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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 28, 1996
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: (281) 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 [ ]
178,862,681 shares of common stock were outstanding as of
October 25, 1996.
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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 June 29, 1996
consolidated balance sheet which was taken from
the audited financial statements included in the
Company's Fiscal 1996 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 1996 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. 28, June 29, Sept 30,
1996 1996 1995
---------- --------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
----------
<S> <C> <C> <C>
Current assets
Cash $ 127,928 $ 107,759 $ 90,265
Accounts and notes receivable,
less allowances of $23,550,
$16,380 and $22,023 1,132,356 1,039,759 1,037,871
Inventories 761,203 723,937 730,550
Deferred taxes 32,785 32,429 36,579
Prepaid expenses 23,144 18,443 22,950
---------- ---------- ----------
Total current assets 2,077,416 1,922,327 1,918,215
Plant and equipment at cost, less
depreciation 1,001,288 990,642 926,720
Goodwill and intangibles, less
amortization 253,298 250,473 256,253
Other assets 166,640 161,963 158,090
---------- ---------- ----------
Total assets $3,498,642 $3,325,405 $3,259,278
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Notes payable $ 50,561 $ 9,390 $ 22,190
Accounts payable 862,299 779,124 806,844
Accrued expenses 214,510 212,746 188,116
Accrued income taxes 65,237 23,330 52,917
Current maturities of long-term
debt 14,110 12,934 6,925
---------- --------- ----------
Total current liabilities 1,206,717 1,037,524 1,076,992
Long-term debt 580,776 581,734 535,591
Deferred taxes 231,019 231,469 207,243
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 35,423 35,179 49,047
Retained earnings 1,618,543 1,568,589 1,425,444
---------- ---------- ----------
1,845,260 1,795,062 1,665,785
Less cost of treasury stock,
12,245,484, 10,880,919 and
8,762,008 shares 365,130 320,384 226,333
---------- ---------- ----------
Total shareholders' equity 1,480,130 1,474,678 1,439,452
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,498,642 $3,325,405 $3,259,278
========== ========== ==========
<FN>
Note: The June 29, 1996 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. 28, Sept. 30,
1996 1995
------------ -----------
<s) <C> <C>
Sales $ 3,679,223 $ 3,291,910
Costs and expenses
Cost of sales 3,028,478 2,704,658
Operating expenses 519,729 469,847
Interest expense 10,917 9,372
Other income, net (241) (444)
------------ -----------
Total costs and expenses 3,558,883 3,183,433
------------ -----------
Earnings before income taxes 120,340 108,477
Income taxes 46,933 42,306
------------ ------------
Net earnings $ 73,407 $ 66,171
============ ============
Average number of shares
outstanding 180,048,304 182,791,952
============ ============
Earnings per share $ 0.41 $ 0.36
============ ============
Dividends paid per common
share $ 0.13 $ 0.11
============ ============
</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. 28, Sept. 30,
1996 1995
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 73,407 $ 66,171
Add non-cash items:
Depreciation and amortization 38,932 33,916
Interest on Liquid Yield Option Notes --- 1,350
Deferred tax provision (882) (12,297)
Provision for losses on accounts receivable 5,401 4,631
Additional investment in certain assets
and liabilities net of effect of
business acquired:
(Increase) in receivables (91,414) (109,969)
(Increase) in inventories (34,304) (62,689)
(Increase) in prepaid expenses (4,249) (4,265)
Increase in accounts payable 77,851 98,464
Increase (decrease) in accrued expenses 1,094 (18,015)
Increase in accrued income taxes 41,907 42,542
(Increase) in other assets (6,873) (5,969)
-------- --------
Net cash provided by operating activities 100,870 33,870
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (42,175) (61,469)
Proceeds from sales of plant and equipment 560 250
Acquisition of business (5,330) ---
-------- --------
Net cash used for investing activities (46,945) (61,219)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 34,518 11,018
Other debt borrowings (repayments) (319) 3,041
Common stock reissued from treasury 11,563 11,415
Treasury stock purchases (56,065) (21,614)
Dividends paid (23,453) (20,132)
-------- --------
Net cash used for financing activities (33,756) (16,272)
-------- --------
Net increase (decrease) in cash 20,169 (43,621)
Cash at beginning of period 107,759 133,886
-------- --------
Cash at end of period $ 127,928 $ 90,265
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 2,784 $ 4,724
Income taxes 7,734 10,688
</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 1996
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 4,900,000 shares in
Fiscal 1996. In February 1996, the Board of
Directors authorized an additional 6,000,000
shares to be purchased under this program. Under
this latest authorization, 4,164,100 shares were
purchased through September 28, 1996.
Results of Operations
---------------------
Sales and cost of sales increased 12% during the
first quarter of Fiscal 1997 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 due to increased borrowings.
Income taxes for the current period reflects an
effective rate of 39%, the same as in the prior year.
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 6, 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.
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8
SIGNATURES
------------------
Pursuant to the requirements of the Securities
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 6, 1996
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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 6, 1996, 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. 28, 1996 Sept. 30, 1995
-------------- --------------
Calculation of Primary Earnings Per Share:
- -----------------------------------------
Net earnings applicable to common stock $ 73,407,000 $ 66,171,000
============= =============
Average number of common shares and common
stock equivalents outstanding 180,048,304 182,791,952
Dilutive effect of stock options (1) --- ---
------------- -------------
180,048,304 182,791,952
============= =============
Primary earnings per share $ 0.41 $ 0.36
============= =============
Calculation of Fully Diluted
Earnings Per Share:
- ----------------------------
Net earnings applicable to common stock $ 73,407,000 $ 66,171,000
============= =============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings
per share 180,048,304 182,791,952
Dilutive effect of stock options and
Liquid Yield Option Notes (2) --- ---
------------- -------------
180,048,304 182,791,952
============= =============
Fully diluted earnings per share $ 0.41 $ 0.36
============= =============
(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%.
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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 its consolidated subsidiaries as of
September 28, 1996, and the related consolidated
statements 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 6, 1996
<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> JUN-29-1996
<PERIOD-END> SEP-28-1996
<CASH> 127,928
<SECURITIES> 0
<RECEIVABLES> 1,155,906
<ALLOWANCES> (23,550)
<INVENTORY> 761,203
<CURRENT-ASSETS> 2,077,416
<PP&E> 1,798,308
<DEPRECIATION> (797,020)
<TOTAL-ASSETS> 3,498,642
<CURRENT-LIABILITIES> 1,206,717
<BONDS> 580,776
<COMMON> 191,294
0
0
<OTHER-SE> 1,288,836
<TOTAL-LIABILITY-AND-EQUITY> 3,498,642
<SALES> 3,679,223
<TOTAL-REVENUES> 3,679,223
<CGS> 3,028,478
<TOTAL-COSTS> 3,558,883
<OTHER-EXPENSES> 241
<LOSS-PROVISION> 5,401
<INTEREST-EXPENSE> 10,917
<INCOME-PRETAX> 120,340
<INCOME-TAX> 46,933
<INCOME-CONTINUING> 73,407
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,407
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
