<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 September 30, 1995
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 [ ]
182,211,874 shares of common stock were outstanding as of
October 27, 1995.
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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 1, 1995
consolidated balance sheet which was taken from
the audited financial statements included in the
Company's Fiscal 1995 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 1995 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> Sept. 30, July 1, Oct. 1,
1995 1995 1994
---------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 90,265 $ 133,886 $ 75,481
Accounts and notes receivable,
less allowances of $22,023,
$16,001 and $22,861 1,037,871 932,533 935,671
Inventories 730,550 667,861 672,385
Deferred taxes 33,851 33,935 36,508
Prepaid expenses 22,950 18,685 20,717
---------- ---------- ----------
Total current assets 1,915,487 1,786,900 1,740,762
Plant and equipment at cost, less
depreciation 926,720 896,079 826,065
Goodwill and intangibles, less
amortization 256,253 258,206 264,005
Other assets 158,090 153,506 139,685
---------- ---------- ----------
Total assets $3,256,550 $3,094,691 $2,970,517
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 22,190 $ 1,181 $ 35,771
Accounts payable 806,844 708,380 705,454
Accrued expenses 188,116 206,131 163,850
Accrued income taxes 52,917 22,462 53,845
Current maturities of long-term
debt 6,925 6,569 5,752
---------- --------- ----------
Total current liabilities 1,076,992 944,723 964,672
Long-term debt 535,591 541,556 535,425
Deferred taxes 204,515 204,809 188,169
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 49,047 48,674 52,955
Retained earnings 1,425,444 1,379,405 1,242,608
---------- ---------- ----------
1,665,785 1,619,373 1,486,857
Less cost of treasury stock,
8,762,008, 8,429,203 and
7,986,583 shares 226,333 215,770 204,606
---------- ---------- ----------
Total shareholders' equity 1,439,452 1,403,603 1,282,251
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,256,550 $3,094,691 $2,970,517
========== ========== ==========
<FN>
Note: The July 1, 1995 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)
13-Week Period Ended
----------------------------
Sept. 30, Oct. 1,
1995 1994
------------ -----------
<s) <C> <C>
Sales $ 3,291,910 $ 2,983,096
Costs and expenses
Cost of sales 2,704,658 2,448,788
Operating expenses 469,847 429,591
Interest expense 9,372 8,453
Other income, net (444) (528)
------------ -----------
Total costs and expenses 3,183,433 2,886,304
------------ -----------
Earnings before income taxes 108,477 96,792
Income taxes 42,306 38,426
------------ ------------
Net earnings $ 66,171 $ 58,366
============ ============
Average number of shares
outstanding 182,791,952 183,295,130
============ ============
Earnings per share $ 0.36 $ 0.32
============ ============
Dividends paid per common
share $ 0.11 $ 0.09
============ ============
</TABLE>
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5
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 13- Week Period Ended
------------------------
Sept. 30, Oct. 1,
1995 1994
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 66,171 $ 58,366
Add non-cash items:
Depreciation and amortization 33,916 31,819
Interest on Liquid Yield Option Notes 1,350 1,466
Deferred tax provision (210) 4,204
Provision for losses on accounts receivable 4,631 5,099
Additional investment in certain assets
and liabilities net of effect of business
acquired:
(Increase) in receivables (109,969) (84,322)
(Increase) in inventories (62,689) (70,391)
(Increase) in prepaid expenses (4,265) (4,337)
Increase in accounts payable 98,464 73,081
(Decrease) in accrued expenses (18,015) (12,193)
Increase in accrued income taxes 30,455 24,677
(Increase) in other assets (5,969) (12,237)
-------- --------
Net cash provided by operating activities 33,870 15,232
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (61,469) (37,975)
Proceeds from sales of plant and equipment 250 719
-------- --------
Net cash used for investing activities (61,219) (37,256)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 11,018 28,877
Other debt borrowings (repayments) 3,041 (1,084)
Common stock reissued from treasury 11,415 12,721
Treasury stock purchases (21,614) (13,251)
Dividends paid (20,132) (16,493)
-------- --------
Net cash (used for) provided
by financing activities (16,272) 10,770
-------- --------
Net decrease in cash (43,621) (11,254)
Cash at beginning of period 133,886 86,735
-------- --------
Cash at end of period $ 90,265 $ 75,481
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 4,724 $ 6,128
Income taxes 10,688 8,928
</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 1995
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, 2,100,000
shares in Fiscal 1995 and 766,000 shares in the
first quarter of Fiscal 1996.
Results of Operations
---------------------
Sales and cost of sales increased 10.4% during the
first quarter of Fiscal 1996 over the same
quarter of the prior year. Operating expenses for
the periods presented remained approximately the
same as a percent of sales.
Interest expense in the current period increased over
the prior period primarily due to rates.
Income taxes for the current period reflect an
effective rate of 39.0% as compared to 39.7% in the
prior year. The rate reduction results from the
effects of several tax savings initiatives.
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 9, 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.
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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 and
Chief Financial Officer
Date: November 9, 1995
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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 9, 1995, 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
---------------------------------
Sept. 30, 1995 Oct. 1, 1994
-------------- --------------
Calculation of Primary Earnings Per Share:
- - -----------------------------------------
Net earnings applicable to common stock $ 66,171,000 $ 58,366,000
============= =============
Average number of common shares and common
stock equivalents outstanding 182,791,952 183,295,130
Dilutive effect of stock options (1) --- ---
------------- -------------
182,791,952 183,295,130
============= =============
Primary earnings per share $ 0.36 $ 0.32
============= =============
Calculation of Fully Diluted Earnings Per Share:
- - ------------------------------------------------
Net earnings applicable to common stock $ 66,171,000 $ 58,366,000
============= =============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings per share 182,791,952 183,295,130
Dilutive effect of stock options and Liquid
Yield Option Notes (2) --- ---
------------- -------------
182,791,952 183,295,130
============= =============
Fully diluted earnings per share $ 0.36 $ 0.32
============= =============
(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 sheet
of Sysco Corporation (a Delaware corporation)
and subsidiaries as of September 30, 1995, and
the related statements consolidated 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 9, 1995
<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-01-1996
<PERIOD-END> SEP-30-1995
<CASH> 90,265
<SECURITIES> 0
<RECEIVABLES> 1,059,894
<ALLOWANCES> 22,023
<INVENTORY> 730,550
<CURRENT-ASSETS> 1,915,487
<PP&E> 1,626,143
<DEPRECIATION> 699,423
<TOTAL-ASSETS> 3,256,550
<CURRENT-LIABILITIES> 1,076,992
<BONDS> 535,591
<COMMON> 191,294
0
0
<OTHER-SE> 1,248,158
<TOTAL-LIABILITY-AND-EQUITY> 3,256,550
<SALES> 3,291,910
<TOTAL-REVENUES> 3,291,910
<CGS> 2,704,658
<TOTAL-COSTS> 3,183,433
<OTHER-EXPENSES> 444
<LOSS-PROVISION> 4,631
<INTEREST-EXPENSE> 9,372
<INCOME-PRETAX> 108,477
<INCOME-TAX> 42,306
<INCOME-CONTINUING> 66,171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,171
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
