indiana 1 1,404 1,832 Iowa 1 642 1,259 Kansas 1 1,975 2,592 Kentucky 3 1,868 3,486 Louisiana 1 2,575 1,875 Maine 1 429 1,008 Maryland 4 4,515 5,609 Massachusetts 3 3,614 6,173 Michigan 4 3,649 6,067 Minnesota 1 2,085 2,370 Mississippi 2 1,318 1,991 Missouri 1 1,128 1,348 Montana 1 2,043 1,876 Nebraska 1 1,518 1,673 New Jersey 3 1,567 5,527 New Mexico 2 1,235 2,024 New York 9 4,337 8,767 North Carolina 2 346 848 Ohio 7 4,681 8,938 Oklahoma 3 1,085 2,634 Oregon 2 2,271 3,455 Pennsylvania 6 2,752 5,945 South Dakota 1 5 100 Tennessee 5 6,423 7,351 Texas 9 8,534 14,529 Utah 1 1,837 1,919 Virginia 1 940 950 Washington 2 2,609 2,812 Wisconsin 1 2,566 2,244 British Columbia, Canada 2 1,426 1,855 --- ------- ------- Total 108 95,584 150,056 === ====== =======
6 8 The Company owns approximately 208,678,000 cubic feet of its distribution facilities and self-serve centers (or 85% of the total cubic feet), and the remainder is occupied under leases expiring at various dates from fiscal 1995 to 2011, exclusive of renewal options. Certain of the facilities owned by the Company are either subject to mortgage indebtedness or industrial revenue bond financing arrangements totaling $71,534,000 at July 2, 1994. Such mortgage indebtedness and industrial revenue bond financing arrangements mature at various dates. Facilities in Lincoln, Nebraska; Albuquerque, New Mexico; Harrisburg, Pennsylvania; San Antonio, Texas; Newark, New Jersey; Atlanta, Georgia; Jackson, Mississippi; and Louisville, Kentucky (which in the aggregate account for approximately 13% of total sales) are operating near maximum capacity and the Company is currently constructing or planning replacements or expansions for these distribution facilities. During fiscal 1995 the Company is planning to complete construction of a distribution facility near Hartford, Connecticut and begin construction of a distribution facility in Milwaukee, Wisconsin. The Company's fleet of approximately 4,500 delivery vehicles consists of tractor and trailer combinations, vans and panel trucks, most of which are either wholly or partially refrigerated for the transportation of frozen or perishable foods. The Company owns approximately 91% of these vehicles and leases the remainder. ITEM 3. LEGAL PROCEEDINGS SYSCO is engaged in various legal proceedings which have arisen but have not been fully adjudicated. These proceedings, in the opinion of management, will not have a material adverse effect upon the consolidated balance sheets or results of operations of the Company when ultimately concluded. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 7 9 ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT The following are the executive officers of the Company, each of whom holds the office opposite his name below until the meeting of the Board of Directors immediately preceding the next Annual Meeting of Stockholders or until his successor has been elected or qualified. Executive officers who are also directors, serve as directors until the expiration of their term which is the Annual Meeting of Stockholders in the calendar year specified in parentheses or until his successor has been elected and qualified.
Served in This Position Name of Officer Capacity Since Age --------------- -------- --------- --- John F. Baugh Senior Chairman of the Board of 1985 78 Directors (1994) John F. Woodhouse Chairman of the Board 1985 & 63 of Directors and Chief 1982 Executive Officer (1995) Herbert Irving Vice Chairman and 1969 76 Chairman of the Finance Committee of the Board of Directors (1994) Bill M. Lindig President and Chief 1985 & 57 Operating Officer and 1983 Director (1996) Charles H. Cotros Executive Vice President and 1988, 1989 57 President, Foodservice & 1985 Operations and Director (1994) James A. Schlindwein Executive Vice President, 1983 & 65 Procurement (until August 30, 1994) 1982 and Director (1994) Gregory K. Marshall Senior Vice President, 1993 & 47 Multi-Unit Sales and Chief 1984 Executive Officer, The SYGMA Network, Inc. Richard J. Schnieders Senior Vice President, 1992 46 Merchandising Services John K. Stubblefield, Jr. Senior Vice President, 1993 & 48 Chief Financial Officer & 1994 Controller
Each of the executive officers listed above has been employed by the Company, or a subsidiary or division of the Company, in an executive capacity throughout the past five years. 8 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The principal market for SYSCO's Common Stock is the New York Stock Exchange. The table below sets forth the high and low sales prices per share for SYSCO's Common Stock as reported on the New York Stock Exchange Composite Tape and the cash dividends paid for the periods indicated.
Common Stock Prices ---------------------------------- Dividends High Low Paid ---------- --------- --------- Fiscal 1993 First Quarter $27-1/4 $23-5/8 $.06 Second Quarter 27-3/4 23-1/2 .06 Third Quarter 27-1/8 23-1/4 .07 Fourth Quarter 27 22-1/4 .07 Fiscal 1994 First Quarter $30-3/8 $23-3/4 $.07 Second Quarter 31 27 .07 Third Quarter 29-1/4 25-1/8 .09 Fourth Quarter 26-3/8 22-5/8 .09
The approximate number of shareholders of SYSCO's Common Stock as of July 2, 1994 was 19,900. 9 11 ITEM 6. SELECTED FINANCIAL DATA
- - - ---------------------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended - - - ---------------------------------------------------------------------------------------------------------------------------------- 1993 (In thousands except for share data) 1994 (53 weeks) 1992 1991 1990 - - - ---------------------------------------------------------------------------------------------------------------------------------- Sales $10,942,499 $10,021,513 $ 8,892,785 $8,149,700 $7,590,568 Earnings before income taxes 367,582 331,977 281,656 250,864 216,086 Income taxes 150,830 130,170 109,427 97,034 83,625 ----------- ---------- ----------- ---------- ---------- Net earnings 216,752 201,807 172,229 153,830 132,461 =========== ========== =========== ========== ========== Earnings per share 1.18 1.08 .93 .83 .73 =========== ========== =========== ========== ========== Cash dividends per share .32 .26 .17 .12 .10 Total assets 2,811,729 2,530,043 2,325,206 2,177,695 2,001,020 Capital expenditures 161,485 127,879 134,290 134,921 182,387 Long-term debt 538,711 494,062 488,828 543,176 583,496 Shareholders' equity 1,240,909 1,137,216 1,056,846 918,626 770,829 ----------- ---------- ----------- ---------- ---------- Total capitalization 1,779,620 1,631,278 1,545,674 1,461,802 1,354,325 =========== ========== =========== ========== ========== Ratio of long-term debt to capitalization 30.3% 30.3% 31.6% 37.2% 43.1%
10 12 ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES SYSCO provides marketing and distribution services to foodservice customers throughout the contiguous United States and western Canada. The company intends to continually expand its market share through profitable sales growth and constant emphasis on the development of its consolidated buying programs. The company also strives to increase the effectiveness of its marketing associates and the productivity of its warehousing and distribution activities. These objectives require continuing investment. SYSCO's resources include cash provided by operations and access to capital from financial markets. SYSCO has a stock repurchase program which is used primarily to offset shares issued from time to time in conjunction with various employee benefit plans and conversions of Liquid Yield Option Notes. The number of shares acquired and their cost for the past three years was 3,000,000 shares for $80,131,000 in fiscal 1994, 7,200,000 shares for $180,343,000 in fiscal 1993 and 800,0000 shares for $19,803,000 in fiscal 1992. SYSCO's operations generate a significant amount of cash which is used to fund the company's investment in facilities, fleet and other equipment required to meet its customers' needs and provide for growth. Net cash generated from operating activities was $282,515,000 in 1994, $257,165,000 in 1993 and $234,552,000 in 1992. Expenditures for facilities, fleet and other equipment were $161,485,000 in 1994, $127,879,000 in 1993 and $134,290,000 in 1992. Expenditures in fiscal 1995 should be in the range of $150,000,000 to $200,000,000. The net cash provided by operations less cash utilized for capital expenditures, the stock repurchase program, cash dividends and other uses resulted in long-term debt of $538,711,000 at July 2, 1994. About 47% of the total long-term debt is at fixed rates averaging 7.98% and 53% was at floating rates averaging 4.36%. Long-term debt to capitalization is 30% at July 2, 1994, equal to the 30% at July 3, 1993 and down from the 32% at June 27, 1992. SYSCO continues to have borrowing capacity available and alternative financing arrangements are evaluated as appropriate. SYSCO has a commercial paper program which is currently supported by a $300,000,000 bank credit facility. During fiscal 1994, 1993 and 1992, commercial paper and bank borrowings ranged from approximately $184,900,000 to $415,100,000, $87,500,000 to $292,500,000 and $130,000,000 to $380,000,000, respectively. In summary, SYSCO believes that through continual monitoring and management of assets together with the availability of additional capital in the financial markets, it will meet its cash requirements while maintaining proper liquidity for normal operating purposes. SALES The annual increases in sales of 9% in 1994 and 13% in 1993 result from several factors. Sales in fiscal 1994 and 1993 were affected by modest growth in the U.S. economy, as well as in the foodservice industry, and acquisitions. Excluding the impact of the 53rd week in fiscal 1993, sales increased about 11.5% in fiscal 1994 and about 10% in fiscal 1993. After adjusting for acquisitions, food price increases and eliminating the sales effect of the 53rd week in fiscal 1993, real sales growth was about 7% in 1994 and 9% in 1993. The cost of SYSCO's foodservice products is estimated to have averaged an increase of about 1.9% from the beginning to the end of fiscal 1994 compared to an increase of approximately 1.2% in fiscal 1993. Industry sources estimate the total foodservice market experienced real growth of approximately 2.3% in calendar 1993 and 1.2% in calendar 1992. 11 13 Sales for fiscal 1992 through 1994 were as follows:
- - - ------------------------------------------------------------------------------------------------ Year Sales % Increase - - - ------------------------------------------------------------------------------------------------ 1994 $10,942,499,000 9% 1993 (53 Weeks) 10,021,513,000 13 1992 8,892,785,000 9
A comparison of the sales mix in the principal product categories during the last three years is presented below:
- - - -------------------------------------------------------------------------------------------------------------- 1994 1993 1992 ------------------------------ Medical supplies 1% --% --% Dairy products 8 8 8 Fresh and frozen meats 16 16 17 Seafoods 6 6 6 Poultry 9 9 8 Frozen fruits, vegetables, bakery and other 14 15 15 Canned and dry products 25 25 26 Paper and disposables 7 7 7 Janitorial products 2 2 2 Equipment and smallwares 3 3 3 Fresh produce 6 6 5 Beverage products 3 3 3 --- --- --- 100% 100% 100% === === ===
A comparison of sales by type of customer during the last three years is presented below:
- - - -------------------------------------------------------------------------------------------------------------- 1994 1993 1992 ------------------------------ Restaurants 60% 60% 60% Hospitals and nursing homes 13 13 13 Schools and colleges 7 7 8 Hotels and motels 6 6 6 All other 14 14 13 --- --- --- 100% 100% 100% === === ===
COST OF SALES Cost of sales increased about 9% in 1994 and 13% in 1993. These increases were generally in line with the increases in sales. The rate of increase is influenced by SYSCO's overall customer and product mix as well as economies realized in product acquisition. OPERATING EXPENSES Operating expenses include the costs of warehousing and delivering products as well as selling and administrative expenses. These expenses as a percent of sales for the 1994, 1993 and 1992 fiscal years were 14.3%, 14.2% and 14.3%, respectively. Changes in the percentage relationship of operating expenses to sales result from an interplay of several economic influences. Inflationary increases in operating costs generally have been offset through improved productivity. 12 14 INTEREST EXPENSE Interest expense decreased $2,732,000 or approximately 7% in fiscal 1994 as compared to a decrease of $4,271,000 or approximately 10% in fiscal 1993. The decrease in fiscal 1994 is due primarily to the expiration of the interest rate swap in December 1993, while the decrease in fiscal 1993 was due to a reduction in average borrowings. Interest capitalization during the past three years was $1,313,000 in 1994, $1,315,000 in 1993 and $2,292,000 in 1992. OTHER INCOME, NET Other income decreased $381,000 or about 18% in fiscal 1994 and decreased $4,292,000 or about 67% in fiscal 1993. About one-half of the decrease in fiscal 1993 resulted from the sale of the last retail distribution company on August 3, 1992. This company previously had significant income from storage and handling activities. Other changes between the years result from fluctuations in miscellaneous activities including gains and losses on the sale of old facilities. EARNINGS BEFORE INCOME TAXES Earnings before income taxes rose $35,605,000 or approximately 11% above fiscal 1993, which had increased $50,321,000 or approximately 18% over the prior year. Additional sales and realization of operating efficiencies contributed to the increases. PROVISION FOR INCOME TAXES The effective tax rate for 1994 was approximately 41% and in 1993 and 1992 was approximately 39%. In August 1993 the Omnibus Budget Reconciliation Act of 1993 became effective. This legislation increased the top corporate tax rate from 34% to 35% effective January 1, 1993. Consequently, in the first quarter of fiscal 1994 SYSCO had a charge to earnings for taxes of $4,900,000 relating to transactions and events through July 3, 1993. About $3,300,000 of the charge relates to an increase in deferred taxes and $1,600,000 relates to the retroactivity of the tax rate increase to January 1, 1993. The effective tax rate for fiscal 1994, excluding the effect of the $4,900,000 charge, was 40%. NET EARNINGS Fiscal 1994 represents the eighteenth consecutive year of increased earnings for SYSCO. Net earnings for the year rose $14,945,000 or approximately 7% above fiscal 1993, which had increased $29,578,000 or approximately 17% over the prior year. Excluding the impact of the extra week in fiscal 1993 and the increased tax rate in fiscal 1994, net earnings would have increased approximately 14% in 1994 and approximately 15% in fiscal 1993. DIVIDENDS The quarterly dividend rate of nine cents per share was established in November 1993 when it was increased from the seven cents per share set in November 1992. RETURN ON SHAREHOLDERS' EQUITY The return on average shareholders' equity for 1994, 1993 and 1992 was approximately 18%, 18% and 17%, respectively. Since inception SYSCO has averaged in excess of a 16% return on shareholders' equity. 13 15 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SYSCO CORPORATION AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS JULY 2, 1994 Financial Statements:
Page Report of Management on Internal Accounting Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Consolidated Financial Statements: Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Consolidated Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Consolidated Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Consolidated Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Summary of Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Additional Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Schedules: V Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1 VI Accumulated Depreciation and Amortization of Plant and Equipment . . . . . . . . . . . . . . . . . . . . . S-2 VIII Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3 IX Short-term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
All other schedules are omitted because they are not applicable or the information is set forth in the consolidated financial statements or notes thereto. Financial Statements of the Registrant are omitted because the Registrant is primarily an operating company and all subsidiaries are wholly-owned. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None 14 16 REPORT OF MANAGEMENT ON INTERNAL ACCOUNTING CONTROLS The management of SYSCO is responsible for the preparation and integrity of the consolidated financial statements of the Company. The accompanying consolidated financial statements have been prepared by the management of the Company, in accordance with generally accepted accounting principles, using management's best estimates and judgment where necessary. Financial information appearing throughout this Annual Report is consistent with that in the consolidated financial statements. To help fulfill its responsibility, management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded against loss or unauthorized use and that transactions are executed in accordance with management's authorizations and are reflected accurately in the Company's records. The concept of reasonable assurance is based on the recognition that the cost of maintaining a system of internal accounting controls should not exceed benefits expected to be derived from the system. SYSCO believes that its long-standing emphasis on the highest standards of conduct and ethics, embodied in comprehensive written policies, serves to reinforce its system of internal controls. The Company's operations review function monitors the operation of the internal control system and reports findings and recommendations to management and the Board of Directors. It also oversees actions taken to address control deficiencies and seeks opportunities for improving the effectiveness of the system. Arthur Andersen LLP, independent public accountants, has been engaged to express an opinion regarding the fair presentation of the Company's financial condition and operating results. As part of their audit of the Company's financial statements, Arthur Andersen LLP considered the Company's system of internal controls to the extent they deemed necessary to determine the nature, timing and extent of their audit tests. The Board of Directors oversees the Company's financial reporting through its Audit Committee which consists entirely of outside directors. The Board, after a recommendation from the Audit Committee, selects and engages the independent public accountants annually. The Audit Committee reviews both the scope of the accountants' audit and recommendations from both the independent public accountants and the internal operations review function for improvements in internal controls. The independent public accountants have free access to the Audit Committee and from time to time confer with them without management representation. 15 17 SYSCO recognizes its responsibility to conduct business in accordance with high ethical standards. This responsibility is reflected in a comprehensive code of business conduct that, among other things, addresses potentially conflicting outside business interests of Company employees and provides guidance as to the proper conduct of business activities. Ongoing communications and review programs are designed to help ensure compliance with this code. The Company believes that its system of internal controls is effective and adequate to accomplish the objectives discussed above. /s/ John F. Woodhouse /s/ John K. Stubblefield, Jr. --------------------- ----------------------------- John F. Woodhouse John K. Stubblefield, Jr. Chairman & Chief Executive Officer Senior Vice President, Chief Financial Officer & Controller 16 18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS Board of Directors and Shareholders Sysco Corporation We have audited the accompanying consolidated balance sheets of Sysco Corporation (a Delaware corporation) and subsidiaries as of July 2, 1994 and July 3, 1993, and the related consolidated results of operations, shareholders' equity and cash flows for each of the three years in the period ended July 2, 1994. These financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sysco Corporation and subsidiaries as of July 2, 1994 and July 3, 1993, and the results of their operations and their cash flows for each of the three years in the period ended July 2, 1994, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in Item 14(a) are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP Arthur Andersen LLP Houston, Texas August 3, 1994 17 19 CONSOLIDATED BALANCE SHEETS
- - - ----------------------------------------------------------------------------------------------------------------------------------- (In thousands except for share data) July 2, 1994 July 3, 1993 - - - ----------------------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash $ 86,735 $ 68,759 Accounts and notes receivable, less allowances of $15,999 and $15,122 856,448 770,553 Inventories 601,994 534,167 Deferred taxes 38,091 28,878 Prepaid expenses 16,380 17,379 ------------- ------------ Total current assets 1,599,648 1,419,736 Plant and equipment at cost, less depreciation 817,221 759,857 Other assets Goodwill and intangibles, less amortization 266,021 267,056 Other 128,839 83,394 ------------- ------------ Total other assets 394,860 350,450 ------------- ------------ Total assets $ 2,811,729 $ 2,530,043 ============= ============ Liabilities and shareholders' equity Current liabilities Notes payable $ 5,247 $ 6,609 Accounts payable 632,373 550,507 Accrued expenses 176,043 159,056 Accrued income taxes 29,168 26,929 Current maturities of long-term debt 3,730 3,372 ------------- ------------ Total current liabilities 846,561 746,473 Long-term debt 538,711 494,062 Deferred taxes 185,548 152,292 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 500,000,000 shares, issued 191,293,725 shares 191,294 191,294 Paid-in capital 60,003 74,158 Retained earnings 1,200,735 1,043,057 ------------- ------------ 1,452,032 1,308,509 Less cost of treasury stock, 8,224,505 and 6,836,329 shares 211,123 171,293 ------------- ------------ Total shareholders' equity 1,240,909 1,137,216 ------------- ------------ Total liabilities and shareholders' equity $ 2,811,729 $ 2,530,043 ============= ============
See Summary of Accounting Policies and Additional Financial Information. 18 20 CONSOLIDATED RESULTS OF OPERATIONS
- - - ----------------------------------------------------------------------------------------------------------------------------------- Year Ended - - - ----------------------------------------------------------------------------------------------------------------------------------- July 3, 1993 (In thousands except for share data) July 2, 1994 (53 Weeks) June 27, 1992 - - - ----------------------------------------------------------------------------------------------------------------------------------- Sales $ 10,942,499 $ 10,021,513 $ 8,892,785 Costs and expenses Costs of sales 8,971,628 8,225,275 7,303,886 Operating expenses 1,568,773 1,427,394 1,270,397 Interest expense 36,272 39,004 43,275 Other income, net (1,756) (2,137) (6,429) ------------- ------------- ------------ Total costs and expenses 10,574,917 9,689,536 8,611,129 ------------- ------------- ------------ Earnings before income taxes 367,582 331,977 281,656 Income taxes 150,830 130,170 109,427 ------------- ------------- ------------ Net earnings $ 216,752 $ 201,807 $ 172,229 ============= ============= ============ Earnings per share $ 1.18 $ 1.08 $ .93 ============= ============= ============
See Summary of Accounting Policies and Additional Financial Information. 19 21 CONSOLIDATED SHAREHOLDERS' EQUITY
- - - ------------------------------------------------------------------------------------------------------------------------------------ Cost of Common Paid-In Retained Treasury (In thousands) Stock Capital Earnings Stock - - - ------------------------------------------------------------------------------------------------------------------------------------ Balance at June 29, 1991 $ 92,600 $ 49,616 $ 776,410 Net earnings for year ended June 27, 1992 172,229 Cash dividends paid, $.17 per share (31,637) Treasury stock purchses, net $ 19,803 Stock issued upon conversion of Liquid Yield Option Notes 1 42 Stock options exercised 386 7,437 Employees' Stock Purchase Plan 186 6,137 Management Incentive Plan 119 3,123 2-for-1 stock split 93,292 (66,355) (26,937) ---------- --------- ----------- --------- Balance at June 27, 1992 186,584 -- 890,065 19,803 Net earnings for year ended July 3, 1993 201,807 Cash dividends paid, $.26 per share (48,815) Treasury stock purchases 180,343 Stock issued upon conversion of Liquid Yield Option Notes 4,710 85,649 Stock options exercised (8,284) (11,557) Employees' Stock Purchase Plan (1,625) (12,785) Management Incentive Plan (1,582) (4,511) ---------- --------- ----------- --------- Balance at July 3, 1993 191,294 74,158 1,043,057 171,293 Net earnings for year ended July 2, 1994 216,752 Cash dividends paid, $.32 per share (59,074) Treasury stock purchases 80,131 Stock issued upon conversion of Liquid Yield Option Notes (642) (3,282) Stock options excercised (9,741) (16,055) Employees' Stock Purchase Plan (1,461) (14,262) Management Incentive Plan (2,311) (6,702) ---------- --------- ----------- --------- Balance at July 2, 1994 $ 191,294 $ 60,003 $1,200,735 $ 211,123 ========== ========= ========== =========
See Summary of Accounting Policies and Additional Financial Information. 20 22 CONSOLIDATED CASH FLOWS
- - - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended - - - ------------------------------------------------------------------------------------------------------------------------------------ July 3, 1993 (In thousands) July 2, 1994 (53 Weeks) June 27, 1992 - - - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net earnings $ 216,752 $ 201,807 $ 172,229 Add non-cash items: Depreciation and amortization 119,982 107,718 99,510 Interst on Liquid Yield Option Notes 5,740 8,004 10,552 Deferred tax provision 23,292 13,281 15,521 Provision for losses on receivables 17,918 14,312 14,422 Additional investment in certain assets and liabilities, net of effect of businesses acquired and sold: (Increase) in receivables (86,487) (103,236) (69,192) (Increase) in inventories (58,282) (38,114) (27,190) Decrease (increase) in prepaid expenses 3,606 (2,864) (1,211) Increase in accounts payable 73,777 54,077 40,413 Increase (decrease) in accrued expenses 15,510 13,144 (3,421) Increase in accrued income taxes 2,277 20,863 3,190 (Increase) in other assets (51,570) (31,827) (20,271) ------------ ------------ ----------- Net cash provided by operating activities 282,515 257,165 234,552 ------------ ------------ ----------- Cash flows from investing activities: Additions to plant and equipment (161,485) (127,879) (134,290) Proceeds from sales of plant and equipment 2,693 5,136 16,379 Acquisitions of businesses, net of cash acquired (15,606) (10,481) (12,996) Proceeds from sale of business -- 10,878 -- ------------ ------------ ----------- Net cash used for investing activities (174,398) (122,346) (130,907) ------------ ------------ ----------- Cash flows from financing activities: Bank and commercial paper borrowings (repayments) 38,798 80,363 (59,389) Other debt repayments (13,240) (8,981) (6,094) Common stock issuances -- -- 17,431 Common stock reissued from treasury 23,506 17,362 -- Treasury stock purchases (80,131) (180,343) (19,803) Dividends paid (59,074) (48,815) (31,637) ------------ ------------ ----------- Net cash used for financing activities (90,141) (140,414) (99,492) ------------ ------------ ----------- Net increase (decrease) in cash 17,976 (5,595) 4,153 Cash at beginning of year 68,759 74,354 70,201 ------------ ------------ ----------- Cash at end of year $ 86,735 $ 68,759 $ 74,354 ============ ============ =========== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 36,527 $ 38,999 $ 44,058 Income taxes 126,310 96,291 89,478
See Summary of Accounting Policies and Additional Financial Information. 21 23 SUMMARY OF ACCOUNTING POLICIES BUSINESS AND CONSOLIDATION SYSCO Corporation (SYSCO) is engaged in the marketing and distribution of a wide range of food and related products to the foodservice or "away-from-home-eating" industry. These services are performed from 68 distribution facilities for approximately 245,000 customers located in the 36 states where the facilities are situated and in 12 adjacent states. The company also has one facility in Vancouver, British Columbia, which provides services to customers in that area. The accompanying financial statements include the accounts of SYSCO and its subsidiaries. All significant intercompany transactions and account balances have been eliminated. Certain amounts in the prior years have been reclassified to conform to the 1994 presentation. Earnings of acquisitions recorded as purchases are included in SYSCO's results of operations from the date of acquisition. INVENTORIES Inventories consist of food and related products held for resale and are valued at the lower of cost (first-in, first-out method) or market. PLANT AND EQUIPMENT Capital additions, improvements and major renewals are classified as plant and equipment and are carried at cost. Depreciation is recorded using the straight-line method which reduces the book value of each asset in equal amounts over its estimated useful life. Maintenance, repairs and minor renewals are charged to earnings when they are incurred. Upon the disposition of an asset, its accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current earnings. Applicable interest charges incurred during the construction of new facilities are capitalized as one of the elements of cost and are amortized over the assets' estimated useful lives. Interest capitalized during the past three years was $1,313,000 in 1994, $1,315,000 in 1993 and $2,292,000 in 1992. GOODWILL AND INTANGIBLES Goodwill and intangibles represents the excess of cost over the fair value of tangible net assets acquired and is being amortized over 40 years using the straight-line method. Accumulated amortization at July 2, 1994, July 3, 1993 and June 27, 1992 is $43,120,000, $35,416,000 and $27,929,000, respectively. COMPUTER SYSTEMS DEVELOPMENT PROJECT SYSCO has capitalized direct costs incurred in connection with an internal computer systems development project. The capitalization of these costs began once it was reasonably certain that the new system would be completed and would fulfill its intended use. Costs of $29,658,000, $14,094,000 and $2,660,000 were capitalized during fiscal 1994, 1993 and 1992, respectively. Amounts capitalized will be amortized over future earnings commencing in fiscal 1995 as completed portions of the project are put into use. INSURANCE PROGRAM SYSCO maintains a self-insurance program covering portions of workers' compensation, general and auto liability costs. The amounts in excess of the self-insured levels are fully insured. Self-insurance accruals are based on claims filed and an estimate for significant claims incurred but not reported. INCOME TAXES SYSCO follows the liability method for deferred income taxes as required by the provisions of Statement of Financial Accounting Standard (SFAS) 109, "Accounting for Income Taxes." CASH FLOW INFORMATION For cash flow purposes, cash includes cash equivalents such as time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. 22 24 ADDITIONAL FINANCIAL INFORMATION INCOME TAXES The income tax provisions consist of the following:
- - - ------------------------------------------------------------------------------------------------------ 1994 1993 1992 --------------------------------------------------- Federal income taxes $130,733,000 $108,990,000 $91,747,000 State and local income taxes 20,097,000 21,180,000 17,680,000 ------------ ------------ ------------ Total $150,830,000 $130,170,000 $109,427,000 ============ ============ ============
Included in the income taxes charged to earnings are net deferred tax provisions of $23,292,000 in 1994, $13,281,000 in 1993 and $15,521,000 in 1992. The provisions result from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the company's deferred tax assets and liabilities are as follows:
- - - ------------------------------------------------------------------------------------------------------ July 2, 1994 July 3, 1993 ------------------------------- Deferred tax liabilities: Excess tax depreciation and basis differences of assets $165,353,000 $143,995,000 Computer systems development project 17,190,000 5,833,000 Other 3,005,000 2,464,000 ------------ ------------ Total deferred tax liabilities 185,548,000 152,292,000 ------------ ------------ Deferred tax assets: Accrued pension expenses 13,003,000 9,367,000 Accrued medical and casualty insurance expenses 8,519,000 9,264,000 Bad debt reserve 6,138,000 4,065,000 Uniform capitalization of inventory 4,746,000 3,560,000 Other 5,685,000 2,622,000 ------------ ------------ Total deferred tax assets 38,091,000 28,878,000 ------------ ------------ Net deferred tax liabilities $147,457,000 $123,414,000 ============ ============
The company has enjoyed taxable earnings during each of its twenty-five year existence and knows of no reason such profitability should not continue. Consequently, the company believes that it is more likely than not that the entire benefit of existing temporary differences will be realized and therefore no valuation allowance has been established for deferred assets. The effective tax rate was 41% in 1994 and 39% in 1993 and 1992 and an analysis is as follows:
- - - ------------------------------------------------------------------------------------------------------ 1994 1993 1992 ------------------------------------------ Statutory Federal income tax rate 35% 34% 34% Retroactive Federal income tax charge 1 -- -- State and local income taxes, net of Federal income tax benefit 5 5 5 -- -- -- 41% 39% 39% == == ==
23 25 ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE The allowance for doubtful accounts receivable was $15,999,000 as of July 2, 1994, $15,122,000 as of July 3, 1993 and $13,673,000 as of June 27, 1992. Customer accounts written off, net of recoveries were $17,291,000 or .16% of sales, $13,163,000 or .13% of sales and $14,377,000 or .16% of sales for fiscal years 1994, 1993 and 1992, respectively. SHAREHOLDERS' EQUITY Earnings per share have been computed by dividing net earnings by 184,338,616 in 1994, 186,745,576 in 1993 and 186,001,381 in 1992, which represents the weighted average number of shares of common stock outstanding during those respective years. In May 1986, the Board of Directors adopted a Warrant Dividend Plan designed to protect against those unsolicited attempts to acquire control of SYSCO that the Board believes are not in the best interest of the shareholders. The plan, as adjusted, provides for a dividend distribution of one-fourth of one Preferred Stock Purchase Right (Right) for each outstanding share of SYSCO common stock. Each Right may be exercised to purchase one one-hundredth of a share of newly created Series A Junior Participating Preferred Stock at an exercise price of $135, subject to adjustment. The Rights will not be exercisable until a party either acquires 20% of the company's common stock or makes a tender offer for 20% or more of its common stock. In the event of a merger or other business combination transaction, each Right effectively entitles the holder to purchase $270 worth of stock of the surviving company for a purchase price of $135. The Rights expire on May 30, 1996 and may be redeemed before expiration by the company at a price of $.05 per Right until a party acquires 20% of the company's common stock or thereafter under certain circumstances. As a result of the Rights distribution, 600,000 of the 1,500,000 authorized preferred shares have been reserved for issuance as Series A Junior Participating Preferred Stock. PLANT AND EQUIPMENT A summary of plant and equipment, including the related accumulated depreciation, appears below:
- - - -------------------------------------------------------------------------------------------------------------- Estimated July 2, 1994 July 3, 1993 Useful Lives ------------------------------------------------------------------- Plant and equipment, at cost Land $ 81,933,000 $ 70,254,000 Buildings and improvements 606,986,000 566,153,000 10-40 years Equipment 718,410,000 619,183,000 3-20 years ------------------- -------------------- 1,407,329,000 1,255,590,000 Accumulated depreciation (590,108,000) (495,733,000) ------------------- -------------------- Net plant and equipment $ 817,221,000 $ 759,857,000 =================== ====================
DEBT At July 2, 1994 and July 3, 1993 SYSCO had $5,247,000 and $6,609,000, respectively, of short-term bank borrowings. The level of such borrowings fluctuates during the year based on working capital requirements. SYSCO's long-term debt is comprised of the following: - - - ---------------------------------------------------------------------------------------------------------- July 2, 1994 July 3, 1993 ----------------------------------------- Revolving loan agreement and commercial paper, interest averaging 4.4% in 1994 and 3.2% in 1993 $ 273,800,000 $ 218,778,000 Senior notes, interest at 9.95%, maturing in 1999 91,500,000 91,500,000 Liquid Yield Option Notes, interest at 6.25%, maturing in 2004 95,653,000 92,614,000 Industrial Revenue Bonds, mortgages and other, interest averaging 6.9% in 1994 and 7.3% in 1993, maturing at various dates to 2026 81,488,000 94,542,000 ---------------- ---------------- Total long-term debt 542,441,000 497,434,000 Less current maturities (3,730,000) (3,372,000) ---------------- ---------------- Net long-term debt $ 538,711,000 $ 494,062,000 ================ ================
24 26 The principal payments required to be made on long-term debt during the next five years are shown below:
Year Amount ---- ------ 1995 $ 3,730,000 1996 3,324,000 1997 9,547,000 1998 2,611,000 1999 101,610,000
SYSCO has a $300,000,000 revolving loan agreement maturing in 1997 which currently supports the company's commercial paper program. Management anticipates extending this agreement prior to its maturity date. The commercial paper borrowings at July 2, 1994 were $273,800,000. The Liquid Yield Option Notes have no periodic interest payments, will yield 6.25% if held to maturity, and can be converted into SYSCO common stock at a conversion rate of 24.512 shares per note. Each note which initially sold for $397.27 has an accreted value of $531.37 at July 2, 1994. The Industrial Revenue Bonds have varying structures. Final maturities range from one to thirty-two years and certain of the bonds provide SYSCO the right to redeem (a call) at various dates. These call provisions generally provide the bondholder a premium in the early call years, declining to par value as the bonds approach maturity. Certain bonds have provisions whereby the holder may require SYSCO to purchase or redeem the bonds (a put) under certain circumstances. If certain of these bonds are purchased from bondholders, they can be remarketed at the then prevailing interest rates. Long-term debt at July 2, 1994 was $538,711,000, of which 47% is secured at fixed rates averaging 7.98% with the average life of eight years, while the remainder is financed at floating rates averaging 4.36%. Certain loan agreements contain typical covenants to protect noteholders including provisions to maintain tangible net worth and funded indebtedness at specified levels. The fair value of SYSCO's long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for debt of the same remaining maturities. The fair value of long-term debt approximates $562,000,000 at July 2, 1994. As part of normal business activities, SYSCO issues letters of credit through major banking institutions as required by certain vendor and insurance agreements. As of July 2, 1994, SYSCO had not entered into any significant derivative or other off-balance-sheet financing arrangements. LEASES Although SYSCO normally purchases assets, it has obligations under capital and operating leases for certain distribution facilities, vehicles and computers. Total rental expense under operating leases was $31,089,000, $27,506,000 and $26,759,000 in fiscal 1994, 1993 and 1992, respectively. Contingent rentals, subleases, assets and obligations under capital leases are not significant. Aggregate minimum lease payments under existing non-capitalized long-term leases are as follows:
Year Amount ---- ------ 1995 $ 13,487,000 1996 10,253,000 1997 7,176,000 1998 4,942,000 1999 3,444,000 Later years 5,612,000
25 27 INCENTIVE STOCK OPTION PLANS EMPLOYEE INCENTIVE STOCK OPTION PLAN The Employee Incentive Stock Option Plan adopted in fiscal 1982 provided for the issuance of options to purchase SYSCO common stock to officers and key personnel of the company and its subsidiaries at the market price at date of grant, as adjusted for stock splits. No further grants will be made under this plan which expired in November 1991 and was replaced by the 1991 Stock Option Plan. The following summary presents information with regard to incentive options under this plan:
- - - ---------------------------------------------------------------------------------------------------------- Maximum Shares Shares Under Average Price Exercisable Option Per Share ----------------------------------------------------- Balance at June 29, 1991 1,579,124 3,683,210 $ 11.77 Granted 740,548 22.25 Cancelled (169,788) 13.25 Exercised (860,080) 9.12 --------- Balance at June 27, 1992 1,682,890 3,393,890 14.65 Granted -- -- Cancelled (191,991) 14.60 Exercised (527,829) 9.77 --------- Balance at July 3, 1993 1,940,987 2,674,070 15.62 Granted -- -- Cancelled (112,187) 13.02 Exercised (757,604) 12.39 --------- Balance at July 2, 1994 1,600,282 1,804,279 17.14 =========
1991 STOCK OPTION PLAN The 1991 Stock Option Plan was adopted in fiscal 1992 and reserves 3,000,000 shares of SYSCO common stock for options to directors, officers and key personnel of the company and its subsidiaries at the market price at date of grant. This plan provides for the issuance of options which are qualified as incentive stock options under the Internal Revenue Code of 1986, options which are not so qualified and stock appreciation rights. To date, the company has issued stock options but no stock appreciation rights. The following summary presents information with regard to options issued under the 1991 plan:
- - - ---------------------------------------------------------------------------------------------------------- Maximum Shares Shares Under Average Price Exercisable Option Per Share ----------------------------------------------------- Balance at June 27, 1992 -- -- $ -- Granted 525,580 25.25 Cancelled (10,260) 25.25 Exercised -- -- --------- Balance at July 3, 1993 -- 515,320 25.25 Granted 633,650 28.88 Cancelled (26,484) 26.50 Exercised (8,071) 25.25 --------- Balance at July 2, 1994 163,305 1,114,415 27.28 =========
26 28 EMPLOYEE BENEFIT PLANS SYSCO and each of its subsidiaries have defined benefit and defined contribution retirement plans for their employees. Also, the company contributes to various multi-employer plans under collective bargaining agreements. The defined benefit pension plans pay benefits to employees at retirement using formulas based on a participant's years of service and compensation. The defined contribution 401(k) plans provide that under certain circumstances the company may make matching contributions of up to 50% of the first 6% of a participant's compensation. The funded status of the defined benefit plans is as follows:
- - - -------------------------------------------------------------------------------------------------------- July 2, 1994 July 3, 1993 ------------------------------------ Assets available for benefits $ 110,344,000 $ 106,338,000 Projected benefit obligation Vested (103,437,000) (88,688,000) Nonvested (9,778,000) (9,181,000) --------------- -------------- Total accumulated benefit obligation (113,215,000) (97,869,000) Effect of projected future compensation increases (16,322,000) (11,299,000) --------------- -------------- Total actuarial projected benefit obligation (129,537,000) (109,168,000) --------------- -------------- Assets (less than) projected obligation $ (19,193,000) $ (2,830,000) =============== ============== Consisting of: Amounts to be offset against (charged to) future pension costs Remaining assets in excess of obligation existing at adoption of SFAS 87 in 1986 $ 10,313,000 $ 11,493,000 Unrecognized actuarial loss due to differences in assumptions and actual experience (21,302,000) (11,161,000) Unrecognized prior service cost 10,011,000 11,194,000 Accrued pension costs (18,215,000) (14,356,000) --------------- -------------- $ (19,193,000) $ (2,830,000) =============== ==============
The projected unit credit method was used to determine the actuarial present value of the accumulated benefit obligation and the projected benefit obligation. The discount rate used was 7.75% in 1994, 1993 and 1992 and the rate of increase in future compensation levels used was 5.5% in each year. The expected long-term rate of return on assets used was 10% in 1994 and 12% in 1993 and 1992. The plans invest primarily in marketable securities and time deposits. Net pension costs were as follows:
- - - ------------------------------------------------------------------------------------------------------- 1994 1993 1992 -------------------------------------------------- Defined benefit plans Benefits earned during the year $ 16,866,000 $ 18,410,000 $ 14,584,000 Interest accrued on benefits earned in prior years 9,655,000 8,663,000 6,467,000 Actual return on plan assets 378,000 (14,355,000) (9,664,000) Net amortization and deferral (13,356,000) 3,063,000 (1,119,000) ------------ ------------ ------------- Net pension costs from defined benefit plans 13,543,000 15,781,000 10,268,000 Defined contribution plans 8,407,000 3,326,000 5,892,000 Multi-employer pension plans 12,412,000 10,285,000 8,776,000 ------------ ------------ ------------- Net pension costs $ 34,362,000 $ 29,392,000 $ 24,936,000 ============ ============ =============
SYSCO also has a Management Incentive Plan that compensates key management personnel for specific performance achievements. The awards under this plan were $12,508,000 in 1994, $11,725,000 in 1993 and $8,026,000 in 1992. In addition to the company's defined benefit plan, participants in the Management Incentive Plan will receive benefits upon retirement under a Supplemental Executive Retirement Plan. This plan is a nonqualified, unfunded supplementary retirement plan for which SYSCO has purchased life insurance on the 27 29 lives of the participants with carrying values of $33,199,000 at July 2, 1994 and $26,740,000 at July 3, 1993. The company is the sole owner and beneficiary of such policies. The periodic pension costs of this plan were $3,109,000 in 1994 and $2,996,000 in 1993. The actuarially determined accumulated benefit obligation for this plan included in accrued expenses was $16,558,000 at July 2, 1994 and $13,898,000 at July 3, 1993. After taking into consideration the effect of future compensation increases, the projected benefit obligation of this plan was $23,941,000 at July 2, 1994 and $19,224,000 at July 3, 1993. SYSCO has an Employees' Stock Purchase Plan which permits employees (other than directors) who have been employed for at least one year to invest by means of periodic payroll deductions in SYSCO common stock at 85% of the closing price on the last business day of each fiscal quarter. During 1994, 579,916 shares of SYSCO common stock were purchased by the participants as compared to 538,923 purchased in 1993 and 514,392 purchased in 1992. The total number of shares which may be sold pursuant to the plan may not exceed 12,000,000 shares of which 1,691,079 remained available at July 2, 1994. At the beginning of fiscal 1994, SYSCO implemented SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This statement requires that the cost of retiree benefits other than pensions be recognized in the financial statements during the years the employee provides services. In the prior years, the company's portion of the cost of these benefits has been expensed under the pay-as-you-go method. SYSCO provides postretirement health care benefits to eligible retired employees and their dependents. This accounting change had no significant effect on net earnings or financial condition in fiscal 1994. Net periodic postretirement benefit cost for fiscal 1994 was as follows: - - - ---------------------------------------------------------------------------------- Service cost-benefits earned during the period $238,000 Interest cost 280,000 Amortization of transition obligation 173,000 -------- Net periodic postretirement benefit cost $691,000 ========
The components of the postretirement benefit obligation, included in accrued expenses at July 2, 1994 were: - - - ---------------------------------------------------------------------------------- Retirees $ 589,000 Fully eligible active participants 1,588,000 Other active employees 2,420,000 ------------ Accumulated postretirement benefit obligation 4,597,000 Unrecognized net loss and effects of changes in assumptions (123,000) Unrecognized prior service cost (1,095,000) Unrecognized transition obligation (3,250,000) ------------ Accrued postretirement benefit liability $ 129,000 ============
The discount rate used to determine the accumulated postretirement benefit obligation was 8%. A health care cost trend rate is not used in the calculations because SYSCO subsidizes the cost of postretirement medical coverage by a fixed dollar amount with the retiree responsible for the cost of coverage in excess of the subsidy, including all future cost increases. The Financial Accounting Standards Board (FASB) has issued an Accounting Standard, which when effective, will require the recognition of certain benefits paid to former or inactive employees after employment but before retirement. SYSCO will recognize the provisions of the FASB Standard in its fiscal year ending July 1, 1995. If the Standard had been adopted in fiscal 1994, the effects on net earnings or financial condition would not be significant. CONTINGENCIES SYSCO is engaged in various legal proceedings which have arisen but have not been fully adjudicated. These proceedings, in the opinion of management, will not have a material adverse effect upon the consolidated financial position or results of operations of the company when ultimately concluded. 28 30 QUARTERLY RESULTS (UNAUDITED) Financial information for each quarter in the years ended July 2, 1994 and July 3, 1993:
- - - ------------------------------------------------------------------------------------------------------------------------------------ Quarter Ended 1994 --------------------------------------------------------------- (In thousands except for share data) October 2 January 1 April 2 July 2 Fiscal Year - - - ------------------------------------------------------------------------------------------------------------------------------------ Sales $ 2,709,874 $ 2,665,882 $ 2,684,854 $ 2,881,889 $ 10,942,499 Cost of sales 2,224,155 2,179,225 2,209,780 2,358,468 8,971,628 Operating expenses 389,249 384,340 391,844 403,340 1,568,773 Interest expense 9,602 10,347 7,949 8,374 36,272 Other income, net (959) (175) (496) (126) (1,756) ------------ ------------ ------------ ------------ ------------ Earnings before income taxes 87,827 92,145 75,777 111,833 367,582 Income taxes 39,767 36,582 30,083 44,398 150,830 ------------ ------------ ------------ ------------ ------------ Net earnings $ 48,060 $ 55,563 $ 45,694 $ 67,435 $ 216,752 ============ ============ ============ ============ ============ Per share: Earnings $ .26 $ .30 $ .25 $ .37 $ 1.18 Cash dividends .07 .07 .09 .09 .32 Market price 30-24 31-27 29-25 26-23 31-23
- - - ------------------------------------------------------------------------------------------------------------------------------------ Quarter Ended --------------------------------------------------------------- 1993 July 3 Fiscal Year (In thousands except for share data) September 26 December 26 March 27 (14 Weeks) (53 Weeks) - - - ------------------------------------------------------------------------------------------------------------------------------------ Sales $ 2,415,827 $ 2,392,345 $ 2,399,326 $ 2,814,015 $ 10,021,513 Cost of sales 1,987,820 1,961,447 1,968,664 2,307,344 8,225,275 Operating expenses 345,632 341,758 351,825 388,179 1,427,394 Interest expense 9,608 9,769 9,369 10,258 39,004 Other income, net (773) 103 (661) (806) (2,137) ------------ ------------ ------------ ------------ ------------ Earnings before income taxes 73,540 79,268 70,129 109,040 331,977 Income taxes 28,681 30,914 27,350 43,225 130,170 ------------ ------------ ------------ ------------ ------------ Net earnings $ 44,859 $ 48,354 $ 42,779 $ 65,815 $ 201,807 ============ ============ ============ ============ ============ Per share: Earnings $ .24 $ .26 $ .23 $ .35 $ 1.08 Cash dividends .06 .06 .07 .07 .26 Market price 27-24 28-24 27-23 27-22 28-22 - - - ------------------------------------------------------------------------------------------------------------------------------------ Percentage increases -- 1994 vs 1993: Sales 12% 11% 12% 2% 9% Earnings before income taxes 19 16 8 3 11 Net earnings 7 15 7 2 7 Earnings per share 8 15 9 6 9
29 31 PART III The information required by Items 10, 11, 12 and 13 is included in the Company's definitive proxy statement which will be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 no later than 120 days after the close of the 1994 fiscal year, and said proxy statement is hereby incorporated by reference thereto. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning Executive Officers is included in Part I (Item 4A) of this Form 10-K (page 8). ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Disclosures regarding related transactions are included in the definitive proxy statement on page 14 under the caption "Compensation Committee Interlocks and Insider Participation." 30 32 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed, or incorporated by reference, as part of this Form 10-K: 1. All financial statements. See index to Consolidated Financial Statements on page 14 of this Form 10-K. 2. Financial Statement Schedules. See page 14 of this Form 10-K. 3. Exhibits. 3(a) Restated Certificate of Incorporation, as amended, hereby incorporated by reference to Form 10-K for the year ended June 29, 1991. 3(b) BYLAWS, AS AMENDED. 4(a) Competitive Advance and Revolving Credit Facility Agreement dated as of July 27, 1988, as amended February 14, 1989 and May 1, 1989 hereby incorporated by reference to the Form 10-K for the year ended July 1, 1989. Agreement and Third Amendment to Competitive Advance and Revolving Credit Facility and Modification of Notes dated as of January 2, 1990 hereby incorporated by reference to Form 10-K for the year ended June 30, 1990. AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF JANUARY 31, 1994. 4(b) Sysco Corporation Note Agreement dated as of June 1, 1989 hereby incorporated by reference to the Form 10-K for the year ended July 1, 1989. 4(c) Indenture, dated as of October 1, 1989, between Sysco Corporation and Chemical Bank, Trustee hereby incorporated by reference to Registration Statement on Form S-3 (File No. 33-31227). 31 33 10(a) Amended and restated Sysco Corporation Executive Deferred Compensation Plan incorporated by reference to Form 10-K for the year ended July 3, 1993. 10(b) Amended and restated Sysco Corporation Supplemental Executive Retirement Plan incorporated by reference to Form 10-K for the year ended July 3, 1993. 10(c) Sysco Corporation Employee Incentive Stock Option Plan incorporated by reference to the Form S-8 filed under the Securities Act of 1933, as amended, dated April 1, 1987, as amended. 10(d) SYSCO CORPORATION AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT 1994 ANNUAL MEETING). 10(e) Sysco Corporation 1991 Stock Option Plan incorporated by reference to Form 10-K for the year ended June 27, 1992. 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 21 SUBSIDIARIES OF THE REGISTRANT 23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT 27 FINANCIAL DATA SCHEDULE (b) Reports on Form 8-K None 32 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Sysco Corporation has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 2nd day of September, 1994. SYSCO CORPORATION By /s/ JOHN F. WOODHOUSE John F. Woodhouse Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities indicated and on the date indicated above. PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS: /s/ JOHN F. BAUGH Senior Chairman of the John F. Baugh Board of Directors /s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President, John K. Stubblefield, Jr. Chief Financial Officer & Controller 33 35 DIRECTORS: /s/ JOHN W. ANDERSON /s/ BILL M. LINDIG John W. Anderson Bill M. Lindig /s/ JOHN F. BAUGH /s/ RICHARD G. MERRILL John F. Baugh Richard G. Merrill _________________________ /s/ DONALD H. PEGLER, JR. Colin G. Campbell Donald H. Pegler, Jr. /s/ CHARLES H. COTROS /s/ FRANK H. RICHARDSON Charles H. Cotros Frank H. Richardson /s/ FRANK A. GODCHAUX III /s/ JAMES A. SCHLINDWEIN Frank A. Godchaux III James A. Schlindwein /s/ JONATHAN GOLDEN /s/ PHYLLIS SHAPIRO SEWELL Jonathan Golden Phyllis Shapiro Sewell /s/ HERBERT IRVING /s/ THOMAS B. WALKER, JR. Herbert Irving Thomas B. Walker, Jr. /s/ DONALD J. KELLER /s/ JOHN F. WOODHOUSE Donald J. Keller John F. Woodhouse Director and Chief Executive Officer 34 36 SYSCO CORPORATION AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
BALANCE AT OTHER CHANGES- BALANCE BEGINNING ADDITIONS RETIREMENT ADD (DEDUCT) AT END CLASSIFICATION OF PERIOD AT COST OR SALES DESCRIBE OF PERIOD -------------- -------------- ------------ ------------ ------------ -------------- YEAR ENDED JUNE 27, 1992 ------------------------ Land.................................. $ 63,903,000 $ 6,348,000 $ (1,351,000) $ 400,000 (A) $ 69,300,000 Buildings and improvements............ 498,386,000 57,621,000 (20,091,000) 5,024,000 (A) 540,940,000 Machinery, fixtures and equipment..... 495,699,000 70,321,000 (18,195,000) 944,000 (A) 548,769,000 -------------- ------------ ------------ ------------ -------------- TOTALS $1,057,988,000 $134,290,000 $(39,637,000) $ 6,368,000 $1,159,009,000 ============== ============ ============ ============ ============== YEAR ENDED JULY 3, 1993 ----------------------- Land.................................. $ 69,300,000 $ 3,265,000 $ (2,362,000) $ 51,000 (A) $ 70,254,000 4,077,000 (A) Buildings and improvements............ 540,940,000 33,300,000 (1,116,000) (11,048,000) (B) 566,153,000 6,364,000 (A) Machinery, fixtures and equipment..... 548,769,000 91,314,000 (21,811,000) (5,453,000) (B) 619,183,000 -------------- ------------ ------------ ------------ -------------- TOTALS $1,159,009,000 $127,879,000 $(25,289,000) $ (6,009,000) $1,255,590,000 ============== ============ ============ ============ ============== YEAR ENDED JULY 2, 1994 ----------------------- Land.................................. $ 70,254,000 $ 11,719,000 $ (40,000) $ 81,933,000 Buildings and improvements............ 566,153,000 39,759,000 (2,080,000) $ 3,154,000 (A) 606,986,000 Machinery, fixtures and equipment..... 619,183,000 110,007,000 (25,519,000) 14,739,000 (A) 718,410,000 -------------- ------------ ------------ ------------ -------------- TOTALS $1,255,590,000 $161,485,000 $(27,639,000) $ 17,893,000 $1,407,329,000 ============== ============ ============ ============ ==============
(A) Allocation of purchase price to plant and equipment at date of acquisition of companies purchased in the fiscal year. (B) Allocation of cost of plant and equipment at date of sale of business sold in the fiscal year. S-1 37 SYSCO CORPORATION AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PLANT AND EQUIPMENT
ADDITIONS BALANCE AT CHARGED TO OTHER CHANGES- BALANCE BEGINNING COSTS AND RETIREMENT ADD (DEDUCT) AT END CLASSIFICATION OF PERIOD EXPENSES OR SALES DESCRIBE OF PERIOD -------------- -------------- ------------ ------------ ------------ -------------- YEAR ENDED JUNE 27, 1992 ------------------------ Buildings and improvements........... $ 95,796,000 $ 25,078,000 $ (7,620,000) $ 22,000 (A) $113,276,000 Machinery, fixtures and equipment.... 263,091,000 63,349,000 (15,710,000) 580,000 (A) 311,310,000 ------------ ------------ ------------ ----------- ------------ TOTALS.............. $358,887,000 $ 88,427,000 $(23,330,000) $ 602,000 $424,586,000 ============ ============ ============ =========== ============ YEAR ENDED JULY 3, 1993 ----------------------- $ 740,000 (A) Buildings and improvements........... $113,276,000 $ 25,464,000 $ (861,000) (5,680,000) (B) $132,939,000 4,987,000 (A) Machinery, fixtures and equipment.... 311,310,000 69,524,000 (19,292,000) (3,735,000) (B) 362,794,000 ------------ ------------ ------------ ----------- ------------ TOTALS.............. $424,586,000 $ 94,988,000 $(20,153,000) $(3,688,000) $495,733,000 ============ ============ ============ =========== ============ YEAR ENDED JULY 2, 1994 ----------------------- Buildings and improvements........... $132,939,000 $ 28,396,000 $ (1,139,000) $ 2,251,000 (A) $162,447,000 Machinery, fixtures and equipment.... 362,794,000 78,820,000 (23,807,000) 9,854,000 (A) 427,661,000 ------------ ------------ ------------ ----------- ------------ TOTALS.............. $495,733,000 $107,216,000 $(24,946,000) $12,105,000 $590,108,000 ============ ============ ============ =========== ============
(A) Allocation to plant and equipment at date of acquisition of companies purchased in the fiscal year. (B) Allocation of cost to plant and equipment at date of sale of business sold in the fiscal year. S-2 38 SYSCO CORPORATION AND SUBSIDIARIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Charged to Balance at Beginning Costs and Other Accounts Deductions End of Description of Period Expenses Describe (1) Describe Period ----------- ---------- ---------- -------------- ---------- ---------- Allowance For year ended for doubtful $14,377,000 (2) June 27, 1992......... accounts $13,583,000 $14,422,000 $ 75,000 30,000 (3) $13,673,000 Allowance For year ended for doubtful $13,163,000 (2) July 3, 1993.......... accounts $13,673,000 $14,312,000 $ 350,000 50,000 (3) $15,122,000 Allowance For year ended for doubtful July 2, 1994.......... accounts $15,122,000 $17,918,000 $ 250,000 $17,291,000 (2) $15,999,000
(1) Allowance accounts added from acquisitions. (2) Customer accounts written off, net of recoveries. (3) Allowance accounts deducted due to sales of businesses. S-3 39 SYSCO CORPORATION AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS
WEIGHTED MAXIMUM AVERAGE AMOUNT WEIGHTED AVERAGE BALANCE AT AVERAGE AMOUNT OUTSTANDING INTEREST RATE CATEGORY OF AGGREGATE END INTEREST OUTSTANDING DURING THE DURING THE SHORT-TERM BORROWINGS OF PERIOD RATE DURING THE PERIOD PERIOD (3) PERIOD (3) --------------------- ---------- -------- ----------------- -------------- ---------------- YEAR ENDED JUNE 27, 1992 ------------------------ Bank credit lines (1)............. $ 2,057,000 5.93% $ 65,500,000 $ 18,198,000 5.57% Commercial paper (2).............. 127,588,000 3.86 250,200,000 160,692,000 5.07 Revolving loan agreement (2)...... -- -- 35,000,000 11,814,000 5.95 YEAR ENDED JULY 3, 1993 ----------------------- Bank credit lines (1)............. $ 6,609,000 4.90% $ 66,800,000 $ 22,717,000 3.65% Commercial paper (2)............. 218,778,000 3.22 250,000,000 165,543,000 3.36 Revolving loan agreement (2)...... -- -- -- -- -- YEAR ENDED JULY 2, 1994 ----------------------- Bank credit lines (1)............. $ 5,247,000 6.17% $ 125,100,000 $ 47,534,000 3.65% Commercial paper (2)............. 273,800,000 4.41 300,000,000 255,056,000 3.50 Revolving loan agreement (2)...... -- -- -- -- --
(1) Bank credit lines primarily reflect the overnight funding of working capital requirements. (2) The Company currently maintains a $300,000,000 revolving credit facility with a group of banks, which supports the commercial paper program and provides short-term fundings as requested. Borrowings under the commercial paper program and the revolving loan agreement are issued with specific maturity dates, generally one to three months. The revolving credit facility expires in fiscal 1997. (3) Average amounts outstanding and weighted average interest rates were computed based upon the weighted average of short-term borrowings and related interest rates during the period. S-4 40 INDEX TO EXHIBITS
Exhibit Number Description of Exhibit ------ ---------------------- 3(a) Restated Certificate of Incorporation, as amended, hereby incorporated by reference to Form 10-K for the year ended June 29, 1991. 3(b) BYLAWS, AS AMENDED. 4(a) Competitive Advance and Revolving Credit Facility Agreement dated as of July 27, 1988, as amended February 14, 1989 and May 1, 1989 hereby incorporated by reference to the Form 10-K for the year ended July 1, 1989. Agreement and Third Amendment to Competitive Advance and Revolving Credit Facility and Modification of Notes dated as of January 2, 1990 hereby incorporated by reference to Form 10-K for the year ended June 30, 1990. AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF JANUARY 31, 1994. 4(b) Sysco Corporation Note Agreement dated as of June 1, 1989 hereby incorporated by reference to the Form 10-K for the year ended July 1, 1989. 4(c) Indenture, dated as of October 1, 1989, between Sysco Corporation and Chemical Bank, Trustee hereby incorporated by reference to Registration Statement on Form S-3 (File No. 33-31227). 10(a) Amended and restated Sysco Corporation Executive Deferred Compensation Plan incorporated by reference to Form 10-K for the year ended July 3, 1993. 10(b) Amended and restated Sysco Corporation Supplemental Executive Retirement Plan incorporated by reference to Form 10-K for the year ended July 3, 1993.
41
Exhibit Number Description of Exhibit ------ ---------------------- 10(c) Sysco Corporation Employee Incentive Stock Option Plan incorporated by reference to the Form S-8 filed under the Securities Act of 1933, as amended, dated April 1, 1987, as amended. 10(d) SYSCO CORPORATION AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT 1994 ANNUAL MEETING). 10(e) Sysco Corporation 1991 Stock Option Plan incorporated by reference to Form 10-K for the year ended June 27, 1992. 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 21 SUBSIDIARIES OF THE REGISTRANT 23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT 27 FINANCIAL DATA SCHEDULE
EX-3.B 2 BY-LAWS 1 BY - LAWS OF SYSCO CORPORATION (A DELAWARE CORPORATION) EXHIBIT 3(b) ARTICLE I STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation certifying the number of shares owed by him in the corporation. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Whenever the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. - 1 - 2 2. FRACTIONAL SHARE INTERESTS. The corporation shall not issue fractions of a share. In lieu thereof it shall either pay in cash the fair value of fractions of a share, as determined by the Board of Directors, to those entitled thereto or issue scrip or fractional warrants in registered or bearer form over the manual or facsimile signature of an officer of the corporation or of its agent, exchangeable as therein provided for full shares, but such scrip or fractional warrants shall not entitle the holder to any rights of a stockholder except as therein provided. Such scrip or fractional warrants may be issued subject to the condition that the same shall become void if not exchanged for certificates representing full shares of stock before a specified date, or subject to the condition that the shares of stock for which such scrip or fractional warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of such scrip or fractional warrants, or subject to any other conditions which the Board of Directors may determine. 3. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation, in accordance with the terms and procedures as outlined in The Uniform Stock Transfer Act. 4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to or dissent from any corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the directors may fix, in advance, a date as the record date for any such determination of stockholders. Such date shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed, the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. When a determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders has been made as provided in this paragraph, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders - 2 - 3 of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the certificate of incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the certificate of incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the certificate of incorporation. 6. STOCKHOLDER MEETINGS. - Time. The first annual meeting shall be held on the second Friday in October, 1970; and each successive annual meeting shall be held on the date and at the time and place fixed, from time to time, by the directors, and if no date has been set by the directors, then on the first Friday in November in each year, unless said date falls on a legal holiday, in which case the meeting shall be held on the secular day next following. A special meeting shall be held on the date and at the time fixed by the directors. - Place. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware. - Call. Annual meetings and special meetings may be called by the Chairman of the Board or by the directors or by any officer instructed by the directors to call the meeting. - Notice Or Waiver Of Notice. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall, (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. If any action is proposed to be taken which would, if taken, entitle stockholders to receive payment for their shares of stock, the notice shall include a statement of that purpose and to that effect. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than fifty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address - 3 - 4 which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice by him before or after the time stated therein. Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. - Stockholder List. The officer who has charge of the stock ledger or the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at the place within the city or other municipality or community where the meeting is to be held, which location shall be specified in the notice of the meeting, or if not so specified, at the location where the meeting is to be held. The list shall also be produced and kept at the time and at the location where the meeting is to be held. The list shall also be produced and kept at the time and at the location of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who the stockholders entitled to examine the stock ledger, the list required by this section, or the books of the corporation, or to vote at any meeting of stockholders. - Conduct Of Meeting. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. - Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as - 4 - 5 long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. - Inspectors And Judges. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election or judges of the vote, as the case may be, to act at the meeting or any adjournment thereof. If an inspector or inspectors or judge or judges are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors or judges. In case any person who may be appointed as an inspector or judge fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector or judge, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector or judge at such meeting with strict impartiality and according to the best of his ability. The inspectors or judges, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors or judge or judges, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. - Quorum. The holders of thirty-five percent (35%) of the shares entitled to vote shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. - Voting. Except as may otherwise be provided in the certificate of incorporation, or in a resolution of the Board of Directors in accordance with Section 151 of the General Corporation Law of Delaware, each share of stock shall entitle the holder thereof to one vote. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power. In the election of directors, voting need not be by ballot. Voting by ballot shall not be required for any other corporate action except as otherwise provided by the General Corporation Law. 7. STOCKHOLDER ACTION WITHOUT MEETINGS. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with if all of the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken; or if less than all of said stockholders, but not less than those having at least the - 5 - 6 minimum voting power required to take corporate action under the provisions of the General Corporation law, shall consent in writing to such corporate action; provided that prompt notice be given to all stockholders of the taking of such action without a meeting and by less than unanimous written consent. ARTICLE II DIRECTORS 1. FUNCTIONS AND DEFINITION. The business of the corporation shall be managed by the Board of Directors of the corporation. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATION AND NUMBER. The property, affairs and business of the corporation shall be managed by its board of directors, consisting of not less than three nor more than sixteen persons, with the exact number of directors determined from time to time by the board of directors. A director need not be a stockholder, a citizen of the United States or a resident of the State of Delaware. The directors shall be divided into three classes. The first class (Class I) shall consist of five directors and the term of office of such class shall expire at the next Annual Meeting of Stockholders in 1978. The second class (Class II) shall consist of five directors and the term of office of such class shall expire at the Annual Meeting of Stockholders in 1979. The third class (Class III) shall consist of five directors and the term of office of such third class shall expire at the Annual Meeting of Stockholders in 1980. At the Annual Meeting of Stockholders in 1977, five directors shall be elected as Class III directors whose term of office shall expire at the Annual Meeting of Stockholders in 1980, one director shall be elected as a Class I director whose term of office shall expire at the Annual Meeting of Stockholders in 1978, and one director shall be elected as a Class II director whose term of office shall expire at the Annual Meeting of Stockholders in 1979. Should the number of directors be increased or decreased in the future, no class of directors shall have more than one director more than any other class of directors. At each annual election commencing at the Annual Meeting of Stockholders in 1978, the successors to the class of directors whose term expires at that time shall be elected to hold office for the term of three years to succeed those whose term expires, so that the term of office of one class of directors shall expire in each year. Each director shall hold office for the term for which he is elected or appointed or until his successor shall be elected and qualified, or until his death, removal or resignation. Newly created directorships resulting from an increase in the number of directors by action of the Board of Directors, may be filled by the Board of Directors at the meeting at which the number of directors is increased, or any subsequent meeting of the directors, by a majority of the directors then in office, although less than a quorum, or by the stockholders at a meeting called for the purpose of electing directors. - 6 - 7 3. ELECTION AND TERM. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors have been elected and qualified or until their earlier resignation or removal and shall serve staggered terms as provided for in ARTICLE II, Paragraph 2 of these By - Laws. Any director may resign at any time upon written notice to the corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the term of office to which they are elected or until their successors have been elected and qualified or until their earlier resignation or removal. In the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including vacancies resulting from the removal of directors for cause or without cause, may be filled only for the remainder of the term of the director or directors whose term he or they may fill, by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. 4. MEETINGS. - Time. Meetings shall be held at such time as the Board shall fix except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - Place. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. - Call. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, or the President, or of a majority of the directors in office. - Notice Or Actual Or Constructive Waiver. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings upon three days' notice for the convenient assembly of the directors thereat. The notice of any meeting need not specify the purpose of the meeting. Any requirement of furnishing a notice shall be waived by any director who signs a written waiver of such notice before or after the time stated therein. - Quorum And Action. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General - 7 - 8 Corporation Law, the act of the Board shall be the act by vote of a majority of the directors present at a meeting, a quorum being present. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these By - Laws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board. - Chairman Of The Meeting. The Chairman of the Board, and if present and acting, shall preside at all meetings. Otherwise, the President, if present and acting, or any other Director chosen by the Board, shall preside. 5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause or without cause by the stockholders. One or more of the directors may be removed for cause by the Board of Directors. 6. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, including an Executive Committee, each committee to consist of two or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. 7. ACTION IN WRITING. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III OFFICERS The directors shall elect a Chairman of the Board, a President, a Secretary, and a Treasurer, and may elect a Vice-Chairman thereof, and one or more Vice-Presidents, Assistant Secretaries, and Assistant Treasurers, and may elect or appoint such other officers and agents as are desired. The President may but need not be a director. Any number of offices may be held by the same person. In the absence, disqualification, death or removal of the Chairman of the Board, the Vice Chairman, the President, or any other director chosen by the Board, shall serve in lieu of the said Chairman. The - 8 - 9 Chairman of the Board shall be an ex officio member of all standing committees unless otherwise provided in the resolution appointing such committees. The Chairman of the Board shall have power to call meetings of the shareholders and directors of the corporation and shall have the power to act as chairman of such meetings. Unless otherwise provided in the resolution of election or appointment, each officer shall hold office until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor has been elected and qualified. Any officer may resign at any time upon written notice. The Chairman, if any, of the Board of Directors shall preside at all meetings of stockholders and directors. Except where by law the signature of the President is required, he shall possess the same power as the President to sign all certificates, contracts and other instruments of the corporation which may be authorized by the Board of Directors. During the absence or disability of the President he shall exercise all the powers and discharge all the duties of the President. The President, in the absence of the Chairman of the Board, shall preside at all meetings of stockholders and directors, shall have general supervision of the affairs of the corporation, shall sign or countersign all certificates, contracts and other instruments of the corporation as authorized by the Board of Directors; shall make reports to the Board of Directors and stockholders and perform all such other duties as are incident to his office or are properly required of him by the Board of Directors. The Vice Presidents, during the absence or disability of the President and the Chairman of the Board of Directors, in the order designated by the Board of Directors, shall exercise all the functions of the President. Each Vice President shall have such powers and discharge such duties as may be assigned to him from time to time by the Board of Directors. The Secretary shall issue notice of all meetings of stockholders and directors, shall keep minutes of all meetings, shall have charge of the seal of the corporation and the corporate books, and shall make such reports and perform such other duties as are incident to his office, or are properly required of him by the Board of Directors. The Treasurer shall have the custody of all monies and securities of the corporation and shall keep regular books of account. He shall disburse the funds of the corporation in payment of the just demands against the corporation or as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Board of Directors from time to time as may be required of him, an account of all his transactions as Treasurer and of the financial condition of the corporation. He shall perform all duties incident to his office or that are properly required of him by the Board of Directors. - 9 - 10 The Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer, and shall perform such other duties as the Board of Directors shall prescribe. In the case of absence or inability to act of any officer of the corporation and of any person herein authorized to act in his place, the Board of Directors may, from time to time, delegate the powers or duties of such officer to any other officer or any director or other person whom it may select. Vacancies in any office arising from any cause may be filled by the directors at any regular or special meeting. The Board of Directors may appoint such other officers and agents as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The Board of Directors may remove any officer for cause or without cause. ARTICLE IV CORPORATE SEAL The corporate seal shall be in such form as the Board of Directors shall prescribe. The corporation seal may be a facsimile seal, if the Board shall so determine. ARTICLE V FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VI CONTROL OVER BY - LAWS The power to amend, alter, and repeal these By - Laws and to adopt new By - Laws shall be vested in the Board of Directors; provided, that the Board of Directors may delegate such power, in whole or in part, to the stockholders; and provided, further, that any By - Law, other than an initial By - Law, which provides for the election of directors by classes for staggered terms shall be adopted by the stockholders. - 10 - 11 ARTICLE VII INDEMNIFICATION (a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in paragraph (c) of this Article VII hereof with respect to proceedings to enforce rights to indemnification, the corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. (b) Right to Advancement of Expenses. The right to indemnification conferred in paragraph (a) of this Article VII shall include the right to be paid by the corporation the expenses incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (hereinafter an "advancement of expenses"; provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon the delivery to the corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Article VII or otherwise. (c) Right of Indemnitee to Bring Suit. The rights to indemnification and to the advancement of expenses conferred in paragraphs (a) and (b) of this Article VII shall be contract rights. If a claim under paragraph (a) or (b) of this Article VII is not paid in - 11 - 12 full by the corporation within sixty days after a written claim has been received by the corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses), it shall be a defense that the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. In any suit by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the corporation shall be entitled to recover such expenses upon a final adjudication that the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VII or otherwise shall be on the corporation. (d) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the corporation's certificate of incorporation, by - law, agreement, vote of stockholders or disinterested directors or otherwise. (e) Insurance. The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. - 12 - EX-4.A 3 4TH AMEND. CREDIT AGREEMENT 1 EXHIBIT 4(a) AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT THIS AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment") dates as of January 31, 1994 is among SYSCO CORPORATION, a Delaware corporation (the "Company"), the banks listed on the signature pages hereof (the "Banks"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as agent for the Banks (in such capacity, the "Agent"), and CHEMICAL BANK, a New York banking corporation, as auction administration agent (in such capacity, the "Auction Administration Agent"). PRELIMINARY STATEMENT The Company, the Banks, certain other banks, the Agent and the Auction Administration Agent have entered into a Competitive Advance and Revolving Credit Facility Agreement dated as of July 27, 1988 as modified by an Agreement and First Amendment to Competitive Advance and Revolving Credit Facility Agreement dated as of February 14, 1989, by an Agreement and Second Amendment to Competitive Advance and Revolving Credit Facility Agreement and Modification of Notes dated as of May 1, 1989 and by an Agreement and Third Amendment to Competitive Advance and Revolving Credit Facility Agreement and Modification of Notes dated as of January 2, 1990 (said Competitive Advance and Revolving Credit Facility Agreement as so modified and amended as being the "Credit Agreement"). All capitalized terms defined in the Credit Agreement and not otherwise defined herein shall have the same meanings herein as in the Credit Agreement. The Company, the Banks, the Agent and the Auction Administration Agent have agreed, upon the 2 terms and conditions specified herein, to amend certain of the provisions of the Credit Agreement as hereinafter set forth: NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Company, the Banks, the Agent and the Auction Administration Agent hereby agree as follows: SECTION 1. Amendments to Section 1.01 of the Credit Agreement. (a) The following terms and related definitions are hereby deleted from Section 1.01 of the Credit Agreement: "Current Assets," "Current Liabilities," "Consolidated Cash Flow" and "Consolidated Fixed Charges." (b) The definition of the term "Indebtedness" contained in Section 1.01 of the Credit Agreement is hereby amended in its entirety to read as follows: " 'Indebtedness' when used with respect to any Person means, without duplication, (i) all indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services (including, without limitation, obligations, contingent or otherwise, in respect of letters of credit, other than payment letters of credit issued to pay for the purchase of goods by such Person in the ordinary course of its business),(ii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property),(iii) all Capitalized Lease Obligations, (iv) all Assurances and (v) all Indebtedness referred to in clause (i),(ii) or (iii) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or interest in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.". SECTION 2. Amendments to Article IV of the Credit Agreement. (a) The first sentence of Section 4.05 of the Credit Agreement is hereby amended in its entirety to read as follows: -2- 3 "Each Assurance and each obligation in respect of a letter of credit (unless such letter of credit is a payment letter of credit issued to pay for the purchase by the Company or a Subsidiary of goods in the ordinary course of such Person's business) is listed in the consolidated financial statements referred to in Section 4.04, in the most recently delivered consolidated financial statements delivered pursuant to Section 5.01(i) or on Schedule III, other than any such Assurance or obligation which together with all such other Assurances and obligations does not exceed 1% of Net Worth.". (b) Section 4.18(c) of the Credit Agreement is hereby amended in its entirety to read as follows: "(c) Neither the Company nor any ERISA Affiliate has incurred, or is reasonably expected to incur, any Withdrawal Liability to any Multiemployer Plan which would exceed in the aggregate 2% of Net Worth.". SECTION 3. Amendments to Article V of the Credit Agreement. (a) Section 5.01(g) of the Credit Agreement is hereby amended in its entirety to read as follows: "(g) Maintenance of Insurance. Maintain, and cause each Subsidiary to maintain, insurance with responsible, reputable and solvent insurance companies or associations (or as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdiction of its incorporation) in such amounts and covering such risks as are usually insured against by corporations of established reputation engaged in the same or similar businesses and similarly situated, including, without limitation, workers' compensation or similar insurance, insurance against loss by fire or damage and public liability insurance; provided however, the Company and any Subsidiary may, in lieu of maintaining such insurance against losses by fire or damage and public liability insurance, maintain a self-insurance program with respect to such losses and liabilities. Any such program of self-insurance maintained by the Company or any Subsidiary shall be of a type with reserves that are appropriate, prudent and customary for corporations of similar size engaged in the same or similar business and owning or operating similar properties." (b) Subsections (i) and (ii) of Section 5.01(i) of the Credit Agreement are hereby amended in their entirety to read as follows: -3- 4 "(i) As soon as available, and in any event within 120 days after the end of each fiscal year, (i) a copy of the annual audit report of the Company for such fiscal year containing a Consolidated balance sheet and Consolidated statements of income, stockholders' equity and Consolidated cash flow for such year of the Company and the Consolidated Subsidiaries, audited and certified by independent certified public accountants of recognized standing; (ii) a report of such certified public accountants stating that, in making the examination necessary for expressing an opinion on such financial statements, nothing came to their attention that caused them to believe that there is in existence or has occurred any Event of Default hereunder, or, to the extent the occurrence thereof is ascertainable by accountants in the course of normal audit procedures, any Default or, if such accountants shall have obtained knowledge of any such Default or Event of Default, they shall disclose in such report the nature thereof and the length of time it has existed; and (iii) an Officers' Certificate of the Company (A) setting forth, in sufficient detail, the information and computations demonstrating whether the Company was in compliance with Sections 5.02(c) and (b) during such fiscal year and as at the end of such fiscal year and (B) stating that there exists no Event of Default or Default, or, if any such Event of Default or Default exists, stating the nature thereof, the period of existence thereof and what action the Company has taken and proposes to take with respect thereto; (ii) As soon as available, and in any event within 60 days after the end of each of the first three quarterly accounting periods in each fiscal year, (i) the Consolidated balance sheet and Consolidated statements of income and Consolidated cash flow for the periods beginning on the first day of such fiscal year and the first day of such quarterly accounting period and ending on the date of such balance sheet, setting forth in comparative form the corresponding Consolidated figures for the corresponding periods of the preceding fiscal year, all in reasonable detail, certified by a Financial Officer of the Company as having been prepared in accordance with generally accepted accounting principles consistently applied throughout the period involved (except for such changes as are disclosed in such financial statements or in the notes thereto and concurred in by independent certified public accountants) and (ii) an Officers' Certificate of the Company (A) setting forth, in sufficient detail, the information and computations demonstrating whether the Company was in compliance with Sections 5.02(c) and (b) during the periods covered by the financial reports then being furnished and as of the end of such periods and (B) stating that there exists no Event of Default or Default, or, if any such Event of Default or Default exists, stating the nature thereof, the period of existence thereof and what action the Company has taken and proposes to take with respect thereto;". (c) Subsection (vi) of Section 5.01(i) of the Credit Agreement is hereby amended in its entirety to read as follows: -4- 5 "(vi) Within ten Business Days after the Company obtains knowledge thereof, notice of any litigation or governmental proceeding pending against the Company or any Subsidiary which, individually or in the aggregate, might otherwise materially adversely affect the business, operations or condition, financial or otherwise, of the Company and the Consolidated Subsidiaries taken as a whole or the ability of the Company to perform its obligations under this Agreement or the Notes;". SECTION 4. Amendments to Section 5.02 of the Credit Agreement. (a) Clause (i) of Section 5.02(a) of the Credit Agreement is hereby amended in its entirety to read as follows: "(i) the Liens existing on the date hereof and listed on Schedule V, or if not so listed, secure obligations which in the aggregate for the Company and its Subsidiaries do not exceed 20% of Net Worth;". (b) Section 5.02(d) of the Credit Agreement is hereby amended in its entirety to read as follows: "(d) Funded Indebtedness. Permit the ratio of Consolidated Funded Indebtedness to Total Capitalization to be greater than .60 to 1.0 at the end of any quarterly accounting period." (c) Section 5.02(e) of the Credit Agreement is hereby deleted in its entirety and shall read as follows: "(e) Working Capital. Intentionally omitted." (d) Section 5.02(f) of the Credit Agreement is hereby deleted in its entirety and shall read as follows: "(f) Cash Flow. Intentionally omitted.". (e) Section 5.02(k) of the Credit Amendment is hereby amended in its entirety to read as follows: "(k) Consolidation, Merger or Acquisition. The Company will not, and will not permit any Consolidated Subsidiary to, (i) enter into a consolidation with any other Person or merge with or into any other Person or (ii) acquire the assets of or of the aggregate equity interest in -5- 6 any other Person (any such transaction being herein called an "Acquisition"), except that: (A) the Company may permit a Consolidated Subsidiary to merge into the Company or may effect an Acquisition of a Consolidated Subsidiary, and a Consolidated Subsidiary may consolidate or merge with or into another Consolidated Subsidiary; and (B) the Company or any Consolidated Subsidiary may merge with, or effect an Acquisition of, any Person other than the Company or a Consolidated Subsidiary if (i) in the case of any merger or Acquisition involving the Company, the Company is the continuing corporation and, in the case of any merger or Acquisition involving a Consolidated Subsidiary, the continuing corporation (immediately after giving effect to such merger or Acquisition is a Consolidated Subsidiary; and (ii) immediately after the consummation of the merger or Acquisition, and after giving effect thereto, no Default or Event of Default would exist.". SECTION 5. Amendments to Section 7.05. Section 7.05 of the Credit Agreement is hereby amended in its entirety to read as follows: "SECTION 7.05. AGENTS' INDEMNITY. NEITHER AGENT SHALL BE REQUIRED TO TAKE ANY ACTION HEREUNDER OR TO PROSECUTE OR DEFEND ANY SUIT IN RESPECT OF THIS AGREEMENT OR THE NOTES UNLESS INDEMNIFIED TO SUCH AGENT'S SATISFACTION BY THE BANKS AGAINST LOSS, COST, LIABILITY AND EXPENSE. IF ANY INDEMNITY FURNISHED TO SUCH AGENT SHALL BECOME IMPAIRED, IT MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE TO DO THE ACTS INDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS GIVEN. IN ADDITION, THE BANKS AGREE TO INDEMNIFY EACH AGENT (TO THE EXTENT NOT REIMBURSED BY THE COMPANY), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE COMMITTED NOTES THEN HELD BY EACH OF THEM (OR IF NO COMMITTED NOTES ARE AT THE TIME OUTSTANDING, RATABLE ACCORDING TO EITHER (I) THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS, OR IF NO COMMITMENTS ARE OUTSTANDING, THE RESPECTIVE AMOUNTS OF THE COMMITMENTS IMMEDIATELY PRIOR TO THE TIME THE COMMITMENTS CEASED TO BE OUTSTANDING, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY SUCH AGENT UNDER THIS AGREEMENT OR THE NOTES -6- 7 (INCLUDING, WITHOUT LIMITATION, ANY ACTION TAKEN OR OMITTED UNDER ARTICLE II OF THIS AGREEMENT); PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM SUCH AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY INTENDS, UNDER THIS SECTION 7.05, TO INDEMNIFY EACH AGENT RATABLY AS AFORESAID FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR RESULTING FROM SUCH AGENT'S SOLE OR CONTRIBUTORY NEGLIGENCE. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE EACH AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY SUCH AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, ADMINISTRATION, OR ENFORCEMENT OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT AND THE NOTES TO THE EXTENT THAT SUCH AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE COMPANY. THE PROVISIONS OF THIS SECTION 7.05 SHALL SURVIVE THE TERMINATION OF THE AGREEMENT AND/OR THE PAYMENT OR ASSIGNMENT OF ANY OF THE NOTES.". SECTION 6. Amendment to Section 8.05. Section 8.05 of the Credit Agreement is hereby amended in its entirety to ready as follows: "SECTION 8.05. INDEMNITY. (A) THE COMPANY SHALL INDEMNIFY THE AGENT, THE BANKS AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES TO WHICH ANY OF THEM MAY BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF OR RESULT FROM (I) THE TRANSACTIONS EVIDENCED BY THE ASSET PURCHASE AGREEMENT AND THE DOCUMENTS EXECUTED IN CONNECTION THEREWITH, (II) THIS AGREEMENT OR ANY ACTUAL OR PROPOSED USE BY THE COMPANY OF THE PROCEEDS OF ANY EXTENSION OF CREDIT BY ANY BANK HEREUNDER OR BREACH BY THE COMPANY OF THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT OR (III) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED INVESTIGATION OR PROCEEDING) RELATING TO THE FOREGOING, AND THE COMPANY SHALL REIMBURSE THE AGENT AND EACH BANK, AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, UPON DEMAND FOR ANY EXPENSES (INCLUDING LEGAL FEES) REASONABLY INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION OR PROCEEDING; BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. -7- 8 (B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED HEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY ORDINARY NEGLIGENCE OF SUCH PERSON. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER OBLIGATIONS OF THE COMPANY HEREUNDER, THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 8.05 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND/OR PAYMENT OF THE NOTES.". SECTION 7. Conditions of Effectiveness. This Amendment shall become effective when, and only when the following conditions shall have been fulfilled: (a) the Company, the Agent, the Auction Administration Agent and each Bank shall have executed a counterpart hereof and delivered the same to the Agent or, in the case of any Bank as to which an executed counterpart hereof shall not have been so delivered, the Agent shall have received written confirmation by telecopy or other similar writing from such Bank of execution of a counterpart hereof by such Bank; and (b) the Agent shall have received from the Company a certificate of the Secretary or Assistant Secretary of the Company certifying that attached thereto is (i) a true and complete copy of the general borrowing resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of the Credit Agreement, as amended hereby, and (ii) the incumbency and specimen signature of each officer of the Company executing this Amendment. SECTION 8. Representations and Warranties True; No Default or Event of Default. The Company hereby represents and warrants to the Agent, the Auction Administration Agent and the Banks that after giving effect to the execution and delivery of this Amendment (a) the representations and warranties set forth in the Credit Agreement are true and correct on the date hereof as though made on and as of such date; provided, however, that for purposes of this clause (a), Schedules II and III as used in Sections 4.02 and 4.05, respectively, of the Credit Agreement shall be -8- 9 deemed to include any supplements to such Schedules delivered to the Agent and the Banks by the Company prior to the date of this Amendment and (b) neither any Default nor Event of Default has occurred and is continuing as of the date hereof. SECTION 9. Reference to the Credit Agreement and Effect on the Notes and other Documents executed pursuant to the Credit Agreement. (a) Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," "herein," "hereof" or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended hereby. (b) Upon the effectiveness of this Amendment, each reference in the Notes and the other documents and agreements delivered or to be delivered pursuant to the Credit Agreement shall mean and be a reference to the Credit Agreement, as affected and amended hereby. (c) The Credit Agreement and the Notes and the other documents and agreements delivered pursuant to the Credit Agreement, as amended and modified by the amendments referred to above, shall remain in full force and effect and are hereby ratified and confirmed. SECTION 10. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. SECTION 11. GOVERNING LAW; BINDING EFFECT. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW AND SHALL BE BINDING UPON THE -9- 10 COMPANY, THE AGENT, THE AUCTION ADMINISTRATION AGENT AND THE BANKS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. SECTION 12. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. SECTION 13. ENTIRE AGREEMENT. THE CREDIT AGREEMENT AS AMENDED HEREBY, THE NOTES AND THE LETTER AGREEMENTS REFERRED TO IN SECTIONS 2.05(B) AND 2.05(C) OF THE CREDIT AGREEMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed effective as of the date first stated herein, by their respective officers thereunto duly authorized. SYSCO CORPORATION By: /s/ WILLIAM J. DELANEY Name: William J. DeLaney Title: Vice President and Treasurer -10- 11 TEXAS COMMERCE BANK NATIONAL ASSOCIATION, INDIVIDUALLY AND AS AGENT By: /s/ JAN H. DANVERS Name: Jan H. Danvers Title: Senior Vice President CHEMICAL BANK, AS AUCTION ADMINISTRATION AGENT By: /s/ JANET M. BELDEN Name: Janet M. Belden Title: Vice President THE CHASE MANHATTAN BANK, N.A. By: /s/ RICHARD A. BONOMO Name: Richard A. Bonomo Title: Vice President CONTINENTAL BANK N.A. By: /s/ MARY JO HOCH Name: Mary Jo Hoch Title: Vice President -11- 12 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ ROBERT IVOSEVICH Name: Robert Ivosevich Title: Authorized Signature NATIONSBANK OF TEXAS, N.A. By: /s/ BOYD P. GENTRY Name: Boyd P. Gentry Title: Senior Vice President THE FUJIBANK, LIMITED, HOUSTON AGENCY By: /s/ DAVID L. KELLEY Name: David L. Kelley Title: Vice President and Senior Manager THE TORONTO-DOMINION BANK By: /s/ LISA ALLISON Name: Lisa Allsion Title: Mgr. Cr. Admin. -12- 13 UNION BANK OF SWITZERLAND, HOUSTON AGENCY AND CAYMAN ISLANDS BRANCH By: /s/ EVANS SWANN Name: Evans Swann Title: Vice President By: /s/ DAN O. BOYLE Name: Dan O. Boyle Title: Vice President WACHOVIA BANK OF NORTH CAROLINA, NATIONAL ASSOCIATION By: /s/ KAY S. TRIPLETT Name: Kay S. Triplett Title: Senior Vice President -13- EX-10.D 4 AMENDED MANAGEMENT INCENTIVE PLAN 1 SYSCO CORPORATION AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN Effective As Of July 3, 1994 EXHIBIT 10(d) This Sysco Corporation Amended and Restated Management Incentive Plan (the "Plan") was adopted by unanimous action of the Plan Compensation Committee (as hereinafter defined) of Sysco Corporation (the "Company") on September 1, 1994, and by the Board of Directors of the Company (the "Board of Directors") on September 2, 1994. 1. STATEMENT OF PRINCIPLE The purpose of the Plan is to reward (i) certain key management personnel for outstanding performance in the management of the divisions or subsidiaries of the Company (both a division and subsidiary of the Company are herein referred to as a "Subsidiary") and (ii) certain corporate personnel for managing the operations of the Company as a whole. Except as otherwise provided in Section 8 hereof, the total number of shares of Sysco Common Stock, $1 par value ("Common Stock"), which may be awarded pursuant to this Plan shall not exceed 2,367,118 shares. All references to periods in the Plan are to fiscal periods unless otherwise specifically noted. 2. PLAN COMPENSATION COMMITTEE The Board of Directors has established a committee (the "Plan Compensation Committee") which is charged with structuring, proposing the implementation of, and implementing the terms and conditions of, the Plan. The Plan Compensation Committee shall, at all times, consist of two or more directors of the Company. The Plan Compensation Committee shall have the authority to adopt, alter and repeal such rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto); to otherwise supervise the administration of the Plan; and, except as to the application of this Plan to Senior Executive Participants (as defined in Section 3 below), to delegate such authority provided to it hereunder as it may deem necessary or appropriate to the Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer and any Executive Vice President with authority over food service operations, and any of them individually. All decisions made by the Plan Compensation Committee pursuant to the provisions of the Plan shall be made in the Plan Compensation Committee's sole discretion and shall be final and binding on all persons, including the Company and Participants. Each director while a member of the Plan Compensation Committee shall (i) meet the definition of "disinterested person" contained in Rule 16b-3 promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and (ii) - 1 - 2 be an "outside director", within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), any regulations interpreting Section 162(m) of the Code, or any other applicable Internal Revenue Service pronouncements pertaining thereto. 3. PARTICIPANTS The participants in the Plan for a fiscal year shall be designated by the Plan Compensation Committee from the persons who are employed by any Subsidiary ("Subsidiary Participants") or the Company ("Corporate Participants"), in the following capacities (Subsidiary Participants, Corporate Participants, and Senior Executive Participants are referred to collectively as "Participants" or individually as a "Participant"): Subsidiary Participants - Persons who serve as the Chairman of the Board of Directors, Chief Executive Officer, Chief Operating Officer, President, or an Executive Vice President of a Subsidiary, regardless of whether such Participant works for a division or a subsidiary of the Company. Corporate Participants - Persons (i) who serve as Chairman of the Board of Directors, Chief Executive Officer, Chief Operating Officer, President, Executive or Senior Vice President, Vice President, Secretary, Treasurer, Controller, Assistant Secretary, Assistant Treasurer, Assistant Controller, General Counsel or any other officer of the Company elected by the Board of Directors, and (ii) who are also employees of the Company or a Subsidiary. Senior Executive Participants - In addition to the participants described above, persons who are "covered employees" of the Company within the meaning of Code Section 162(m) and proposed Treasury Regulation 1.162-27(c)(2) (or any successor statute or regulating section, or any administrative interpretation thereof) (the "Executive Compensation Provisions") during a fiscal year of the Company shall be participants in the Plan for such fiscal year. If a Participant is both a Senior Executive Participant and a Corporate or a Subsidiary Participant during a fiscal year as a result of the application of the Executive Compensation Provisions, he or she shall be considered a Senior Executive Participant, and not a Corporate or a Subsidiary Participant, during such fiscal year, and shall be subject to any and all restrictions applicable to Senior Executive Participants hereunder during such fiscal year. To the extent possible, the Plan Compensation Committee shall designate Participants in the Plan prior to the commencement of the fiscal year in which such designated Participants will be entitled to a bonus under the Plan, or as soon as practicable during the fiscal year in which a person first becomes eligible to be a Participant. Once designated as a Participant, the Plan Compensation Committee can remove an employee as a Participant with or without cause at any time and the Participant shall not be entitled to any bonus under the Plan for the year in which he or she is removed regardless of when during such year he or she is removed. -2- 3 4. DEFINITIONS (A) For Table A Calculations: (i) Total Capital - for any Subsidiary, the sum of the following components: (a) Stockholders' equity - the average of the amounts outstanding for such Subsidiary at the end of each quarter for which the computation is being made (quarterly average basis). (b) Long-term debt - the average of the long-term portion of debt of such Subsidiary outstanding at the end of each quarter for which the computation is being made (quarterly average basis). (c) Intercompany borrowings - the average of the amount outstanding at the end of each day during the period for which the computation is being made (daily average basis). (d) FASB No. 13 leases - the average of the capitalized value of long-term leases at the end of each quarter during the period for which the computation is being made (quarterly average basis). (e) Imputed plant and equipment - for Subsidiaries which are leasing major capital items, the estimated present value of the cost of such items as of the end of the fiscal year will be included in the determination of Total Capital. (ii) Return on Capital - the Return on Capital for any Subsidiary is expressed as a percentage and is computed by dividing the Subsidiary's pretax earnings by the Subsidiary's Total Capital. (iii) Increase in Pretax Earnings - the Increase in Pretax Earnings is expressed as a percentage increase of the Subsidiary's actual pretax earnings for the current year compared to the greater of (a) the Subsidiary's actual pretax earnings for the prior year, or (b) those earnings which would have been required to have been earned by the Subsidiary in the prior year in order to have obtained a 20% return on such Subsidiary's Total Capital. (B) For Table B Calculations: (i) Return on Stockholders' Equity - expressed as a percentage and computed by dividing the Company's net after-tax earnings for the year by the Company's average stockholders' equity at the end of each quarter during the year. -3- 4 (ii) Increase in Earnings Per Share - expressed as a percentage increase of the net after-tax earnings per share for the year over the prior year's net after-tax earnings per share. (C) Method of Calculating Quarterly Averages: In determining the average amount outstanding of stockholders' equity, long-term debt, and capitalized value of long-term leases under paragraphs 4(A)(i)(a), (b) and (d), above, and the quarterly average stockholders' equity under paragraph 4(B)(i) above, such averages shall be determined by dividing five (5) into the sum of the amounts outstanding of the relevant category at the end of each of the four quarters of the fiscal year plus the amount outstanding of the relevant category at the beginning of the fiscal year. 5. METHOD OF OPERATION The bonus which a Participant can earn is based on the performance of the Company as a whole and either the performance of the Subsidiary which employs such Participant (as to Subsidiary Participants) or of a select group of Subsidiaries (as to Corporate Participants). The bonus is calculated with respect to an entire fiscal year and, if earned, shall be paid in accordance with Section 7 hereof. (A) Subsidiary Participants and certain Senior Executive Participants. With respect to each Subsidiary Participant and each Senior Executive Participant who would be a Subsidiary Participant but for the application of the Executive Compensation Provisions, a portion of the bonus may be earned on the basis of the results of operations of the Subsidiary employing such Participant, and the balance of the bonus on the basis of the results of operations of the Company as a whole, all as shown on Tables A and B attached hereto and made a part hereof. The bonus for such a Participant shall equal the sum of (i) 70% of the Participant's annual base salary in effect at the fiscal year end times the applicable percentage determined from Table A, the "Operations of the Subsidiary" (as adjusted, if applicable, as provided in Section 5(B), plus (ii) 20% of the Participant's annual base salary in effect at the fiscal year end times the applicable percentage determined from Table B, the "Operations of the Company", subject to the further adjustments and additions provided for in the Plan, unless the Plan Compensation Committee shall formulate a different bonus structure as to any Subsidiary Participant. No bonus shall be paid to a Subsidiary Participant or to a Senior Executive Participant who would be a Subsidiary Participant but for the application of the Executive Compensation Provisions based upon the Table B calculation unless he or she is entitled to a bonus based upon the Table A calculation. For Subsidiary Participants and Senior Executive Participants who would be Subsidiary Participants but for the application of the Executive Compensation provisions, the portion of the bonus based upon the results of Operations of the Subsidiary is determined by multiplying the appropriate percentage shown on Table A which coincides for the relevant Subsidiary with the appropriate level of Return on Capital and Increase in Pretax Earnings by -4- 5 70% of the Participant's base salary. Accordingly, such a Participant will not be entitled to any bonus under this Section 5(A) unless the Subsidiary that employs the Participant achieves, as a minimum, an Increase in Pretax Earnings of 4% and a 12% Return on Capital, unless the Plan Compensation Committee formulates a different bonus structure for such Participant. By way of example based upon Table A, if the Subsidiary achieves only these minimum results, the Participant will be entitled to a bonus of 70% of his or her base salary multiplied by a bonus factor of 5%. Subject to the further adjustments and additions provided for in this Plan, the remaining portion of the bonus for Subsidiary Participants and Senior Executive Participants who would be Subsidiary Participants but for the application of the Executive Compensation Provisions is based upon the Operations of the Company. This portion of such a Participant's bonus is calculated by determining the appropriate percentage shown on Table B which coincides with the appropriate Increase in Earnings Per Share and Return on Stockholders' Equity for the Company as a whole, and multiplying that percentage by 20% of the Participant's base salary. A Subsidiary Participant or a Senior Executive Participant who would be a Subsidiary Participant but for the application of the Executive Compensation provisions will receive no bonus as a result of the Table B calculation unless the Company achieves an Increase in Earnings Per Share of at least 10% and achieves a Return on Stockholders' Equity of at least 14%, unless the Plan Compensation Committee formulates a different bonus structure for such Participant. By way of example, if the Company achieves only these minimum results, such a Participant would receive, based upon Table B, a bonus of 20% of his or her base salary multiplied by the bonus factor of 10%, provided that the Participant is entitled to a bonus based upon the Operations of the Subsidiary employing such Participant. Notwithstanding the foregoing, unless otherwise determined by the Plan Compensation Committee in its sole discretion, only Subsidiary Participants whose Subsidiary achieved a 20% or greater Return on Capital for the fiscal year preceding the fiscal year for which the bonus is being determined (the "Prior Fiscal Year"; the fiscal year for which the bonus is being calculated is the "Current Fiscal Year") shall be entitled to a bonus determined from Tables A and B in the manner provided in this paragraph 5(A). For any Subsidiary Participant whose Subsidiary did not achieve a 20% or greater Return on Capital for the Prior Fiscal Year, the Plan Compensation Committee may establish a special bonus formula for, or it may decline to award a bonus to, such Subsidiary Participant for the Current Fiscal Year. (B) Additional Bonus. In addition to the bonus calculated in accordance with Section 5(A) above, a Subsidiary Participant may also be entitled to an additional bonus ("Additional Bonus") if awarded by the Plan Compensation Committee in its sole discretion. The Additional Bonus shall be established by the Plan Compensation Committee, in its sole discretion, at one or more times during such fiscal year or within ninety (90) days following the end of such fiscal year. The Plan Compensation Committee shall determine the Additional Bonus applicable to a particular Subsidiary Participant, if any, based upon (i) annual sales increases of the Subsidiary which employs such Participant over prior year's sales in excess of 15%, (ii) the development of management personnel at the Subsidiary which employs such Participant who are made available -5- 6 for transfer to other Subsidiaries or the corporate headquarters of the Company, (iii) such Participant's supervision of another Subsidiary or Subsidiaries in addition to the Subsidiary which employs them and to which they are primarily responsible, and (iv) such other criteria as the Plan Compensation Committee may develop in its sole discretion. A Senior Executive Participant who would be a Subsidiary Participant but for the application of the Executive Compensation Provisions shall not be entitled to an Additional Bonus. (C) Corporate Participants and certain Senior Executive Participants. With respect to a Corporate Participant or Senior Executive Participant who would be a Corporate Participant but for the application of the Executive Compensation Provisions and subject to the further adjustments and additions provided for in this Plan, a portion of the bonus shall depend upon the results of the Operations of the Company as shown on Table B, and the balance of his or her bonus shall depend on the number of Subsidiaries obtaining a 20% or greater Return on Capital. The portion of such Participant's bonus based upon the Operations of the Company is calculated in the same manner as that portion of a Subsidiary Participant's bonus which is based upon the Operations of the Company except that it is equal to the product of (i) a percentage of such Participant's base salary (the "Salary Percentage") and (ii) the appropriate percentage shown on Table B which coincides with the appropriate Increase in Earnings per Share and Return on Stockholder's Equity for the Company as a whole. The Salary Percentage of a Corporate Participant or Senior Executive Participant who would be a Corporate Participant but for the application of the Executive Compensation Provisions shall be one hundred percent (100%) unless reduced by the Plan Compensation Committee at such time as the Plan Compensation Committee shall determine in its sole discretion. A Corporate Participant or Senior Executive Participant who would be a Corporate Participant but for the application of the Executive Compensation Provisions will not receive any bonus (as a result of the Table B calculation or otherwise) unless the Company achieves an Increase in Earnings Per Share of at least 10% and achieves a Return on Stockholders' Equity of at least 14%. Subject to the further adjustments and additions provided for in this Plan, the remainder of the bonus payable hereunder to a Corporate Participant or a Senior Executive Participant who would be a Corporate Participant but for the application of the Executive Compensation Provisions is calculated by determining the number of Subsidiaries of the Company that have attained at least a 20% or greater Return on Capital. If a minimum of ten Subsidiaries have obtained a 20% or greater Return on Capital, and all Subsidiaries which have obtained a 20% or greater Return on Capital employ at least 50% or more of the aggregate of the Total Capital of all Subsidiaries, then such Participant will be entitled to receive an additional bonus equal to the product of (i) the Participant's Salary Percentage and (ii) 9% of the Participant's base -6- 7 salary for the first ten Subsidiaries which obtain such a Return on Capital and an additional 1-1/2% of the Participant's base salary for each additional Subsidiary which obtains such a Return on Capital. By way of example, if 18 Subsidiaries (which, in the aggregate, employ 51% of the Total Capital of all Subsidiaries) obtain a 20% or greater Return on Capital, a Corporate Participant or Senior Executive Participant who would be a Corporate Participant but for the application of the Executive Compensation Provisions will receive a bonus equal to the product of (i) the Participant's Salary Percentage and (ii) 21% of the Participant's base salary (9% for the performance of the first ten Subsidiaries in the group, and 12% for the performance of the additional eight Subsidiaries in the group). (D) General Rules Regarding Bonus Calculation. In determining whether or not the results of operations of a Subsidiary or the Company for a given fiscal year results in a bonus, generally accepted accounting principles shall be applied on a basis consistent with prior periods, and such determination shall be based on the calculations made by the Company, approved (in the case of Senior Executive Participants) by the Plan Compensation Committee and binding on each Participant. Except as provided in Section 11 as to Senior Executive Participants, there is no limit to the bonus that can be obtained. Although Tables A and B to the Plan have only been calculated to 160% and 142%, respectively, the "grids" shall be deemed to continue to increase in the same ratios as set forth. (E) Tax Law Changes. If the Internal Revenue Code is amended during any year and, as a result of such amendment(s), the effective tax rate applicable to the earnings of the Company (as described in the "Summary of Accounting Policies" section of the Company's annual report to the Securities and Exchange Commission on Form 10-K) changes during a year, the calculation of the net after-tax earnings per share of the Company (which calculations determine the appropriate "grid" set forth in Table B applicable to a Participant) for the year in which such rate change becomes effective (the "Rate Change Year") shall be made as if such rate change had not occurred during the Rate Change Year. In determining the appropriate "grid" applicable to a Participant in the year following the Rate Change Year, the calculation of the net after-tax earnings per share of the Company for such following year shall be made after taking into account such rate change, and shall be compared, for purposes of computing the appropriate Increase in Earnings Per Share for such year, with the net after-tax earnings per share of the Company for the Rate Change Year, computed after taking into account such rate change. 6. NO EMPLOYMENT ARRANGEMENTS IMPLIED Nothing herein shall imply any right of employment for a Participant and if a Participant is terminated, voluntarily or involuntarily, with or without cause, prior to the end of a given fiscal year, such Participant shall not be entitled to any bonus for such fiscal year regardless of whether -7- 8 or not such bonus had been or would have been earned in whole or in part, but any unpaid bonus earned with respect to a prior fiscal year shall not be affected. 7. PAYMENT Within 90 days following the end of each fiscal year, the Company shall determine, and, in the case of Senior Executive Participants, the Plan Compensation Committee shall approve, the amount of any bonus earned by each Participant pursuant to the provisions of Section 5 above. Such bonus shall be payable in cash unless the Participant has given notice to the Plan Compensation Committee within 90 days after the commencement of such fiscal year that such Participant has elected the option provided in Section 7(A) below. The amount of any bonus that a Participant is entitled to receive for a fiscal year shall be determined as of the last day of such fiscal year and each Participant shall be deemed to have constructively received his bonus (including the value of the shares of stock if he or she elects to receive a portion of his or her bonus in stock) as of the last day of such fiscal year notwithstanding the fact that it may be paid or delivered to him or her thereafter. (A) Each Participant shall be entitled to receive, in increments of 5%, up to 40% of his or her bonus in shares of Common Stock (with the exact percent fixed by the Participant) with such shares to be valued at the closing price of the Common Stock on the primary securities exchange on which such stock is traded on the last trading day of such fiscal year. Such election shall be made no later than 90 days after the beginning of the fiscal year in respect of which the bonus is to be calculated and once made shall be irrevocable for such fiscal year. If the Participant elects to receive such shares, the Participant shall receive as additional compensation an additional number of shares of Common Stock equal to 50% of the number of shares received by reason of this election (the "Additional Shares"), plus the Additional Cash Bonus (as defined in Section 7(B) below). For example, if a Participant earns a $10,000 bonus and the Common Stock is selling at $50 per share, and the Participant elects to receive 40% of the bonus in the form of Common Stock in a timely manner, the Participant would receive $6,000 plus 120 shares of Common Stock (80 shares pursuant to his election, plus 40 Additional Shares), plus the Additional Cash Bonus (as defined in Section 7(B) below). (B) If a Participant elects to receive Common Stock in accordance with Section 7(A) above, he or she shall also receive, as an additional bonus pursuant to the Plan, a cash amount equal to the value of the Additional Shares (which shall be the aggregate closing price of the Additional Shares on the last trading day of such fiscal year), multiplied by the effective tax rate applicable to the Company for the fiscal year for which the bonus is calculated, as described in the "Summary of Accounting Policies" section of the Company's annual report to the Securities and Exchange Commission on Form 10-K for such fiscal year (the "Additional Cash Bonus"). 8. RECAPITALIZATION OF COMPANY In the event of a recapitalization of the Company or its merger into or consolidation with another corporation, a Participant shall be entitled to receive such securities which he or she -8- 9 would have been entitled to receive had he or she been a shareholder of the Company holding shares pursuant to this Plan at the time of such recapitalization, merger or consolidation. In the event of a stock split, stock, dividend or combination of shares with respect to the Common Stock of the Company after the determination of the number of shares to which a Participant is entitled but before delivery of such shares to the Participant, then the number of shares that such Participant shall be entitled to receive shall be proportionately adjusted. 9. INVESTMENT REPRESENTATION AND RESTRICTIONS ON THE STOCK AND RIGHT OF REPURCHASE BY THE COMPANY (A) The shares to be issued to a Participant may, at the option of the Company, be unregistered and in such event the Participant shall execute an investment letter in form satisfactory to the Company, which letter shall contain an agreement that the Participant will not sell, transfer, give or otherwise convey any of such shares for a period of two years from the date on which such shares were issued to the Participant, except in the event of the Participant's death or termination of employment due to disability or retirement under normal Company benefit plans, but then only in accordance with the requirements of the Securities Act of 1933, as amended, and the rules and regulations thereunder, and the shares shall bear a legend reflecting the investment representation and the unregistered status of the shares. (B) If the shares to be issued to a Participant are registered pursuant to the registration provisions of the Securities Act of 1933, as amended, then the Participant shall enter into an agreement at the time of issuance of such shares that the Participant will not sell, transfer, give or otherwise convey any of such shares for a period of two years from the date on which such shares were issued to the Participant, except in the event of death or termination of employment due to disability or retirement under the normal Company benefit plans, and such shares shall bear a legend reflecting the terms of such restriction. (C) If a Participant's employment is terminated at any time within the first year following the issuance of shares for any reason, with or without cause, other than his death or termination of employment due to disability or retirement under normal Company benefit plans, then upon demand of the Company made in writing within 30 days from the date of termination, such Participant will sell to the Company all of the stock issued to the Participant within the twelve months preceding the date of termination at a purchase price equal to the lower of the then market price of the stock as hereinafter determined or the price at which the stock was valued for purposes of issuing it pursuant to this Plan. If a Participant's employment is terminated after one year but before two years from the date on which any shares of Common Stock were issued to him pursuant to this Plan, on the demand of the Company made in writing within 30 days from the date of termination, such Participant will sell to the Company, in addition to the shares he or she may be required to sell under the preceding sentence, 50% of the stock issued to the Participant within twenty-four months but more than twelve months preceding the date of termination at a purchase price equal to the lower of the then market price of the stock as hereinafter determined, or the price at which the stock was valued for purposes of issuing it pursuant to this Plan. The market price of the Common Stock shall be deemed to be the closing price of such stock on the -9- 10 primary securities exchange on which such stock is traded on the date of termination; and if such stock did not trade on such date, then on the next day on which it does trade. The shares of Common Stock issued under this Plan shall bear a legend reflecting these restrictions. 10. AMENDMENTS AND TERMINATION This Plan may be amended at any time by the Board of Directors and any such amendment shall be effective as of commencement of the fiscal year during which the Plan is amended, regardless of the date of the amendment, unless otherwise stated by the Board of Directors, provided that if such an amendment affects any material term of a performance goal hereunder, and thus would affect the ability of the Corporation to deduct payments of compensation to Senior Executive Participants because of the provisions of Code Section 162(m), any regulations issued interpreting Code Section 162(m), or any other applicable Internal Revenue Service pronouncements pertaining thereto, such amendment must be approved by the stockholders of the Company after disclosure of the terms of such amendment to the stockholders, prior to the payment of any amounts pursuant to the terms of such amendment to any Senior Executive Participant. This Plan may be terminated at any time by the Board of Directors and termination will be effective as of the commencement of the fiscal year in which such action to terminate the Plan is taken. 11. OVERALL LIMITATION UPON PAYMENTS UNDER PLAN TO SENIOR EXECUTIVE PARTICIPANTS. Notwithstanding any other provision in this Plan to the contrary, in no event shall any Senior Executive Participant be entitled to a bonus amount for any fiscal year (which bonus amount shall include, if applicable, the value of the Additional Shares (as defined in Section 7(A) above, and the Additional Cash Bonus (as defined in Section 7(B) above)) in excess of one percent (1%) of the Company's earnings before income taxes as publicly disclosed in the "Consolidated Results of Operations" section of the Company's annual report to the Securities and Exchange Commission on Form 10-K for such fiscal year. -10- 11 EXHIBIT 1 - TABLE A MANAGEMENT INCENTIVE PLAN OPERATIONS OF THE SUBSIDIARY SUBSIDIARY PARTICIPANT - 70% OF PARTICIPANT'S BASE SALARY MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE A
PERCENTAGE INCREASE IN PRETAX EARNINGS RETURN ON CAPITAL 4-6 6-8 8-10 10-12 12-14 14-16 16-18 18-20 20-23 23-25 25-28 28-30 30-33 33-35 35-38 38-40 40-43 43-45 45-48 48-50 50-53 - - - ----------------------------------------------------------------------------------------------------------------------------------- 12-16 5 7 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 16-20 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 20-24 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 24-28 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 28-32 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 32-36 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 36-40 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 40-44 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 44-48 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 48-52 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 52-56 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150 56-60 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150 152 155 60-64 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150 152 155 157 160
12 EXHIBIT 2 - TABLE B MANAGEMENT INCENTIVE PLAN OPERATIONS OF THE COMPANY SUBSIDIARY PARTICIPANT - 20% OF THE PARTICIPANT'S BASE SALARY MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE B CORPORATE PARTICIPANT - 70% OF PARTICIPANT'S BASE SALARY MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE B
Return on PERCENTAGE INCREASE IN EARNINGS PER SHARE Stockholders' Equity 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 ---------------------------------------------------------------------------------------------------------------------------- 14% 10 20 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 15% 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 16% 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 17% 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 18% 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 19% 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 20% 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 21% 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142
EX-11 5 COMPUTATION OF PER SHARE EARNINGS 1 SYSCO CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11
June 27, 1992 July 3, 1993 July 2, 1994 ------------- ------------ ------------ Calculation of Primary Earnings Per Share: - - - ------------------------------------------ Net earnings applicable to common stock $172,229,000 $201,807,000 $216,752,000 ============ ============ ============ Average number of common shares and common stock equivalents outstanding 186,001,381 186,745,576 184,338,616 Dilutive effect of stock options (1) -- -- -- ------------ ------------ ------------ 186,001,381 186,745,576 184,338,616 ============ ============ ============ Primary earnings per share $ .93 $ 1.08 $ 1.18 ============ ============ ============ Calculation of Fully Diluted Earnings Per Share: - - - ------------------------------------------------ Net earnings applicable to common stock $172,229,000 $201,807,000 $216,752,000 ============ ============ ============ Average number of shares outstanding on a fully diluted basis -- same as for calculation of primary earnings per share 186,001,381 186,745,576 184,338,616 Dilutive effect of stock options and Liquid Yield Option Notes (2) -- -- -- ------------ ------------ ------------ 186,001,381 186,745,576 184,338,616 ============ ============ ============ Fully diluted earnings per share $ .93 $ 1.08 $ 1.18 ============ ============ ============
(1) Maximum possible dilutive effect of outstanding options in each year is less than 3%. (2) Maximum possible dilutive effect of outstanding options and Liquid Yield Option Notes during each year is less than 3%. EX-21 6 SUBSIDIARIES 1 SYSCO CORPORATION AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 Registrant: Sysco Corporation The following is a list of wholly-owned subsidiaries of the Registrant at July 2, 1994.
State of Name of Subsidiary Incorporation - - - ------------------ ------------- Allied-Sysco Food Services, Inc. ................................. California Arrow-Sysco Food Services, Inc. .................................. Delaware Bell/Sysco Food Services, Inc. ................................... North Carolina Deaktor/Sysco Food Services Company .............................. Pennsylvania DiPaolo/Sysco Food Services, Inc. ................................ Ohio Grants - Sysco Food Services, Inc. ............................... Michigan Hardin's-Sysco Food Services, Inc. ............................... Tennessee K.W. Food Distributors, Ltd. ..................................... B.C. Canada Lankford-Sysco Food Services, Inc. ............................... Maryland Maine/Sysco, Inc. ................................................ Maine Major-Sysco Food Services, Inc. .................................. California Mid-Central /Sysco Food Services, Inc. ........................... Missouri Miesel/Sysco Food Service Company ................................ Delaware Nobel/Sysco Food Services Company ................................ Colorado * Sysco Equipment & Furnishings Company .................... Delaware Olewine's-Sysco Food Services Company ............................ Pennsylvania Robert Orr-Sysco Food Services Co. ............................... Tennessee Pegler-Sysco Food Services Company ............................... Nebraska * Food Service Transportation, Inc. ........................ Nebraska * Pegler-Sysco Transportation Co. .......................... Nebraska Ritter Sysco Food Services, Inc. ................................. New Jersey * Dowd Food Discount Corp. ................................. New Jersey Smelkinson Sysco Food Services, Inc. ............................. Delaware Sysco Avard Food Services, Inc. .................................. Delaware Sysco Food Services - Chicago, Inc. .............................. Delaware Sysco Food Services - Jacksonville, Inc. ......................... Delaware Sysco Food Services of Arizona, Inc. ............................. Delaware Sysco Food Services of Arkansas, Inc. ............................ Arkansas Sysco Food Services of Atlanta, Inc. ............................. Delaware Sysco Food Services of Atlantic City, Inc. ....................... Delaware
2
State of Name of Subsidiary Incorporation - - - ------------------ ------------- Sysco Food Services of Austin, Inc. .............................. Delaware Sysco Food Services of Beaumont, Inc. ............................ Texas Sysco Food Services of Central Florida, Inc. ..................... Delaware Sysco Food Services of Cleveland, Inc. ........................... Delaware Sysco Food Services of Dallas, Inc. .............................. Texas Sysco Food Services of Houston, Inc. ............................. Delaware Sysco Food Services of Idaho, Inc. ............................... Idaho Sysco Food Services of Indianapolis, Inc. ........................ Delaware Sysco Food Services of Iowa, Inc. ................................ Delaware Sysco Food Services of Los Angeles, Inc. ......................... Delaware Sysco Food Services of Minnesota, Inc. ........................... Delaware Sysco Food Services of Montana, Inc. ............................. Delaware Sysco Food Services of Oklahoma, Inc. ............................ Delaware Sysco Food Services of Portland, Inc. ............................ Delaware Sysco Food Services of San Antonio, Inc. ......................... Delaware Sysco Food Services of Seattle, Inc. ............................. Delaware Sysco Food Services of South Florida, Inc. ....................... Delaware Sysco Food Services of St. Louis, Inc. ........................... Delaware Sysco Food Services of Virginia, Inc. ............................ Virginia Sysco/Frost-Pack Food Services, Inc. ............................. Michigan Sysco Intermountain Food Services, Inc. .......................... Delaware Sysco/Louisville Food Services Co. ............................... Delaware Tartan Sysco Food Services, Inc. ................................. Pennsylvania * Concors Supply Co., Inc. ................................. Delaware * Garden Cash & Carry, Inc. ................................ Delaware The SYGMA Network, Inc. .......................................... Delaware The SYGMA Network of Ohio, Inc. .................................. Delaware The SYGMA Network of Pennsylvania, Inc. .......................... Delaware Inactive - - - -------- CFS Bakeries, Inc. ............................................... California CFS Continental Transportation Company ........................... Illinois FSB, Inc. ........................................................ Delaware Sysco Frosted Foods, Inc. ........................................ Delaware SyscoMed, Inc. ................................................... Delaware Tartan Foods, Inc. ............................................... Delaware Vernon, Inc. ..................................................... California
* 2nd Tier Subsidiary EX-23 7 ACCOUNTANT'S CONSENT 1 SYSCO CORPORATION AND SUBSIDIARIES INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT EXHIBIT 23 As independent public accountants, we hereby consent to the incorporation of our report included in the Company's Report on Form 10-K for the year ended July 2, 1994 into the Company's previously filed (i) Post-Effective Amendment No. 1 of the Registration Statement and Prospectus of Sysco Corporation relating to the offering of Sysco Common Stock under the Sysco Corporation Management Incentive Plan (Registration No. 2-73392, (ii) Registration Statement and Prospectus of Sysco Corporation relating to the Sysco Corporation 1974 Employee's Stock Purchase Plan (Registration No. 33-10906), (iii) Post-Effective Amendment No. 1 of the Registration Statement and Prospectus relating to the offering of Sysco Common Stock under the Sysco Corporation Incentive Stock Option Plan (Registration No. 2-76096), (iv) Registration Statement and Prospectus of Sysco Corporation relating to the offering of additional shares of Sysco Common Stock under the Sysco Corporation Management Incentive Plan (Registration No. 33- 45804), and (v) Registration Statement and Prospectus of Sysco Corporation relating to the offering of Sysco Common Stock under the Sysco Corporation 1991 Stock Option Plan (Registration No. 33-45820). /s/ Arthur Andersen LLP Arthur Andersen LLP Houston, Texas August 3, 1994 EX-27 8 FINANCIAL DATA SCEDULE
5 This schedule contains summary financial information extracted from Item 8., Financial Statements and Supplementary Data and is qualified by reference to such financial statements. 1,000 YEAR JUL-02-1994 JUL-02-1994 86,735 0 872,447 (15,999) 601,994 1,599,648 1,407,329 (590,108) 2,811,729 846,561 538,711 191,294 0 0 1,049,615 2,811,729 10,942,499 10,942,499 8,971,628 10,574,917 (1,756) 17,918 36,272 367,582 150,830 216,752 0 0 0 216,752 1.18 1.18
-----END PRIVACY-ENHANCED MESSAGE-----