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Page 1 of 12
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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 Identification No.)
incorporation or organization)
1390 Enclave Parkway
Houston, Texas 77077-2099
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (713) 584-1390
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 reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
183,174,998 shares of common stock were outstanding as of
October 28, 1994.
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2
PART I. FINANCIAL INFORMATION
---------------------------------------------------
Item 1. Financial Statements
The following consolidated financial statements
have been prepared by the Company, without
audit, with the exception of the July 2, 1994
consolidated balance sheet which was taken from
the audited financial statements included in the
Company's Fiscal 1994 Annual Report on Form
10-K. The financial statements include
consolidated balance sheets, consolidated
results of operations and consolidated cash
flows. In the opinion of management, all
adjustments, which consist of normal recurring
adjustments, necessary to present fairly the
financial position, results of operations and
cash flows for all periods presented, have been
made.
These financial statements should be read in
conjunction with the audited financial
statements and notes thereto included in the
Company's Fiscal 1994 Annual Report on Form 10-
K.
A review of the financial information herein has
been made by Arthur Andersen LLP, independent
public accountants, in accordance with established
professional standards and procedures for such a
review. A letter from Arthur Andersen LLP
concerning their review is included as Exhibit 15.
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3
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
<CAPTION> Oct. 1, July 2, Oct. 2,
1994 1994 1993
---------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 75,481 $ 86,735 $ 61,907
Accounts and notes receivable,
less allowances of $22,861,
$15,999 and $21,818 935,671 856,448 854,417
Inventories 672,385 601,994 598,544
Deferred taxes 36,508 38,091 29,400
Prepaid expenses 20,717 16,380 21,362
---------- ---------- ----------
Total current assets 1,740,762 1,599,648 1,565,630
Plant and equipment at cost, less
depreciation 826,065 817,221 778,018
Goodwill and intangibles, less
amortization 264,005 266,021 267,584
Other assets 139,685 128,839 99,844
---------- ---------- ----------
Total assets $2,970,517 $2,811,729 $2,711,076
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 35,771 $ 5,247 $ 29,659
Accounts payable 705,454 632,373 630,255
Accrued expenses 163,850 176,043 153,091
Accrued income taxes 53,845 29,168 42,429
Current maturities of long-term
debt 5,752 3,730 6,539
---------- --------- ----------
Total current liabilities 964,672 846,561 861,973
Long-term debt 535,425 538,711 514,080
Deferred taxes 188,169 185,548 161,767
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, 191,294 191,294 191,294
Paid-in capital 52,955 60,003 63,573
Retained earnings 1,242,608 1,200,735 1,078,193
---------- ---------- ----------
1,486,857 1,452,032 1,333,060
Less cost of treasury stock,
7,986,583, 8,224,505 and
6,321,840 shares 204,606 211,123 159,804
---------- ---------- ----------
Total shareholders' equity 1,282,251 1,240,909 1,173,256
---------- ---------- ----------
Total liabilities and
shareholders' equity $2,970,517 $2,811,729 $2,711,076
========== ========== ==========
<FN>
Note: The July 2, 1994 balance sheet has been taken from the audited
financial statements at that date.
</TABLE>
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4
SYSCO Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
13-Week Period Ended
----------------------------
Oct. 1, Oct. 2,
1994 1993
------------ -----------
Sales $ 2,983,096 $ 2,709,874
Costs and expenses
Cost of sales 2,448,788 2,224,155
Operating expenses 429,591 389,249
Interest expense 8,453 9,602
Other income, net (528) (959)
------------ -----------
Total costs and expenses 2,886,304 2,622,047
------------ -----------
Earnings before income taxes 96,792 87,827
Income taxes 38,426 39,767
------------ ------------
Net earnings $ 58,366 $ 48,060
============ ============
Average number of shares
outstanding 183,295,130 184,921,789
============ ============
Earnings per share $ 0.32 $ 0.26
============ ============
Dividends paid per common
share $ 0.09 $ 0.07
============ ============
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5
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 13- Week Period Ended
------------------------
Oct. 1, Oct. 2,
1994 1993
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 58,366 $ 48,060
Add non-cash items:
Depreciation and amortization 31,819 28,462
Interest on Liquid Yield Option Notes 1,466 1,407
Deferred tax provision 4,204 8,182
Provision for losses on accounts receivable 5,099 4,783
Additional investment in certain assets
and liabilities net of effect of business
acquired:
(Increase) in receivables (84,322) (71,294)
(Increase) in inventories (70,391) (54,279)
(Increase) in prepaid expenses (4,337) (3,440)
Increase in accounts payable 73,081 71,187
(Decrease) in accrued expenses (12,193) (6,902)
Increase in accrued income taxes 24,677 15,081
(Increase) in other assets (12,237) (18,168)
-------- --------
Net cash provided by operating activities 15,232 23,079
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (37,975) (38,323)
Proceeds from sales of plant and equipment 719 878
Acquisitions of business, net of cash
acquired --- (12,715)
-------- --------
Net cash used for investing activities (37,256) (50,160)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 28,877 45,831
Other debt repayments (1,084) (11,386)
Common stock reissued from treasury 12,721 10,734
Treasury stock purchases (13,251) (12,026)
Dividends paid (16,493) (12,924)
-------- --------
Net cash provided by financing activities 10,770 20,229
-------- --------
Net decrease in cash (11,254) (6,852)
Cash at beginning of period 86,735 68,759
-------- --------
Cash at end of period $ 75,481 $ 61,907
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 6,128 $ 5,250
Income taxes 8,928 15,662
</TABLE>
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6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
-------------------------------
The liquidity and capital resources discussion
included on page 11 of the Company's Fiscal 1994
Annual Report on Form 10-K remains applicable,
other than the common stock repurchase program
described below.
In Fiscal 1992, the Company began a common stock
repurchase program and purchased 8,000,000 shares
in Fiscal 1992 and 1993. In September 1993, the
Board of Directors authorized an additional
10,000,000 shares to be purchased under its stock
repurchase program. Under this program, 3,000,000
shares were purchased in Fiscal 1994 and 531,700
shares in the first quarter of Fiscal 1995.
Results of Operations
---------------------
Sales and cost of sales increased 10.1% during the
first quarter of Fiscal 1995 over the same
quarter of the prior year.
Operating expenses showed a slight increase as a
percent of sales, primarily due to higher than
normal expenses related to the start-up costs
associated with the addition of several pieces
of significant new business and the higher than
average operating costs of recently acquired
companies.
Interest expense in the current period declined from
the prior period primarily due to the expiration of
the interest rate swap in December 1993.
Income taxes for the prior period includes a $4.9
million provision relating to the retroactive impact
of the Omnibus Budget Reconciliation Act of 1993.
Excluding this charge, the effective tax rate for
the current and prior periods was 39.7%, reflecting
the federal tax rate increase to 35%.
Increases in pretax earnings, net earnings and
earnings per share for the periods shown resulted
from a combination of the above factors.
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7
PART II. OTHER INFORMATION
-------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11, Statement re computation of per
share earnings.
Exhibit 15, Letter from Arthur Andersen LLP
dated November 4, 1994, re unaudited financial
statements.
Exhibit 27, Financial data schedule.
(b) No reports on Form 8-K have been filed during
the quarter for which this report is filed.
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8
SIGNATURES
------------------
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSCO CORPORATION
(Registrant)
By /s/ JOHN K. STUBBLEFIELD, JR.
-----------------------------
John K. Stubblefield, Jr.
Senior Vice President &
Chief Financial Officer
Date: November 4, 1994
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9
<TABLE>
EXHIBIT INDEX
----------------------
<CAPTION> SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- - - ----- ----------------------------------------- -------------
<S> <C> <C>
11 SYSCO Corporation and its Consolidated
Subsidiaries statement re computation of
per share earnings 10
15 Letter from Arthur Andersen LLP dated
November 4, 1994, re unaudited financial
statements 11
27 SYSCO Corporation and its Consolidated
Subsidiaries financial data schedule 12
</TABLE>
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10
Exhibit 11
SYSCO CORPORATION AND ITS CONSOLIDATED SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
13-Week Period Ended
---------------------------------
Oct. 1, 1994 Oct. 2, 1993
------------ --------------
Calculation of Primary Earnings Per Share:
- - - -----------------------------------------
Net earnings applicable to common stock $ 58,366,000 $ 48,060,000
============= =============
Average number of common shares and common
stock equivalents outstanding 183,295,130 184,921,789
Dilutive effect of stock options (1) --- ---
------------- -------------
183,295,130 184,921,789
============= =============
Primary earnings per share $ 0.32 $ 0.26
============= =============
Calculation of Fully Diluted Earnings Per Share:
- - - ------------------------------------------------
Net earnings applicable to common stock $ 58,366,000 $ 48,060,000
============= =============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings per share 183,295,130 184,921,789
Dilutive effect of stock options and Liquid
Yield Option Notes (2) --- ---
------------- -------------
183,295,130 184,921,789
============= =============
Fully diluted earnings per share $ 0.32 $ 0.26
============= =============
(1) Maximum possible dilutive effect of outstanding options in each period
is less than 3%.
(2) Maximum possible dilutive effect of outstanding effect of outstanding
options and Liquid Yield Option Notes during each period is less
than 3%.
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11
Exhibit 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Sysco Corporation:
We have reviewed the consolidated balance sheets
of Sysco Corporation (a Delaware corporation)
and subsidiaries as of October 1, 1994, and
the related consolidated statements of results
of operations and cash flows for the thirteen
week period then ended included in the Company's
Quarterly Report on Form 10-Q. These financial
statements are the responsibility of the Company's
management.
We conducted our review in accordance with
standards established by the American Institute
of Certified Public Accountants. A review of
interim financial information consists
principally of applying analytical procedures to
financial data and making inquiries of persons
responsible for financial and accounting
matters. It is substantially less in scope than
an audit conducted in accordance with generally
accepted auditing standards, the objective of
which is the expression of an opinion regarding
the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any
material modifications that should be made to
the financial statements referred to above for
them to be in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
November 4, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the financial statements and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> OCT-01-1994
<CASH> 75,481
<SECURITIES> 0
<RECEIVABLES> 958,532
<ALLOWANCES> (22,861)
<INVENTORY> 672,385
<CURRENT-ASSETS> 1,740,762
<PP&E> 1,440,201
<DEPRECIATION> (614,136)
<TOTAL-ASSETS> 2,970,517
<CURRENT-LIABILITIES> 964,672
<BONDS> 535,425
<COMMON> 191,294
0
0
<OTHER-SE> 1,090,957
<TOTAL-LIABILITY-AND-EQUITY> 2,970,517
<SALES> 2,986,096
<TOTAL-REVENUES> 2,986,096
<CGS> 2,448,788
<TOTAL-COSTS> 2,886,304
<OTHER-EXPENSES> (528)
<LOSS-PROVISION> 5,099
<INTEREST-EXPENSE> 8,453
<INCOME-PRETAX> 96,792
<INCOME-TAX> 38,426
<INCOME-CONTINUING> 58,366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,366
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
