<PAGE>
Page 1 of 13
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 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 [ ]
183,404,837 shares of common stock were outstanding as of
February 2, 1996.
<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 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.
<PAGE>
3
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
<CAPTION> Dec. 30, July 1, Dec. 31,
1995 1995 1994
----------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 117,193 $ 133,886 $ 84,224
Accounts and notes receivable,
less allowances of $27,521,
$16,001 and $29,448 1,018,231 932,533 919,262
Inventories 742,003 667,861 703,318
Deferred taxes 25,109 33,935 35,837
Prepaid expenses 22,809 18,685 22,000
---------- ---------- ----------
Total current assets 1,925,345 1,786,900 1,764,641
Plant and equipment at cost, less
depreciation 971,331 896,079 839,761
Goodwill and intangibles, less
amortization 254,339 258,206 262,072
Other assets 160,375 153,506 146,869
---------- ---------- ----------
Total assets $3,311,390 $3,094,691 $3,013,343
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 52,082 $ 1,181 $ 66,508
Accounts payable 766,744 708,380 688,537
Accrued expenses 196,044 206,131 171,680
Accrued income taxes 13,527 22,462 11,596
Current maturities of
long-term debt 7,103 6,569 3,146
---------- --------- ----------
Total current liabilities 1,035,500 944,723 941,467
Long-term debt 569,370 541,556 561,066
Deferred taxes 208,096 204,809 202,643
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 36,988 48,674 52,078
Retained earnings 1,476,055 1,379,405 1,289,643
---------- ---------- ----------
1,704,337 1,619,373 1,533,015
Less cost of treasury stock,
7,453,996, 8,429,203 and
8,805,905 shares 205,913 215,770 224,848
---------- ---------- ----------
Total shareholders' equity 1,498,424 1,403,603 1,308,167
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,311,390 $3,094,691 $3,013,343
========== ========== ==========
<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)
<CAPTION> 26-Week Period Ended 13-Week Period Ended
---------------------------- -----------------------------
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
1995 1994 1995 1994
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Sales $ 6,593,495 $ 5,989,759 $ 3,301,585 $ 3,006,663
Costs and expenses
Cost of sales 5,410,459 4,912,364 2,705,801 2,463,576
Operating expenses 939,741 857,867 469,894 428,276
Interest expense 19,704 18,421 10,332 9,968
Other, net (794) (1,073) (350) (545)
------------ ----------- ------------ ------------
Total costs and expenses 6,369,110 5,787,579 3,185,677 2,901,275
------------ ----------- ------------ ------------
Earnings before income taxes 224,385 202,180 115,908 105,388
Income taxes 87,510 80,265 45,204 41,839
------------ ------------ ------------ ------------
Net earnings $ 136,875 $ 121,915 $ 70,704 $ 63,549
============ ============ ============ ============
Average number of shares
outstanding 182,970,451 183,091,860 183,156,420 182,890,596
============ ============ ============ ============
Earnings per share $ 0.75 $ 0.67 $ 0.39 $ 0.35
============ ============ ============ ============
Dividends paid per common
share $ 0.22 $ 0.18 $ 0.11 $ 0.09
============ ============ ============ ============
(/Table)
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5
</TABLE>
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 26-Week Period Ended
------------------------
Dec. 30, Dec. 31,
1995 1994
--------- ----------
<S> <C> <C>
Operating activities:
Net earnings $ 136,875 $ 121,915
Add non-cash items:
Depreciation and amortization 68,650 64,308
Interest on Liquid Yield Option Notes 2,274 2,979
Deferred tax provision 12,113 19,349
Provision for losses on accounts receivable 8,849 10,265
Additional investment in certain assets
and liabilities net of effect of business
acquired:
(Increase) in receivables (94,547) (73,079)
(Increase) in inventories (74,142) (101,324)
(Increase) in prepaid expenses (4,124) (5,620)
Increase in accounts payable 58,364 56,164
(Decrease) in accrued expenses (10,087) (4,363)
(Decrease) in accrued income taxes (8,935) (17,572)
(Increase) in other assets (11,195) (20,909)
-------- --------
Net cash provided by operating activities 84,095 52,113
-------- --------
Investing activities:
Additions to plant and equipment (139,538) (82,058)
Sales and retirements of plant and
equipment 2,171 2,038
-------- --------
Net cash used for investing activities (137,367) (80,020)
Financing activities:
Bank and commercial paper borrowings 164,608 85,851
Other debt borrowings (repayments) 2,610 (5,799)
Common stock reissued from treasury 15,862 16,415
Treasury stock purchases (106,276) (38,064)
Dividends paid (40,225) (33,007)
-------- --------
Net cash provided by financing activities 36,579 25,396
-------- --------
Net (decrease) in cash (16,693) (2,511)
Cash at beginning of period 133,886 86,735
--------- --------
Cash at end of period $ 117,193 $ 84,224
========= ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 19,230 $ 18,542
Income taxes 82,749 78,133
</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 this stock
repurchase program. Under this program, 3,000,000
shares were purchased in Fiscal 1994, 2,100,000
shares in Fiscal 1995, and 3,484,000 shares in the
first half of Fiscal 1996.
In November, 1995 the Company determined to
redeem all outstanding Liquid Yield Option Notes
(LYON's) on December 4, 1995 at a price of $579.92
per $1,000 principal amount at maturity, or
approximately $90,400,000 in the aggregate. These
zero coupon subordinated notes were outstanding and
convertible into common stock at the rate of
24.512 shares per $1,000 principal amount at
maturity. During this quarter, in lieu of
redemption, bondholders converted 155,685, of the
155,815 outstanding LYON's into common stock,
resulting in the issuance of 3,816,133 shares.
Results of Operations
---------------------
Sales increased 10% during the 26 weeks and 9.8% in
the second quarter of Fiscal 1996 over comparable
periods of the prior year. Cost of sales increased
10% during the 26 weeks and 9.8% in the second quarter
of Fiscal 1996 which is generally in line with the
sales increases. Operating expenses for the periods
presented remained approximately the same as a percent
of sales.
Interest expense in the current periods increased
over the prior periods due to increased borrowings.
Income taxes for the current periods reflect an
effective rate of 39% 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.
<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 3, 1995 ("1995 Annual Meeting"). At the 1995
Annual Meeting the following persons were elected to serve
as directors of the Company for three year terms: Colin T.
Campbell, Frank A. Godchaux III, Donald J. Keller,
Frank H. Richardson and John F. Woodhouse.
The terms of the following persons as directors of the
Company continued after the 1995 Annual Meeting:
John F. Baugh, John W. Anderson, Charles H. Cotros,
Jonathan Golden, Bill M. Lindig, Richard G. Merrill,
Donald H. Pegler, Jr., Phyllis S. Sewell, Arthur J. Swenka
and Thomas B. Walker, Jr.
At the 1995 Annual Meeting, the stockholders voted upon the
election of directors, as noted above, and on:
(a) Approval of the Sysco Corporation 1995 Management
Incentive Plan;
(b) Approval of the Sysco Corporation Non-Employee
Directors Stock Option Plan; and
(c) Approval of the reservation of 8,000,000
additional shares of Sysco Corporation Common
Stock under the Sysco Corporation 1991 Stock
Option Plan.
The results of such vote were as follows:
<PAGE>
8
<TABLE>
<CAPTION> Number of Votes Cast
--------------------
Withheld and Broker
Matter Voted Upon For Against Abstained Non-votes
----------------- ----------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
(a) Approval of the Management
Incentive Plan 134,674,843 12,605,590 5,592,584 4,586,394
(b) Approval of the Non-
Employee Directors Stock
Option Plan 139,215,399 7,736,746 5,448,001 5,059,265
(c) Approval of the reservation
of additional shares under
the 1991 Stock Option Plan 127,847,907 18,931,506 5,620,732 5,059,265
(d) Election of Director:
Colin G. Campbell 156,131,695 1,327,716 -- --
Frank A. Godchaux III 155,580,990 1,878,421 -- --
Donald J. Keller 156,158,967 1,300,444 -- --
Frank H. Richardson 156,155,717 1,303,694 -- --
John F. Woodhouse 155,705,807 1,753,604 -- --
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10(e) Sysco Corporation 1995 Management
Incentive Plan incorporated by reference to Form
10-K for the year ended July 1, 1995
Exhibit 10(g) Sysco Corporation Non-Employee
Directors Stock Option Plan incorporated by
reference to Form 10-K for the year ended
July 1, 1995
Exhibit 11, Statement re computation of per
share earnings.
Exhibit 15, Letter from Arthur Andersen LLP
dated February 8, 1996, 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>
9
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 8, 1996
<PAGE>
10
<TABLE>
EXHIBIT INDEX
----------------------
<CAPTION> SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ----- ----------------------------------------- -------------
<S> <C> <C>
10(e) Sysco Corporation 1995 Management
Incentive Plan incorporated by
reference to Form 10-K for the year
ended July 1, 1995
10(g) Sysco Corporation Non-Employee
Directors Stock Option Plan
incorporated by reference to Form
10-K for the year ended July 1, 1995
11 Sysco Corporation and its Consolidated
Subsidiaries statement re computation
of per share earnings 11
15 Letter from Arthur Andersen LLP dated
February 8, 1996, re unaudited financial
statements 12
27 Sysco Corporation and its Consolidated
Subsidiaries Financial Data Schedule 13
</TABLE>
<PAGE>
11
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. 30, 1995 Dec. 31, 1994 Dec. 30, 1995 Dec. 31, 1994
------------- -------------- ------------- --------------
Calculation of Primary Earnings Per Share:
- -----------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable to common stock $ 136,875,000 $ 121,915,000 $ 70,704,000 $ 63,549,000
============= ============= ============= =============
Average number of common shares and common
stock equivalents outstanding 182,970,451 183,091,860 183,156,420 182,890,596
Dilutive effect of stock options <F1> --- --- --- ---
------------- ------------- ------------- -------------
182,970,451 183,091,860 183,156,420 182,890,596
============= ============= ============= =============
Primary earnings per share $ 0.75 $ 0.67 $ 0.39 $ 0.35
============= ============= ============= =============
Calculation of Fully Diluted
Earnings Per Share:
- ----------------------------
Net earnings applicable to common stock $ 136,875,000 $ 121,915,000 $ 70,704,000 $ 63,549,000
============= ============= ============= =============
Average number of shares outstanding
on a fully diluted basis - same as
for calculation of primary earnings
per share 182,970,451 183,091,860 183,156,420 182,890,596
Dilutive effect of stock options and
Liquid Yield Option Notes <F2> --- --- --- ---
------------- ------------- ------------- ------------
182,970,451 183,091,860 183,156,420 182,890,596
============= ============= ============= ============
Fully diluted earnings per share $ 0.75 $ 0.67 $ 0.39 $ 0.35
============= ============= ============= ============
<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>
12
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 30, 1995, 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 8, 1996
<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> JUN-29-1996
<PERIOD-END> DEC-30-1995
<CASH> 117,193
<SECURITIES> 0
<RECEIVABLES> 1,045,752
<ALLOWANCES> (27,521)
<INVENTORY> 742,003
<CURRENT-ASSETS> 1,925,345
<PP&E> 1,690,577
<DEPRECIATION> (719,246)
<TOTAL-ASSETS> 3,311,390
<CURRENT-LIABILITIES> 1,035,500
<BONDS> 569,370
<COMMON> 191,294
0
0
<OTHER-SE> 1,307,130
<TOTAL-LIABILITY-AND-EQUITY> 3,311,390
<SALES> 6,593,495
<TOTAL-REVENUES> 6,593,495
<CGS> 5,410,459
<TOTAL-COSTS> 6,369,110
<OTHER-EXPENSES> (794)
<LOSS-PROVISION> 8,849
<INTEREST-EXPENSE> 19,704
<INCOME-PRETAX> 224,385
<INCOME-TAX> 87,510
<INCOME-CONTINUING> 136,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136,875
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.75
</TABLE>
