-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TuAkxq5eWq7mLh8l0XS5IE28WaaIZgsaYQPlNUi+MJld+nC/LVVDUntq4KS1UbfJ DUwfPdubdy6G7yGD6tPh6w== 0000950129-95-001268.txt : 19951002 0000950129-95-001268.hdr.sgml : 19951002 ACCESSION NUMBER: 0000950129-95-001268 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19950701 FILED AS OF DATE: 19950927 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSCO CORP CENTRAL INDEX KEY: 0000096021 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [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: 95576571 BUSINESS ADDRESS: STREET 1: 1390 ENCLAVE PKWY CITY: HOUSTON STATE: TX ZIP: 77077 BUSINESS PHONE: 7135841390 10-K 1 SYSCO CORPORATION 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 1, 1995 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 $5,141,000,000 AT SEPTEMBER 8, 1995 (BASED ON THE CLOSING SALES PRICE ON THE NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SEPTEMBER 8, 1995, AS REPORTED BY THE WALL STREET JOURNAL (SOUTHWEST EDITION)). AT SEPTEMBER 8, 1995, THE REGISTRANT HAD ISSUED AND OUTSTANDING AN AGGREGATE OF 182,778,021 SHARES OF ITS COMMON STOCK. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the proxy statement to be filed not later than 120 days after July 1, 1995 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 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 meats, fully prepared entrees, fruits, vegetables and desserts, and a full line of canned and dry goods, fresh meats, 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 and 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 8,700 sales, marketing and service representatives, the Company keeps informed of the needs of its customers 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 5% of SYSCO's sales for its fiscal year ended July 1, 1995. Approximately 5% of traditional foodservice sales during fiscal 1995 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 1, 1995, 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 1995 1994 1993 - ---------------- ----- ------ ------ Restaurants 60% 60% 60% Hospitals and nursing homes 12 13 13 Schools and colleges 7 7 7 Hotels and motels 6 6 6 Other 15 14 14 --- --- --- Totals 100% 100% 100% === === ===
SOURCES OF SUPPLY SYSCO estimates that it purchases from thousands of independent sources, none of which accounts for 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 1995, fifty-one companies have been acquired, as follows: 2 4
Date Company Acquired ------- -------- The Grant Grocer Company June 1970 The Albany Frosted Foods, Inc. and Affiliated Companies September 1970 Arrow Food Distributors, Inc. January 1971 Koon Food Sales, Inc. March 1971 Rome Foods Company October 1971 Saunders Food Distributors, Inc. October 1971 Hallsmith Company, Inc. April 1972 The Miesel Company June 1972 Robert Orr & Company July 1972 Jay Rodgers Co. July 1972 Hardin's, Inc. August 1972 Baraboo Food Products, Inc. May 1973 E. R. Cochran Company December 1973 The Fialkow Company December 1973 Sterling-Keeleys Incorporated December 1973 Harrisonburg Fruit & Produce Co. April 1974 Alabama Complete Foods, Inc. July 1974 Swan Food Sales, Inc. October 1974 Tri-State General Food Supply Co., Inc. December 1974 Marietta Institutional Wholesalers, Inc. June 1975 Monticello Provision Company August 1975 Oregon Film Service, Inc. and Affiliated Companies September 1975 Mid-Central Fish & Frozen Foods, Inc. December 1975 Glen-Webb & Co. December 1978 Select-Union Foods, Inc. April 1979 S.E. Lankford, Jr. Produce, Inc. September 1981 General Management Corporation and Subsidiaries January 1982 Frosted Foods, Inc. January 1982 Pegler & Company October 1983 Bell Distributing Company December 1983 DiPaolo Food Distributors, Inc. June 1985 B. A. Railton Company September 1985 CML Company, Inc. September 1985 New York Tea Company September 1985 Operating divisions of PYA/Monarch, Inc. and PYA/Monarch of Texas, Inc. (Wholly-owned subsidiaries of Sara Lee Corporation) Amarillo, Texas September 1985 Austin, Texas September 1985 Beaumont, Texas September 1985 Trammell, Temple & Staff, Inc. January 1986 Deaktor Brothers Provision Co. March 1986 Bangor Wholesale Foods, Inc. June 1986 General Foodservice Supply, Inc. December 1986 Vogel's June 1987 Major-Hosking's, Inc. July 1987 Foodservice distribution - related businesses of Staley Continental, Inc. (CFS Continental) August 1988 Olewine's, Inc. December 1988 Oklahoma City-based foodservice distribution businesses of Scrivner, Inc. April 1990 New York and Pennsylvania-based foodservice distribution businesses of Scrivner, Inc. April 1991 Benjamin Polakoff & Son, Inc. May 1992 Perloff Brothers, Inc. (Tartan Foods) December 1992 St. Louis Division of Clark Foodservice, Inc. February 1993 Ritter Food Corporation August 1993
3 5 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, consisting of approximately 700 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. During fiscal 1995, 1994 and 1993, approximately $202,000,000, $161,000,000, and $128,000,000, respectively, were invested in facility expansions, fleet additions and other capital asset enhancements. The Company estimates its capital expenditures in fiscal 1996 should be in the range of $210,000,000 to $230,000,000. During the three years ended July 1, 1995, capital expenditures have been financed primarily by internally generated funds, the Company's commercial paper program and bank borrowings. EMPLOYEES As of July 1, 1995, the Company had approximately 28,100 employees, 23% of whom are represented by unions, primarily the International Brotherhood of Teamsters. Contract negotiations are handled locally with monitoring and assistance by the corporate staff. Collective bargaining agreements covering approximately 49% of the Company's union employees expire during fiscal 1996. 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. 4 6 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. DEBT ISSUANCE In June 1995, the Company issued $150,000,000 principal amount of 6 1/2% Senior Notes due June 15, 2005. These notes, which were priced at 99.4% of par, are unsecured, not redeemable prior to maturity and are not subject to any sinking fund requirement. The notes were issued under a $500,000,000 shelf registration filed with the Securities and Exchange Commission in June 1995. No other securities have been issued under the shelf registration. 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 has completed 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. Installation will continue company-wide through the next several years and such installations are expected to provide the basis for business expansion over this period without having a material adverse effect on the business or operations of the Company. 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 103 facilities within the United States and two in Canada. 5 7 ITEM 2. PROPERTIES As of July 1, 1995 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 1 65 324 Arizona 1 1,485 3,410 Arkansas 1 1,200 1,145 California 10 8,021 16,155 Colorado 5 2,759 5,476 Connecticut 1 2,417 2,659 Florida 3 6,054 5,158 Georgia 3 3,195 6,179 Idaho 1 578 656 Illinois 2 2,824 3,225 Indiana 1 1,404 1,832 Iowa 1 687 1,215 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 4,427 5,596 Massachusetts 3 3,395 3,696 Michigan 3 3,452 5,438 Minnesota 1 2,085 2,370 Mississippi 2 2,179 2,736 Missouri 1 1,128 1,348 Montana 1 2,043 1,830 Nebraska 1 2,092 2,618 New Jersey 3 1,567 5,527 New Mexico 2 1,856 2,024 New York 9 4,397 8,767 North Carolina 2 346 848 Ohio 5 4,557 8,728 Oklahoma 3 1,145 2,519 Oregon 2 2,335 3,455 Pennsylvania 6 4,125 6,068 South Dakota 1 5 100 Tennessee 4 6,305 7,351 Texas 9 10,624 15,650 Utah 1 1,810 1,845 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 105 104,950 152,770 === ======= =======
6 8 The Company owns approximately 219,491,000 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 1996 to 2015, 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 $65,983,000 at July 1, 1995. Such mortgage indebtedness and industrial revenue bond financing arrangements mature at various dates. Facilities in Newark, New Jersey; Jackson, Mississippi; San Antonio, Texas; Louisville, Kentucky; Cleveland, Ohio; Detroit, Michigan; Cincinnati, Ohio; Austin, Texas; and Harrisonburg, Virginia (which in the aggregate account for approximately 14% of total sales) are operating near maximum capacity and the Company is currently constructing or planning replacements or expansions for these distribution facilities. The Company is planning to complete construction of full service distribution facilities near Milwaukee, Wisconsin and Tampa, Florida during fiscal 1996. The Company's fleet of approximately 4,800 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 93% 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 NAME OF OFFICER CAPACITY POSITION SINCE AGE - ------------------------------------------------------------------------------------------------------- John F. Baugh Senior Chairman of the Board of 1985 79 Directors (1997) John F. Woodhouse Chairman of the Board 1985 64 of Directors (1995) Bill M. Lindig President and Chief 1985, 1995 58 Executive Officer and & 1983 Director (1996) Charles H. Cotros Executive Vice President and 1988, 1995 58 Chief Operating Officer and & 1985 Director (1997) O. Wayne Duncan Senior Vice President, 1995 57 Operations Thomas E. Lankford Senior Vice President, 1995 47 Operations Gregory K. Marshall Senior Vice President, 1993 & 48 Multi-Unit Sales and Chief 1984 Executive Officer, The SYGMA Network, Inc. Richard J. Schnieders Senior Vice President, 1992 47 Merchandising Services John K. Stubblefield, Jr. Senior Vice President and 1993 & 49 Chief Financial Officer 1994 Arthur J. Swenka Senior Vice President, 1995 58 Operations and Director (1997) James D. Wickus Senior Vice President, 1995 52 Operations Diane S. Day Vice President and Treasurer 1994 46
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 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 Fiscal 1995 First Quarter $26-1/2 $21-1/8 $.09 Second Quarter 27-3/4 23-5/8 .09 Third Quarter 28-3/4 24-7/8 .11 Fourth Quarter 29-7/8 26-1/4 .11
The approximate number of shareholders of SYSCO's Common Stock as of July 1, 1995 was 21,100. 9 11 Item 6. SELECTED FINANCIAL DATA
- ----------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended - ----------------------------------------------------------------------------------------------------------------------- 1993 (In thousands except for share data) 1995 1994 (53 Weeks) 1992 1991 - ----------------------------------------------------------------------------------------------------------------------- Sales $12,118,047 $10,942,499 $10,021,513 $8,892,785 $8,149,700 Earnings before income taxes 417,618 367,582 331,977 281,656 250,864 Income taxes 165,794 150,830 130,170 109,427 97,034 ------------------------------------------------------------------------- Net earnings 251,824 216,752 201,807 172,229 153,830 ========================================================================= Earnings per share 1.38 1.18 1.08 .93 .83 ========================================================================= Cash dividends per share .40 .32 .26 .17 .12 Total assets 3,094,691 2,811,729 2,530,043 2,325,206 2,177,695 Capital expenditures 201,577 161,485 127,879 134,290 134,921 Long-term debt 541,556 538,711 494,062 488,828 543,176 Shareholders' equity 1,403,603 1,240,909 1,137,216 1,056,846 918,626 ------------------------------------------------------------------------- Total capitalization 1,945,159 1,779,620 1,631,278 1,545,674 1,461,802 ========================================================================= Ratio of long-term debt to capitalization 27.8% 30.3% 30.3% 31.6% 37.2%
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 continue to 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 2,100,000 shares for $53,166,000 in fiscal 1995, 3,000,000 shares for $80,131,000 in fiscal 1994 and 7,200,000 shares for $180,343,000 in fiscal 1993. 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 $336,903,000 in 1995, $282,515,000 in 1994 and $257,165,000 in 1993. Expenditures for facilities, fleet and other equipment were $201,577,000 in 1995, $161,485,000 in 1994 and $127,879,000 in 1993. Expenditures in fiscal 1996 should be in the range of $210,000,000 to $230,000,000. In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due June 15, 2005. These notes, which were priced at 99.4% of par, are unsecured, not redeemable prior to maturity and are not subject to any sinking fund requirement. The notes were issued under a $500,000,000 shelf registration filed with the Securities and Exchange Commission in June 1995. No other securities have been issued under the shelf registration. 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 $541,556,000 at July 1, 1995. About 71% of the total debt is at fixed rates averaging 7.42% and 29% of the total debt is at floating rates averaging 6.01%. Long-term debt to capitalization is 28% at July 1, 1995, down from the 30% at July 2, 1994 and at July 3, 1993. 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 1995, 1994 and 1993, commercial paper and bank borrowings ranged from approximately $146,200,000 to $425,100,000, $184,900,000 to $415,100,000 and $87,500,000 to $292,500,000, 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 11% in 1995 and 9% in 1994 result from several factors. Sales in fiscal 1995 and 1994 were affected by the relatively modest growth in the U.S. economy, as well as in the foodservice industry. After adjusting for food price increases and adjusting for acquisitions in fiscal 1994, real sales growth was about 9% in 1995 and 7% in 1994. The cost of SYSCO's foodservice products is estimated to have averaged an increase of about 2% from the beginning to the end of fiscal 1995 compared to an increase of approximately 1.9% in fiscal 1994. Industry sources estimate the total foodservice market experienced real growth of approximately 3% in calendar 1994 and 2.3% in calendar 1993. 11 13 Sales for fiscal 1993 through 1995 were as follows:
- ------------------------------------------------------------------------------- Year Sales % Increase - ------------------------------------------------------------------------------- 1995 $12,118,047,000 11% 1994 10,942,499,000 9 1993 (53 Weeks) 10,021,513,000 13
A comparison of the sales mix in the principal product categories during the last three years is presented below:
- ------------------------------------------------------------------------------- 1995 1994 1993 ------------------------ Medical supplies 1% 1% --% Dairy products 8 8 8 Fresh and frozen meats 15 16 16 Seafoods 6 6 6 Poultry 9 9 9 Frozen fruits, vegetables, bakery and other 15 14 15 Canned and dry products 25 25 25 Paper and disposables 7 7 7 Janitorial products 2 2 2 Equipment and smallwares 3 3 3 Fresh produce 6 6 6 Beverage products 3 3 3 ------------------------ 100% 100% 100% ========================
A comparison of sales by type of customer during the last three years is presented below:
- ------------------------------------------------------------------------------- 1995 1994 1993 ------------------------ Restaurants 60% 60% 60% Hospitals and nursing homes 12 13 13 Schools and colleges 7 7 7 Hotels and motels 6 6 6 All other 15 14 14 ------------------------ 100% 100% 100% ========================
COST OF SALES Cost of sales increased about 11% in 1995 and 9% in 1994. 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 1995, 1994 and 1993 fiscal years were 14.3%, 14.3% and 14.2%, 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 increased $2,307,000 or approximately 6% in fiscal 1995 as compared to a decrease of $2,732,000 or approximately 7% in fiscal 1994. The increase in fiscal 1995 is due primarily to increased borrowings and rates, while the decrease in fiscal 1994 was due primarily to the expiration of an interest rate swap in December 1993. Interest capitalized during the past three years was $2,833,000 in 1995, $1,313,000 in 1994 and $1,315,000 in 1993. OTHER INCOME, NET Other income increased $467,000 or about 27% in fiscal 1995 and decreased $381,000 or about 18% in fiscal 1994. 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 $50,036,000 or approximately 14% above fiscal 1994, which had increased $35,605,000 or approximately 11% over the prior year. Additional sales and realization of operating efficiencies contributed to the increases. PROVISION FOR INCOME TAXES The effective tax rate for 1995 was approximately 40% compared to 41% in 1994 and 39% in 1993. 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 1995 represents the nineteenth consecutive year of increased earnings for SYSCO. Net earnings for the year rose $35,072,000 or approximately 16% above fiscal 1994, which had increased $14,945,000 or approximately 7% over the prior year. After adjusting for the $4,900,000 catch-up tax provision in fiscal 1994, net earnings in 1995 increased about 14% over 1994. Excluding the impact of the extra week in fiscal 1993 and the increased tax rate in fiscal 1994, net earnings increased approximately 14% in 1994 over 1993. DIVIDENDS The quarterly dividend rate of eleven cents per share was established in November 1994 when it was increased from the nine cents per share set in November 1993. RETURN ON SHAREHOLDERS' EQUITY The return on average shareholders' equity for 1995, 1994 and 1993 was approximately 19%, 18% and 18%, 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 1, 1995 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 Schedule: II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . S-1
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/ BILL M. LINDIG /s/ JOHN K. STUBBLEFIELD, JR. - ------------------------------------- ------------------------------- Bill M. Lindig John K. Stubblefield, Jr. President and Chief Executive Officer Senior Vice President and Chief Financial Officer 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 1, 1995 and July 2, 1994, and the related statements of consolidated results of operations, shareholders' equity and cash flows for each of the three years in the period ended July 1, 1995. These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the schedule 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 1, 1995 and July 2, 1994, and the results of their operations and their cash flows for each of the three years in the period ended July 1, 1995, 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 schedule listed in Item 14(a) is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states 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 2, 1995 17 19 CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------- (In thousands except for share data) July 1, 1995 July 2, 1994 - --------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash $ 133,886 $ 86,735 Accounts and notes receivable, less allowances of $16,001 and $15,999 932,533 856,448 Inventories 667,861 601,994 Deferred taxes 33,935 38,091 Prepaid expenses 18,685 16,380 --------------------------- Total current assets 1,786,900 1,599,648 Plant and equipment at cost, less depreciation 896,079 817,221 Other assets Goodwill and intangibles, less amortization 258,206 266,021 Other 153,506 128,839 --------------------------- Total other assets 411,712 394,860 --------------------------- Total assets $3,094,691 $2,811,729 =========================== Liabilities and shareholders' equity Current liabilities Notes payable $ 1,181 $ 5,247 Accounts payable 708,380 632,373 Accrued expenses 206,131 176,043 Accrued income taxes 22,462 29,168 Current maturities of long-term debt 6,569 3,730 --------------------------- Total current liabilities 944,723 846,561 Long-term debt 541,556 538,711 Deferred taxes 204,809 185,548 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 48,674 60,003 Retained earnings 1,379,405 1,200,735 --------------------------- 1,619,373 1,452,032 Less cost of treasury stock, 8,429,203 and 8,224,505 shares 215,770 211,123 --------------------------- Total shareholders' equity 1,403,603 1,240,909 --------------------------- Total liabilities and shareholders' equity $3,094,691 $2,811,729 ===========================
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 1, 1995 July 2, 1994 (53 Weeks) - ---------------------------------------------------------------------------------------------------------------- Sales $12,118,047 $10,942,499 $10,021,513 Costs and expenses Cost of sales 9,927,448 8,971,628 8,225,275 Operating expenses 1,736,625 1,568,773 1,427,394 Interest expense 38,579 36,272 39,004 Other income, net (2,223) (1,756) (2,137) --------------------------------------------------- Total costs and expenses 11,700,429 10,574,917 9,689,536 --------------------------------------------------- Earnings before income taxes 417,618 367,582 331,977 Income taxes 165,794 150,830 130,170 --------------------------------------------------- Net earnings $ 251,824 $ 216,752 $ 201,807 =================================================== Earnings per share $ 1.38 $ 1.18 $ 1.08 ===================================================
See Summary of Accounting Policies and Additional Financial Information. 19 21 CONSOLIDATED SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------- Common Stock Treasury Stock ----------------------- Paid-in Retained ------------------------ (In thousands except for share data) Shares Amount Capital Earnings Shares Amount - ------------------------------------------------------------------------------------------------------------------------------- Balance at June 27, 1992 186,583,586 $186,584 $ 890,065 807,514 $ 19,803 Net earning for year ended July 3, 1993 201,807 Cash dividends paid, $.26 per share (48,815) Treasury stock purchases 7,200,000 180,343 Stock issued upon conversion of Liquid Yield Option Notes 4,710,139 4,710 $ 85,649 Stock options exercised (8,284) (466,306) (11,557) Employees' Stock Purchase Plan (1,625) (517,504) (12,785) Management Incentive Plan (1,582) (187,375) (4,511) ------------------------------------------------------------------------------------ Balance at July 3, 1993 191,293,725 191,294 74,158 1,043,057 6,836,329 171,293 Net earnings for year ended July 2, 1994 216,752 Cash dividends paid, $.32 per share (59,074) Treasury stock purchases 3,000,000 80,131 Stock issued upon conversion of Liquid Yield Option Notes (642) (130,228) (3,282) Stock options exercised (9,741) (652,732) (16,055) Employees' Stock Purchase Plan (1,461) (561,368) (14,262) Management Incentive Plan (2,311) (267,496) (6,702) ------------------------------------------------------------------------------------ Balance at July 2, 1994 191,293,725 191,294 60,003 1,200,735 8,224,505 211,123 Net earnings for year ended July 1, 1995 251,824 Cash dividends paid, $.40 per share (73,154) Treasury stock purchases 2,100,000 53,166 Stock issued upon conversion of Liquid Yield Option Notes (1,812) (592,700) (15,170) Stock options exercised (6,297) (437,654) (11,196) Employees' Stock Purchase Plan (2,635) (623,071) (15,944) Management Incentive Plan (585) (241,877) (6,209) ------------------------------------------------------------------------------------ Balance at July 1, 1995 191,293,725 $191,294 $ 48,674 $1,379,405 8,429,203 $215,770 ====================================================================================
See Summary of Accounting Policies and Additional Financial Information. 20 22 CONSOLIDATED CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------- Year Ended - ------------------------------------------------------------------------------------------------------------------------- July 3, 1993 (In thousands) July 1, 1995 July 2, 1994 (53 Weeks) - ------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 251,824 $ 216,752 $ 201,807 Add non-cash items: Depreciation and amortization 130,796 119,982 107,718 Interest on Liquid Yield Option Notes 6,013 5,740 8,004 Deferred tax provision 23,417 23,292 13,281 Provision for losses on receivables 15,988 17,918 14,312 Additional investment in certain assets and liabilities, net of effect of businesses acquired and sold: (Increase) in receivables (92,073) (86,487) (103,236) (Increase) in inventories (65,867) (58,282) (38,114) (Increase) decrease in prepaid expenses (2,305) 3,606 (2,864) Increase in accounts payable 76,007 73,777 54,077 Increase in accrued expenses 30,088 15,510 13,144 (Decrease) increase in accrued income taxes (6,706) 2,277 20,863 (Increase) in other assets (30,279) (51,570) (31,827) --------------------------------------------- Net cash provided by operating activities 336,903 282,515 257,165 --------------------------------------------- Cash flows from investing activities: Additions to plant and equipment (201,577) (161,485) (127,879) Proceeds from sales of plant and equipment 5,088 2,693 5,136 Acquisitions of businesses, net of cash acquired -- (15,606) (10,481) Proceeds from sale of business -- -- 10,878 --------------------------------------------- Net cash used for investing activities (196,489) (174,398) (122,346) --------------------------------------------- Cash flows from financing activities: Bank and commercial paper borrowings 15,747 38,798 80,363 Other debt repayments (6,521) (13,240) (8,981) Common stock reissued from treasury 23,831 23,506 17,362 Treasury stock purchases (53,166) (80,131) (180,343) Dividends paid (73,154) (59,074) (48,815) --------------------------------------------- Net cash used for financing activities (93,263) (90,141) (140,414) --------------------------------------------- Net increase (decrease) in cash 47,151 17,976 (5,595) Cash at beginning of year 86,735 68,759 74,354 --------------------------------------------- Cash at end of year $ 133,886 $ 86,735 $ 68,759 ============================================= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 38,487 $ 36,527 $ 38,999 Income taxes 145,596 126,310 96,291
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 67 distribution facilities for approximately 255,000 customers located in the 37 states where facilities are situated and in 11 adjacent states. The company also has one facility in Vancouver, British Columbia, which services 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. 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 $2,833,000 in 1995, $1,313,000 in 1994 and $1,315,000 in 1993. GOODWILL AND INTANGIBLES Goodwill and intangibles represent the excess of cost over the fair value of tangible net assets acquired and are amortized over 40 years using the straight-line method. Accumulated amortization at July 1, 1995, July 2, 1994 and July 3, 1993 is $50,935,000, $43,120,000 and $35,416,000, 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 $17,593,000, $29,658,000 and $14,094,000 were capitalized during fiscal 1995, 1994 and 1993, respectively. Amounts capitalized will be amortized over future earnings as completed portions of the project are put into use. Accumulated amortization at July 1, 1995 was $232,000. INSURANCE PROGRAM SYSCO maintains a self-insurance program covering portions of workers' compensation and general and automobile 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 Standards (SFAS) No. 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:
- ------------------------------------------------------------------------------------------------------ 1995 1994 1993 ------------------------------------------ Federal income taxes $144,574,000 $130,733,000 $108,990,000 State and local income taxes 21,220,000 20,097,000 21,180,000 ------------------------------------------ Total $165,794,000 $150,830,000 $130,170,000 ==========================================
Included in the income taxes charged to earnings are net deferred tax provisions of $23,417,000 in 1995, $23,292,000 in 1994 and $13,281,000 in 1993. 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 1, 1995 July 2, 1994 --------------------------------- Deferred tax liabilities: Excess tax depreciation and basis differences of assets $178,548,000 $165,353,000 Computer systems development project 24,293,000 17,190,000 Other 1,968,000 3,005,000 -------------------------------- Total deferred tax liabilities 204,809,000 185,548,000 -------------------------------- Deferred tax assets: Accrued pension expenses 14,963,000 13,003,000 Accrued medical and casualty insurance expenses 7,480,000 8,519,000 Bad debt reserve 5,424,000 6,138,000 Uniform capitalization of inventory 4,918,000 4,746,000 Other 1,150,000 5,685,000 -------------------------------- Total deferred tax assets 33,935,000 38,091,000 -------------------------------- Net deferred tax liabilities $170,874,000 $147,457,000 ================================
The company has enjoyed taxable earnings during each year of its twenty-six 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 40% in 1995, 41% in 1994 and 39% in 1993 and an analysis is as follows:
- --------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 --------------------------------- Statutory Federal income tax rate 35% 35% 34% Retroactive Federal income tax charge - 1 State and local income taxes, net of Federal income tax benefit 5 5 5 --------------------------------- 40% 41% 39% =================================
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE The allowance for doubtful accounts receivable was $16,001,000 as of July 1, 1995, $15,999,000 as of July 2, 1994 and $15,122,000 as of July 3, 1993. Customer accounts written off, net of recoveries, were $15,986,000 or .13% of sales, $17,291,000 or .16% of sales and $13,163,000 or .13% of sales for fiscal years 1995, 1994 and 1993, respectively. SHAREHOLDERS' EQUITY Earnings per share have been computed by dividing net earnings by 182,779,806 in 1995, 184,338,616 in 1994 and 186,745,576 in 1993, 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 23 25 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 1, 1995 July 2, 1994 Useful Lives ---------------------------------------------------------------- Plant and equipment, at cost Land $ 86,185,000 $ 81,933,000 Buildings and improvements 675,011,000 606,986,000 10-40 years Equipment 807,826,000 718,410,000 3-20 years ----------------------------------------- 1,569,022,000 1,407,329,000 Accumulated depreciation (672,943,000) (590,108,000) ----------------------------------------- Net plant and equipment $ 896,079,000 $ 817,221,000 =========================================
DEBT At July 1, 1995 and July 2, 1994 SYSCO had $1,181,000 and $5,247,000, 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 1, 1995 July 2, 1994 ----------------------------- Commercial paper, interest averaging 6.1% in 1995 and 4.4% in 1994 $ 144,510,000 $ 273,800,000 Senior notes, interest at 9.95%, maturing in 1999 91,500,000 91,500,000 Senior notes, interest at 6.5%, maturing in 2005 149,103,000 - Liquid Yield Option Notes, interest at 6.25%, maturing in 2004 88,045,000 95,653,000 Industrial Revenue Bonds, mortgages and other debt, interest averaging 7.1% in 1995 and 6.9% in 1994, maturing at various dates to 2026 74,967,000 81,488,000 ----------------------------- Total long-term debt 548,125,000 542,441,000 Less current maturities (6,569,000) (3,730,000) ----------------------------- Net long-term debt $ 541,556,000 $ 538,711,000 =============================
The principal payments required to be made on long-term debt during the next five years are shown below:
----------------------------------------------------------------------------------------- Year Amount ----------------------------------------------------------------------------------------- 1996 $ 6,569,000 1997 9,499,000 1998 2,644,000 1999 101,549,000 2000 152,930,000
24 26 SYSCO has a $300,000,000 revolving loan agreement maturing in 2000 which currently supports the company's commercial paper program. The commercial paper borrowings at July 1, 1995 were $144,510,000. 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 per $1,000 of face value at maturity, has an accreted value at July 1, 1995 of $565.01 per $1,000 of face value. In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due June 15, 2005. These notes, which were priced at 99.4% of par, are unsecured, not redeemable prior to maturity and are not subject to any sinking fund requirement. The notes were issued under a $500,000,000 shelf registration filed with the Securities and Exchange Commission in June 1995. No other securities have been issued under the shelf registration. The Industrial Revenue Bonds have varying structures. Final maturities range from one to thirty-one 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 1, 1995 was $541,556,000, of which 71% is at fixed rates averaging 7.42% with an average life of eight years, while the remainder is financed at floating rates averaging 6.01%. 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 $584,000,000 at July 1, 1995. 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 1, 1995 and July 2, 1994 letters of credit outstanding were $29,664,000 and $30,664,000, respectively. As of July 1, 1995 SYSCO has 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 $32,105,000, $31,089,000 and $27,506,000 in fiscal 1995, 1994 and 1993, 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 -------------------------------------------------------- 1996 $14,815,000 1997 11,808,000 1998 8,984,000 1999 6,904,000 2000 4,324,000 Later years 7,418,000
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. 25 27 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 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 (111,719) 12.98 Exercised (757,604) 12.39 --------- Balance at July 2, 1994 1,600,594 1,804,747 17.14 Granted -- -- Cancelled (153,024) 15.30 Exercised (558,506) 14.40 --------- Balance at July 1, 1995 1,093,217 1,093,217 18.80 =========
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 under this plan. 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 Granted 1,004,100 25.50 Cancelled (83,168) 26.83 Exercised (4,901) 25.25 --------- Balance at July 1, 1995 504,915 2,030,446 26.42 =========
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN In December 1994, the Board of Directors adopted, subject to the approval of the shareholders at the annual meeting in November 1995, a non-employee directors stock option plan which permits the issuance of up to 200,000 shares of common stock to directors who are not employees of SYSCO. Under this plan options to purchase common stock, at the fair market 26 28 value on the date of the grant, are granted to each non-employee director annually, provided certain earnings goals are met. As of July 1, 1995, options for 18,000 shares had been contingently granted to nine non-employee directors under this plan. 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) plan provides that under certain circumstances the company may make matching contributions of up to 50% of the first 6% of a participant's compensation. SYSCO's contribution to this plan was $4,254,000 in 1995, $8,163,000 in 1994 and $2,901,000 in 1993. The funded status of the defined benefit plans is as follows:
- -------------------------------------------------------------------------------------------------------------------------------- July 1, 1995 July 2, 1994 ----------------------------- Assets available for benefits $ 137,613,000 $ 110,344,000 ----------------------------- Projected benefit obligation Vested (129,265,000) (103,437,000) Nonvested (10,651,000) (9,778,000) ----------------------------- Total accumulated benefit obligation (139,916,000) (113,215,000) Effect of projected future compensation increases (22,238,000) (16,322,000) ----------------------------- Total actuarial projected benefit obligation (162,154,000) (129,537,000) ----------------------------- Assets (less than) projected obligation $ (24,541,000) $ (19,193,000) ============================= 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 $ 9,134,000 $ 10,313,000 Unrecognized actuarial loss due to differences in assumptions and actual experience (21,538,000) (21,302,000) Unrecognized prior service cost 9,074,000 10,011,000 Accrued pension costs (21,211,000) (18,215,000) ----------------------------- $ (24,541,000) $ (19,193,000) =============================
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 8% in 1995 and 7.75% in 1994 and 1993 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 9% in 1995, 10% in 1994 and 12% in 1993. The plans invest primarily in marketable securities and time deposits. Net pension costs were as follows:
- -------------------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 ---------------------------------------------- Defined benefit plans Benefits earned during the year $ 17,622,000 $ 16,866,000 $ 18,410,000 Interest accrued on benefits earned in prior years 11,476,000 9,655,000 8,663,000 Actual return on plan assets (19,078,000) 378,000 (14,355,000) Net amortization and deferral 7,125,000 (13,356,000) 3,063,000 ---------------------------------------------- Net pension costs from defined benefit plans 17,145,000 13,543,000 15,781,000 Defined contribution plans 4,274,000 8,407,000 3,326,000 Multi-employer pension plans 13,550,000 12,412,000 10,285,000 ---------------------------------------------- Net pension costs $ 34,969,000 $ 34,362,000 $ 29,392,000 ==============================================
SYSCO also has a Management Incentive Plan that compensates key management personnel for specific performance achievements. The awards under this plan were $16,545,000 in 1995, $12,508,000 in 1994 and $11,725,000 in 1993. In addition to receiving benefits under the company's defined benefit plan, participants in the Management Incentive Plan will 27 29 receive benefits upon retirement under a Supplemental Executive Retirement Plan. This plan is a nonqualified, unfunded supplementary retirement plan. In order to meet its obligations under this plan, SYSCO maintains life insurance policies on the lives of the participants with carrying values of $40,200,000 at July 1, 1995 and $33,199,000 at July 2, 1994. SYSCO is the sole owner and beneficiary of such policies. The periodic pension costs of this plan were $3,659,000 in 1995 and $3,109,000 in 1994. The actuarially determined accumulated benefit obligation for this plan included in accrued expenses was $19,004,000 at July 1, 1995 and $16,558,000 at July 2, 1994. After taking into consideration the effect of future compensation increases, the projected benefit obligation of this plan was $27,046,000 at July 1, 1995 and $23,941,000 at July 2, 1994. 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 1995, 584,526 shares of SYSCO common stock were purchased by the participants as compared to 579,916 purchased in 1994 and 538,923 purchased in 1993. The total number of shares which may be sold pursuant to the plan may not exceed 12,000,000 shares of which 1,106,553 remained available at July 1, 1995. 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 provided, through December 31, 1994, 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 costs were as follows:
- ---------------------------------------------------------------------------------------------------------------- 1995 1994 ------------------------------ Service cost - benefits earned during the period $288,000 $238,000 Interest cost 377,000 280,000 Amortization of transition obligation 165,000 173,000 Amortization of prior service cost 83,000 - ------------------------------ Net periodic postretirement benefit cost $913,000 $691,000 ==============================
The components of the postretirement benefit obligation, included in accrued expenses at July 1, 1995 and July 2, 1994 were:
- ---------------------------------------------------------------------------------------------------------------- July 1, 1995 July 2, 1994 -------------------------------- Retirees $ 472,000 $ 589,000 Fully eligible active participants 1,721,000 1,588,000 Other active employees 2,534,000 2,420,000 -------------------------------- Accumulated postretirement benefit obligation 4,727,000 4,597,000 Unrecognized net gain (loss) and effects of changes in assumptions 263,000 (123,000) Unrecognized prior service cost (1,012,000) (1,095,000) Unrecognized transition obligation (2,761,000) (3,250,000) -------------------------------- Accrued postretirement benefit liability $ 1,217,000 $ 129,000 ================================
The discount rate used to determine the accumulated postretirement benefit obligation was 7.75% in 1995 and 8% in 1994. 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. At the beginning of fiscal 1995, SYSCO implemented SFAS 112, "Employers' Accounting for Postemployment Benefits," which requires that accrual accounting be used for the cost of certain obligations to be paid to former or inactive employees after employment but before retirement. Such obligations include salary continuation, disability, severance and workers' compensation. This accounting change had no significant effect on net earnings or financial condition in fiscal 1995. 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 1, 1995 and July 2, 1994:
- ----------------------------------------------------------------------------------------------------------------------------------- 1995 Quarter Ended ----------------------------------------------------------------- (In thousands except for share data) October 1 December 31 April 1 July 1 Fiscal Year - ----------------------------------------------------------------------------------------------------------------------------------- Sales $ 2,983,096 $ 3,006,663 $ 2,966,355 $ 3,161,933 $ 12,118,047 Cost of sales 2,448,788 2,463,576 2,432,677 2,582,407 9,927,448 Operating expenses 429,591 428,276 436,443 442,315 1,736,625 Interest expense 8,453 9,968 10,317 9,841 38,579 Other income, net (528) (545) (624) (526) (2,223) ------------------------------------------------------------------------------------ Earnings before income taxes 96,792 105,388 87,542 127,896 417,618 Income taxes 38,426 41,839 34,754 50,775 165,794 ------------------------------------------------------------------------------------ Net earnings $ 58,366 $ 63,549 $ 52,788 $ 77,121 $ 251,824 ==================================================================================== Per share: Earnings $ .32 $ .35 $ .29 $ .42 $ 1.38 Cash dividends .09 .09 .11 .11 .40 Market price 27-21 28-24 29-25 30-26 30-21
- ----------------------------------------------------------------------------------------------------------------------------------- 1994 Quarter Ended ----------------------------------------------------------------- (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 - ----------------------------------------------------------------------------------------------------------------------------------- Percentage increases--1995 vs. 1994: Sales 10% 13% 10% 10% 11% Earnings before income taxes 10 14 16 14 14 Net earnings 21 14 16 14 16 Earnings per share 23 17 16 14 17
29 31 PART III Except as otherwise indicated, 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 1995 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 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 Schedule. 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 hereby incorporated by reference to Form 10-K for the year ended July 2, 1994. AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF NOVEMBER 15, 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. 31 33 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). 4(d) Indenture, dated as of June 15, 1995, between Sysco Corporation and First Union National Bank of North Carolina, Trustee, hereby incorporated by reference to Registration Statement on Form S-3 (File No. 33-60023). 10(a) AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN 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 incorporated by reference to Form 10-K for the year ended July 2, 1994. 10(e) SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL MEETING). 10(f) Sysco Corporation 1991 Stock Option Plan incorporated by reference to Form 10-K for the year ended June 27, 1992. 10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL MEETING). 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 1st day of September, 1995. SYSCO CORPORATION By /s/ BILL M. LINDIG ------------------------------------- Bill M. Lindig President 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. WOODHOUSE Chairman of the Board - ------------------------------------ John F. Woodhouse /s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President and - ---------------------------------- Chief Financial Officer John K. Stubblefield, Jr.
33 35 DIRECTORS: /s/ JOHN W. ANDERSON /s/ RICHARD G. MERRILL - -------------------------------- -------------------------------- John W. Anderson Richard G. Merrill /s/ JOHN F. BAUGH /s/ DONALD H. PEGLER, JR. - -------------------------------- -------------------------------- John F. Baugh Donald H. Pegler, Jr. /s/ COLIN G. CAMPBELL /s/ FRANK H. RICHARDSON - -------------------------------- -------------------------------- Colin G. Campbell Frank H. Richardson /s/ CHARLES H. COTROS /s/ PHYLLIS SHAPIRO SEWELL - -------------------------------- -------------------------------- Charles H. Cotros Phyllis Shapiro Sewell /s/ FRANK A. GODCHAUX III /s/ ARTHUR J. SWENKA - -------------------------------- -------------------------------- Frank A. Godchaux III Arthur J. Swenka /s/ JONATHAN GOLDEN /s/ THOMAS B. WALKER, JR. - -------------------------------- -------------------------------- Jonathan Golden Thomas B. Walker, Jr. /s/ DONALD J. KELLER /s/ JOHN F. WOODHOUSE - -------------------------------- -------------------------------- Donald J. Keller John F. Woodhouse /s/ BILL M. LINDIG - -------------------------------- Bill M. Lindig
34 36 SYSCO CORPORATION AND SUBSIDIARIES SCHEDULE II -- 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 $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 Allowance For year ended for doubtful July 1, 1995......... accounts $15,999,000 $15,988,000 $ -- $15,986,000 (2) $16,001,000
(1) Allowance accounts added from acquisitions. (2) Customer accounts written off, net of recoveries. (3) Allowance accounts deducted due to sales of businesses. S-1 37 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended July 1, 1995 Commission File No. 1-6544 SYSCO CORPORATION (Exact Name of Registrant as Specified in its Charter) EXHIBITS 38 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 hereby incorporated by reference to Form 10-K for the year ended July 2, 1994. AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE AND REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF NOVEMBER 15, 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). 4(d) Indenture, dated as of June 15, 1995, between Sysco Corporation and First Union National Bank of North Carolina, Trustee, hereby incorporated by reference to Registration Statement on Form S-3 (File No. 33-60023).
39
Exhibit Number Description of Exhibit - ------ ---------------------- 10(a) AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN. 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 incorporated by reference to Form 10-K for the year ended July 2, 1994. 10(e) SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT 1995 ANNUAL MEETING). 10(f) Sysco Corporation 1991 Stock Option Plan incorporated by reference to Form 10-K for the year ended June 27, 1992. 10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL MEETING). 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 21 SUBSIDIARIES OF THE REGISTRANT 23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT 27 FINANCIAL DATA SCHEDULE
EX-4.A 2 REVOLVING CREDIT FACILITY AGREEMENT 1 EXHIBIT #4(a) 2 AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT THIS AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment") dated as of November 15, 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, by an Agreement and Third Amendment to Competitive Advance and Revolving Credit Facility Agreement and Modification of Notes dated as of January 2, 1990, and by an Agreement and Fourth Amendment to Competitive Advance and Revolving Credit Facility Agreement dated as of January 31, 1994 (said Competitive Advance and Revolving Credit Facility Agreement as so modified and amended 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 -1- 3 the Credit Agreement. The Company, the Banks, the Agent and the Auction Administration Agent have agreed, upon the terms and conditions specified herein, to amend Section 1.01 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. Amendment to Section 1.01 of the Credit Agreement. The definition of the term "Original Termination Date" contained in Section 1.01 of the Credit Agreement is hereby amended in its entirety to read as follows: "`Original Termination Date' means December 31, 1999." SECTION 2. 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. -2- 4 SECTION 3. 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 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 4. 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 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 5. 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. -3- 5 SECTION 6. 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 COMPANY, THE AGENT, THE AUCTION ADMINISTRATION AGENT AND THE BANKS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. SECTION 7. 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 8. 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. -4- 6 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: Name: Title: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, INDIVIDUALLY AND AS AGENT By: Name: Jay Schwartz Title: Vice President -5- 7 CHEMICAL BANK, AS AUCTION ADMINISTRATION AGENT By: Name: Title: -6- 8 THE CHASE MANHATTAN BANK, N.A. By: Name: Title: -7- 9 BANK OF AMERICA ILLINOIS (SUCCESSOR TO CONTINENTAL BANK N.A.) By: Name: Title: -8- 10 CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: Name: Title: -9- 11 NATIONSBANK OF TEXAS, N.A. By: Name: Title: -10- 12 THE FUJI BANK, LIMITED, HOUSTON AGENCY By: Name: Title: -11- 13 THE TORONTO-DOMINION BANK By: Name: Title: -12- 14 UNION BANK OF SWITZERLAND, HOUSTON AGENCY AND CAYMAN ISLANDS BRANCH By: Name: Title: By: Name: Title: -13- 15 WACHOVIA BANK OF NORTH CAROLINA, NATIONAL ASSOCIATION By: Name: Title: -14- EX-10.A 3 SYSCO CORPORATION EXECUTIVE DEFERRED COMP PLAN 1 EXHIBIT #10(a) 2 AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN 3 AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN TABLE OF CONTENTS
Section ARTICLE I -- DEFINITIONS Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 Company Match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 Deferred Compensation Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 MIP Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17 Sysco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.18 Total Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19 Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20 ARTICLE II - ELIGIBILITY ARTICLE III - BONUS DEFERRAL AND COMPANY CONTRIBUTIONS Bonus Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Company Match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 ARTICLE IV - ACCOUNT Establishing a Participant's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Credit of the Participant's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Crediting of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Procedure to Credit Interest After Distribution Has Begun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
-i- 4 TABLE OF CONTENTS (CONTINUED)
Section ARTICLE V - VESTING Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Company Match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 ARTICLE VI - DISTRIBUTIONS Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Termination Prior to Death, Disability or Retirement . . . . . . . . . . . . . . . . . . . . . 6.4 Events Causing a Reduction in Credited Interest . . . . . . . . . . . . . . . . . . . . . . . 6.5 Forfeiture For Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Forfeiture For Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Expenses Incurred in Enforcing the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 Restrictions on any Portion of Total Payments Determined to be Excess Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . . 6.10 Responsibility for Distributions and Withholding and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 ARTICLE VII - ADMINISTRATION Committee Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Committee Organization and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Powers of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Committee Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 ARTICLE VIII - ADOPTION BY SUBSIDIARIES Procedure for and Status After Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Termination of Participation By Adopting Subsidiary . . . . . . . . . . . . . . . . . . . . . 8.2 ARTICLE IX - AMENDMENT AND/OR TERMINATION Amendment or Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 No Retroactive Effect on Awarded Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
-ii- 5 TABLE OF CONTENTS (CONTINUED)
Section ARTICLE X - FUNDING Payments Under This Agreement are the Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Agreement May Be Funded Through Rabbi Trust . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Reversion of Excess Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Participants Must Reply Only on General Credit of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 ARTICLE XI - MISCELLANEOUS Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Distributions to Incompetents of Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 Reliance Upon Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9
-iii- 6 AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN WHEREAS, Sysco Corporation has established the Sysco Executive Deferred Compensation Plan effective July 3, 1988, which plan was last amended and restated in its entirety by an instrument dated September 20, 1993 (the "Plan"); WHEREAS, Sysco Corporation retained the right to amend the Plan at any time by an instrument in writing; and WHEREAS, the Plan has been amended by the First Amendment to the Plan, which amendment was executed January 26, 1995, and by the Second Amendment to the Plan, which amendment was executed June 7, 1995, and; WHEREAS, it has been determined that the Plan should again be restated to incorporate the First and Second Amendments so that the Plan, as amended, is set forth in one document; NOW, THEREFORE, Sysco Corporation amends and restates the Sysco Corporation Executive Deferred Compensation Plan as follows: 7 ARTICLE I DEFINITIONS 1.1 Account. "Account" means a Participant's Account in the Deferred Compensation Ledger maintained by the Committee which reflects the benefits a Participant is entitled to under this Plan. 1.2 Beneficiary. "Beneficiary" means a person or entity designated by the Participant under the terms of this Plan to receive any amounts distributed under the Plan upon the death of the Participant. 1.3 Board of Directors. "Board of Directors" means the Board of Directors of Sysco. 1.4 Change of Control. "Change of Control" means the occurrence of one or more of the following events: (a) Any "person", including a "syndication" or "group" as those terms are used in Section 13(d)(3) of the Securities Act, is or becomes the beneficial owner, directly or indirectly, of securities of Sysco representing 20% or more of the combined voting power of Sysco's then outstanding Voting Securities; (b) Sysco is merged or consolidated with another corporation and immediately after giving effect to the merger or consolidation either (i) less than 80% of the outstanding Voting Securities of the surviving or resulting entity are then beneficially owned in the aggregate by (x) the stockholders of Sysco immediately prior to such merger or consolidation, or (y) if a record date has been set to determine the stockholders of Sysco entitled to vote on such merger or consolidation, the stockholders of Sysco as of such record date, or (ii) the Board of Directors, or similar governing body, of the surviving or resulting entity does not have as a majority of its members the persons specified in clause (c)(i) and (ii) below; (c) If at any time the following do not constitute a majority of the Board of Directors of Sysco (or any successor entity referred to in clause (b) above): (i) persons who are directors of Sysco on July 12, 1991; and -2- 8 (ii) persons who, prior to their election as a director of Sysco (or successor entity if applicable) were nominated, recommended or endorsed by a formal resolution of the Board of Directors of Sysco; (d) If at any time during a calendar year a majority of the directors of Sysco are not persons who were directors at the beginning of the calendar year; and (e) Sysco transfers substantially all of its assets to another corporation which is a less than 80% owned subsidiary of Sysco. 1.5 Code. "Code" means the Internal Revenue Code of 1986, as amended from time to time. 1.6 Company. "Company" means Sysco and any Subsidiary adopting the Plan. 1.7 Company Match. "Company Match" means the 50% match which the Company makes yearly to that portion of the amount deferred, if any, during a Plan Year by a Participant under this Plan which is not in excess of 20% of the Participant's MIP Bonus. 1.8 Committee. "Committee" means the persons who are from time to time serving as members of the committee administering this Plan. 1.9 Deferred Compensation Ledger. "Deferred Compensation Ledger" means the ledger maintained by the Committee for each Participant which reflects the amount of compensation deferred by the Participant under this Plan, the Company match, and the amount of interest credited on each of these amounts. 1.10 Disability. "Disability" means a physical or mental condition that meets the eligibility requirements for the receipt of disability income under the terms of the Disability Income Plan sponsored by Sysco for those employees participating in the Sysco Corporation Management Incentive Plan. 1.11 MIP Bonus. "MIP Bonus" means a bonus awarded or to be awarded to the Participant under the Sysco Corporation Management Incentive Plan. -3- 9 1.12 Participant. "Participant" means an employee of a Company who is eligible for and is participating in the Plan. 1.13 Plan. "Plan" means the Sysco Corporation Executive Deferred Compensation Plan set forth in this document, as amended from time to time. 1.14 Plan Year. "Plan Year" means a one year period which coincides with the fiscal year of Sysco. Sysco has a 52/53 week fiscal year beginning on the Sunday next following the Saturday closest to June 30th of each calendar year. 1.15 Retirement. "Retirement" means any termination of the employment of a Participant from all Companies on or after attaining age 65. 1.16 Securities Act. "Securities Act" means the Securities Exchange Act of 1934, as amended from time to time. 1.17 Subsidiary. "Subsidiary" means any wholly owned subsidiary of Sysco. 1.18 Sysco. "Sysco" means the Sysco Corporation, the sponsor of this Plan. 1.19 Total Payments. "Total Payments" mean all payments or benefits received or to be received by a Participant in connection with a Change of Control of Sysco and the termination of his employment under the terms of this Agreement or the Sysco Corporation Supplemental Executive Retirement Plan, and in connection with a Change of Control of Sysco under the terms of any stock option plan or any other plan, arrangement or agreement with the Company, its successors, any person whose actions result in a Change of Control or any person affiliated with the Company or who as a result of the completion of transactions causing a Change of Control become affiliated with the Company within the meaning of Section 1504 of the Code, taken collectively. -4- 10 1.20 Voting Securities. "Voting Securities" means any security which ordinarily possesses the power to vote in the election of the Board of Directors without the happening of any precondition or contingency. -5- 11 ARTICLE II ELIGIBILITY Initially, all participants in the Sysco Corporation Management Incentive Plan, exclusive of any participant whose income is subject to the Canadian tax laws, will be eligible to participate in this Plan. However, the Committee retains the right to establish such additional eligibility requirements for participation in this Plan as it may determine is appropriate or necessary from time to time and has the right to determine, in its sole discretion, that any one or more persons who meet the eligibility requirements will not be eligible to participate for one or more Plan Years beginning after the date they are notified of this decision by the Committee. -6- 12 ARTICLE III BONUS DEFERRAL AND COMPANY CONTRIBUTIONS 3.1 Bonus Deferral Election. A Participant may elect prior to the beginning of any Plan Year what, if any, percentage of his MIP Bonus earned during the ensuing Plan Year is to be deferred under this Plan. Prior to the period the Committee establishes for each Participant to make his election, the Committee will notify all eligible Participants of the maximum and minimum percentages of the MIP Bonus earned during the ensuing Plan Year that may be deferred. Once an election has been made as to the percentage to be deferred it becomes irrevocable for that Plan Year. The election to participate in the Plan for a given Plan Year will be effective only upon receipt by the Committee of the Participant's percentage deferral election on such form as will be determined by the Committee from time to time. If the Committee fails to receive an election prior to the beginning of a Plan Year, the Participant will be deemed to have elected not to defer any part of his MIP Bonus for that Plan Year. 3.2 Company Match. The Company will award each Participant who elects to defer a portion of his MIP Bonus under this Plan with an amount equal to 50% of that portion of the amount deferred which is not in excess of 20% of his MIP Bonus, for a maximum match by the Company of 10% of the Participant's MIP Bonus. -7- 13 ARTICLE IV ACCOUNT 4.1 Establishing a Participant's Account. The Committee will establish an Account for each Participant in a special Deferred Compensation Ledger which will be maintained by the Company. The Account will reflect the amount of the Company's obligation to the Participant at any given time. 4.2 Credit of the Participant's Deferral and the Company's Match. Upon completion of the Plan Year the Committee will determine, as soon as administratively practicable, the amount of a Participant's MIP Bonus that has been deferred for that Plan Year and the amount of the Company Match and will credit those amounts to the Participant's Account in the Deferred Compensation Ledger as of the July 1st coincident with or closest to the end of the Plan Year for which the MIP Bonus was awarded. 4.3 Crediting of Interest. Interest will be credited on a Participant's Account at the rate established by Section 4.4 in the form of simple interest compounded annually but credited on a monthly basis. The interest earned on each deferral and each Company Match will be entered separately. 4.4 Interest Rate. Interest will be applied to each year's deferral and each Company Match at the highest of the following described rates plus 1%: (a) a 20 year Treasury Bond, (b) a 10 year Treasury Note, and (c) the composite yield on Moody's Seasoned Corporate Bond Yield Index. -8- 14 The highest rate is determined by taking a monthly average for the calendar year ending prior to the beginning of the Plan Year. The rate, once established, will be used for the entire Plan Year and will be compounded annually. This interest will continue to be credited until distribution is made in the case of a lump sum or until distribution has commenced in the case of an installment distribution when the rate calculated under Section 4.5 becomes applicable. However if an event described in Section 6.5 occurs, the rate credited under this Section will be reduced as required in Section 6.5. 4.5 Procedure to Credit Interest After Distribution Has Begun. For purposes of crediting interest to a Participant's Account once the Participant has qualified for and is receiving an installment distribution, the interest rate to be applied to the declining balance beginning immediately after the first installment is due will be that rate determined by taking a monthly average of the rate calculated under Section 4.4 for the last calendar year prior to the month in which the first installment becomes due. This rate, once established, will be used until the distribution is complete and will be compounded annually. -9- 15 ARTICLE V VESTING 5.1 Deferrals. All deferrals of the MIP Bonus will be 100% vested at all times. The applicable interest accumulated on those deferrals will be 100% vested except for any reduction which may occur under Section 6.5 and for the events of forfeiture described in Section 6.6 and 6.7. 5.2 Company Match. Each Company Match together with interest accumulated on those matches will vest on: (a) the tenth anniversary of the date as of which the Company Match was credited to the Participant's Account, (b) the Participant's attaining age 60, (c) the Participant's death, (d) the Participant's becoming disabled or (e) a Change of Control, whichever shall occur earliest, except for the events of forfeiture described in Sections 6.6 and 6.7 and any reduction caused by the restriction in Section 6.10. -10- 16 ARTICLE VI DISTRIBUTIONS 6.1 Death. Upon the death of a Participant, the Participant's Beneficiary or Beneficiaries will receive the portion of the amount credited to the Participant's Account in the Deferred Compensation Ledger which is vested under Sections 5.1 and 5.2 in 15 equal annual installments of principal and interest. The first installment will be made 90 days after the Participant's death and each succeeding installment will be made on the same day of each succeeding year thereafter. Each Participant, upon making his initial deferral election, will file with the Committee a designation of one or more Beneficiaries to whom distributions otherwise due the Participant will be made in the event of his death prior to the complete distribution of the amount credited to his Account in the Deferred Compensation Ledger. The designation will be effective upon receipt by the Committee of a properly executed form which the Committee has approved for that purpose. The Participant may from time to time revoke or change any designation of Beneficiary by filing another approved Beneficiary designation form with the Committee. If there is no valid designation of Beneficiary on file with the Committee at the time of the Participant's death, or if all of the Beneficiaries designated in the last Beneficiary designation have predeceased the Participant or otherwise ceased to exist, the Beneficiary will be the Participant's spouse, if the spouse survives the Participant, or otherwise the Participant's estate. A Beneficiary must survive the Participant by 60 days in order to be considered to be living on the date of the Participant's death. If any Beneficiary survives the Participant but dies or otherwise ceases to exist before receiving all amounts due the Beneficiary from the Participant's Account, the balance of the amount which would have been paid to that Beneficiary -11- 17 will, unless the Participant's designation provides otherwise, be distributed to the individual deceased Beneficiary's estate or to the Participant's estate in the case of a Beneficiary which is not an individual. Any Beneficiary designation which designates any person or entity other than the Participant's spouse must be consented to in writing in a form acceptable to the Committee in order to be effective. 6.2 Disability. Upon the disability of a Participant, the Participant will receive the portion of the amount credited to the Participant's Account in the Deferred Compensation Ledger which is vested under Sections 5.1 and 5.2 in 15 equal annual installments of principal and interest. The first installment will be made 90 days after the Participant becomes disabled and each succeeding installment will be made on the same day of each succeeding year thereafter. 6.3 Retirement. Upon the Retirement of a Participant, the Participant will receive the portion of the amount credited to his Account in the Deferred Compensation Ledger which is vested under Sections 5.1 and 5.2 in 15 equal annual installments of principal and interest. The first installment will be made 90 days after the Participant's retirement and each succeeding installment will be made on the same day of each succeeding year thereafter. 6.4 Termination Prior to Death, Disability or Retirement. Upon a Participant's termination from the employ of all Companies on or after age 60 but prior to death, Disability or Retirement, the Participant will receive the portion of the amount credited to his Account in the Deferred Compensation Ledger which is vested under Sections 5.1 and 5.2 in 15 equal annual installments of principal and interest. The first installment will be made 90 days after the Participant's termination and each succeeding installment will be made on the same day of each succeeding year thereafter. Upon a Participant's termination from the employ of all -12- 18 Companies prior to both age 60 and death, Disability or Retirement, the Participant will receive the portion of the amount credited to his Account in the Deferred Compensation Ledger which is vested under Sections 5.1 and 5.2 in one lump sum cash payment 90 days after the Participant's termination. Any amounts not then vested will be forfeited. 6.5 Events Causing a Reduction in Credited Interest. If a Participant terminates under Section 6.4 and there is no Change of Control during the preceding four Plan Years, the interest on that portion or all of the deferrals in the Account which the Participant becomes entitled to receive may be reduced. Where there is no Change of Control during the preceding four Plan Years the interest rate provided in Section 4.4 will become inapplicable to each deferral which has become distributable because of the Participant's termination but has been credited to the Participant's Account less than 10 years on that date if the Participant is not at least age 60 prior to the end of the Plan Year. Instead the interest on each such deferral will be reduced to the rate for 90 day Treasury Bills on the first market day of the calendar year during which the Plan Year began. The rate, once established, will be used for the entire Plan Year and will be compounded annually. 6.6 Forfeiture For Cause. If the Committee finds, after full consideration of the facts presented on behalf of both the Company and a former Participant, that the Participant was discharged by the Company for fraud, embezzlement, theft, commission of a felony, proven dishonesty in the course of his employment by the Company which damaged the Company, or for disclosing trade secrets of the Company, the entire amount credited to his Account in the Deferred Compensation Ledger, exclusive of an amount equal to the sum of the total deferrals of the Participant, will be forfeited even though it may have been previously vested under Sections 5.1 and/or 5.2. The decision of the Committee as to the cause of a former Participant's -13- 19 discharge and the damage done to the Company will be final. No decision of the Committee will affect the finality of the discharge of the Participant by the Company in any manner. Notwithstanding the foregoing, the forfeiture created by this Section will not apply to a Participant or former Participant discharged during the Plan Year in which a Change of Control occurs, or during the next three succeeding Plan Years following the Plan Year in which a Change of Controls occurs unless an arbitrator selected to review the Committee's findings agrees with the Committee's determination to apply the forfeiture. The arbitrator will be selected by permitting the Company and the Participant to strike one name each from a panel of three names obtained from the American Arbitration Association. The person whose name is remaining will be the arbitrator. 6.7 Forfeiture for Competition. If at the time a distribution is being made or is to be made to a Participant or former Participant, the Committee finds after full consideration of the facts presented on behalf of the Company and the Participant or former Participant, that the Participant or former Participant at any time within two years from his termination of employment from all Companies which adopted this Plan, and without written consent of the Company, directly or indirectly owns, operates, manages, controls or participates in the ownership, management, operation or control of or is employed by, or is paid as a consultant or other independent contractor by a business which competes or at any time did compete with the Company by which he was formerly employed in a trade area served by the Company at the time distributions are being made or to be made and in which the Participant or former Participant had represented the Company while employed by it; and, if the Participant or former Participant continues to be so engaged 60 days after written notice has been given to him, the Committee will forfeit all amounts otherwise due the Participant or former Participant, exclusive -14- 20 of an amount equal to the sum of the total deferrals of the Participant or former Participant even though it may have been previously vested under Sections 5.1 and/or 5.2. Notwithstanding the foregoing, the forfeiture created by this Section will not apply to any Participant or former Participant whose termination of employment from all Companies which adopted this Plan occurs during the Plan Year in which a Change of Control occurs or during the next three succeeding Plan Years following the Plan Year in which a Change of Control occurs. 6.8 Hardship Withdrawals. Any Participant who is in pay status may request a hardship withdrawal. No hardship withdrawal can exceed the lesser of the amount credited to the Participant's Account or the amount reasonably needed to satisfy the emergency need. Whether a hardship exists and the amount reasonably needed to satisfy the emergency need will be determined by the Committee based upon the evidence presented by the Participant and the rules established in this Section. If a hardship withdrawal is approved by the Committee it will be paid within 10 days of the Committee's determination. A hardship for this purpose is a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a) of the Internal Revenue Code of 1986, as amended) of the Participant, loss of the Participant's property due to casualty, or any similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. The circumstances that will constitute a hardship will depend upon the facts of each case, but, in any case, payment may not be made to the extent that the hardship is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant's assets, to the extent the liquidation of such assets will not itself cause severe financial hardship, or (c) by cessation of deferrals -15- 21 under this Plan. Such foreseeable needs for funds as the need to send a Participant's child to college or the desire to purchase a home will not be considered to be a hardship. 6.9 Expenses Incurred in Enforcing the Plan. The Company will, in addition, pay a Participant for all legal fees and expenses incurred by him in contesting or disputing his termination or in seeking to obtain or enforce any benefit provided by this Plan if the termination occurs in the Plan Year in which a Change of Control occurs or during the next three succeeding Plan Years following the Plan Year in which a Change of Control occurs except to the extent that the payment of those fees or expenses are restricted under Section 6.10. 6.10 Restrictions on any Portion of Total Payments Determined to be Excess Parachute Payments. In the event that any payment or benefit received or to be received by a Participant in connection with a Change of Control of Sysco, or the termination of his employment by the Company would not be deductible, whether in whole or in part, by the Company or any affiliated company, as a result of Section 280G of the Code and a reduction under the Sysco Corporation Supplemental Executive Retirement Plan is not sufficient to cause all benefits paid under this Plan to be deductible, the benefits payable under this Plan shall be reduced until no portion of the Total Payments is not deductible as a result of Section 280G of the Code, or the benefits payable under this Agreement have been reduced to an amount equal to the Participant's MIP Bonus deferred under this Plan together with the interest accrued on the deferred amount. In determining this limitation: (a) no portion of the Total Payments which the Participant has waived in writing prior to the date of the payment of benefits under this Plan will be taken into account, (b) no portion of the Total Payments which tax counsel, selected by the Company's independent auditors and acceptable to the Participant, determined not to constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code will be taken into -16- 22 account, (c) no portion of the Total Payments which tax counsel, selected by the Company's independent auditors and acceptable to the Participant, determines to be reasonable compensation for services rendered within the meaning of Section 280G(b)(4) of the Code will be taken into account, and (d) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the Company's independent auditors in accordance with Sections 280G(d)(3) and (4) of the Code. 6.11 Responsibility for Distributions and Withholding of Taxes. The Committee will furnish information, to the Company last employing the Participant, concerning the amount and form of distribution to any Participant entitled to a distribution so that the Company may make or cause the Rabbi Trust to make the distribution required. It will also calculate the deductions from the amount of the benefit paid under the Plan for any taxes required to be withheld by federal, state or local government and will cause them to be withheld. If a Participant has deferred compensation under the Plan while in the service of more than one Company, each Company for which the Participant was working will reimburse the disbursing agent for the amount attributable to compensation deferred while the Participant was in the service of that Company if it has not already provided that funding to the disbursing agent. -17- 23 ARTICLE VII ADMINISTRATION 7.1 Committee Appointment. The Committee will be appointed by the Board of Directors. The initial Committee members will be Messrs. Woodhouse, Lindig and Lowrey and Mrs. Riker. Each Committee member will serve until his or her resignation or removal. The Board of Directors will have the sole discretion to remove any one or more Committee members and appoint one or more replacement or additional Committee members from time to time. 7.2 Committee Organization and Voting. The Committee will select from among its members a chairman who will preside at all of its meetings and will elect a secretary without regard to whether that person is a member of the Committee. The secretary will keep all records, documents and data pertaining to the Committee's supervision and administration of the Plan. A majority of the members of the Committee will constitute a quorum for the transaction of business and the vote of a majority of the members present at any meeting will decide any question brought before the meeting. In addition, the Committee may decide any question by vote, taken without a meeting, of a majority of its members. A member of the Committee who is also a Participant will not vote or act on any matter relating solely to himself. 7.3 Powers of the Committee. The Committee will have the exclusive responsibility for the general administration of the Plan according to the terms and provisions of the Plan and will have all powers necessary to accomplish those purposes, including but not by way of limitation the right, power and authority: (a) to make rules and regulations for the administration of the Plan; -18- 24 (b) to construe all terms, provisions, conditions and limitations of the Plan; (c) to correct any defect, supply any omission or reconcile any inconsistency that may appear in the Plan in the manner and to the extent it deems expedient to carry the Plan into effect for the greatest benefit of all parties at interest; (d) to designate the persons eligible to become Participants and to establish the maximum and minimum amounts that may be elected to be deferred; (e) to determine all controversies relating to the administration of the Plan, including but not limited to: (1) differences of opinion arising between the Company and a Participant except when the difference of opinion relates to the entitlement to, the amount of or the method or timing of payment of a benefit affected by a Change of Control, in which event it shall be decided by judicial action; and (2) any question it deems advisable to determine in order to promote the uniform administration of the Plan for the benefits of all parties at interest; and (f) to delegate by written notice those clerical and recordation duties of the Committee, as it deems necessary or advisable for the proper and efficient administration of the Plan. 7.4 Committee Discretion. The Committee in exercising any power or authority granted under this Plan or in making any determination under this Plan shall perform or refrain from performing those acts using its sole discretion and judgment. Any decision made by the Committee or any refraining to act or any act taken by the Committee in good faith shall be final and binding on all parties. The Committee's decision shall never be subject to de novo review. Notwithstanding the foregoing, the Committee's decisions, refraining to act or acting is to be subject to judicial review for those incidents occurring during the Plan Year in which a Change of Control occurs and during the next three succeeding Plan Years. -19- 25 7.5 Annual Statements. The Committee will cause each Participant to receive an annual statement as soon as administratively possible after the conclusion of each Plan Year containing the amounts deferred and the Company Match through the end of that Plan Year and the interest applicable to the deferred and matched amounts, and the amount vested as of the end of that Plan Year. 7.6 Reimbursement of Expenses. The Committee will serve without compensation for their services but will be reimbursed by Sysco for all expenses properly and actually incurred in the performance of their duties under the Plan. -20- 26 ARTICLE VIII ADOPTION BY SUBSIDIARIES 8.1 Procedure for and Status After Adoption. Any Subsidiary may, with the approval of the Committee, adopt this Plan by appropriate action of its board of directors. The terms of the Plan will apply separately to each Subsidiary adopting the Plan and its Participants in the same manner as is expressly provided for Sysco and its Participants except that the powers of the Board of Directors and the Committee under the Plan will be exercised by the Board of Directors of Sysco alone. Sysco and each Subsidiary adopting the Plan will bear the cost of providing plan benefits for its own Participants. It is intended that the obligation of Sysco and each Subsidiary with respect to its Participants will be the sole obligation of the Company that is employing the Participant and will not bind any other Company. 8.2 Termination of Participation By Adopting Subsidiary. Any Subsidiary adopting the Plan may, by appropriate action of its board of directors, terminate its participation in the Plan. The Committee may, in its discretion, also terminate a Subsidiary's participation in the Plan at any time. The termination of the participation in this Plan by a Subsidiary will not, however, affect the rights of any Participant who is working or has worked for the Subsidiary as to amounts previously standing to his credit in his Account in the Deferred Compensation Ledger or reduce the interest rate of interest to accrue on amounts deferred by him and credited to his Account prior to the distribution of those funds to the Participant without his consent. -21- 27 ARTICLE IX AMENDMENT AND/OR TERMINATION 9.1 Amendment or Termination of the Plan. The Board of Directors may amend or terminate this Plan at any time by an instrument in writing without the consent of any adopting Company. 9.2 No Retroactive Effect on Awarded Benefits. No amendment will affect the rights of any Participant to the amounts then standing to his credit in his Account in the Deferred Compensation Ledger, to change the method of calculating the rate of interest already accrued or to accrue in the future on amounts deferred by him or matched by the Company prior to the date of the amendment or to change a Participant's right under any provision relating to a Change of Control after a Change of Control has occurred without the Participant's consent. However, the Board of Directors shall retain the right at any time to change in any manner the method of calculating the rate of interest on all amounts deferred by a Participant and/or matched by the Company after the date of the amendment if it has been announced to the Participants. 9.3 Effect of Termination. If the Plan is terminated, all amounts deferred by Participants and matched by the Company and credited to a Participant's Account will immediately vest under Sections 5.1 and 5.2 and interest will be applied to the Account in accordance with Section 4.4 as if the Participant were entitled to and did retire on the date the Plan terminated. Distribution would then, as soon as conveniently practicable, commence in accordance with Section 6.3 and interest during the distribution period would be calculated and credited in accordance with Section 4.5. The forfeiture provisions of Sections 6.6 and 6.7 and -22- 28 the restriction set out in Section 6.10 would continue to apply throughout the period of distribution. -23- 29 ARTICLE X FUNDING 10.1 Payments Under This Agreement are the Obligation of the Company. The Company will pay the benefits due the Participants under this Plan; however should it fail to do so when a benefit is due, the benefit will be paid by the trustee of that certain trust agreement, entered into contemporaneously with this agreement, by and between the Company and Texas Commerce Bank National Association. In any event, if the trust fails to pay for any reason, the Company still remains liable for the payment of all benefits provided by this Plan. 10.2 Agreement May Be Funded Through Rabbi Trust. It is specifically recognized by both the Company and the Participants that the Company may, but is not required to, purchase life insurance so as to accumulate assets sufficient to fund the obligations of the Company under this Plan and that the Company may, but is not required to contribute any policy or policies it may purchase and any amount it finds desirable to a trust established to accumulate assets sufficient to fund the obligations of all of the Companies signatory to this Plan. However, under all circumstances, the Participants will have no rights to any of those policies; and likewise, under all circumstances, the rights of the Participants to the assets held in the trust will be no greater than the rights expressed in this agreement. Nothing contained in the trust agreement which creates the funding trust will constitute a guarantee by any Company that assets of the Company transferred to the trust will be sufficient to pay any benefits under this Plan or would place the Participant in a secured position ahead of general creditors should the Company become insolvent or bankrupt. Any trust agreement prepared to fund the Company's obligations under this agreement must specifically set out these principles so it is clear in that trust -24- 30 agreement that the Participants in this Plan are only unsecured general creditors of the Company in relation to their benefits under this Plan. 10.3 Reversion of Excess Assets. Any adopting Company may, at any time, request the actuary, who last performed the annual actuarial valuation of the Sysco Retirement Plan, to determine the present Account balance, assuming the Account balance to be fully vested and the interest rate not to be reduced (whether they are or not), as of the month end coincident with or next preceding the request, of all Participants and Beneficiaries of deceased Participants for which all Companies are or will be obligated to make payments under this Plan. If the fair market value of the assets held in the trust, as determined by the Trustee as of that same date, exceeds the total of the Account balances of all Participants and Beneficiaries by 25%, any Company may direct the trustee to return to each Company its proportionate part of the assets which are in excess of 125% of the Account balances. Each Company's share of the excess assets will be the Participants' Accounts earned while in the employ of that Company as compared to the total of the Account balances earned by all Participants under the Plan times the excess assets. If there has been a Change of Control, for the purpose of determining if there are excess funds, all contributions made prior to the Change of Control will be subtracted from the fair market value of the assets held in the trust as of the determination date but before the determination is made. 10.4 Participants Must Rely Only on General Credit of the Company. It is also specifically recognized by both the Company and the Participants that this Plan is only a general corporate commitment and that each Participant must rely upon the general credit of the Company for the fulfillment of its obligations hereunder. Under all circumstances the rights of Participants to any asset held by the Company will be no greater than the rights expressed in this -25- 31 agreement. Nothing contained in this agreement will constitute a guarantee by the Company that the assets of the Company will be sufficient to pay any benefits under this Plan or would place the Participant in a secured position ahead of general creditors of the Company. Though the Company may establish or become a signatory to a Rabbi Trust, as indicated in Section 10.1, to accumulate assets to fulfill its obligations, the Plan and any such trust will not create any lien, claim, encumbrance, right, title or other interest of any kind whatsoever in any Participant in any asset held by the Company, contributed to any such trust or otherwise designated to be used for payment of any of its obligations created in this agreement. No specific assets of the Company have been or will be set aside, or will in any way be transferred to the trust or will be pledged in any way for the performance of the Company's obligations under this Plan which would remove such assets from being subject to the general creditors of the Company. -26- 32 ARTICLE XI MISCELLANEOUS 11.1 Limitation of Rights. Nothing in this Plan will be construed: (a) to give any employee of any Company any right to be designated a Participant in the Plan; (b) to give a Participant any right with respect to the compensation deferred, the Company match or the interest credited in the Deferred Compensation Ledger except in accordance with the terms of this Plan; (c) to limit in any way the right of the Company to terminate a Participant's employment with the Company at any time; (d) to evidence any agreement or understanding, expressed or implied, that the Company will employ a Participant in any particular position or for any particular remuneration; or (e) to give a Participant or any other person claiming through him any interest or right under this Plan other than that of any unsecured general creditor of the Company. 11.2 Distributions to Incompetents or Minors. Should a Participant become incompetent or should a Participant designate a Beneficiary who is a minor or incompetent, the Committee is authorized to pay the funds due to the parent of the minor or to the guardian of the minor or incompetent or directly to the minor or to apply those funds for the benefit of the minor or incompetent in any manner the Committee determines in its sole discretion. 11.3 Nonalienation of Benefits. No right or benefit provided in this Plan will be transferable by the Participant except, upon his death, to a named Beneficiary as provided in this Plan. No right or benefit under this Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void. No right or benefit under this Plan will in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person -27- 33 entitled to such benefits. If any Participant or any Beneficiary becomes bankrupt or attempts to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit under this Plan, that right or benefit will, in the discretion of the Committee, cease. In that event, the Committee may have the Company hold or apply the right or benefit or any part of it to the benefit of the Participant or Beneficiary, his or her spouse, children or other dependents or any of them in any manner and in any proportion the Committee believes to be proper in its sole and absolute discretion, but is not required to do so. 11.4 Reliance Upon Information. The Committee will not be liable for any decision or action taken in good faith in connection with the administration of this Plan. Without limiting the generality of the foregoing, any decision or action taken by the Committee when it relies upon information supplied it by any officer of the Company, the Company's legal counsel, the Company's independent accountants or other advisors in connection with the administration of this Plan will be deemed to have been taken in good faith. 11.5 Severability. If any term, provision, covenant or condition of the Plan is held to be invalid, void or otherwise unenforceable, the rest of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated. 11.6 Notice. Any notice or filing required or permitted to be given to the Committee or a Participant will be sufficient if in writing and hand delivered or sent by U.S. mail to the principal office of the Company or to the residential mailing address of the Participant. Notice will be deemed to be given as of the date of hand delivery or if delivery is by mail, as of the date shown on the postmark. -28- 34 11.7 Gender and Number. If the context requires it, words of one gender when used in this Plan will include the other genders, and words used in the singular or plural will include the other. 11.8 Governing Law. The Plan will be construed, administered and governed in all respects by the laws of the State of Texas. 11.9 Effective Date. This Plan will be operative and effective on July 3, 1988. IN WITNESS WHEREOF, the Company has executed this document on this 16th day of August, 1995, restating the Plan to incorporate the First Amendment executed January 26, 1995, and the Second Amedment executed June 7, 1995, into the amended and restated Plan, executed September 20, 1993. SYSCO CORPORATION By /s/ La Dee G. Riker -------------------------- -29- EX-10.E 4 SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN 1 EXHIBIT #10(e) 2 SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN This Sysco Corporation 1995 Management Incentive Plan (the "Plan") was adopted by unanimous action of the Plan Compensation Committee (as hereinafter defined) of Sysco Corporation (the "Company") on May 9, 1995, and by the Board of Directors of the Company (the "Board of Directors") on May 10, 1995. 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 and/or managing the operations of certain Subsidiaries. Except as otherwise provided in Section 8 hereof, the total number of shares of Sysco Common Stock, $1.00 par value ("Common Stock"), which may be awarded pursuant to the Plan shall not exceed 2,124,234 shares. All references to periods in the Plan are to fiscal periods unless otherwise specifically noted. Nothing in the Plan shall be deemed to affect incentive bonuses paid or to be paid to participants under any predecessor management incentive plan for fiscal years prior to the Company's 1996 fiscal year. 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) including without limitation the manner of determining financial and accounting concepts discussed in the Plan; to otherwise supervise the administration of the Plan; and, except as to the application of the 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, 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 (hereinafter defined). 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) 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 or the Company, in the following capacities (Subsidiary Participants, Corporate Participants, Designated Participants and Senior Executive Participants are referred to collectively as "Participants" or individually as a "Participant"): Subsidiary Participants -- Persons who serve as an officer of a Subsidiary, regardless of whether such Participant works for a division or a subsidiary of the Company. Corporate Participants -- Persons who serve as an officer of the Company who are also employees of the Company or a Subsidiary. 1 3 Designated Participants -- Persons other than Corporate Participants or Subsidiary Participants who are employed by a Subsidiary or by the corporate office of the Company who are designated by the Plan Compensation Committee from time to time. Senior Executive Participants -- 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 regulation section, or any administrative interpretation thereof) (the "Executive Compensation Provisions") during a fiscal year of the Company and who have been designated by the Plan Compensation Committee as Corporate, Subsidiary or Designated Participants in the Plan for such fiscal year. If a Participant is both a Senior Executive Participant and a Corporate, Subsidiary or Designated 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, Subsidiary or Designated 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. 4. 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 and possibly Designated Participants) or of a select group of Subsidiaries (as to Corporate and possibly Designated Participants), subject to the discretion of the Plan Compensation Committee to formulate a different bonus structure as to any Participant, other than Senior Executive Participants. The bonus is calculated with respect to an entire fiscal year and, if earned, shall be paid in accordance with Section 6 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 depend upon the return on capital and/or increase in pretax earnings of the Subsidiary employing such Participant; a portion of the bonus may depend upon the return on stockholder's equity and increase in earnings per share of the Company as a whole; and a portion of the bonus may depend upon any one or more of the following performance factors: (i) sales of the Company and/or one or more Subsidiaries, (ii) pretax earnings of the Company, (iii) net earnings of the Company and/or one or more Subsidiaries, (iv) control of operating and/or nonoperating expenses of the Company and/or one or more Subsidiaries, (v) margins of the Company and/or one or more Subsidiaries, (vi) market price of the Company's securities, and (vii) other objectively measurable factors directly tied to the performance of the Company and/or one or more Subsidiaries. The relative weights of the factors considered and the percentages of the total bonus comprised by the portion of the bonus determined with respect to the Subsidiary employing the Participant and the portion of the bonus determined with respect to the Company shall be determined by the Plan Compensation Committee in its sole discretion. Notwithstanding the foregoing, the Plan Compensation Committee may alter the bonus formula with respect to any such Participant by changing the performance targets as determined in the sole discretion of the Committee. In addition to the bonus calculated in accordance with the first paragraph of Section 4(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 may be established by the Plan Compensation Committee at one or more times during such fiscal year or within ninety (90) days following 2 4 the end of such fiscal year based on such criteria as the Plan Compensation Committee may develop in its sole discretion. (B) 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 the Plan, a portion of the bonus may depend upon the return on stockholder's equity and increase in earnings per share of the Company; portion of the bonus may depend upon the return on capital of one or more of the Subsidiaries and/or the increase in pretax earnings of one or more of the Subsidiaries; and a portion of the bonus may depend upon any one or more of the following performance factors: (i) sales of the Company and/or one or more Subsidiaries, (ii) pretax earnings of the Company, (iii) net earnings of the Company and/or one or more Subsidiaries, (iv) control of operating and/or nonoperating expenses of the Company and/or one or more Subsidiaries, (v) margins of the Company and/or one or more Subsidiaries, (vi) market price of the Company's securities, and (vii) other objectively measurable factors directly tied to the performance of the Company and/or one or more Subsidiaries. The relative weights of the factors considered and the percentage of the total bonus comprised by the portion of the bonus determined with respect to the Subsidiaries of the Company and the portion determined with respect to the Company shall be determined by the Plan Compensation Committee in its sole discretion. Notwithstanding the foregoing, the Plan Compensation Committee may alter the bonus formula with respect to any such Participant by changing the performance targets as determined in the sole discretion of the Committee. (C) Designated Participants. The Plan Compensation Committee may formulate a bonus structure for each Designated Participant which is based on performance factors determined by the Plan Compensation Committee in its sole discretion. The bonus structure for any Designated Participant may be similar to or may vary materially from the bonus structure for Corporate Participants or Subsidiary Participants. (D) General Rules Regarding Bonus Calculation. In determining whether or not the results of operations of a Subsidiary or Subsidiaries or the Company for a given fiscal year result 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 and binding on each Participant. Except as provided in Section 10 as to Senior Executive Participants, there is no limit to the bonus that can be obtained. Prior to payment of the bonus to Senior Executive Participants, the Plan Compensation Committee shall certify that the performance goals and other material terms of the Plan have been achieved with respect to the Senior Executive Participants. 5. 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 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. 6. PAYMENT Within 90 days following the end of each fiscal year, the Company shall determine the amount of any bonus earned by each Participant pursuant to the provisions of Section 4 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 6(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 3 5 received his or her 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 6(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 or her election, plus 40 Additional Shares), plus the Additional Cash Bonus (as defined in Section 6(B) below). (B) If a Participant elects to receive Common Stock in accordance with Section 6(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"). 7. 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 would have been entitled to receive had he or she been a shareholder of the Company holding shares pursuant to the 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. 8. INVESTMENT REPRESENTATION AND RESTRICTIONS ON THE STOCK AND RIGHT OF REPURCHASE BY THE COMPANY (A) The shares to be issued to a Participant may be unregistered, at the option of the Company, 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 the Participant's death or termination of employment due to disability or retirement under normal Company benefit plans, then upon demand of the Company made 4 6 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 the 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 the Participant pursuant to the 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 the Plan. The market price of the Common Stock shall be deemed to be the closing price of such stock on the 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 the Plan shall bear a legend reflecting these restrictions. 9. AMENDMENTS AND TERMINATION The 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. The 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. 10. OVERALL LIMITATION UPON PAYMENTS UNDER PLAN TO SENIOR EXECUTIVE PARTICIPANTS. Notwithstanding any other provision in the 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 6(A) above, and the Additional Cash Bonus (as defined in Section 6(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. 5 EX-10.G 5 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 1 EXHIBIT #10(g) 2 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN This Non-Employee Directors Stock Option Plan (the "Plan") is established to attract, retain and compensate for service as members of the Board of Directors highly qualified individuals who are not current employees of Sysco Corporation (the "Corporation") and to enable them to increase their ownership in the Corporation's common stock. This Plan will be beneficial to the Corporation and its stockholders since it will allow these directors to have a greater personal financial stake in the Corporation through the ownership of Corporation common stock, in addition to underscoring their common interest with stockholders in increasing the value of the Corporation over the longer term. 1. ELIGIBILITY. All members of the Corporation's Board of Directors who are not current employees of the Corporation or any of its subsidiaries ("Non-Employee Directors") are eligible to participate in this Plan. 2. OPTIONS. No stock options granted pursuant to this Plan ("Options") may be "Incentive Stock Options" under Section 422 of the Internal Revenue Code of 1986, as amended. 3. SHARES AVAILABLE. (a) Number of Shares Available: There are hereby reserved for issuance under this Plan 200,000 shares of the Corporation's Common Stock, $1.00 par value ("Common Stock"), which may be authorized but unissued shares, treasury shares, or shares purchased on the open market. (b) Recapitalization Adjustment: In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of the Corporation, adjustments in the number and kind of shares authorized by this Plan, in the number and kind of shares to be issued under Section 4 below, in the number and kind of shares covered by outstanding Options under this Plan, and in the option price thereof, shall be made if, and in the same manner as, such adjustments are made to options issued under the Corporation's plan pursuant to which Incentive Stock Options may be granted which is then in effect. 4. ANNUAL GRANT OF STOCK OPTIONS. If the Corporation achieves for any fiscal year an increase in after-tax earnings per share of 10% or more over after-tax earnings per share for the prior fiscal year, determined consistently with determinations made in connection with the measurement of the Corporation's performance under incentive compensation plans for management of the Corporation, each individual elected, re-elected or continuing as a Non-Employee Director shall automatically receive an Option for 2,000 shares of Common Stock on the first business day (the "Award Date") after the Corporation's Annual Meeting of Stockholders which follows the close of such fiscal year. Notwithstanding the foregoing, if, on the Award Date, the General Counsel of the Corporation determines, in his/her sole discretion, that the Corporation is in possession of material, undisclosed information about the Corporation, then the annual grant of Options to Non-Employee Directors shall be suspended until the second day after public dissemination of such information, and the price, exercisability dates and option period shall then be determined by reference to such later date. If Common Stock is not traded on the New York Stock Exchange ("NYSE") on any date a grant would otherwise be awarded, then the grant shall be made the next day thereafter on which Common Stock is so traded. The foregoing notwithstanding, the first Option grant pursuant to this Plan shall be made effective as of December 12, 1994. All Option grants pursuant to this Plan shall be evidenced by a written instrument consistent with the provisions hereof. 5. OPTION PRICE. The price of the Option shall be the last closing price of the Corporation Common Stock on the NYSE prior to the grant of the Option. 6. OPTION PERIOD. An Option granted under the Plan shall become exercisable and shall expire in accordance with the vesting and other conditions contained on Exhibit A hereto, as the same may be amended in accordance with paragraph 10 hereof; provided, however, that no Option may be exercised later than ten years after the date of grant thereof. 1 3 7. PAYMENT. The Option exercise price shall be paid in cash in U.S. dollars at the time the Option is exercised or in shares of Corporation Common Stock having an aggregate value equal to the Option exercise price (determined as of the first business day prior to the date of exercise, pursuant to the formula set forth in paragraph 5 above) or by a combination of cash and Common Stock. 8. CESSATION OF SERVICE. Upon cessation of service as a Non-Employee Director (for reasons other than death), all Options, whether or not exercisable at the date of cessation of service, shall be forfeited by the grantee; provided, however, that, subject to Paragraph 3 of Exhibit A, if a grantee leaves the Board of Directors in "good standing" (for reasons other than death), such grantee's Options shall remain in effect, vest, become exercisable and expire as if the grantee had remained a Non-Employee Director of the Corporation. Whether or not a Non-Employee Director has left the Board in "good standing" shall be determined by the Corporation's Board of Directors, in its sole discretion; provided, however, that any Non-Employee Director who serves out his/her term but does not stand for re-election at the end thereof shall be deemed to have left the Board of Directors in "good standing." 9. DEATH. Upon the death of a Non-Employee Director, only those Options which were exercisable on the date of death shall be exercisable by his/her legal representatives or heirs. Such Options must be exercised within one year from date of death or they shall be automatically forfeited (but in no event may the Options be exercised beyond the last date on which they could have been exercised had the Non-Employee Director not died). 10. ADMINISTRATION AND AMENDMENT OF THE PLAN. This Plan shall be administered by the Board of Directors of the Corporation. This Plan may be terminated or amended by the Board of Directors as it deems advisable. However, amendments to this Plan shall not be made more frequently than every six months unless necessary to comply with the Internal Revenue Code of 1986, as amended, or with the Employee Retirement Income Security Act of 1974, as amended, or any successors thereto, or the regulations promulgated thereunder. No amendment may revoke or alter in a manner unfavorable to the grantees any Options then outstanding, nor may the Board amend this Plan without stockholder approval where the absence of such approval would cause the Plan to fail to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Act"), or any other requirement of applicable law or regulation. An Option may not be granted under this Plan after that date which is ten years from the date of stockholder approval of this Plan, but Options granted prior to that date shall continue to become exercisable and may be exercised according to their terms. 11. NONTRANSFERABILITY. No Option granted under this Plan is transferable other than by will or the laws of descent and distribution. During the grantee's lifetime, an Option may be exercised only by the grantee or the grantee's guardian or legal representative. 12. COMPLIANCE WITH SEC REGULATIONS. It is the Corporation's intent that this Plan comply in all respects with Rule 16b-3 under the Act and any regulations promulgated thereunder. If any provision of this Plan is at any time found not to be in compliance with the Rule, the provision shall be deemed null and void. All grants and exercises of Options under this Plan shall be executed in accordance with the requirements of Section 16 of the Act, as amended, and any regulations promulgated thereunder. 13. MISCELLANEOUS. Except as provided in this Plan, no Non-Employee Director shall have any claim or right to be granted an Option under this Plan. Neither this Plan nor any actions hereunder shall be construed as giving any director any right to be retained in the service of the Corporation. 14. EFFECTIVE DATE. This Plan shall be effective on December 1, 1994, subject to stockholder approval hereof being obtained at the Corporation's 1995 Annual Meeting of Stockholders; provided, however, that all Option grants made hereunder prior to this Plan having been approved by the Corporation's stockholders are hereby expressly made contingent upon obtaining such approval. 2 4 EXHIBIT A TO SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN In addition to the conditions set out in the Plan, the exercise of an Option is contingent upon satisfying the below requirements: 1. The fiscal year immediately prior to the fiscal year in which the Option is granted is the "Base Year" for determining if vesting requirements have been met. One-third of the total number of shares covered by an Option shall vest at the conclusion of each of the next three fiscal years of the Corporation following the Base Year, provided that the pretax earnings of the Corporation increased at least 20% in such fiscal year over the Corporation's pretax earnings for the prior fiscal year. If pretax earnings of the Corporation should increase less than 20% in any one fiscal year over the prior fiscal year, the Option can be vested at the conclusion of any fiscal year ending within the five-year period following the date of grant of the Option (the "Vesting Period") in which pretax earnings of the Corporation for the fiscal years after the Base Year have grown at a minimum rate of 15%, compounded annually, with one-third of the total number of shares covered by the Option to vest for each fiscal year after the Base Year included in the calculation of the 15% compounded minimum growth rate. 2. If neither of the vesting requirements set out in the paragraph immediately above are met, an Option may still vest, in part or in whole, subject to the following criteria: (a) For any fiscal year within the Vesting Period in which the Corporation's annual return on shareholders' equity (computed in a manner consistent with the computation of the Corporation's annual return on shareholders' equity under the Corporation's incentive compensation plans for management of the Corporation) equals or exceeds 17.5% and the increase in pretax earnings of the Corporation over the prior fiscal year equals or exceeds 15%, one-third of the Option will vest. (b) If the Corporation's average annual return on shareholders' equity (computed in a manner consistent with the computation of the Corporation's annual return on shareholders' equity under the Corporation's incentive compensation plans for management of the Corporation) for the five fiscal years ending within the Vesting Period equals or exceeds 17.5% and the increase in pretax earnings of the Corporation over such five fiscal years equals or exceeds 10%, compounded annually, the Option will fully vest. 3. If none of the vesting requirements set out above are met within the Vesting Period as to any portion of an Option, such Option (or portion thereof) will nonetheless vest and become exercisable six months prior to the expiration thereof (the "Supplemental Vesting Date") provided that the grantee of the Option (the "Grantee") continues to serve on the Corporation's Board of Directors as a Non-Employee Director on the Supplemental Vesting Date. Notwithstanding anything in Section 8 of the Plan to the contrary, if any Option (or portion thereof) has not vested by the end of the Vesting Period, said Option (or portion thereof) shall be automatically forfeited when the Grantee ceases to serve as a Non-Employee Director (for reasons other than death) if such cessation occurs prior to the Supplemental Vesting Date. 4. Subject to the limitations set forth in the Plan, the vested portion of an Option may be exercised at any time following the conclusion of the fiscal year in which it vests, provided that at the time of exercise all of the conditions set forth in the Plan have been met. No portion of any Option may be exercised prior to one calendar year following the date of grant thereof. EX-11 6 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT #11 2 SYSCO CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11
July 3, 1993 July 2, 1994 July 1, 1995 ------------ ------------ ------------ Calculation of Primary Earnings Per Share: ------------------------------------------ Net earnings applicable to common stock $201,807,000 $216,752,000 $251,824,000 ============ ============ ============ Average number of common shares and common stock equivalents outstanding 186,745,576 184,338,616 182,779,806 Dilutive effect of stock options (1) -- -- -- ------------ ------------ ------------ 186,745,576 184,338,616 182,779,806 ============ ============ ============ Primary earnings per share $ 1.08 $ 1.18 $ 1.38 ============ =========== ============ Calculation of Fully Diluted Earnings Per Share: ------------------------------------------------ Net earnings applicable to common stock $201,807,000 $216,752,000 $251,824,000 ============ ============ ============ Average number of shares outstanding on a fully diluted basis -- same as for calculation of primary earnings per share 186,745,576 184,338,616 182,779,806 Dilutive effect of stock options and Liquid Yield Option Notes (2) -- -- -- ------------ ------------ ------------ 186,745,576 184,338,616 182,779,806 ============ ============ ============ Fully diluted earnings per share $ 1.08 $ 1.18 $ 1.38 ============ ============ ============
(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 7 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT #21 2 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 1, 1995.
State of Name of Subsidiary Incorporation ------------------ ------------- Allied-Sysco Food Services, Inc. . . . . . . . . . . . . . California Bell/Sysco Food Services, Inc. . . . . . . . . . . . . . . North Carolina Deaktor/Sysco Food Services Company . . . . . . . . . . . Pennsylvania K.W. Food Distributors Ltd. . . . . . . . . . . . . . . . . B.C. Canada 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 Pegler-Sysco Food Services Company . . . . . . . . . . . . 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 Financial Services, Inc. . . . . . . . . . . . . . . Delaware * Arrow - Sysco Food Services, Inc. . . . . . . . . . . Delaware * Hardin's - Sysco Food Services, Inc. . . . . . . . . Tennessee * Lankford - Sysco Food Services, Inc. . . . . . . . . Maryland * Robert Orr - Sysco Food Services, Inc. . . . . . . . Tennessee * Sysco Food Services of Dallas, Inc. . . . . . . . . . Delaware * Sysco Food Services of Houston, Inc. . . . . . . . . Delaware Sysco Food Services - Chicago, Inc. . . . . . . . . . . . Delaware Sysco Food Services - Jacksonville, Inc. . . . . . . . . . Delaware Sysco Food Services - West Coast Florida, Inc. . . . . . . Delaware
3
State of Name of Subsidiary Incorporation ------------------ ------------- 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 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 Central Pennsylvania, Inc. . . . . . . Pennsylvania Sysco Food Services of Cleveland, 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 Philadelphia, Inc. . . . . . . . . . . Pennsylvania * Concors Supply Co., Inc. . . . . . . . . . . . . . . . . Delaware * Garden Cash & Carry, 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 The SYGMA Network, Inc. . . . . . . . . . . . . . . . . . . . Delaware The SYGMA Network of Ohio, Inc. . . . . . . . . . . . . . . . Delaware INACTIVE -------- CFS Bakeries, Inc. . . . . . . . . . . . . . . . . . . . . . . California CFS Continental Transportation Company . . . . . . . . . . . . Illinois DiPaolo/Sysco Food Services Company . . . . . . . . . . . . . Ohio FSB, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware Grants - Sysco Food Services, Inc. . . . . . . . . . . . . . . Michigan Sysco Frosted Foods, Inc. . . . . . . . . . . . . . . . . . . Delaware SyscoMed, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Delaware Tartan Foods, Inc. . . . . . . . . . . . . . . . . . . . . . . Delaware Vernon, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . California
* 2nd Tier Subsidiary EX-23 8 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT 1 EXHIBIT #23 2 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 1, 1995 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), (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), and (vi) Registration Statement and Prospectus of Sysco Corporation relating to the $500,000,000 debt securities offering (Registration No. 33-60023). /s/ Arthur Andersen LLP Arthur Andersen LLP Houston, Texas August 2, 1995 EX-27 9 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Item 8., Financial Statements and Supplementary Data and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUL-1-1995 JUL-1-1995 133,886 0 948,534 (16,001) 667,861 1,786,900 1,569,022 (672,943) 3,094,691 944,723 541,556 191,294 0 0 1,212,309 3,094,691 12,118,047 12,118,047 9,927,448 11,700,429 0 15,988 38,579 417,618 165,794 251,824 0 0 0 251,824 1.38 1.38
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