<PAGE>
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 December 31, 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 [ ]
182,616,855 shares of common stock were outstanding as of
February 3, 1995.
<PAGE>
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.
<PAGE>
3
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
<CAPTION> Dec. 31, July 2, Jan. 1,
1994 1994 1994
(Unaudited) (Audited) (Unaudited)
----------- --------- -----------
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 84,224 $ 86,735 $ 50,767
Accounts and notes receivable,
less allowances of $29,366,
$15,999 and $27,161 919,262 856,448 829,041
Inventories 703,318 601,994 640,172
Deferred taxes 35,837 38,091 32,116
Prepaid expenses 22,000 16,380 19,237
---------- ---------- ----------
Total current assets 1,764,641 1,599,648 1,571,333
Plant and equipment at cost, less
depreciation 839,761 817,221 790,433
Goodwill and intangibles, less
amortization 262,072 266,021 265,544
Other assets 146,869 128,839 107,252
---------- ---------- ----------
Total assets $3,013,343 $2,811,729 $2,734,562
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 66,508 $ 5,247 $ 56,826
Accounts payable 688,537 632,373 568,556
Accrued expenses 171,680 176,043 145,199
Accrued income taxes 11,596 29,168 19,704
Current maturities of long-term
debt 3,146 3,730 6,535
---------- --------- ----------
Total current liabilities 941,467 846,561 796,820
Long-term debt 561,066 538,711 565,756
Deferred taxes 202,643 185,548 167,418
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 191,294 191,294 191,294
Paid-in capital 52,078 60,003 62,297
Retained earnings 1,289,643 1,200,735 1,120,797
---------- ---------- ----------
1,533,015 1,452,032 1,374,388
Less cost of treasury stock,
8,805,905, 8,224,505 and
6,661,743 shares 224,848 211,123 169,820
---------- ---------- ----------
Total shareholders' equity 1,308,167 1,240,909 1,204,568
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,013,343 $2,811,729 $2,734,562
========== ========== ==========
<FN>
Note: The July 2, 1994 balance sheet has been taken from the audited
financial statements at that date.
</TABLE>
<PAGE>
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
---------------------------- -----------------------------
Dec. 31, Jan. 1, Dec. 31, Jan. 1,
1994 1994 1994 1994
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Sales $ 5,989,759 $ 5,375,756 $ 3,006,663 $ 2,665,882
Costs and expenses
Cost of sales 4,912,364 4,403,380 2,463,576 2,179,225
Operating expenses 857,867 773,589 428,276 384,340
Interest expense 18,421 19,949 9,968 10,347
Other income, net (1,073) (1,134) (545) (175)
------------ ----------- ------------ ------------
Total costs and expenses 5,787,579 5,195,784 2,901,275 2,573,737
------------ ----------- ------------ ------------
Earnings before income taxes 202,180 179,972 105,388 92,145
Income taxes 80,265 76,349 41,839 36,582
------------ ------------ ------------ ------------
Net earnings $ 121,915 $ 103,623 $ 63,549 $ 55,563
============ ============ ============ ============
Average number of shares
outstanding 183,091,860 184,836,752 182,890,596 184,751,726
============ ============ ============ ============
Earnings per share $ 0.67 $ 0.56 $ 0.35 $ 0.30
============ ============ ============ ============
Dividends paid per common
share $ 0.18 $ 0.14 $ 0.09 $ 0.07
============ ============ ============ ============
(/Table)
<PAGE>
5
</TABLE>
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 26-Week Period Ended
------------------------
Dec. 31, Jan. 1,
1994 1994
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 121,915 $103,623
Add non-cash items:
Depreciation and amortization 64,308 58,391
Interest on Liquid Yield Option Notes 2,979 2,838
Deferred tax provision 19,349 11,336
Provision for losses on accounts receivable 10,265 9,319
Additional investment in certain assets
and liabilities net of effect of business
acquired:
(Increase) in receivables (73,079) (50,481)
(Increase) in inventories (101,324) (96,460)
(Increase) decrease in prepaid expenses (5,620) 749
Increase in accounts payable 56,164 9,960
(Decrease) in accrued expenses (4,363) (15,334)
(Decrease) in accrued income taxes (17,572) (7,386)
(Increase) in other assets (20,909) (26,868)
-------- --------
Net cash provided by (used for) operating
activities 52,113 (313)
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (82,058) (77,861)
Proceeds from sales of plant and equipment 2,038 1,139
Acquisitions of business, net of cash
acquired --- (11,925)
-------- --------
Net cash used for investing activities (80,020) (88,647)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 85,851 115,241
Other debt repayments (5,799) (5,806)
Common stock reissued from treasury 16,415 15,030
Treasury stock purchases (38,064) (27,614)
Dividends paid (33,007) (25,883)
-------- --------
Net cash provided by financing activities 25,396 70,968
-------- --------
Net decrease in cash (2,511) (17,992)
Cash at beginning of period 86,735 68,759
-------- --------
Cash at end of period $ 84,224 $ 50,767
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 18,542 $ 20,186
Income taxes 78,133 74,200
</TABLE>
<PAGE>
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 this stock
repurchase program. Under this program, 3,000,000
shares were purchased in Fiscal 1994 and 1,530,000
shares in the first half of Fiscal 1995.
Results of Operations
---------------------
Sales increased 11% during the 26 weeks and 13% in
the second quarter of Fiscal 1995 over the same
quarter of the prior year. Cost of sales increased
12% during the 26 weeks and 13% in the second quarter
of Fiscal 1995 which is generally in line with the
sales increases. Operating expenses for the periods
presents remained approximately the same as a percent
of sales.
Interest expense in the current periods declined from
the prior periods primarily due to expiration of the
interest rate swap in December 1993 which more than
offset the incremental interest expense related to
increased borrowings and rates.
Income taxes for the prior 26 weeks 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 current federal tax rate of 35%.
Increases in pretax earnings, net earnings and
earnings per share for the periods shown resulted
from a combination of the above factors.
<PAGE>
7
PART II. OTHER INFORMATION
-------------------------
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on
November 4, 1994 ("1994 Annual Meeting"). At the 1994
Annual Meeting the following persons were elected to serve
as directors of the Company for three year terms: John F.
Baugh, Charles H. Cotros, Jonathan Golden, Arthur J. Swenka
and Thomas B. Walker, Jr. The terms of the following
persons as directors of the Company continued after the 1994
Annual Meeting: John W. Anderson, Colin G. Campbell, Frank
A. Godchaux III, Donald H. Keller, Bill M. Lindig, Richard
G. Merrill, Donald H. Pegler Jr., Frank H. Richardson,
Phyllis S. Sewell and John F. Woodhouse.
At the 1994 Annual Meeting, the stockholders voted upon the
election of directors, as noted above, and approval of the
Amended and Restated SYSCO Corporation Management Incentive
Plan (the "Plan"). The results of such vote were as
follows:
<TABLE>
<CAPTION> Number of Votes Cast
--------------------
Withheld and Broker
Matter Voted Upon For Against Abstained Non-votes
----------------- ----------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
(i) Approval of the Plan 142,186,337 15,915,402 3,085,851 --
(ii) Election as Director:
John F. Baugh 159,298,164 1,889,426 -- --
Charles H. Cotros 159,352,842 1,834,748 -- --
Jonathan Golden 159,463,104 1,724,486 -- --
Arthur J. Swenka 159,516,781 1,670,809 -- --
Thomas B. Walker, Jr. 159,371,420 1,816,170 -- --
</TABLE>
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 February 7, 1995, 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.
<PAGE>
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: February 7, 1995
<PAGE>
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
February 7, 1995, re unaudited financial
statements 11
27 SYSCO Corporation and its Consolidated
Subsidiaries Financial Data Schedule 12
</TABLE>
<PAGE>
10
Exhibit 11
SYSCO CORPORATION AND ITS CONSOLIDATED SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION> 26-Week Period Ended 13-Week Period Ended
----------------------------- -------------------------------
Dec. 31,1994 Jan. 1, 1994 Dec. 31, 1994 Jan. 1, 1994
------------ -------------- ------------- ------------
Calculation of Primary Earnings Per Share:
- - - -----------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable to common stock $ 121,915,000 $ 103,623,000 $ 63,549,000 $ 55,563,000
============= ============= ============= =============
Average number of common shares and common
stock equivalents outstanding 183,091,860 184,836,752 182,890,596 184,751,726
Dilutive effect of stock options <F1> --- --- --- ---
------------- ------------- ------------- -------------
183,091,860 184,836,752 182,890,596 184,751,726
============= ============= ============= =============
Primary earnings per share $ 0.67 $ 0.56 $ 0.35 $ 0.30
============= ============= ============= =============
Calculation of Fully Diluted Earnings Per Share:
- - - ------------------------------------------------
Net earnings applicable to common stock $ 121,915,000 $ 103,623,000 $ 63,549,000 $ 55,563,000
============= ============= ============= =============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings per share 183,091,860 184,836,752 182,890,596 184,751,726
Dilutive effect of stock options and Liquid
Yield Option Notes <F2> --- --- --- ---
------------- ------------- ------------- ------------
183,091,860 184,836,752 182,890,596 184,751,726
============= ============= ============= ============
Fully diluted earnings per share $ 0.67 $ 0.56 $ 0.35 $ 0.30
============= ============= ============= ============
<FN>
<F1> Maximum possible dilutive effect of outstanding options in each period is less than 3%.
<F2> Maximum possible dilutive effect of outstanding effect of outstanding options and
Liquid Yield Option Notes during each period is less than 3%.
</TABLE>
<PAGE>
11
Exhibit 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Sysco Corporation:
We have reviewed the consolidated balance sheet
of Sysco Corporation (a Delaware corporation)
and subsidiaries as of December 31, 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 LLP
Houston, Texas
February 7, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from Item 1. Financial Statements and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> DEC-31-1994
<CASH> 84,224
<SECURITIES> 0
<RECEIVABLES> 948,628
<ALLOWANCES> (29,366)
<INVENTORY> 703,318
<CURRENT-ASSETS> 1,764,641
<PP&E> 1,470,618
<DEPRECIATION> (630,857)
<TOTAL-ASSETS> 3,013,343
<CURRENT-LIABILITIES> 941,467
<BONDS> 561,066
<COMMON> 191,294
0
0
<OTHER-SE> 1,116,873
<TOTAL-LIABILITY-AND-EQUITY> 3,013,343
<SALES> 5,989,759
<TOTAL-REVENUES> 5,989,759
<CGS> 4,912,364
<TOTAL-COSTS> 5,787,579
<OTHER-EXPENSES> (1,073)
<LOSS-PROVISION> 10,265
<INTEREST-EXPENSE> 18,421
<INCOME-PRETAX> 202,180
<INCOME-TAX> 80,265
<INCOME-CONTINUING> 121,915
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 121,915
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
</TABLE>
