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Page 1 of 11
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 January 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 [ ]
184,207,806 shares of common stock were outstanding as of
February 4, 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 3, 1993
consolidated balance sheet which was taken from
the audited financial statements included in the
Company's Fiscal 1993 Annual Report on Form
10-K. The financial statements include
consolidated balance sheets, consolidated
results of operations and consolidated cash
flows. Certain amounts in the prior year have
been reclassified to conform to the current
presentation. 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 1993 Annual Report on Form 10-
K.
A review of the financial information herein has
been made by Arthur Andersen & Co., independent
public accountants, in accordance with
established professional standards and
procedures for such a review. A letter from
Arthur Andersen & Co. 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)
<CAPTION> Jan. 1, July 3, Dec.16,
1994 1993 1992
---------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 50,767 $ 68,759 $ 59,369
Accounts and notes receivable,
less allowances of $27,161,
$15,122 and $24,969 829,041 770,553 743,886
Inventories 640,172 534,167 552,470
Deferred taxes 32,116 28,878 26,810
Prepaid expenses 19,237 17,379 17,651
---------- ---------- ----------
Total current assets 1,571,333 1,419,736 1,400,186
Plant and equipment at cost, less
depreciation 790,433 759,857 752,832
Goodwill and intangibles, less
amortization 265,544 267,056 269,608
Other assets 107,252 83,394 77,509
---------- ---------- ----------
Total assets $2,734,562 $2,530,043 $2,500,135
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 56,826 $ 6,609 $ 1,151
Accounts payable 568,556 550,507 545,268
Accrued expenses 145,199 159,056 140,798
Accrued income taxes 19,704 26,929 7,056
Current maturities of long-term
debt 6,535 3,372 2,533
---------- --------- ----------
Total current liabilities 796,820 746,473 696,806
Long-term debt 565,756 494,062 493,147
Deferred taxes 167,418 152,292 144,002
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, 191,293,725
and 189,920,102 shares 191,294 191,294 189,920
Paid-in capital 62,297 74,158 53,020
Retained earnings 1,120,797 1,043,057 960,878
---------- ---------- ----------
1,374,388 1,308,509 1,203,818
Less cost of treasury stock,
6,661,743, 6,836,329 and
1,514,415 shares 169,820 171,293 37,638
---------- ---------- ----------
Total shareholders' equity 1,204,568 1,137,216 1,166,180
---------- ---------- ----------
Total liabilities and
shareholders' equity $2,734,562 $2,530,043 $2,500,135
========== ========== ==========
<FN>
Note: The July 3, 1993 balance sheet has been taken from the audited
financial statements at that date.
</TABLE>
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4
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
<CAPTION> 26-Week Period Ended 13-Week Period Ended
---------------------------- --------------------------
Jan. 1, Dec. 26, Jan. 1, Dec. 26,
1994 1992 1994 1992
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 5,375,756 $ 4,808,172 $ 2,665,882 $ 2,392,345
Costs and expenses
Cost of sales 4,403,380 3,949,267 2,179,225 1,961,447
Operating expenses 773,589 687,390 384,340 341,758
Interest expense 19,949 19,377 10,347 9,769
Other income, net (1,134) (670) (175) 103
------------ ----------- ------------ -----------
Total costs and expenses 5,195,784 4,655,364 2,573,737 2,313,077
------------ ----------- ------------ -----------
Earnings before income taxes 179,972 152,808 92,145 79,268
Income taxes 76,349 59,595 36,582 30,914
------------ ------------ ------------ -----------
Net earnings $ 103,623 $ 93,213 $ 55,563 $ 48,354
============ ============ ============ ===========
Average number of shares
outstanding 184,836,752 186,448,357 184,751,726 187,029,497
============ ============ ============ ============
Earnings per share $ 0.56 $ 0.50 $ 0.30 $ 0.26
============ ============ ============ ============
Dividends paid per common
share $ 0.14 $ 0.12 $ 0.07 $ 0.06
============ ============ ============ ============
</TABLE>
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5
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 26- Week Period Ended
------------------------
Jan. 1, Dec. 26,
1994 1992
-------- ----------
<S> <C> <C>
Operating activities:
Net earnings $103,623 $ 93,213
Add non-cash items:
Depreciation and amortization 58,391 52,524
Interest on Liquid Yield Option Notes 2,838 4,950
Deferred tax provision 11,336 7,059
Provision for losses on accounts
receivable 9,319 9,760
Additional investment in net current assets
over liabilities:
(Increase) in receivables (50,481) (76,273)
(Increase) in inventories (96,460) (59,387)
Decrease (Increase) in prepaid expenses 749 (2,560)
Increase in accounts payable 9,960 51,397
(Decrease) in accrued expenses (15,334) (5,824)
(Decrease) increase in accrued income taxes (7,386) 626
(Increase) in other assets (26,868) (22,410)
-------- --------
Net cash (used for) provided by
operating activities (313) 53,075
-------- --------
Investing activities:
Additions to plant and equipment (77,861) (71,304)
Sales and retirements of plant and equipment 1,139 3,888
Acquisitions of businesses, net of cash
acquired (11,925) (5,314)
Proceeds from sale of business --- 10,878
-------- --------
Net cash used for investing activities (88,647) (61,852)
-------- --------
Financing activities:
Bank and commercial paper borrowings 115,241 47,236
Other debt repayments (5,806) (5,822)
Common stock reissued from treasury 15,030 9,966
Treasury stock purchases (27,614) (35,188)
Dividends paid (25,883) (22,400)
-------- --------
Net cash provided by (used for)
financing activities 70,968 (6,208)
-------- --------
Net (decrease) in cash (17,992) (14,985)
Cash at beginning of period 68,759 74,354
-------- --------
Cash at end of period $ 50,767 $ 59,369
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 20,186 $ 19,584
Income taxes 74,200 52,868
</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 1993
Annual Report on Form 10-K remains applicable,
other than the common stock repurchase program
described below.
In September 1993, the number of common shares
authorized to be purchased was increased by an
additional 10,000,000 shares. As was the case
with the previous 8,000,000 share repurchase
program completed in June 1993, this program
will be utilized primarily to offset shares
issued in conjunction with various employee
benefit plans and future conversions of Liquid
Yield Option Notes. As of the end of the
second quarter, 1,000,000 shares have been
purchased in conjunction with this program.
Results of Operations
---------------------
Sales and cost of sales increased 12% during the
26 weeks and 11% in the second quarter of Fiscal
1994 over comparable periods of the prior year.
Operating expenses for the periods presented
showed a slight increase as a percent of sales.
This increase was the result of the interplay
of several economic influences including
accelerated growth in territorial street sales
and the acquisition of companies with higher than
average operating costs. Interest expense in the
current periods remained approximately the same
as the prior year periods. Income taxes includes
a $4.9 million provision relating to the retroactive
impact of recently enacted federal tax legislation.
Excluding this charge, the effective tax rate for
the current periods was 39.7% compared to 39% for
the prior year, reflecting the federal tax rate
increase to 35% from 34%.
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 & Co.
dated February 9, 1994, re unaudited financial
statements.
(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.
Sr. Vice President & Controller
(Chief Accounting Officer)
Date: February 9, 1994
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9
EXHIBIT INDEX
----------------------
SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ----- ----------------------------------------- -------------
11 SYSCO Corporation and Subsidiary Companies
statement re computation of per share
earnings 10
15 Letter from Arthur Andersen & Co. dated
February 9, 1994, re unaudited financial
statements 11
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10
<TABLE> Exhibit 11
SYSCO CORPORATION AND ITS CONSOLIDATED SUBSIDARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
26-Week Period Ended 13-Week Period Ended
-------------------------------- ----------------------------
Jan. 1, 1994 Dec. 26, 1992 Jan. 1, 1994 Dec. 26, 1992
------------- ------------- ------------- -------------
<S> <C> <C>
Calculation of Primary Earnings Per Share:
- -----------------------------------------
Net earnings applicable to common stock $ 103,623,000 $ 93,213,000 $ 55,563,000 $ 48,354,000
============= ============= ============= =============
Average number of common shares and common
stock equivalents outstanding 184,836,752 186,448,357 184,751,726 187,029,497
Dilutive effect of stock options (1) --- --- --- ---
------------- ------------- ------------- ------------
184,836,752 186,448,357 184,751,726 187,029,497
============= ============= ============= ============
Primary earnings per share $ 0.56 $ 0.50 $ 0.30 $ 0.26
============= ============= ============= ============
Calculation of Fully Diluted Earnings Per Share:
- ------------------------------------------------
Net earnings applicable to common stock $ 103,623,000 $ 93,213,000 $ 55,563,000 $ 48,354,000
============= ============= ============= ============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings per share 184,836,752 186,448,357 184,751,726 187,029,497
Dilutive effect of stock options and Liquid
Yield Option Notes (2) --- --- --- ---
------------- ------------- ------------- ------------
184,836,752 186,448,357 184,751,726 187,029,497
============= ============= ============= ============
Fully diluted earnings per share $ 0.56 $ 0.50 $ 0.30 $ 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%.
</TABLE>
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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 January 1, 1994, and the
related consolidated statements of results of
operations and cash flows for the twenty-six week
and thirteen week periods 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 & CO.
Houston, Texas
February 9, 1994
