<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 March 29, 1997
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 [ ]
174,407,385 shares of common stock were outstanding as of
May 2, 1997.
<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 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.
<PAGE>
3
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
<CAPTION> March 29, June 29, March 30,
1997 1996 1996
(Unaudited) (Audited) (Unaudited)
----------- ---------- -----------
ASSETS
----------
<S> <C> <C> <C>
Current assets:
Cash $ 84,093 $ 107,759 $ 74,281
Accounts and notes receivable,
less allowances of $39,402,
$16,380 and $32,446 1,075,408 1,039,759 1,050,209
Inventories 745,304 723,937 736,068
Deferred taxes 44,739 32,429 25,890
Prepaid expenses 24,405 18,443 23,829
---------- ---------- ----------
Total current assets 1,973,949 1,922,327 1,910,277
Plant and equipment at cost, less
depreciation 1,034,711 990,642 993,052
Goodwill and intangibles, less
amortization 249,375 250,473 252,406
Other assets 164,678 161,963 161,234
---------- ---------- ----------
Total other assets 414,053 412,436 413,640
---------- ---------- ----------
Total assets $ 3,422,713 $ 3,325,405 $3,316,969
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 13,103 $ 9,390 $ 29,044
Accounts payable 827,322 779,124 808,877
Accrued expenses 241,939 212,746 204,454
Accrued income taxes 33,563 23,330 16,349
Current maturities of long-term
debt 9,525 12,934 9,196
---------- --------- ----------
Total current liabilities 1,125,452 1,037,524 1,067,920
Long-term debt 623,158 581,734 559,079
Deferred taxes 236,224 231,469 223,178
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 33,391 35,179 36,137
Retained earnings 1,706,749 1,568,589 1,508,511
---------- ---------- ----------
1,931,434 1,795,062 1,735,942
Less cost of treasury stock,
15,994,038, 10,880,919 and
9,357,492 shares 493,555 320,384 269,150
---------- ---------- ----------
Total shareholders' equity 1,437,879 1,474,678 1,466,792
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,422,713 $3,325,405 $3,316,969
========== ========== ==========
<FN>
Note: The June 29, 1996 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> 39-Week Period Ended 13-Week Period Ended
---------------------------- -----------------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Sales $ 10,759,905 $ 9,850,605 $ 3,470,334 $ 3,257,110
Costs and expenses
Cost of sales 8,827,840 8,086,303 2,844,881 2,675,844
Operating expenses 1,550,986 1,418,850 512,563 479,109
Interest expense 34,385 29,975 11,580 10,271
Other, net 48 (1,205) 307 (411)
------------ ----------- ------------ ------------
Total costs and expenses 10,413,259 9,533,923 3,369,331 3,164,813
------------ ----------- ------------ ------------
Earnings before income taxes 346,646 316,682 101,003 92,297
Income taxes 135,192 123,506 39,391 35,996
------------ ------------ ------------ ------------
Net earnings $ 211,454 $ 193,176 $ 61,612 $ 56,301
============ ============ ============ ============
Average number of shares
outstanding 178,333,249 182,985,177 176,534,015 183,014,629
============ ============ ============ ============
Earnings per share $ 1.19 $ 1.06 $ 0.35 $ 0.31
============ ============ ============ ============
Dividends paid per common
share $ 0.41 $ 0.35 $ 0.15 $ 0.13
============ ============ ============ ============
(/Table)
<PAGE>
5
</TABLE>
<TABLE>
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
<CAPTION> 39-Week Period Ended
------------------------
March 29, March 30,
1997 1996
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 211,454 $193,176
Add non-cash items:
Depreciation and amortization 118,904 105,971
Interest on Liquid Yield Option Notes --- 2,274
Deferred tax provision (7,631) 14,327
Provision for losses on accounts receivable 18,541 12,861
Additional investment in certain assets
and liabilities net of effect of
business acquired:
(Increase) in receivables (47,606) (130,537)
(Increase) in inventories (18,405) (68,207)
(Increase) in prepaid expenses (5,510) (5,144)
Increase in accounts payable 42,874 100,497
Increase (decrease) in accrued expenses 28,523 (1,677)
Increase in accrued income taxes 10,233 5,974
(Increase) in other assets (8,804) (13,924)
-------- --------
Net cash provided by operating activities 342,573 215,591
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (149,072) (196,302)
Sales and retirements of plant and equipment 1,878 3,696
Acquisition of business (5,330) ---
-------- --------
Net cash used for investing activities (152,524) (192,606)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 33,005 132,615
Other debt borrowings 1,533 3,368
Common stock reissued from treasury 22,551 20,624
Treasury stock purchases (197,510) (175,127)
Dividends paid (73,294) (64,070)
-------- --------
Net cash used for financing activities (213,715) (82,590)
-------- --------
Net (decrease) in cash (23,666) (59,605)
Cash at beginning of period 107,759 133,886
-------- --------
Cash at end of period $ 84,093 $ 74,281
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 26,026 $ 24,821
Income taxes 134,716 100,814
</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 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 this stock
repurchase program. Under this additional
authority 3,000,000 shares were purchased in
Fiscal 1994, 2,100,000 shares in Fiscal 1995,
and 4,900,000 in Fiscal 1996.
In February 1996, the Board of Directors authorized
an additional 6,000,000 shares to be purchased
under this program. All 6,000,000 shares were
purchased under this program during the first half
of Fiscal 1997. In November 1996, the Board of
Directors authorized an additional 6,000,000
shares for repurchase. Under this latest
authorization, 2,349,100 shares were purchased
through March 29, 1997.
On April 22, 1997, in two separate offerings, the
Company drew down the remaining $150,000,000 of
the $500,000,000 shelf debt registration filed
with the Securities and Exchange Commission in
June 1995. The Company issued 7.16% debentures
totaling $50,000,000 due April 15, 2027. These
debentures were priced at par, are unsecured,
are not subject to any sinking fund requirement
and are redeemable at the option of the holder on
April 15, 2007, but otherwise are not redeemable
prior to maturity. The Company also issued
7.25% Senior Notes totaling $100,000,000 due
April 15, 2007. These notes were priced at
99.611% of par and are unsecured, not redeemable
prior to maturity and not subject to any
sinking fund requirement.
<PAGE> 7
Results of Operations
---------------------
Sales increased 9% during the 39 weeks and 7% in
the third quarter of Fiscal 1997 over comparable
periods of the prior year. Cost of sales increased
9% during the 39 weeks and 6% in the third quarter
of Fiscal 1997 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%, the same as in the prior
year periods.
Increases in pretax earnings, net earnings and
earnings per share for the periods shown resulted
from a combination of the above factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3(i) Restated Certification
of Incorporation, as amended,
incorporated by reference to Form 10-K
for the year ended June 29, 1991.
3(ii) Bylaws, as amended, incorporated
by reference to Form 10-K for the
year ended July 2, 1994.
11 Statement re computation of per
share earnings.
15 Letter from Arthur Andersen LLP
dated April 18, 1997, re unaudited
financial statements.
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
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: May 7, 1997
<PAGE>
10
<TABLE>
EXHIBIT INDEX
----------------------
<CAPTION> SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ----- ----------------------------------------- -------------
<S> <C> <C>
3(i) Restated Certification of Incorporation,
as amended, incorporated by reference
to Form 10-K for the year ended
June 29, 1991.
3(ii) Bylaws, as amended, incorporated by
reference to Form 10-K for the year
ended July 2, 1994.
11 SYSCO Corporation and its Consolidated
Subsidiaries statement re computation of
per share earnings 11
15 Letter from Arthur Andersen LLP dated
April 18, 1997, 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> 39-Week Period Ended 13-Week Period Ended
---------------------------- -----------------------------
March 29, March 30, March 29, March 30,
1997 1996 1997 1996
------------- ------------- ------------- --------------
Calculation of Primary Earnings Per Share:
<S> <C> <C> <C> <C>
Net earnings applicable to common stock $ 211,454,000 $ 193,176,000 $ 61,612,000 $ 56,301,000
============= ============= ============= =============
Average number of common shares and common
stock equivalents outstanding 178,333,249 182,985,177 176,534,015 183,014,629
Dilutive effect of stock options <F1> --- --- --- ---
------------- ------------- ------------- -------------
178,333,249 182,985,177 176,534,015 183,014,629
============= ============= ============= =============
Primary earnings per share $ 1.19 $ 1.06 $ 0.35 $ 0.31
============= ============= ============= =============
Calculation of Fully Diluted Earnings
Per Share:
Net earnings applicable to common stock $ 211,454,000 $ 193,176,000 $ 61,612,000 $ 56,301,000
============= ============= ============= =============
Average number of shares outstanding on a
fully diluted basis - same as for
calculation of primary earnings
per share 178,333,249 182,985,177 176,534,015 183,014,629
Dilutive effect of stock options and Liquid
Yield Option Notes <F2> --- --- --- ---
------------- ------------- ------------- ------------
178,333,249 182,985,177 176,534,015 183,014,629
============= ============= ============= ============
Fully diluted earnings per share $ 1.19 $ 1.06 $ 0.35 $ 0.31
============= ============= ============= ============
<FN>
<F1> Maximum possible dilutive effect of outstanding options in each period is less than 3%.
<F2> Maximum possible dilutive 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 sheets
of Sysco Corporation (a Delaware corporation)
and consolidated subsidiaries as of March 29,
1997, and the related consolidated results of
operations and cash flows for the thirty-nine
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
April 18, 1997
<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> 9-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> MAR-29-1997
<CASH> $ 84,093
<SECURITIES> 0
<RECEIVABLES> 1,114,810
<ALLOWANCES> (39,402)
<INVENTORY> 745,304
<CURRENT-ASSETS> 1,973,949
<PP&E> 1,879,485
<DEPRECIATION> (844,774)
<TOTAL-ASSETS> 3,422,713
<CURRENT-LIABILITIES> 1,125,452
<BONDS> 623,158
<COMMON> 191,294
0
0
<OTHER-SE> 1,246,585
<TOTAL-LIABILITY-AND-EQUITY> 3,422,713
<SALES> 10,759,905
<TOTAL-REVENUES> 10,759,905
<CGS> 8,827,840
<TOTAL-COSTS> 10,413,259
<OTHER-EXPENSES> (48)
<LOSS-PROVISION> 18,541
<INTEREST-EXPENSE> 34,385
<INCOME-PRETAX> 346,646
<INCOME-TAX> 135,192
<INCOME-CONTINUING> 211,454
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,454
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
