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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 April 2, 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 [ ]
183,608,896 shares of common stock were outstanding as of
May 6, 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 Except for Share Data)
<CAPTION> April 2, July 3, March 27,
1994 1993 1993
----------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets:
Cash $ 64,128 $ 68,759 $ 67,955
Accounts and notes receivable,
less allowances of $33,046,
$15,122 and $28,747 859,284 770,553 745,669
Inventories 612,534 534,167 547,300
Deferred taxes 36,026 28,878 28,232
Prepaid expenses 22,097 17,379 22,391
---------- ---------- ----------
Total current assets 1,594,069 1,419,736 1,411,547
Plant and equipment at cost, less
depreciation 801,794 759,857 760,011
Goodwill and intangibles, less
amortization 263,603 267,056 269,115
Other assets 112,675 83,394 78,861
---------- ---------- ----------
Total assets $2,772,141 $2,530,043 $2,519,534
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 27,903 $ 6,609 $ 19,836
Accounts payable 647,512 550,507 558,327
Accrued expenses 163,191 159,056 154,952
Accrued income taxes 30,221 26,929 16,802
Current maturities of long-term
debt 6,307 3,372 2,526
---------- --------- ----------
Total current liabilities 875,134 746,473 752,443
Long-term debt 512,332 494,062 458,110
Deferred taxes 173,776 152,292 147,697
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 191,293,481 shares 191,294 191,294 191,293
Paid-in capital 61,446 74,158 75,815
Retained earnings 1,149,860 1,043,057 990,360
---------- ---------- ----------
1,402,600 1,308,509 1,257,468
Less cost of treasury stock,
7,457,639, 6,836,329 and
3,871,472 shares 191,701 171,293 96,184
---------- ---------- ----------
Total shareholders' equity 1,210,899 1,137,216 1,161,284
---------- ---------- ----------
Total liabilities and
shareholders' equity $2,772,141 $2,530,043 $2,519,534
========== ========== ==========
<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> 39-Week Period Ended 13-Week Period Ended
---------------------------- --------------------------
April 2, March 27, April 2, March 27,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 8,060,610 $ 7,207,498 $ 2,684,854 $ 2,399,326
Costs and expenses
Cost of sales 6,613,160 5,917,931 2,209,780 1,968,664
Operating expenses 1,165,433 1,039,215 391,844 351,825
Interest expense 27,898 28,746 7,949 9,369
Other income, net (1,630) (1,331) (496) (661)
------------ ----------- ------------ -----------
Total costs and expenses 7,804,861 6,984,561 2,609,077 2,329,197
------------ ----------- ------------ -----------
Earnings before income taxes 255,749 222,937 75,777 70,129
Income taxes 106,432 86,945 30,083 27,350
------------ ------------ ------------ -----------
Net earnings $ 149,317 $ 135,992 $ 45,694 $ 42,779
============ ============ ============ ============
Average number of shares
outstanding 184,624,948 187,068,330 184,201,317 188,307,148
============ ============ ============ ============
Earnings per share $ 0.81 $ 0.73 $ 0.25 $ 0.23
============ ============ ============ ============
Dividends paid per common
share $ 0.23 $ 0.19 $ 0.09 $ 0.07
============ ============ ============ ============
</TABLE>
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5
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 39- Week Period Ended
------------------------
April 1, March 27,
1994 1993
-------- ----------
<S> <C> <C>
Operating activities:
Net earnings $149,317 $ 135,992
Add non-cash items:
Depreciation and amortization 88,961 79,761
Interest on Liquid Yield Option Notes 4,273 6,481
Deferred tax provision 13,784 9,317
Provision for losses on accounts
receivable 14,346 12,449
Additional investment in net current assets
over liabilities:
(Increase) in receivables (85,751) (76,434)
(Increase) in inventories (68,822) (51,247)
(Increase) in prepaid expenses (2,111) (7,876)
Increase in accounts payable 88,916 61,897
Increase in accrued expenses 2,658 9,040
Increase in accrued income taxes 3,131 10,751
(Increase) in other assets (33,514) (25,761)
-------- --------
Net cash provided by
operating activities 175,188 164,370
-------- --------
Investing activities:
Additions to plant and equipment (117,494) (102,922)
Sales and retirements of plant and equipment 1,976 4,554
Acquisitions of businesses, net of cash
acquired (11,897) (10,700)
Proceeds from sale of business --- 10,878
-------- --------
Net cash used for investing activities (127,415) (98,190)
-------- --------
Financing activities:
Bank and commercial paper borrowings 34,451 57,786
Other debt repayments (8,983) (8,457)
Common stock reissued from treasury 19,354 13,638
Treasury stock purchases (54,712) (99,849)
Dividends paid (42,514) (35,697)
-------- --------
Net cash used for
financing activities (52,404) (72,579)
-------- --------
(Decrease) in cash (4,631) (6,399)
Cash at beginning of period 68,759 74,354
-------- --------
Cash at end of period $ 64,128 $ 67,955
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 26,022 $ 24,481
Income taxes 91,341 67,680
</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, the Fiscal 1994
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
third quarter, 2,000,000 shares have been
purchased in conjunction with the Fiscal 1994
program.
Results of Operations
---------------------
Sales and cost of sales increased 12% during the
39 weeks and in the third quarter of Fiscal
1994 over comparable periods of the prior year.
Operating expenses for the periods presented
remained approximately the same as a percent of
sales.
Because of the severe winter weather during this quarter,
the overall foodservice industry growth was diminished
and sales increases for a number of SYSCO operating
companies fell below their original expectations. In
addition, operating pretax margins of the weather-impacted
companies were negatively affected by the adverse
conditions. A precise measurement of the impact on
earnings cannot be made.
Interest expense in the current periods declined from the
prior periods primarily due to the expiration of the
interest rate swap in December 1993. 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 May 6, 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: May 6, 1994
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9
EXHIBIT INDEX
----------------------
SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- - ----- ----------------------------------------- -------------
11 SYSCO Corporation and Its Consolidated
Subsidiaries statement re computation
of per share earnings 10
15 Letter from Arthur Andersen & Co. dated
May 6, 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>
39-Week Period Ended 13-Week Period Ended
-------------------------------- -----------------------------
April 2, 1994 March 27, 1993 April 2, 1994 March 27, 1993
------------- -------------- ------------- --------------
<S> <C> <C>
Calculation of Primary Earnings Per Share:
- - -----------------------------------------
Net earnings applicable to common stock $ 149,317,000 $ 135,992,000 $ 45,694,000 $ 42,779,000
============= ============= ============= =============
Average number of common shares and common
stock equivalents outstanding 184,624,948 187,068,330 184,201,317 188,307,148
Dilutive effect of stock options (1) --- --- --- ---
------------- ------------- ------------- ------------
184,624,948 187,068,330 184,201,317 188,307,148
============= ============= ============= ============
Primary earnings per share $ 0.81 $ 0.73 $ 0.25 $ 0.23
============= ============= ============= ============
Calculation of Fully Diluted Earnings Per Share:
- - ------------------------------------------------
Net earnings applicable to common stock $ 149,317,000 $ 135,992,000 $ 45,694,000 $ 42,779,000
============= ============= ============= ============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings per share 184,624,948 187,068,330 184,201,317 188,307,148
Dilutive effect of stock options and Liquid
Yield Option Notes (2) --- --- --- ---
------------- ------------- ------------- ------------
184,624,948 187,068,330 184,201,317 188,307,148
============= ============= ============= ============
Fully diluted earnings per share $ 0.81 $ 0.73 $ 0.25 $ 0.23
============= ============= ============= ============
(1) Maximum possible dilutive effect of outstanding options in each period
is less than 3%.
(2) Maximum possible dilutive 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 April 2, 1994, and the
related consolidated statements of results of
operations and cash flows for the thirteen week
and thirty-nine 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
May 6, 1994
